GOAI 10-Q
Eva Live Inc (GOAI)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
For the Quarterly Period Ended
OR
For the transition period from ______________ to ______________
Commission File No.
(Exact name of registrant as specified in its charter)
| 7370 | ||||
State or Other Jurisdiction of Incorporation or Organization) |
(Primary Standard Industrial Classification Number) |
(IRS Employer Identification Number) |
Tel:
(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
| The
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Indicate
by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
Indicate
by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule
405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant
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Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See the definition of “accelerated filer” and “large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):
| Large accelerated filer | ☐ | Accelerated filer | ☐ |
| ☐ | Smaller reporting company | ||
| Emerging growth company |
If
an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No
The number of shares of Common Stock, $ par value of the registrant outstanding on June 30, 2026, was .
EVA LIVE INC.
FORM 10-Q
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2026
INDEX
| PART I – FINANCIAL INFORMATION | ||
| Item 1. | Financial Statements | F-1 |
| Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 1 |
| Item 3. | Quantitative and Qualitative Disclosure About Market Risk | 11 |
| Item 4. | Controls and Procedures | 11 |
| PART II – OTHER INFORMATION | ||
| Item 1. | Legal Proceedings | 13 |
| Item 1A. | Risk Factors | 13 |
| Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 13 |
| Item 3. | Defaults Upon Senior Securities | 14 |
| Item 4. | Mine Safety Disclosures | 14 |
| Item 5. | Other Information | 14 |
| Item 6. | Exhibits | 14 |
| i |
Item 1. Financial Statements
Index to Consolidated Financial Statements
| F-1 |
EVA LIVE, INC.
CONSOLIDATED BALANCE SHEETS
| June 30, 2026 | December 31, 2025 | |||||||
| (Unaudited) | (Audited) | |||||||
| Assets: | ||||||||
| Current assets | ||||||||
| Cash | $ | $ | ||||||
| Accounts receivable, net of allowance for doubtful
accounts of $ | ||||||||
| Marketable securities | ||||||||
| Original issuance discount, net | ||||||||
| Deferred financing costs, net | ||||||||
| Other assets | ||||||||
| Total current assets | $ | $ | ||||||
| Capitalized website development costs, net | ||||||||
| Investment in private securities | ||||||||
| Furniture, fixtures, and equipment | ||||||||
| Total assets | $ | $ | ||||||
| Liabilities and stockholders’ equity (deficit): | ||||||||
| Accounts payable and accrued liabilities | ||||||||
| Accrued expenses | ||||||||
| Convertible promissory notes | ||||||||
| Accrued interest | ||||||||
| Total current liabilities | $ | $ | ||||||
| Senior secured convertible promissory note, face value | ||||||||
| Less: Unamortized debt discount | ( | ) | ||||||
| Convertible note payable, net of unamortized discount | ||||||||
| Derivative liability | ||||||||
| Total long-term liabilities | ||||||||
| Total liabilities | $ | $ | ||||||
| Commitments and Contingencies (Note 6) | ||||||||
| Stockholders’ equity: | ||||||||
| Common stock, par value $, shares authorized; and shares issued and outstanding, as of June 30, 2026 and December 31, 2025, respectively | ||||||||
| Deferred stock-based compensation | ( | ) | ||||||
| Additional paid-in capital | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Total stockholders’ equity (deficit) | $ | $ | ||||||
| Total liabilities and stockholders’ equity: | $ | $ | ||||||
The accompanying notes are an integral part of these consolidated financial statements.
| F-2 |
EVA LIVE, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
| Three Months Ended | Six Months Ended | |||||||||||||||
| June
30, 2026 | June
30, 2025 | June
30, 2026 | June
30, 2025 | |||||||||||||
| (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | |||||||||||||
| Sales | ||||||||||||||||
| Total revenue | $ | $ | $ | $ | ||||||||||||
| Operating expenses | ||||||||||||||||
| General and administrative | ||||||||||||||||
| Media traffic purchase | ||||||||||||||||
| Amortization and depreciation | ||||||||||||||||
| Total operating expenses | ||||||||||||||||
| Operating income (loss) | ( | ) | ( | ) | ||||||||||||
| Other income (expense): | ||||||||||||||||
| Interest expense | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Marketable securities gain (loss), unrealized | ||||||||||||||||
| Change in fair value of derivative liability | ( | ) | ||||||||||||||
| Loss on settlement of payable | ( | ) | ||||||||||||||
| Loss on issuance of senior secured convertible promissory note | ( | ) | ||||||||||||||
| Total other income (expense) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Income (loss) before provision for income taxes | ( | ) | ( | ) | ||||||||||||
| Provision (benefit) for income taxes | ||||||||||||||||
| Net income (loss) | $ | ( | ) | $ | $ | ( | ) | $ | ||||||||
| Net loss per common share, basic and diluted | ) | ) | ||||||||||||||
| Weighted average number of common shares outstanding basic and diluted | ||||||||||||||||
The accompanying notes are an integral part of these consolidated financial statements.
