Quarterly Report for Quarter Ending March 31, 2026 (Form 10-Q)

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

References to the "Company," "FOXO," "us," "our" or "we" refer to FOXO Technologies Inc. and its consolidated subsidiaries. The following discussion and analysis summarize the significant factors affecting the consolidated operating results, financial condition, liquidity, capital resources and cash flows of our Company as of and for the periods presented below. You should read the following discussion of our financial condition and results of operations in conjunction with the unaudited condensed consolidated financial statements and the related notes included elsewhere in this Form 10-Q and with our audited consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2025, as filed with the SEC. In addition to our historical consolidated financial information, the following discussion contains forward-looking statements that reflect our plans, estimates, and beliefs. Our actual results could differ materially from those discussed in the forward-looking statements. Factors that could cause or contribute to these differences include those discussed below. We undertake no obligation to update publicly any forward-looking statements for any reason, except as required by law, even as new information becomes available or events occur in the future.

Formation

We were formed as a limited liability company on November 11, 2019, following our separation from GWG Holdings, Inc. We were previously named InsurTech Holdings, LLC and FOXO BioScience LLC. On November 13, 2020, FOXO Bioscience LLC completed a conversion to a C Corporation and became FOXO.

Effective September 15, 2022, we consummated our previously announced business combination pursuant to the Merger Agreement, whereby DWIN Merger Sub Inc. merged with and into Legacy FOXO, with Legacy FOXO surviving as a wholly-owned subsidiary of the Company. Upon consummation of our business combination, our name changed from Delwinds Insurance Acquisition Corp. to FOXO Technologies Inc.

Overview

As of March 31, 2026, FOXO owns and operates four principal subsidiaries.

Myrtle Recovery Centers, Inc., ("Myrtle") a 30-bed behavioral health facility in East Tennessee. Myrtle provides inpatient services for detox and residential treatment and outpatient services for medication assisted treatment ("MAT") and OBOT Programs.

Rennova Community Health, Inc., ("RCHI") owns and operates Scott County Community Hospital, Inc. ("SCCH") (d/b/a Big South Fork Medical Center ("BSF")), a critical access-designated ("CAH") hospital in East Tennessee.

Vector BioSource Inc. ("Vector") is an information, data and biospecimen sourcing provider serving the biotechnology, clinical research and pharmaceutical research industries.

FOXO Labs, Inc. is a biotechnology company dedicated to improving human health and life span through the development of cutting-edge technology and product solutions for various industries.

Our Business Segments

We manage and classify our business into three reportable business segments: (i) Healthcare, (ii) Life Science Services and (iii) Labs.

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Healthcare - The Company's healthcare segment includes Myrtle and RCHI's hospital SCCH, doing business as BSF. Myrtle offers behavioral health services, primarily substance use disorder treatments and services that are provided on either an inpatient, residential basis or an outpatient basis. BSF has 25 inpatient beds, and a 24/7 emergency department and provides ancillary services, including laboratory, radiology, respiratory and pharmacy services. BSF is designated as a Critical Access Hospital (rural) hospital.

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Life Science Services - The Company's Life Science Services segment began with the acquisition of Vector on September 19, 2025. Vector is an information, data and biospecimen sourcing provider serving the biotechnology, clinical research and pharmaceutical research industries.

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Labs - The Company's Labs segment is commercializing proprietary epigenetic biomarker technology. The Company's innovative biomarker technology enables the adoption of new saliva-based health and wellness biomarker solutions. The Company's research demonstrates that epigenetic biomarkers, collected from saliva, provide measures of individual health and wellness for the factors used in life insurance underwriting traditionally obtained through blood and urine specimens.

Reverse Stock Splits

On April 17, 2025, the Company's board of directors (pursuant to a previously-obtained shareholder approval) approved the First Reverse Stock Split. The First Reverse Stock Split was effective at 4:01 p.m., Eastern Time, on April 28, 2025. Trading reopened on April 29, 2025, which is when the Company's Class A Common Stock began trading on a post reverse stock split basis.

On July 17, 2025, the Company's board of directors (pursuant to previously obtained shareholder approval) approved the Second Reverse Stock Split and together with the First Reverse Stock Split. The Second Reverse Stock Split was effective at 4:01 p.m., Eastern Time, on July 27, 2025. Trading reopened on July 28, 2025, which is when the Company's Class A Common Stock began trading on a post reverse stock split basis.

All share amounts herein have been adjusted to reflect the reverse stock split.

On September 2, 2025, RHI, a shareholder representing a majority of the voting control of the Company, approved a proposal to amend our Certificate of Incorporation to effect a reverse stock split of our issued and outstanding Common Stock any time before July 31, 2026, at a ratio ranging from one-for-ten (1:10) to one-for-five hundred (1:500) with the exact ratio within such range to be determined at the sole discretion of the Company's Board of Directors, without further approval or authorization of our stockholders before the filing of an amendment to the Certificate of Incorporation effecting the proposed reverse split. The Company has filed an Information Statement on Schedule 14C with the SEC with respect to the matters approved by the Majority Stockholder and has mailed the definitive Information Statement on Schedule 14C to its stockholders of record as of the record date.

On September 25, 2025, the Company submitted a Company-Related Notification to FINRA's Department of Market Operations in connection with a proposed reverse stock split. On March 6, 2026, the Department issued a deficiency notice pursuant to FINRA Rule 6490(d)(3), determining that the Company's corporate action submission would not be processed.

The Department's determination was based, in part, on a pending SEC civil action against the managing partner of an institutional investor that holds shares of the Company's Series A Preferred Stock, as well as the Department's view that, upon conversion of such preferred stock, the investor could own approximately 95% of the Company's outstanding common stock, without giving effect to the beneficial ownership limitations contained in the terms of such securities.

The Company disagreed with the Department's determination and, on March 12, 2026, filed a Notice of Appeal. On April 30, 2026, a subcommittee of FINRA's Uniform Practice Code Committee (the "UPCC Subcommittee") issued its final determination affirming the Department's denial.

As a result of the UPCC Subcommittee's final determination, the Company is currently unable to complete the proposed reverse stock split unless it resolves the underlying basis for the denial. The inability to complete the reverse stock split may limit the Company's ability to access capital, including under its existing $5.0 million equity line of credit under the Strata Purchase Agreement, which could materially adversely affect the Company's liquidity and its ability to execute its business plan. The Company is currently evaluating its options with respect to the UPCC Subcommittee's determination, but there can be no assurance that the Company will otherwise be able to complete a reverse stock split.

On May 12, 2026, the Company entered into exchange agreements with the two institutional investors whose Series A Preferred Stock holdings were referenced in the Department's determination, pursuant to which such investors exchanged their shares of Series A Preferred Stock for senior unsecured non-convertible promissory notes, as more fully described in Note 16 to the accompanying unaudited condensed consolidated financial statements. The Company plans to submit a new Company-Related Notification to FINRA's Department of Market Operations in connection with a new, proposed reverse stock split.

