NOTE 3 – GHS EQUITY FINANCING AGREEMENT AND RELATED ACCOUNTING

On November 4, 2025, the Company entered into an Equity Financing Agreement with GHS Investments LLC, a Nevada limited liability company (“GHS”), providing the Company with an equity line of credit of up to $20.0 million over a 24-month term commencing upon the effectiveness of a registration statement to be filed with the U.S. Securities and Exchange Commission (“SEC”) (the “GHS Agreement”).

Pursuant to the GHS Agreement, and subject to the effectiveness of a registration statement on Form S-1 (the “S-1”), the Company may, from time to time and at its sole discretion, deliver put notices (“Put Notices”) directing GHS to purchase shares of the Company’s common stock for aggregate gross proceeds of up to $20.0 million. Each individual draw (“Put”) may range from $10,000 to $500,000 and may not exceed 200% of the average daily trading dollar volume of the Company’s common stock for the ten (10) trading days preceding the applicable Put Notice date. A minimum of ten (10) trading days must elapse between successive Puts, and GHS’s beneficial ownership may not exceed 4.99% of the Company’s outstanding common stock at any time.

The purchase price for each Put equals the lower of (i) 95% of the lowest volume-weighted average price (“VWAP”) during the five-trading-day pricing period following delivery of a Put Notice, or (ii) 100% of the lowest intraday trading price during that same pricing period. Settlement occurs on the trading day immediately following the pricing period, at which time GHS remits funds to the Company, net of customary clearing and transaction fees not to exceed 3%.

Commitment Shares and Deferred Offering Costs

In connection with execution of the GHS Agreement, the Company issued 500,000 restricted shares of common stock to GHS as commitment shares (the “Commitment Shares”) as consideration for GHS’s commitment under the facility. The Commitment Shares are included for resale in the S-1.

The fair value of the Commitment Shares issued was $40,050 based on the quoted market price of common stock on the date of issuance, and represents a cost of obtaining access to future equity financing under the facility. As no amounts had been drawn under the facility as of December 31, 2025, this amount has been recorded as Deferred Offering Costs on the consolidated balance sheet.

The deferred offering costs will be recognized as a reduction of additional paid-in capital (i.e., a cost of equity financing) on a pro rata basis as the Company utilizes the facility through future drawdowns. If the Company does not utilize the facility, the deferred amount will be recognized as an expense when it is determined that no future economic benefit will be realized. Future puts will be recognized at fair value and the difference between net settlement and fair value will be recorded in earnings.

Accounting Considerations

The GHS Agreement includes variable pricing mechanisms based on future market prices of the Company’s common stock. The Company evaluated the agreement under ASC 815 and determined it is a contract indexed to its own stock and should be recorded as equity.

As of December 31, 2025, no Put Notices had been issued and no shares had been sold under the facility. The Company will reassess the accounting for the GHS Agreement upon each future draw under the facility.

Other Terms

The Company agreed to deposit $10,000 with GHS’s legal counsel at the closing of the first put to offset transaction-related costs.

The GHS Agreement will terminate upon the earlier of (i) the aggregate purchase of $20.0 million of the Company’s common stock under the facility, or (ii) twenty-four (24) months from execution of the agreement. Either party may suspend or terminate the GHS Agreement upon the occurrence of customary events of default, including, among others, a trading suspension, registration lapse, insolvency, or material breach.

The Company expects to use proceeds from any future equity draws, if any, for general working capital and strategic initiatives. No funds had been drawn under the facility as of December 31, 2025.

Subsequent to year end, the Company completed the filing of the S-1, which was declared effective by the SEC. See Note 13.