| F-3 |
EVA LIVE, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT)
Three Months Ended June 30, 2026
(Unaudited)
| Three Months Ended | Number of Shares | Common Stock | Additional Paid-in Capital | Deferred Stock-Based Compensation | Accumulated Deficit | Total Equity | ||||||||||||||||||
| Balance — March 31, 2025 | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||
| Net income | - | |||||||||||||||||||||||
| Balance — June 30, 2025 | ( | ) | ||||||||||||||||||||||
| Balance — March 31, 2026 | ( | ) | ( | ) | ||||||||||||||||||||
| Deferred stock-based compensation for shares issued for services, consultant, valued at $ per share | - | |||||||||||||||||||||||
| Shares issued per equity distribution (at-the-market offering) at $ per share | ||||||||||||||||||||||||
| Shares issued to settle convertible notes (Streeterville) at $ per share | ||||||||||||||||||||||||
| Shares issued to settle convertible notes (Diagonal) at $ per share | ||||||||||||||||||||||||
| Shares issued to settle accounts payable at $ per share | ||||||||||||||||||||||||
| Shares issued to settle accrued liabilities (related parties) at $ per share | ||||||||||||||||||||||||
| Net loss | - | ( | ) | ( | ) | |||||||||||||||||||
| Balance — June 30, 2026 | $ | $ | $ | ( | ) | $ | ( | ) | $ | |||||||||||||||
The accompanying notes are an integral part of these consolidated financial statements.
| F-4 |
EVA LIVE, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT)
Three Months Ended June 30, 2026
(Unaudited)
| Six Months Ended | Number of Shares | Common Stock | Additional Paid-in Capital | Deferred Stock-Based Compensation | Accumulated Deficit | Total Equity | ||||||||||||||||||
| Balance — December 31, 2024 | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||
| Net income | - | |||||||||||||||||||||||
| Balance — June 30, 2025 | ( | ) | ||||||||||||||||||||||
| Balance — December 31, 2025 | ( | ) | ||||||||||||||||||||||
| Shares issued for services, consultant, valued at $ per share | ( | ) | ||||||||||||||||||||||
| Stock-based compensation — CEO option exercise valued at $ per share | ||||||||||||||||||||||||
| Increase in APIC for officer’s stock-based compensation | - | |||||||||||||||||||||||
| Shares issued for note settlement valued at $ per share | ||||||||||||||||||||||||
| Shares issued for accounts payable settlement valued at $ per share | ||||||||||||||||||||||||
| Shares issued for advisory services, underwriter, valued at $ per share | ||||||||||||||||||||||||
| Shares issued per equity distribution (at-the-market offering) at $ per share | ||||||||||||||||||||||||
| Shares issued to settle convertible notes (Streeterville) at $ per share | ||||||||||||||||||||||||
| Shares issued to settle convertible notes (Diagonal) at $ per share | ||||||||||||||||||||||||
| Shares issued to settle accounts payable at $ per share | ||||||||||||||||||||||||
| Shares issued to settle accrued liabilities (related parties) at $ per share | ||||||||||||||||||||||||
| Net loss | - | ( | ) | ( | ) | |||||||||||||||||||
| Balance — June 30, 2026 | $ | $ | $ | ( | ) | $ | ( | ) | $ | |||||||||||||||
The accompanying notes are an integral part of these consolidated financial statements.
| F-5 |
EVA LIVE, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
| Six Months Ended | ||||||||
| June 30, 2026 | June 30, 2025 | |||||||
| (Unaudited) | (Unaudited) | |||||||
| Cash Flows from operating activities: | ||||||||
| Net loss | $ | ( | ) | $ | ||||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Depreciation and amortization | ||||||||
| Shares issued for services | ||||||||
| Deferred stock based compensation | ( | ) | ||||||
| Stock-based compensation | ||||||||
| Loss on extinguishment of debt | ||||||||
| Amortization of deferred financing costs and original issue discount | ( | ) | ||||||
| Loss on issuance of convertible note | ||||||||
| Change in fair value of derivative liability | ( | ) | ||||||
| Unrealized gain on marketable securities | ( | ) | ||||||
| Amortization of debt discount, convertible note | ||||||||
| Marketable securities received as non-cash consideration | ( | ) | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | ( | ) | ( | ) | ||||
| Accounts payable and accrued liabilities | ||||||||
| Accrued expenses | ( | ) | ||||||
| Accrued interest | ||||||||
| Non-cash debt reclassifications, net of issuance costs reclassified to financing | ( | ) | ( | ) | ||||
| Net Cash used in operating activities | $ | ( | ) | $ | ||||
| Cash flow from investing activities: | ||||||||
| Purchase of capitalized software and equipment | ( | ) | ( | ) | ||||
| Net Cash used in investing activities | $ | ( | ) | $ | ( | ) | ||
| Cash flow from financing activities: | ||||||||
| Proceeds from convertible note (Streeterville) | ||||||||
| Proceeds from notes (Diagonal/Boot) | ||||||||
| Repayment of notes (Diagonal/Boot/Allison) | ( | ) | ||||||
| Debt issuance costs paid (placement agent and legal) | ( | ) | ||||||
| Proceeds from at-the-market equity offering | ||||||||
| Net Cash Provided by financing activities | $ | $ | ||||||
| Net change in Cash and cash equivalents for the period | ||||||||
| Cash and cash equivalents at the beginning of the period | ||||||||
| Cash and cash equivalents at the end of the period | $ | $ | ||||||
| Non-cash investing and financing activities: | ||||||||
| Initial recognition of derivative liability — convertible note bifurcation | ||||||||
| Marketable securities received as non-cash consideration for IR services contracts | ||||||||
| Traffic purchase reclassification | ( | ) | ||||||
| Shares issued to repay senior secured convertible note (Streeterville) | ||||||||
| Shares issued to repay convertible notes (Diagonal/Boot) | ||||||||
| Shares issued for settlement of accrued liabilities (related parties) | ||||||||
| Equity interest in Psquared Inc. received in settlement of accounts receivable | ||||||||
| Shares issued for settlement of accounts payable | ||||||||
| Shares issued for consulting and advisory services | ||||||||
| Supplemental cash flow information: | ||||||||
| Cash paid for interest | ||||||||
The accompanying notes are an integral part of these consolidated financial statements.