Acquisition of Vector Under Stock Purchase Agreement

On September 9, 2025, the Company entered into the Stock Purchase Agreement with Vector, (the "Vector SPA"), between the stockholders (each, a "Seller," or, together, the "Sellers") owning all of the issued and outstanding equity securities of Vector (the "Purchased Shares") and FOXO Acquisition Corporation, a Florida corporation and wholly-owned subsidiary of the Company ("FAC"), (the "Vector Acquisition"). Pursuant to the SPA, upon closing on September 19, 2025, the Sellers exchanged the Purchased Shares for (i) $500,000 in cash, (ii) 60,000 shares of the Company's Series E Cumulative Redeemable Secured Preferred Stock (the "Series E Preferred Stock") with a stated value of $25.00 per share, or a total stated value of $1,500,000, (iii) 386,847,195 three year warrants to purchase shares of the Company's Class A Common Stock with an exercise price of $0.00517 per share (the "Vector Warrants"), which was equal to the closing price of the Company's Class A Common Stock on the trading day immediately prior to closing, plus 10%, (subject to adjustment) valued at $769,826 and (iv) up to 80,000 shares of Series E Preferred Stock to be issued to the Sellers on or before 120 days after the two-year anniversary of the closing; provided that, such shares will only be issued in the event that the Qualifying Revenue (as defined in the Vector SPA) of the Business (as defined in the Vector SPA) during the 12-month period between the first and second anniversary of the closing are at least $4,000,000; provided, further, that in the event that less than $4,000,000 of Qualifying Revenues are actually collected by Vector on or before 90 days after the second anniversary of the closing, the number of shares of Series E Preferred Stock to be issued to the Sellers will be reduced by an amount equal to one share for each $25.00 of Qualifying Revenues less than $4,000,000 collected by such date; and, provided, further, if a Change of Control (as defined in the Vector SPA) of the Company occurs prior to the two-year anniversary of the closing, all of the up to 80,000 shares of Series E Preferred Stock will be issued to the Sellers as of the date of such Change of Control. Pursuant to the Vector SPA, the Sellers have the right, but not obligation, to repurchase the Purchased Shares under certain limited circumstances at fair market value as determined by a third party and subject to a floor. As of March 31, 2026, the Company has recorded $500,000 of additional contingent purchase price consideration, which amount was based on the estimated value of additional shares of Series E Preferred Stock that will be owed pursuant to current projections of Qualifying Revenue.

Vector is an information, data and biospecimen sourcing provider serving the biotechnology, clinical research and pharmaceutical research industries.

Current Business Strategy

Myrtle Recovery Centers, Inc.

We acquired Myrtle on June 14, 2024 under the terms of a stock exchange agreement with RHI. Myrtle was formed in the second quarter of 2022 to pursue opportunities in the behavioral health sector, including substance abuse treatment, initially in rural markets. Services are provided on either an inpatient, residential basis or an outpatient basis.

Myrtle was granted a license by the Department of Mental Health and Substance Abuse Services of Tennessee to operate an alcohol and drug treatment facility in Oneida, Tennessee. The facility, which is located at BSF's campus, commenced operations and began accepting patients on August 14, 2023. The facility offers alcohol and drug residential detoxification and residential rehabilitation treatment services for up to 30 patients. On November 1, 2023, Myrtle began accepting patients at its OBOT. The OBOT is located adjacent to Myrtle's alcohol and drug treatment facility in Oneida, Tennessee and complements the existing residential rehabilitation and detoxification services offered at Myrtle. On April 11, 2023, Myrtle sold shares of its common stock equivalent to a 1.961% ownership stake in the subsidiary for de minimis value to an unaffiliated individual licensed as a physician in Tennessee. The shares have certain transfer restrictions, including the right of the subsidiary to transfer the shares to another physician licensed in Tennessee for de minimis value. The shares were sold to the individual for Tennessee healthcare regulatory reasons.

We plan to expand the Myrtle business model by acquiring additional operating facilities and by replicating the model in other rural hospital properties or suitable premises.

Rennova Community Health, Inc.

We acquired RCHI on September 10, 2024 under the terms of a stock exchange agreement with RHI. RCHI's wholly-owned subsidiary, SCCH, is an east Tennessee based Critical Access Designated (CAH) 25-bed hospital licensed by the state of Tennessee, offering quality healthcare services for Oneida and the surrounding areas. SCCH is doing business as BSF. BSF consists of a 52,000-square foot hospital building and 6,300-square foot professional building on approximately 4.3 acres. BSF has 25 inpatient beds, and 24/7 emergency department and provides ancillary services, including laboratory, radiology, respiratory and pharmacy services. The hospital became operational on August 8, 2017 and it became designated as a Critical Access Hospital (rural) hospital in December 2021, retroactive to June 30, 2021. The hospital first opened in late 1955 and was known as Scott County Community Hospital. The hospital has been operated by RCHI since August 2017.

We plan to grow this division by expansion of services at its BSF campus and acquisitions in targeted areas.

Vector BioSource Inc.

Vector is an information, data and biospecimen sourcing provider serving the biotechnology, clinical research and pharmaceuticals research industries. Vector plans to transform the biospecimen sourcing landscape with an innovative AI-driven platform that it believes will provide researchers' immediate access to bio-samples, including, whole blood samples, bulk serum collections and toxicology urine specimens. The Company is actively pursuing an acquisition in the sector that, if successful, will deliver an FDA-approved collection and processing capability in the US from which Vector can aggressively grow its business. Vector is also actively seeking international sourcing partners that can provide certain (rare) disease state samples for the research and development sector only. Vector has initiated its first agreement with a partner in India and has been successful in sourcing samples from there as well as from Latin America to satisfy certain orders received.

We plan to grow this division by organic expansion of the current business and acquisition of similar or complementary businesses.

FOXO Labs

Our epigenetics subsidiary has been serving as a pioneer in the development and integration of epigenetic biomarkers into state-of-the-art underwriting protocols and consumer engagement tools. We are using next-generation technology to transform human health and longevity.

Epigenetic technology has been proven to provide health, lifestyle, and longevity insights that have never before been accessible to humans-from just a single saliva sample. Using saliva-based epigenetic biomarkers, we are eliminating the need for invasive collection, allowing us to provide scientists with advanced epigenetic testing services and bioinformatic tools that support groundbreaking research.

We believe there is growing demand for direct-to-consumer wellness testing and epigenetic data analysis tools and are concentrating efforts on: (1) our Bioinformatics Services offering, a suite of bioinformatic tools to help researchers process, analyze, and interpret epigenetic data; and (2) research and development in the fields of health and wellness testing powered by machine learning and artificial intelligence (including a potential AI platform for the delivery of health and well-being data-driven insights to individuals, healthcare professionals and third-party service providers). To further these goals, we intend to leverage the extensive epigenetic data we have generated in our clinical trials and the expertise of our team and continue building strategic alliances with new partners in academia, business, healthcare and government. We also intend to frequently evaluate and develop commercialization opportunities for our product and service offerings and our research findings.