| F-6 |
NOTE 1 — BUSINESS DESCRIPTION AND NATURE OF OPERATIONS
NATURE OF OPERATIONS
The Company
Eva
Live Inc. (the “Company”) was incorporated under the laws of the State of Nevada on August 27, 2002, as International Pit
Boss Gaming, Inc. On October 1, 2002, the Company merged with Pro Roads Systems, Inc. (a Florida corporation), a public shell company
traded on the pink sheets. Pro Roads Systems, Inc. had no operations before the merger. The purpose of the merger was to change the Company’s
domicile from Florida to Nevada. From its inception to 2006, the Company designed and developed software for the gaming industry. The
Company changed its name on February 14, 2006, to Logo Industries Corporation and, on November 18, 2008, to Malwin Ventures Inc. On February
11, 2014, the Company announced negotiations with Impact Future Media LLC, and its President/Founder, Francois Garcia, acquired
On
September 28, 2021 (the “Acquisition Date”), the Company merged into EvaMedia Corp. (“EvaMedia”). Upon completion
of the reverse merger, the Company acquired all issued and outstanding shares of EvaMedia’s capital stock. As a result, the Company
issued shares of the Company’s common stock to shareholders of EvaMedia, and immediately following the Acquisition,
shares of common stock were issued and outstanding. As a result, EvaMedia’s shareholders control
We deemed EvaMedia as an accounting acquirer based on the following facts: (i) after the reverse merger, former shareholders of EvaMedia held a majority of the voting interest of the combined company; (ii) former Board of Directors of EvaMedia possess majority control of the Board of Directors of the combined company; (iii) members of the management of EvaMedia are responsible for the management of the combined company. As such, we have treated the financial statements of EvaMedia as the historical financial statements of the combined company, and (iv) EvaMedia’s relative size, measured in assets and revenues, is significantly larger than that of the Company.
We have identified the Company as the legal acquirer, as it is the entity that issued securities. Comparatively, we have identified EvaMedia as the legal acquiree, the entity whose equity interests are acquired.
Since September 28, 2021, the Company has operated at the junction of digital marketing and media monetization.
On
September 9, 2021, the Company completed a reverse split in the amount of
Organization and Principles of Consolidation
On June 16, 2026, the Company announced the formation of Eva Defense Inc. (“Eva Defense”), its first wholly owned subsidiary. Eva Defense was established as a strategic initiative to pursue acquisitions of, and partnerships with, companies in the drone, autonomous systems, and defense technology sectors, including businesses involved in drone technologies, autonomous platforms, artificial intelligence applications, surveillance systems, advanced sensor technologies, and robotics.
As of June 30, 2026, Eva Defense was a newly formed entity with no operating history, no revenues, and no material assets, and the Company had not entered into any definitive agreement to acquire any business or to enter into any partnership through Eva Defense. Any such acquisition or partnership would be subject to the identification of suitable opportunities, the negotiation and execution of definitive agreements, and other conditions, and there can be no assurance that Eva Defense will complete any acquisition or partnership or generate any revenue.
The accompanying consolidated financial statements include the accounts of the Company and its wholly owned subsidiary. All intercompany accounts and transactions have been eliminated in consolidation.
| F-7 |
NOTE 1 — BUSINESS DESCRIPTION AND NATURE OF OPERATIONS (continued)
The Business
We execute our business through the Eva Platform based on Artificial Intelligence, or AI, to match advertising campaigns to specific ad spots one at a time. Our system creates conversion mapping tables that allow us to increase conversion rates by analyzing those trends with optimized historical conversion rates and further capitalizing on and improving those rates. We leverage “big data,” an accumulation of data that is too large and complex for traditional database management tools to process. Since more companies are attempting to leverage big data to make strategic business decisions, we have built automated tools that analyze the data and feed the relevant information into our decision logic. We have designed our solution to optimize brand campaigns to create brand awareness and direct response campaigns with a fixed conversion point.
Recent Developments
Equity Interest in Psquared Inc.
On
June 1, 2026, the Company entered into a Debt Settlement and Equity Issuance Agreement with Psquared Inc. (“Psquared”), pursuant
to which the Company settled $
Proposed Acquisition of Psquared Inc.
On June 10, 2026, the Company announced that it had signed a non-binding letter of intent to acquire Psquared, a performance-marketing company. Under the proposed transaction, Psquared would be operated as a wholly owned subsidiary and its founder would continue to lead the business. The proposed acquisition remains subject to the completion of due diligence, the negotiation and execution of definitive agreements, regulatory approvals, and other customary closing conditions. The Company has not entered into a definitive agreement with respect to Psquared, and there can be no assurance that the Company will enter into a definitive agreement or complete the acquisition on the terms described, or at all. No amounts related to the proposed acquisition are reflected in the accompanying consolidated financial statements.
Discontinued Pursuit of Spiro Senior Care Transaction
On
May 27, 2026, the Company announced that it had executed a non-binding letter of intent with Dermatech Mobile Care, d/b/a Spiro Senior
Care (“Spiro”), contemplating a strategic partnership under which the Company would acquire a
Proposed Acquisition of Airbeam Wireless Technologies Inc.
Subsequent
to June 30, 2026, on July 20, 2026, the Company announced that it had signed a non-binding letter of intent to acquire a controlling
Other Transactions During the Period
During the six months ended June 30, 2026, the Company completed a number of financing and equity transactions, including sales of common stock under its Equity Distribution Agreement dated April 14, 2026, the issuance and conversion of convertible promissory notes, and the settlement of accrued liabilities and accounts payable through the issuance of common stock. These transactions did not change the nature of the Company’s operations and are described in Note 9 — Debt Financing, Note 10 — Stockholders’ Equity, and Note 8 — Related Party Transactions.
Corporate Information
The Company’s principal office is The Plaza, 1800 Century Park East, Suite 600, Los Angeles, CA 90067 (“California Lease”), and our corporate website is www.eva.live.
| F-8 |
NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation and Principles of Consolidation
The summary of significant accounting policies presented below is designed to assist in understanding the Company’s financial statements. These financial statements and accompanying notes represent the Company’s management, which is responsible for their integrity and objectivity. These accounting policies conform to accounting principles generally accepted in the United States of America (“GAAP”) in all material respects. We have applied them consistently to prepare the accompanying financial statements.
The accompanying unaudited consolidated financial statements have been prepared in accordance with GAAP for interim financial information and the rules and regulations of the Securities and Exchange Commission (“SEC”). Accordingly, certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted. The results for the three and six months ended June 30, 2026 and 2025 are not necessarily indicative of the results of operations for the full year. These financial statements and related footnotes should be read in conjunction with the consolidated financial statements and footnotes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025, filed with the SEC on March 16, 2026.
Use of Estimates
Preparing financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclose contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Significant estimates in these consolidated financial statements include the allowance for doubtful accounts, the grant-date fair value of share-based compensation awards, the fair value of the compound embedded derivative associated with the Streeterville convertible note, the fair value of equity securities received as non-cash consideration, the recoverability of long-lived assets, and the realizability of deferred tax assets. Actual results could differ from those estimates.
Cash and Cash Equivalents
Cash
and cash equivalents include Cash on hand, deposits at banking institutions, and all highly liquid short-term investments with original
maturities of 90 days or less. The Company had cash balances of $
Revenue Recognition
The Company recognizes revenue in accordance with ASC 606, Revenue from Contracts with Customers. The Company generates revenue through its proprietary Eva Platform by providing digital advertising services, including programmatic media buying, AI-driven campaign optimization, and media traffic arbitrage across major advertising networks. Revenue is recognized when control of the promised services is transferred to the customer, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those services.
The Company evaluates its arrangements with customers to determine whether it acts as a principal or agent in the transaction, which affects whether revenue is reported on a gross or net basis. This determination requires significant judgment, particularly with respect to the Company’s media buying activities, where the Company assesses whether it controls the advertising inventory before it is transferred to the customer. We intend to disaggregate revenue into categories to provide useful information to the users of financial statements about nature, amount, timing, and uncertainty of revenue and cash flows. As our customer base expands or we start licensing our platform to third parties or our customers, we intend to divide our revenues into two categories:
| a) | Campaign Revenues: Revenues derived from the principal-based model. | |
| b) | Subscription Revenues: Revenues sourced from the agency-based model. |
The Company has concluded that it acts as the principal in its advertising transactions and accordingly recognizes revenue on a gross basis, as the Company controls the advertising services before they are delivered to the customer, assumes inventory risk, has pricing discretion, and bears the primary responsibility for fulfillment.