The Board of Directors continues to consider its options for this division of our business. While there is significant opportunity to monetize and grow the epigenetics business the Company cannot pursue these opportunities until it secures required capital. Intangible assets in this division have been impaired to zero as there currently is no timeline for getting a revenue generating product to market. We believe significant value could be achieved by launching an interpretation product in partnership with nutrients providers for people to manage their diet and wellbeing but will also consider joint ventures or the sale of this business if viable.

Net Revenues

Healthcare generates revenues from hospital and ancillary services as well as substance abuse treatments, including inpatient and outpatient services. Life Science Services generates revenues from sales of biological materials, such as blood and urine to the pharmaceutical and biotechnology research sectors. Labs currently recognizes revenues from collecting a royalty from Illumina, Inc. related to the sales of the Infinium Mouse Methylation Array.

Results of Operations

Three Months Ended March 31, 2026 and 2025

		Three Months Ended
		March 31,								Change in				Change in
		2026				2025				$				%
Net revenues		$	5,168,036			$	3,169,920			$	1,998,116				63.03	%
Operating expenses:
Direct costs of revenues			2,534,213				1,903,936				630,277				33.10	%
Research and development			35,550				30,000				5,550				18.50	%
Management contingent share plan expense			-				18,878				(18,878	)			-100.00	%
Selling, general and administrative expenses			2,875,124				2,764,086				111,038				4.02	%
Total operating expenses			5,444,887				4,716,900				727,987				15.43	%
Loss from operations			(276,851	)			(1,546,980	)			1,270,129				-82.10	%
Change in fair value of warrant liabilities			-				31,594				(31,594	)			-100.00	%
Gain from extinguishment of debt			-				1,863,834				(1,863,834	)			-100.00	%
Loss from legal settlement			(18,250	)			-				(18,250	)			0.00	%
Interest expense			(973,135	)			(889,792	)			(83,343	)			9.37	%
Other non-operating expenses, net			(186,950	)			(79,464	)			(107,486	)			135.26	%
Provision for income taxes			-				-				-				0.00	%
Net loss, including noncontrolling interest			(1,455,186	)			(620,808	)			(834,378	)			134.40	%
Noncontrolling interest			3,213				4,350				(1,137	)			-26.14	%
Net loss attributable to FOXO			(1,451,973	)			(616,458	)			(835,515	)			135.53	%
Preferred stock dividends and deemed dividends			-				(172,125	)			172,125				-100.00	%
Net loss to common stockholders		$	(1,451,973	)		$	(788,583	)		$	(663,390	)			84.12	%

Net Revenues. Net revenues were $5.2 million for the three months ended March 31, 2026, compared to $3.2 million for the three months ended March 31, 2025, an increase of $2.0 million. Myrtle contributed approximately $0.1 million of the increase, RCHI contributed approximately $1.5 million of the increase and Vector, acquired on September 19, 2025, contributed approximately $0.4 million of the increase. We attribute the increase in RCHI's net revenues primarily to increased swing-bed patient services. A "swing-bed" is a change in reimbursement status, as the billing status "swings" from billing for acute care services to billing for post-acute skilled nursing services, despite the fact that the patient stays in the same physical location.

Direct Costs of Revenues. Direct costs of revenues were $2.5 million for the three months ended March 31, 2026, compared to $1.9 million of direct costs of revenues for the three months ended March 31, 2025. We attribute the increase to Vector's direct costs of revenues of $0.2 million. Vector was acquired on September 19, 2025. In addition, Myrtle's direct costs of revenues increased by $0.1 million and RCHI's increased by $0.3 million. As a percentage of net revenues, direct costs of revenues were 49% and 60% for the three months ended March 31, 2026 and 2025, respectively.

Research and Development. Research and development expenses remained constant at $35,550 and $30,000 for the three months ended March 31, 2026 and 2025, respectively.

Management Contingent Share Plan. Management Contingent Share Plan expense for the three months ended March 31, 2025 represents expense for 168 unvested shares that were previously granted under the Management Contingent Share Plan. No unvested shares were outstanding during the three months ended March 31, 2026.

Selling, General and Administrative. Selling, general and administrative expenses were $2.9 million for the three months ended March 31, 2026, compared to $2.8 million for the three months ended March 31, 2025. We attribute the increase primarily to Vector's selling, general and administrative expenses of $0.2 million and an increase in Corporate's selling, general and administrative expenses of $0.1 million, partially offset by a decrease in our Healthcare segment's selling, general and administrative expenses of $0.2 million.

Change in Fair Value of Warrant Liabilities. The fair value of warrant liabilities increased by $0 and $31,594 in the three months ended March 31, 2026 and 2025, respectively. Changes in the fair values result from changes in the quoted prices of the Public Warrants on the OTC Pink Marketplace.

Gain from Extinguishment of Debt. During the three months ended March 31, 2025, we exchanged $5.4 million of Senior PIK Notes, which included $1.9 million of accrued interest, for $3.5 million of stated value of our Series B Preferred Stock resulting in a gain of $1.9 million.

Loss from Legal Settlement. We incurred an expense of $18,250 in the three months ended March 31, 2026, related to a legal proceeding.

Interest Expense. Interest expense was $1.0 million for the three months ended March 31, 2026 compared to $0.9 million for the three months ended March 31, 2025. The increase was due to the increase in loans and notes payable during the three months ending March 31, 2026 compared to the 2025 period and $0.4 million of default penalties and interest that was incurred in the three months ended March 31, 2026. Partially offsetting the increase in the three months ended March 31, 2026 was a reduction of interest expense on the Senior PIK Notes that were exchanged for the Company's Series B Preferred Stock in January 2025 and interest on the right-of-use operating lease obligations that is included in selling, general and administrative expenses in the 2026 period.

Other Non-Operating Expenses, Net. Other non-operating expenses, net were $0.2 million for the three months ended March 31, 2026, compared to other non-operating expenses, net of $0.1 million for the three months ended March 31, 2025. The non-operating expenses, net in the three months ended March 31, 2026 resulted primarily from $0.2 million of penalties and interest for nonpayment of payroll taxes and $50,608 of additional purchase price consideration for RCHI, partially offset by $69,811 of hospital cafeteria income. The other non-operating expenses, net in the three months ended March 31, 2025 resulted primarily from $0.2 million of penalties and interest for nonpayment of payroll taxes, partially offset by $0.1 million of hospital cafeteria income.