During the three months ended June 30, 2026, the Company commenced one new marketing service contract with a non-affiliated counterparty, which involves both cash consideration and non-cash consideration in the form of restricted shares of the customer’s common stock. Revenue under these contracts is recognized over time on a straight-line basis over the contract service period, as the Company’s customers simultaneously receive and consume the benefits of the services as they are performed (single performance obligation satisfied over time under ASC 606-10-25-27). The non-cash consideration is measured at fair value at contract inception per ASC 606-10-32-21 and recorded as a contract liability (deferred revenue) until earned. See Note 4 — Revenue Recognition.
| F-9 |
NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Accounts Receivable
Trade accounts receivable is recorded at the invoiced amount and do not bear interest. The Company evaluates the collectability of its accounts receivable in accordance with ASC 326, Financial Instruments — Credit Losses, using the current expected credit loss (“CECL”) methodology. Under this framework, the Company estimates expected credit losses over the contractual term of its receivables based on historical loss experience, current conditions, and reasonable and supportable forecasts.
The
assessment requires significant management judgment, particularly given the Company’s customer concentration, the programmatic
advertising industry’s extended payment cycles, and the material proportion of balances aged beyond 90 days. As of June 30, 2026
and December 31, 2025, gross trade accounts receivable totaled $
| Aging bucket | June 30, 2026 | |||
| Current | $ | ( | ) | |
| 1 – 30 days | ||||
| 31 – 60 days | ( | ) | ||
| 61 – 90 days | ||||
| 91 days and over | ||||
| Total trade accounts receivable, net | $ | |||
The
Current bucket above includes a $(
The Company’s receivables are concentrated among a limited number of customers. As of June 30, 2026, the three largest customer balances represented approximately 63% of trade accounts receivable and the five largest represented approximately 79%, with no other customer exceeding 5%. Nonpayment by any one of these customers could have a material adverse effect on the Company’s financial position and results of operations.
Management
assesses collectability on a customer-by-customer basis, considering the creditworthiness of counterparties (including publicly traded
entities subject to SEC reporting), the aging of individual balances, the results of collection efforts and negotiations with customers,
the continuation of service relationships, and subsequent collections evidence. Based on this assessment, the Company recorded an allowance
for credit losses of $
Bad
debt expense was $
During
the three months ended June 30, 2026, the Company settled $
| F-10 |
NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Office Lease
The
Company’s office arrangements comprise a month-to-month arrangement for its Los Angeles corporate office and a fixed-term membership
subscription for its Las Vegas office. In each case the provider retains a substantive right to substitute or relocate the space, so
the Company does not have the right to control the use of an identified asset and the arrangements do not meet the definition of a lease
under ASC 842, Leases. Office facility costs are recognized in general and administrative expenses as incurred and were $
Marketable Securities and Equity Securities Received as Non-Cash Consideration
During the six months ended June 30, 2026, the Company received equity securities of two non-affiliate counterparties as non-cash consideration under marketing service agreements (see Note 4 — Revenue Recognition). Of these, restricted shares of Jet.AI, Inc. (“JTAI”) were received during the three months ended June 30, 2026. The Company accounts for these equity securities at fair value with changes in fair value recognized in net income, in accordance with ASC 321, Investments — Equity Securities.
Fair value is determined using the unadjusted quoted market price of the underlying common stock at the contract inception date and at each subsequent reporting date. Six-month Rule 144 holding periods applicable to the underlying securities are holder-specific restrictions that are not characteristics of the securities themselves and accordingly do not affect fair value measurement; no discount for lack of marketability has been applied. Share counts and per-share amounts reflect Braiin Limited’s three-for-one forward stock split effective April 28, 2026 and Jet.AI’s two-hundred-for-one share consolidation effected in the first quarter of 2026.
As
of June 30, 2026, the carrying amount of equity securities received as non-cash consideration was $
At June 30, 2026, all of the equity securities held were subject to Rule 144 holding-period restrictions, with remaining durations ranging from less than one month to approximately three and one-half months.
Concentrations of Credit Risk
Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash and trade accounts receivable.
The
Company places its cash with major banking institutions. Balances at each institution are insured by the Federal Deposit Insurance Corporation
up to $
Concentrations
of credit risk with respect to trade accounts receivable are significant. As of June 30, 2026, three customers individually accounted
for approximately
A substantial portion of these balances is aged beyond 90 days. Nonpayment by any one of the Company’s largest customers could have a material adverse effect on the Company’s financial position and results of operations. See “Accounts Receivable and Allowance for Credit Losses” above for further information regarding the aging of trade accounts receivable and management’s assessment of collectability.
| F-11 |
NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Stock-Based Compensation
The Company applies ASC 718, Compensation — Stock Compensation, as amended by ASU 2018-07 (which extended the scope of ASC 718 to share-based payments to non-employees), to account for stock-based compensation. Equity-classified awards are measured at the grant-date fair value of the equity instruments and recognized as expense over the requisite service period.