Net Loss Attributable to FOXO. Net loss attributable to FOXO was $1.5 million for the three months ended March 31, 2026 compared to a net loss attributable to FOXO of $0.6 million for the three months ended March 31, 2025. The loss from operations was $0.3 million and $1.5 million for the three months ended March 31, 2026 and 2025, respectively, or a decrease in the loss of $1.2 million due primarily to the improvement in the operating results of our Healthcare segment. The $0.9 million increase in the net loss attributable to FOXO in the three months ended March 31, 2026 compared to the 2025 period was primarily due to the $1.9 million gain from extinguishment of Senior PIK Notes in the three months ended March 31, 2025. Excluding the one-time gain, the net loss attributable to FOXO improved by approximately $1.0 million in the 2026 period. We did not incur deemed dividends in the three months ended March 31, 2026. We recorded deemed dividends in the three months ended March 31, 2025 of $0.2 million from the issuances of preferred stock and the triggers of the down-round provisions of the Assumed Warrants. Including these deemed dividends, the net loss to common stockholders was $1.5 million and $0.8 million for the three months ended March 31, 2026 and 2025, respectively.

Analysis of Segment Results:

The following is an analysis of our results by reportable segment for the three months ended March 31, 2026 compared to the three months ended March 31, 2025. The primary earnings/loss measure used for assessing reportable segment performance is segment income/loss defined as earnings/loss before interest, income taxes, and depreciation and amortization not associated with a specific segment. Segment income/loss by reportable segment also excludes corporate and other costs, including management, IT, and overhead costs.

Healthcare

		Three Months Ended March 31, 2026				Three Months Ended March 31, 2025				Change in $				Change in %
Net revenues		$	4,798,551			$	3,161,431			$	1,637,120				52	%
Operating expenses			(4,504,850	)			(4,010,379	)			(494,471	)			12	%
Noncontrolling interest			3,213				4,350				(1,137	)			-26	%
Segment Income (Loss)		$	296,914			$	(844,598	)		$	(1,141,512	)			-135	%

Net Revenues. Net revenues were $4.8 million and $3.1 million for the year three months ended March 31, 2026 and 2025, respectively, an increase of $1.6 million. Net revenues of the three month ended March 31, 2026 of $4.8 million include Myrtle's net revenues of $0.6 million and RCHI's net revenues of $4.2 million. Net revenues for the three months ended March 31, 2025 of $3.2 million include Myrtle's net revenues $0.5 million and RCHI's net revenues of $2.7 million. We attribute the increase in RCHI's net revenues primarily to increased swing-bed patient services. A "swing-bed" is a change in reimbursement status, as the billing status "swings" from billing for acute care services to billing for post-acute skilled nursing services, despite the fact that the patient stays in the same physical location.

Segment Income (Loss). Segment income was $0.3 million for the three months ended March 31, 2026, compared to segment loss of $0.8 million for the three months ended March 31, 2025. We attributable the improvement in the segment income primarily to the increase in net revenues.

Life Science Services

		Three Months Ended March 31, 2026				Three Months Ended March 31, 2025				Change in $				Change in %
Net revenues		$	361,250			$	-			$	361,250			NM
Operating expenses			(218,834	)			-				(218,834	)		NM
Segment Income		$	142,416			$	-			$	142,416			NM

NM = Not meaningful

Net Revenues. Net revenues were $0.4 million for the three months ended March 31, 2026 and represent net revenues from Vector, which was acquired on September 19, 2025.

Segment Income. Segment income was $0.1 million for the three months ended March 31, 2026 and represents the income from Vector.

Labs

		Three Months Ended March 31, 2026				Three Months Ended March 31, 2025				Change in $				Change in %
Net revenues		$	4,386			$	8,489			$	(4,103	)			-48	%
Operating expenses			(36,756	)			(31,494	)			(5,262	)			17	%
Segment Loss		$	(32,370	)		$	(23,005	)		$	(9,365	)			41	%

Net revenues. Net revenues were $4,386 and $8,489 for the three months ended March 31, 2026 and 2025, respectively. Net revenues consist primarily of royalty income.

Segment Loss. Segment loss increased to $32,370 for the three months ended March 31, 2026 compared to a loss of $23,005 for the three months ended March 31, 2025.

Other Operating Data:

We use Adjusted EBITDA to evaluate our operating performance. Adjusted EBITDA does not represent and should not be considered an alternative to net income as determined by U.S. GAAP, and our calculations thereof may not be comparable to those reported by other companies. We believe Adjusted EBITDA is an important measure of operating performance and provides useful information to investors because it highlights trends in our business that may not otherwise be apparent when relying solely on U.S. GAAP measures and because it eliminates items that have less bearing on our operating performance. Adjusted EBITDA, as presented herein, is a supplemental measure of our performance that is not required by, or presented in accordance with, U.S. GAAP. We use non-GAAP financial measures as supplements to our U.S. GAAP results in order to provide a more complete understanding of the factors and trends affecting our business. Adjusted EBITDA is a measure of operating performance that is not defined by U.S. GAAP and should not be considered a substitute for net (loss) income as determined in accordance with U.S. GAAP.

We reconcile our non-GAAP financial measure to our net loss, which is its most directly comparable financial measure calculated and presented in accordance with U.S. GAAP. Our management uses Adjusted EBITDA as a financial measure to evaluate the profitability and efficiency of our business model. Adjusted EBITDA is not presented in accordance with U.S. GAAP. Adjusted EBITDA includes adjustments for provision for income taxes, as applicable, interest income and expense, depreciation and amortization, equity-based compensation, and certain other infrequent and/or unpredictable non-cash charges or benefits, such as impairments, changes in fair value of warrant liabilities, adjustments for right-of-use operating lease expense and adjustments to include pro forma operating performance of acquisitions as if they had occurred at the beginning of the earliest period presented.

		For the Three Months Ended March 31,
		2026				2025
Net loss attributable to FOXO		$	(1,451,973	)		$	(616,458	)
Add: Depreciation and amortization			171,094				143,044
Add: Interest expense, excluding interest for right-of-use obligations			973,135				669,306
Add: Equity-based compensation			-				27,716
Add: (Gain) from extinguishment of debt			-				(1,863,834	)
Add: Loss from legal settlement			18,250				-
Add: Change in fair value of warrant liability			-				(31,594	)
Add: Amortization of consulting fees paid in stock			-				96,904
Add: Interest expense for right-of-use obligations			199,868				220,486
Subtotal			(89,626	)			(1,354,430	)
Add: Right-of-use operating lease expense (proforma for Vector for 2025)			(310,065	)			(301,065	)
Add: Pro Forma 2025 adjusted EBITDA for Vector			-				(14,134	)
Adjusted EBITDA		$	(399,691	)		$	(1,669,629	)

Liquidity and Capital Resources

Sources of Liquidity and Capital

We had cash and cash equivalents of $65,896 and $207,453 as of March 31, 2026 and December 31,2025, respectively. We have incurred net losses since our inception. For the three months ended March 31, 2026 and 2025, we incurred net losses attributable to FOXO of $1.5 million and $0.6 million, respectively. As of March 31, 2026, we had a working capital deficit of $27.1 million. Cash used in operations was $0.6 million and $1.3 million for the three months ended March 31, 2026 and 2025, respectively. We expect to incur additional losses in future periods. Our current revenue and operating cash flow is not adequate to fund our operations for the next twelve months and requires us to fund our business through other sources until the time we achieve adequate scale. Securing additional capital is necessary to execute our business strategy.

Strata Purchase Agreement, As Amended

During the fourth quarter of 2023, we entered into the Strata Purchase Agreement with ClearThink, as supplemented by that certain Supplement to Strata Purchase Agreement, dated as of October 13, 2023, by and between us and ClearThink. On August 13, 2024, we entered into Amendment No. 1 to the Strata Purchase Agreement pursuant to which the commitment amount was increased from $2.0 million to $5.0 million. On May 15, 2025, we amended and restated the Strata Purchase Agreement to extend the maturity date to June 30, 2026 and improve and simplify the Purchase Price to define the price per share of Common Stock purchased shall equal 90% of the average of the two (2) lowest daily VWAP during the Valuation Period. To utilize this Agreement and access funding from the equity line of credit described, the Company was required to obtain an effective registration statement, which was obtained on February 11, 2026. Despite having an effective registration statement, we have not been able to access the operating capital available under the Strata Purchase Agreement because current market conditions, including the low trading price and limited trading volume of our Class A Common Stock, have prevented us from satisfying the contractual conditions required for puts under the agreement.

Third Party Promissory Notes Payable

During the three months ended March 31, 2026, we entered into five third-party promissory notes with principal balances totaling $0.8 million and we issued 150 million shares of our Class A Common Stock valued at $15,000 as an inducement to the issuance of one of these promissory notes with a principal balance of $115,000. In addition, the Company had outstanding obligations to issue an additional 21,985 shares of its Class A Common Stock as inducements and commitment shares under the terms of promissory notes issued in prior periods.

During the three months ended March 31, 2025, the Company issued 217,302 shares of its Class A Common Stock for conversions and exchanges of $828,474 of promissory notes payable and related accrued interest. In addition, during the three months ended March 31, 2025, the Company issued 30,752 shares of its Class A Common Stock as inducements and commitment shares under the terms of various promissory notes and it agreed to issue an additional 26,085 shares of its common stock as inducements and commitment shares under the terms of promissory notes.

In February 2025, the Western Note Payable (the "Western Note"), which we assumed when we acquired SCCH, was sold to a new third party holder, Silverback Capital Corporation ("Silverback"), and it was amended and restated. Per the terms of the amendment and restatement, the principal balance of the note, which included previously accrued interest expense, totaled $1.1 million, the maturity date was February 26, 2026 and the note was convertible into shares of the Company's Class A Common Stock at a conversion price equal to 90% of the average VWAP for the five trading days prior to conversion. During the year ended December 31, 2025, Silverback converted $0.5 million of the principal balance of the Western Note into 318,171 shares of our Class A Common Stock. The Western Note is currently in default as Silverback failed to make further payments to Western Healthcare, LLC and it is probable that no further conversions of the principal balance into shares of our Class A Common Stock will take place.

In January 2025, we exchanged all outstanding Senior PIK Notes (including all accrued and unpaid interest) (which total value was $5.4 million on the date of the exchange) into 3.457.5 shares of our Series B Preferred Stock with a total stated value of $3.5 million. As a result of the exchange, during the three months ended March31, 2025, the Company recorded a gain from extinguishment of the Senior PIK Notes of $1.9 million,

As of March 31, 2026, the total principal balance of third-party promissory notes payable was $3.2 million, which was net of $0.1 million of debt discounts. In addition, $0.2 million of accrued interest was owed on these notes.

At March 31, 2026, $2.5 million of the outstanding principal balance and associated one-time accrued interest of third-party promissory notes (excluding the Western Note, which was purchased by a third party that failed to make further payments to Western Healthcare LLC and it is probable that no further conversions of the principal balance into shares of our Class A Common Stock will take place) were convertible into 19.7 billion shares of our Class A Common Stock per the conversion terms of the notes. One other promissory note outstanding at March 31, 2026, was convertible but only in the event of an event of default as that term is defined in the applicable agreement. Each of these notes is more fully discussed in the Note 9 to the accompanying unaudited condensed consolidated financial statements.

Related Party Promissory Notes and Loans Payable

On September 10, 2024, we issued a note payable that had a maturity date of September 10, 2026 to RHI in the principal amount of $22.0 million for the purchase of RCHI. During December, 2024, we exchanged $21.0 million of the promissory note owed to RHI for 21,000 shares of our Series A Preferred Stock with a stated value of $1,000 per share and we issued to RHI a new promissory note in the principal amount of $1.0 million due on June 5, 2025. At March 31, 2026, the note is in default and the Company is in discussions with RHI about extending the maturity date of the note which extension we expect to receive. During the year ended December 31, 2025, we issued an additional note payable to RHI in the principal amount of $6.1 million for additional purchase price consideration for the purchase of RCHI, of which $5.0 million was exchanged for 5,000 shares of our Series A Preferred Stock with a stated value of $1,000 per share on August 18, 2025 leaving an additional note due to RHI at December 31, 2025 of $1.1 million. During the three months ended March 31, 2026, we increased the additional note payable to RHI by $50,608 for additional purchase price consideration for the purchase of RCHI.

In addition, to the notes and loan discussed in the paragraph above, we have outstanding at March 31, 2026: (i) a note payable to RHI in the amount of $264,565 for the purchase of Myrtle; (ii) a note payable to RHI in the original amount of $1.6 million, which was the amount owed by Myrtle to RHI on the date that we acquired Myrtle, which balance was $1.4 million at March 31, 2026; (iii) a loans payable to RHI in the amount of $0.7 million for working capital purposes; and (iv) we have outstanding at March 31, 2026, three additional promissory notes payable to related parties totaling $0.8 million. The total amount of notes and loans payable owed to RHI and its subsidiaries from the Company and its subsidiaries at March 31, 2026 was $4.5 million. Each of these notes is more fully discussed in the Note 9 to the accompanying unaudited condensed consolidated financial statements.

Other Loans

At March 31, 2026, we had outstanding $82,236 of other loans consisting of a loan assumed in the acquisition of Vector with a balance of $28,823 and a loan that was issued under an accounts receivable sales agreement with a balance of $53,413.

Preferred Stock

As of March 31, 2026, we had outstanding shares of preferred stock consisting of: (i) 19,233 shares of our Series A Preferred Stock that were issued for the purchase of RCHI and for cash investment; (ii) 3,245 shares of our Series B Preferred Stock that were issued in exchange for the Senior PIK Notes; (iii) 304 shares of our Series C Preferred Stock, a portion of which were issued for cash and a portion of which were issued in exchange of our Series B Preferred Stock; (iv) 4,312 shares of our Series D Preferred Stock that were issued for settlement of legal fees and accrued expenses; and (v) 68,000 shares of our Series E Preferred Stock, 60,000 of which were issued for the acquisition of Vector and 8,000 of which were issued to RHI for payment of $0.2 million of a note payable. All our outstanding shares of preferred stock have a stated value of $1,000 per share except for our Series E Preferred Stock, which has a stated value of $25 per share.