For options granted, the Company estimates the grant-date fair value using the Black-Scholes-Merton closed-form option-pricing model, with inputs that include the underlying stock price, the exercise price, the expected term, the expected volatility (peer-derived where the Company’s own price history is insufficient or distorted), the risk-free interest rate based on the U.S. Treasury yield curve at the grant date for a maturity equal to the expected term, and an assumed dividend yield of zero.
For the CEO Award (described in Note 8), the requisite service period for the first tranche extended from May 31, 2025 through January 1, 2026. The Company evaluated the attribution of compensation cost over this period and, given the short duration of the service period, the cliff vesting structure, and the fact that the award remained fully forfeitable until the vesting date, recognized the associated compensation cost upon satisfaction of the service condition in the first quarter of 2026. Cumulative compensation cost recognized through the vesting date is mathematically identical to the result that would have been produced under straight-line attribution; the methodologies differ only in inter-period allocation.
For non-employee awards subject to a multi-year service condition, the Company recognizes the grant-date fair value as compensation cost on a straight-line basis over the requisite service period, with forfeitures accounted for as they occur. The unvested portion of share-based awards issued in advance of vesting is presented as common stock payable (a contra-equity caption).
Convertible promissory notes and Embedded Derivatives
The Company accounts for convertible debt instruments under ASC 470-20, Debt — Debt with Conversion and Other Options, and ASC 815-15, Derivatives and Hedging — Embedded Derivatives. For each convertible note, the Company evaluates whether the embedded conversion feature must be bifurcated from the host debt and accounted for separately as a derivative liability. Bifurcation is required where (i) the embedded feature is not clearly and closely related to the host debt; (ii) the hybrid instrument is not measured in its entirety at fair value with changes in fair value reported in earnings; and (iii) a separate instrument with the same terms as the embedded feature would meet the definition of a derivative under ASC 815-10.
Where the conversion feature is contingent solely upon a default or other contingent event that is not deemed probable of occurrence at issuance, the feature is not separated from the host debt and the note is recorded as conventional debt at amortized cost, with original issue discount, deferred financing costs, and one-time interest charges (where applicable) presented as direct deductions from or accretions to the carrying amount of the debt under ASC 835-30 and amortized to interest expense over the contractual term using a straight-line approximation of the effective interest method.
Where the conversion feature is exercisable at the holder’s option, and the conversion ratio is variable based on inputs (such as a percentage of the lowest VWAP over a trailing period) that fail the indexation test of ASC 815-40-15-7C, the feature is bifurcated and accounted for as a derivative liability at fair value, with changes in fair value recognized in earnings. The host debt is recorded at residual proceeds after allocation to the derivative; where the derivative fair value exceeds the proceeds available for allocation to the host debt, the excess is recognized as a Day-1 loss in earnings at issuance.
Fair Value Measurements
The Company uses current market values to recognize certain assets and liabilities at a fair value. Fair value is the estimated price at which an asset can be sold or a liability settled in an orderly transaction with a third party under current market conditions. The Company uses the following methods and valuation techniques for deriving fair values:
Market Approach – The market approach uses the prices associated with actual market transactions for similar or identical assets and liabilities to derive a fair value.
Income Approach – The income approach uses estimated future cash flows or earnings, adjusted by a discount rate representing the time value of money and the risk of cash flows not being achieved, to derive a discounted present value.
Cost Approach – The cost approach uses the estimated cost to replace an asset adjusted for the obsolescence of the existing asset.
| F-12 |
NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
The Company ranks the fair value hierarchy of information sources from Level 1 (best) to Level 3 (worst). The Company uses these three levels to select inputs for valuation techniques:
| Level 1 | Level 2 | Level 3 | ||
| Level 1 is a quoted price for an identical item in an active market on the measurement date. This is the most reliable evidence of fair value and is used whenever this information is available. | Level 2 is directly or indirectly observable inputs other than quoted prices. An example of a Level 2 input is a valuation multiple for a business unit based on comparable entities’ sales. | Level 3 is an unobservable input. It may include the Company’s data, adjusted for other reasonably available information. Examples of a Level 3 input are an internally generated financial forecast. |
As
of June 30, 2026, the Company’s recurring fair value measurements consist of (i) marketable equity securities of $
Legal Proceedings
The Company discloses a loss contingency if there is at least a reasonable possibility that a material loss has been incurred. The Company records its best estimate of loss related to pending legal proceedings when the loss is considered probable, and the amount can be reasonably estimated. The Company can reasonably estimate a range of loss with no best estimate; the Company records the minimum estimated liability. As additional information becomes available, the Company assesses the potential liability of pending legal proceedings, revises its estimates, and updates its disclosures accordingly. The Company’s legal costs associated with defending itself are recorded as expenses incurred. The Company is currently not involved in any litigation.
Impairment of Long-Lived Assets
The Company reviews long-lived assets for impairment in accordance with FASB ASC 360, Property, Plant, and Equipment. Long-lived assets are tested for recoverability whenever events or changes in circumstances indicate that the Company may not be able to recover the carrying amounts. An impairment charge amount is recognized if and when the asset’s carrying value exceeds the fair value.
The Company follows ASC 260, Earnings Per Share, to account for earnings per share. Basic earnings per share (“EPS”) is calculated by dividing net income or loss by the weighted average number of shares of common stock outstanding during the period. Diluted EPS is calculated by dividing net income or loss by the weighted average number of common shares and dilutive common share equivalents outstanding. As of June 30, 2026 and 2025, the Company had and shares of common stock issued and outstanding, respectively.
For
the three and six months ended June 30, 2026, common stock equivalents were anti-dilutive due to the net losses of $
For
the three and six months ended June 30, 2025, the Company had convertible promissory notes outstanding with an aggregate principal balance
of $
The weighted average number of common shares outstanding used to compute basic and diluted net income (loss) per share was and for the three months ended June 30, 2026 and 2025, respectively, and and for the six months ended June 30, 2026 and 2025, respectively. Basic and diluted net income (loss) per common share was $ and $ for the three months ended June 30, 2026 and 2025, respectively, and $ and $ for the six months ended June 30, 2026 and 2025, respectively.
Provision for Income Taxes
The provision for income taxes is determined using the asset and liability method. This method calculates deferred tax assets and liabilities based on the temporary differences between the consolidated financial statement and income tax bases of assets and liabilities using the enacted tax rates applicable each year.
The Company utilizes a two-step approach to recognizing and measuring uncertain tax positions, commonly referred to as tax contingencies. The first step is to evaluate the tax position for recognition by determining whether the weight of available evidence indicates it is more likely than not that the position will be sustained on audit, including the resolution of related appeals or litigation. The second step is to measure the tax benefit at its maximum, more than 50%, which is likely to be realized upon ultimate settlement.
The Company considers various factors when evaluating and estimating its tax positions and benefits, which may necessitate periodic adjustments and may not accurately predict actual outcomes. The Company includes interest and penalties related to tax contingencies in the provision of income taxes in the consolidated statements of operations. The Management of the Company does not expect the total amount of unrecognized tax benefits to change significantly in the next 12 months.
| F-13 |
NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Recent Accounting Pronouncements
In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which requires expanded disclosures relating to the effective tax rate reconciliation and income taxes paid. ASU 2023-09 is effective for annual periods beginning after December 15, 2024, with early adoption permitted. The Company is evaluating the impact of this standard on its disclosures.
In November 2024, the FASB issued ASU 2024-03, Income Statement — Reporting Comprehensive Income — Expense Disaggregation Disclosures (Subtopic 220-40), which requires disclosure of additional information about specific expense categories in the notes to financial statements. ASU 2024-03 is effective for annual periods beginning after December 15, 2026 and interim periods within annual periods beginning after December 15, 2027. The Company is evaluating the impact of this standard on its disclosures.
Other recent accounting pronouncements issued by the FASB (including its Emerging Issues Task Force) and the SEC are not, or are not believed by management to be, material to the Company’s present or future consolidated financial statements.
Reclassification — SAB Topic 1.M / SAB Topic 1.N (SAB 99 / SAB 108)
During the six months ended June 30, 2026, the Company identified two classification errors affecting previously reported periods, each arising from the automatic categorization rules applied by the Company’s bank-feed accounting integration. In both cases the cash outflow was recorded in the correct amount and in the correct period; only the line items to which it was assigned were incorrect.
(a) Boot Capital LLC installment payments
Three
monthly installment payments aggregating $
The
Company evaluated the misstatement under SEC Staff Accounting Bulletin Topic 1.M and concluded that it is immaterial to the financial
statements for the year ended December 31, 2025, taken as a whole, both quantitatively (0.42% of net income for that year) and qualitatively.
The Company corrected the misstatement on an out-of-period basis in the three months ended March 31, 2026, in accordance with SAB Topic
1.N rather than restating the prior year. The correction reclassified $
(b) Placement agent fee
A
payment of $
The
correction reclassifies $
The
Company evaluated this misstatement under SAB Topic 1.M and concluded that it is immaterial, both quantitatively — representing
The Company has enhanced its controls over the classification of disbursements, including verification of the beneficiary named in each outgoing wire against the vendor recorded in the general ledger and review of disbursements above a defined threshold prior to posting. Management’s evaluation of the effectiveness of the Company’s disclosure controls and procedures as of June 30, 2026, is set out in Part I, Item 4 of this Quarterly Report.
Rounding Error
Due to rounding, the numbers presented in the financial statements for the periods ending June 30, 2026 and December 31, 2025, and throughout the report, may not precisely add up to the totals provided, and percentages may not accurately reflect the absolute figures.
| F-14 |
NOTE 3 — GOING CONCERN
Basis of Going Concern Evaluation
In accordance with FASB Accounting Standards Codification (“ASC”) 205-40, Presentation of Financial Statements—Going Concern, management evaluates at each annual and interim reporting period whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date that these unaudited condensed consolidated financial statements are issued. The accompanying unaudited condensed consolidated financial statements have been prepared assuming the Company will continue as a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that might result from the outcome of this uncertainty.