No shares of our preferred stock were issued during the three months ended March 31, 2026. We issued 60 shares of our Series C Preferred Stock for net cash of $44,825 during the three months ended March 31, 2025. During the three months ended March 31, 2026 and 2025, 109 shares and 308 shares, respectively, of our Series A Preferred Stock were converted into 1,087,000,000 shares and 73,374 shares, respectively, of our Class A Common Stock.

Going Concern

Our primary uses of cash are to fund our operations as we continue to grow our business, including Vector that we acquired on September 19, 2025, as well as to service our debt. Capital expenditures have historically not been material to our consolidated operations, and we do not anticipate making material capital expenditures over the next 12 months unless we secure additional capital to expand the current operations. We expect that our liquidity requirements will continue to consist of working capital, including payments of outstanding debt and accrued liabilities and general corporate expenses associated with the growth of our business. Based on the size of our current operations, we do not have sufficient capital to fund our corporate overhead for at least 12 months from the date hereof. We expect to address our liquidity needs through the pursuit of additional funding through a combination of equity or debt financing and additional strategic acquisitions that we expect will contribute to positive cash flow to enable us to fund our operations. Completing such acquisitions requires significant additional capital that has not yet been secured.

We have taken various actions to bolster our cash position, including raising funds through the private placements and the issuances of promissory notes and other loans, and conserving cash by issuing shares of our preferred stock and shares of our Class A Common Stock under exchange agreements, license agreements, legal settlements, consulting agreements, finder's fees related to equity and debt financing and consulting agreements, among other transactions, as an alternative to paying in cash.

Based on our current operating plan, our cash position as of March 31, 2026, and after taking into account the actions described above, we do not expect to be able to fund our operations through the twelve months ended March 31, 2027 without the need for additional financing or other increases in our cash and cash equivalents balances to enable us to fund our future operations.

We have based our estimates as to how long we expect we will be able to fund our operations on assumptions that may prove to be wrong, and we could use our available capital resources sooner than we currently expect, in which case we would be required to obtain additional financing sooner than currently projected, which funding may not be available to us on acceptable terms, or at all. Our failure to raise capital as and when needed would have a negative impact on our financial condition and our ability to pursue our business strategy. We may raise additional capital through equity offerings, debt financings or other capital sources. If we do raise additional capital through public or private equity offerings, or convertible debt offerings, the ownership interest of our existing stockholders will be diluted, and the terms of these securities may include liquidation or other preferences that adversely impact our existing stockholders' rights. If we raise additional capital through debt financing, we may be subject to covenants limiting or restricting our ability to take certain actions.

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

The following table presents our capital resources as of March 31, 2026 and December 31, 2025:

		March 31,				December 31,				Change Increase
		2026				2025				(Decrease)
Cash		$	65,896			$	207,453			$	241,557
Working capital (deficit)			(27,074,932	)			(25,546,280	)			1,528,652
Total debt, net of discounts of $93,081 and $119,122, respectively			8,609,877				7,292,040				1,317,837
Total stockholders' equity			9,636,114				11,076,300				(1,440,186	)

The following table summarizes our cash flow data for the three months ended March 31, 2026 and 2025:

		Cash Provided by/ (Used in)
Three Months Ended March 31,		2026				2025
Operating Activities		$	(577,898	)		$	(1,337,591	)
Investing Activities		$	(3,995	)		$	-
Financing Activities		$	440,336			$	1,286,230

Operating Activities

Our net cash used in operating activities in the three months ended March 31, 2026 was $0.6 million compared to $1.3 million, or $0.7 million less than was used in the in the 2025 period. While the net loss, including noncontrolling interest, was $1.5 million in the three months ended March 31, 2026 compared to $0.6 million in the three months ended March 31, 2025, excluding the $1.9 million noncash gain from extinguishment of the Senior PIK Notes in the three months ended March 31, 2025, the net loss was $2.5 million or $1.0 million more than the comparable 2026 period resulting in less cash used in operations in the three months ended March 31, 2026.

Investing Activities

Investing activities used $3,995 and $0 in the three months ended March 31, 2026 and 2025, respectively. The cash used in investing activities for the three months ended March 31, 2026 resulted from purchases of property and equipment.

Financing Activities

Net cash provided by financing activities for three months ended March 31, 2026 was $0.4 million compared to $1.3 million for the three months ended March 31, 2025. Net cash provided by financing activities for the three months ended March 31, 2026, included $0.7 million from the issuances of third party notes payable and $1.2 million of borrowings from related party loans and note payable, partially offset by $1.1 million of payments of related party loans and note payable, $0.2 million of payments of third party notes payable and $0.2 of payments on other loans. Net cash provided by financing activities for the three months ended March 31, 2025, included $1.0 million and $0.3 million from the issuances of third party notes payable and borrowings under a related party note payable, respectively, $0.3 million from other loans and $44,825 from the issuance of shares of preferred stock, partially offset by $0.2 million of payments on other loans and $46,322 of payments of a note payable.

Off-Balance Sheet Financing Arrangements

We have no obligations, assets or liabilities which would be considered off-balance sheet arrangements. We do not participate in transactions that create relationships with unconsolidated entities or financial partnerships, often referred to as variable interest entities, which would have been established for the purpose of facilitating off-balance sheet arrangements.

We have not entered into any off-balance sheet financing arrangements, established any special purpose entities, guaranteed any debt or commitments of other entities, or entered into any non-financial assets.

Critical Accounting Policies

The preparation of the consolidated financial statements and related notes included under "Item 1. Financial Statements" and related disclosures in conformity with U.S. GAAP. The preparation of these unaudited condensed consolidated financial statements requires the selection of the appropriate accounting principles to be applied and the judgments and assumptions on which to base accounting estimates, which affect the reported amounts of assets and liabilities as of the date of the balance sheets, the reported amounts of revenue and expenses during the reporting periods, and related disclosures. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances at the time such estimates are made. Actual results and outcomes may differ materially from our estimates, judgments, and assumptions. We periodically review our estimates in light of changes in circumstances, facts, and experience. The effects of material revisions in estimates are reflected in the consolidated financial statements prospectively from the date of the change in estimate.

We define our critical accounting policies and estimates as those that require us to make subjective judgments about matters that are uncertain and are likely to have a material impact on our financial condition and results of operations as well as the specific manner in which we apply those principles. We believe the critical accounting policies used in the preparation of our financial statements which require significant estimates and judgments are as follows:

IMPAIRMENT OF GOODWILL AND INTANGIBLE ASSETS

Goodwill is required to be tested annually or whenever events have occurred that suggest that goodwill may be impaired. Goodwill is tested at the reporting unit level. The Company has three reporting units: Myrtle, SCCH and Vector. Step 0 in the goodwill impairment test model is to perform a qualitative analysis. This step is not required but can be applied to determine if it is more likely than not that an impairment has occurred. Step 1 is to perform a quantitative analysis to determine a reporting unit's fair value and to compare the fair value to the reporting unit's carrying value. If the carrying value exceeds the unit's fair value, a goodwill impairment is recorded to adjust the unit's carrying value to fair value.

The Company reviews its intangible assets to determine potential impairment annually or whenever events or changes in circumstances indicate that the carrying amount of an asset group may not be fully recoverable. For intangible assets, recoverability is measured by comparing the carrying amount of the asset group with the future undiscounted cash flows the assets are expected to generate. Considerable management judgment is necessary to estimate future cash flows. Accordingly, actual results could vary significantly from such estimates. If such assets are considered impaired, an impairment loss is measured by comparing the amount by which the carrying value exceeds the fair value of the long-lived assets.

REVENUE RECOGNITION POLICY

The Company recognizes revenue in accordance with ASC, "Revenue from Contracts with Customers (Topic 606)," including subsequently issued updates. Under the accounting guidance, revenues are presented net of estimated contractual allowances and estimated implicit price concessions.

Healthcare

The Company's healthcare segment consists of the operations of Myrtle and of RCHI.

Myrtle's revenues relate to contracts with patients in which its performance obligations are to provide behavioral health care services to its patients. Revenues are recorded during the period in which its obligations to provide health care services are satisfied. Myrtle's performance obligations for inpatient services are generally satisfied over periods averaging approximately 7 to 28 days depending on the service line, and revenues are recognized based on charges incurred. The contractual relationships with patients, in most cases, also involve third-party payers and the transaction prices for the services provided are dependent upon the terms provided by or negotiated with the third-party payers. The payment arrangements with third-party payers for the services Myrtle provides to its patients typically specify payments at amounts less than its standard charges. Services provided to patients are generally paid at prospectively determined rates per diem.

RCHI's revenues relate to contracts with patients of BSF in which its performance obligations are to provide health care services to the patients. Revenues are recorded during the period its obligations to provide health care services are satisfied. Its performance obligations for inpatient services are generally satisfied over periods averaging approximately three days, and revenues are recognized based on charges incurred. Its performance obligations for outpatient services, including emergency room-related services, are generally satisfied over a period of less than one day. The contractual relationships with patients, in most cases, also involve a third-party payer (Medicare, Medicaid, managed care health plans and commercial insurance companies) and the transaction prices for the services provided are dependent upon the terms provided by Medicare and Medicaid or negotiated with managed care health plans and commercial insurance companies. The payment arrangements with third-party payers for the services it provides to the related patients typically specify payments at amounts less than our standard charges. Medicare, because of BSF's designation as a critical access care hospital, generally pays for inpatient and outpatient services at rates related to the hospital's costs. Services provided to patients having Medicaid coverage are generally paid at prospectively determined rates per discharge, per identified service or per covered member. Agreements with commercial insurance carriers, managed care and preferred provider organizations generally provide for payments based upon predetermined rates per diagnosis, per diem rates or discounted fee-for-service rates.

Laws and regulations governing Medicare and Medicaid programs are complex and subject to interpretation. Estimated reimbursement amounts are adjusted in subsequent periods as cost reports are prepared and filed and as final settlements are determined (in relation to certain government programs, primarily Medicare, this is generally referred to as the "cost report" filing and settlement process). As of March 31, 2026 and December 31, 2025, $1.8 million and $1.9 million, respectively, of Medicare cost report settlement liabilities were recorded.

Management continually reviews the contractual estimation process to consider the frequent changes in managed care contractual terms resulting from contract renegotiations and renewals. Under the revenue recognition accounting guidance, revenues are presented net of estimated contractual allowances and estimated implicit price concessions. The healthcare segment's net revenues are based upon the estimated amounts it expects to be entitled to receive from third-party payers and patients based, in part, on Medicare and Medicaid rates as discussed above as for each of Myrtle and BSF. The healthcare segment also records estimated implicit price concessions related to uninsured accounts to record self-pay revenues at the estimated amounts it expects to collect.

The collection of outstanding receivables is the healthcare segment's primary source of operating cash and is critical to its operating performance. The primary collection risks relate to patient accounts for which the primary insurance carrier has paid the amounts covered by the applicable agreement, but patient responsibility amounts (deductibles and copayments) remain outstanding. Implicit price concessions relate primarily to amounts due directly from patients. Accounts are written off when all reasonable internal and external collection efforts have been carried out. The estimates for implicit price concessions are based upon management's assessment of historical write-offs and expected net collections, business and economic conditions and other collection indicators.

Life Science Services

Our Life Science Services segment's revenue consists of revenue from Vector, which was acquired on September 19, 2025. The Company recognizes revenue from the sale of high-quality bio-samples and bulk biological materials for every stage of life science research in accordance with ASC 606. As a result of applying this five-step model under ASC 606, the Company recognizes revenues from its sale of products upon their transfer of control to the customer, which is considered complete at either the time of shipment or arrival at destination based upon agreed upon terms within the contract. The Company's payment terms for the sale of standard products are typically 30 to 60 days.

Labs

The Company has recorded minor revenues from its Labs segment during the three months ended March 31, 2026 and 2025. Labs currently recognizes revenue from collecting a royalty from Illumina, Inc. related to the sales of the Infinium Mouse Methylation Array. The Company applies judgment in determining the customer's ability and intention to pay based on a variety of factors including the customer's historical payment experience.

CONTRACTUAL ALLOWANCES AND DOUBTFUL ACCOUNTS POLICY

In accordance with ASC, "Revenue from Contracts with Customers (Topic 606)," including subsequently issued updates, the Company does not present "allowances for doubtful accounts" on its balance sheets, rather its accounts receivable are reported at realizable value, net of estimated contractual allowances and estimated implicit price concessions (also referred to as doubtful accounts), which are estimated and recorded in the period the related revenue is recorded. ASC, "Financial Instruments Credit Losses (Topic 326)," requires that healthcare organizations estimate credit losses on a forward-looking basis taking into account historical collection and payer reimbursement experience as an integral part of the estimation process related to contractual allowances and doubtful accounts. Receivables deemed to be uncollectible are charged against the allowance for doubtful accounts after all collection efforts have ceased or the account is settled for less than the amount originally estimated to be collected. Recoveries of receivables previously written-off are recorded as credits to the allowance for doubtful accounts. Revisions to the allowances for doubtful accounts are recorded as adjustments to revenues.

During the three months ended March 31, 2026 and 2025, estimated contractual allowances and implicit price concessions of $19.4 million and $17.5 million, respectively, have been recorded as reductions to revenues and accounts receivable balances to enable the Company to record its revenues and accounts receivable at the estimated amounts it expects to collect. As required by Topic 606, after deducting estimated contractual allowances and implicit price concessions from the healthcare segment's revenues for the three months ended March 31, 2026 and 2025, the Company recorded healthcare net revenues of $4.8 million and $3.2 million, respectively. The Company continues to review the provisions for contractual allowances and implicit price concessions.

BUSINESS COMBINATIONS

The Company follows the guidance in ASC 805, Business Combinations for determining the appropriate accounting treatment for business acquisitions. Under ASC 805, the assets acquired, and liabilities assumed are recorded as of the acquisition date, at their respective fair values and consolidated with those of the Company. The excess of the purchase prices over the aggregate fair value of the tangible assets acquired and liabilities assumed is treated as goodwill in accordance with ASC 805. During the measurement period or until valuation studies are completed, the provisional amounts used for the purchase price allocation are subject to adjustments for a period not to exceed one year from the date of acquisition. Acquisition costs are expensed as incurred.

Going Concern

On a quarterly basis, we assess going concern uncertainty for our consolidated financial statements to determine if we have sufficient cash and cash equivalents on hand and working capital to operate for a period of at least one year from the date our consolidated financial statements are issued or are available to be issued (the "look-forward period"). Based on conditions that are known and reasonably knowable to us, we consider various scenarios, forecasts, projections, and estimates, and we make certain key assumptions, including the timing and nature of projected cash expenditures or programs, among other factors, and our ability to delay or curtail those expenditures or programs within the look-forward period, if necessary. Until additional equity or debt capital is secured, there is substantial doubt about the Company's ability to continue as a going concern.

Recent Accounting Pronouncements

In November 2024, the FASB issued ASU 2024-04, Debt with Conversions and Other Options (Subtopic 470-20), Induced Conversions of Convertible Debt Instruments. The amendments in this ASU clarify when the settlement of a debt instrument should be accounted for as an induced conversion. Under this ASU, (a) to be accounted for as an induced conversion, an inducement offer is required to preserve the form and amount of consideration issuable upon conversion in accordance with the terms of the instrument (rather than only the equity securities issuable upon conversion), (b) whether a settlement of convertible debt is an induced conversion should be assessed as of the date the inducement offer is accepted by the holder, and (c) issuers that have exchanged or modified a convertible debt instrument within the preceding 12 months (that did not result in extinguishment accounting) should use the terms that existed 12 months before the inducement offer was accepted when determining whether induced conversion accounting should be applied. The amendments in this ASU are effective for all entities for annual reporting periods beginning after December 15, 2025, and interim reporting periods within those annual reporting periods. Early adoption is permitted for all entities that have adopted the amendments in ASU 2020-06. The amendments in this ASU permit an entity to apply the new guidance on either a prospective or a retrospective basis. The adoption of this ASU did not have an impact on the Company's financial statements for the three months ended March 31, 2026 and 2025.

In September 2025, the FASB issued ASU 2025-07, Intangibles-Goodwill and Other- Internal-Use Software (Subtopic 350-40). The target of this update is accounting for internal use software. The amendments in this Update remove all references to prescriptive and sequential software development stages (referred to as "project stages") throughout Subtopic 350-40. Therefore, an entity is required to start capitalizing software costs when both of the following occur: 1. Management has authorized and committed to funding the software project. 2. It is probable that the project will be completed and the software will be used to perform the function intended (referred to as the "probable-to-complete recognition threshold"). In evaluating the probable-to-complete recognition threshold, an entity is required to consider whether there is significant uncertainty associated with the development activities of the software (referred to as "significant development uncertainty"). The two factors to consider in determining whether there is significant development uncertainty are whether: 1. The software being developed has technological innovations or novel, unique, or unproven functions or features, and the uncertainty related to those technological innovations, functions, or features, if identified, has not been resolved through coding and testing. 2. The entity has determined what it needs the software to do (for example, functions or features), including whether the entity has identified or continues to substantially revise the software's significant performance requirements. The amendments in this Update specify that the disclosures in Subtopic 360-10, Property, Plant, and Equipment-Overall, are required for all capitalized internal-use software costs, regardless of how those costs are presented in the financial statements. Furthermore, the amendments in this Update supersede the website development costs guidance and incorporate the recognition requirements for website-specific development costs from Subtopic 350-50 into Subtopic 350-40. Under current GAAP, entities are required to capitalize development costs incurred for internal-use software depending on the nature of the costs and the project stage during which they occur. The amendments in this ASU improve the operability of the guidance by removing all references to software development project stages so that the guidance is neutral to different software development methods, including methods that entities may use to develop software in the future. The amendments in this ASU are effective for all entities for annual reporting periods beginning after December 15, 2027, and interim reporting periods within those annual reporting periods. Early adoption is permitted as of the beginning of an annual reporting period. The amendments in this ASU permit an entity to apply the new guidance on either a prospective or a retrospective basis. The Company has not yet determined the impact of the adoption of this ASU on its consolidated financial statements.

In December 2025, the FASB issued ASU 2025-11, Interim Reporting Topic 270. The amendments in this Update clarify interim disclosure requirements and the applicability of Topic 270. The amendments in this Update result in a comprehensive list of interim disclosures that are required by GAAP. In developing the list of disclosures required by other Topics, the FASB focused on identifying the interim disclosures that are currently required under GAAP. The objective of the amendments is to provide clarity about the current requirements, rather than evaluate whether to expand or reduce interim disclosure requirements. The amendments in this Update also include a disclosure principle that requires entities to disclose events since the end of the last annual reporting period that have a material impact on the entity. The intent of the disclosure principle, which is modeled after a previous SEC disclosure requirement, is to help entities determine whether disclosures not specified in Topic 270 should be provided in interim reporting periods. The amendments in this Update also clarify the applicability of Topic 270, the types of interim reporting, and the form and content of interim financial statements in accordance with GAAP. The amendments in this Update are effective for interim reporting periods within annual reporting periods beginning after December 15, 2027, for public business entities. Early adoption is permitted. The amendments in this Update can be applied either (1) prospectively or (2) retrospectively to any or all prior periods presented in the financial statements. The Company has not yet determined the additional information that it will be required to provide upon adoption of this ASU.

Factors That May Adversely Affect our Results of Operations

Our results of operations may be adversely affected by various factors that could cause economic uncertainty and volatility in the financial markets, many of which are beyond our control. This risk is amplified by our current need to secure additional capital which efforts have been hindered by our inability to get approval from FINRA to complete that Corporate Action approval to execute a reverse split of our common shares on a timely basis. Our business could be impacted by, among other things, downturns in the financial markets or in economic conditions, Medicare and Medicaid cost reimbursement, increases in oil prices, inflation, increases in interest rates, supply chain disruptions, declines in consumer confidence and spending, a resurgence of the COVID-19 pandemic and/or the emergence of new variants or new pandemics, cyber security risks and geopolitical instability. We cannot at this time fully predict the likelihood of one or more of the above events, their duration or magnitude or the extent to which they may negatively impact our business.