Management performed this evaluation as of the date these unaudited condensed consolidated financial statements were issued, and considered the conditions and events described below in the aggregate, before consideration of management’s plans, as required by ASC 205-40-50-4.
Conditions and Events Considered
Results
of operations. For the six months ended June 30, 2026, the Company recorded revenue of $
The
net loss for the six months ended June 30, 2026, includes $
Liquidity
and cash flows. Operating activities used cash of $
Cash
used in operating activities averaged approximately $
Working
capital composition. As of June 30, 2026, the Company had total current assets of $
Accounts
receivable. Gross trade accounts receivable were $
| F-15 |
NOTE 3 — GOING CONCERN (continued)
Media
traffic purchase costs. Media traffic purchase costs were $
Debt
obligations maturing within the look-forward period. As of June 30, 2026, the Company had notes payable of $
Streeterville
Note. On February 26, 2026, the Company issued a Senior Secured Convertible Promissory Note to Streeterville Capital, LLC in the
original principal amount of $
The
Streeterville Note also includes a redemption right exercisable by the holder if the Nasdaq Official Closing Price of the
Company’s common stock is below the Floor Price of $
The
Company’s common stock declined materially between the effective date of the Streeterville Note and the end of the period. Shares
issued in the at-the-market offering during April and May 2026 were sold at prices of approximately $ to $ per share, shares
issued in settlement of the Streeterville Note during the second quarter were issued at an average of approximately $ per share,
and shares issued on June 10, 2026, in settlement of accounts payable and related-party liabilities were issued at $ per share. The
closing price of the common stock was $ on June 30, 2026, compared with $ on the effective date of the Streeterville Note, a
decline of approximately
Proposed transactions. The Company has entered into non-binding letters of intent with respect to the proposed acquisitions of Psquared Inc. and Airbeam Wireless Technologies Inc., and formed Eva Defense Inc. to pursue acquisitions in the drone, autonomous systems and defense technology sectors (see Note 1 — Business Description and Nature of Operations and Note 12 — Subsequent Events). No definitive agreements have been executed and no amounts related to these transactions are reflected in the accompanying unaudited condensed consolidated financial statements. These proposed transactions are not sources of liquidity, and their consummation could require the Company to fund cash consideration, transaction costs and the working capital requirements of the acquired businesses during the look-forward period.
Management has concluded that, considered in the aggregate and before consideration of management’s plans, the conditions and events described above raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date these unaudited condensed consolidated financial statements are issued.
| F-16 |
NOTE 3 — GOING CONCERN (continued)
Management’s Plans
Management has evaluated the conditions and events described above and has identified the following plans. In accordance with ASC 205-40-50-6, only plans that are both probable of being effectively implemented and probable of mitigating the conditions giving rise to substantial doubt have been considered in reaching the conclusion set out below.
(a)
Maxim Equity Distribution Agreement (at-the-market offering). On April 14, 2026, the Company entered into an Equity Distribution
Agreement with Maxim Group LLC (“Maxim”) providing for the offer and sale, from time to time and at the Company’s discretion,
of shares of common stock having an aggregate offering price of up to $
At
June 30, 2026, shares of the Company’s common stock, representing approximately % of the shares then outstanding,
were held by non-affiliates. Computed by reference to the closing price of the common stock of $ on June 30, 2026, the aggregate
market value of those shares was $
Remaining
capacity of approximately $
(b)
Normalization of media traffic purchase costs. Management expects media traffic purchase costs as a percentage of revenue to continue
to revert toward historical levels of approximately
(c)
Collection of outstanding accounts receivable. Management is actively engaged with the Company’s largest counterparties regarding
collection of the $
| F-17 |
NOTE 3 — GOING CONCERN (continued)
(d)
Reduction of general and administrative run-rate. General and administrative expenses were $
Conversion of the Streeterville Note into common stock is exercisable at the election of the holder and is not a plan within management’s control; accordingly, potential conversions have not been considered as a plan under ASC 205-40. The Streeterville Note matures on February 26, 2028, outside the look-forward period, and is described above under “Conditions and Events Considered.”
Conclusion
Management
has evaluated the plans described above. The Equity Distribution Agreement remains available and is within the Company’s discretion
to utilize; however, the Company’s ability to sell shares under its Form S-3 is limited by General Instruction I.B.6 to approximately
$
Accordingly, management has concluded that its plans do not alleviate the substantial doubt about the Company’s ability to continue as a going concern within one year after the date these unaudited condensed consolidated financial statements are issued. The accompanying unaudited condensed consolidated financial statements have been prepared on a going concern basis and do not include any adjustments relating to the recoverability and classification of asset carrying amounts or the amount and classification of liabilities that might result from the outcome of this uncertainty.
Continued Listing Compliance
The
Company’s common stock is listed on the Nasdaq Capital Market under the symbol “GOAI” and is subject to the continued
listing requirements of the Nasdaq Stock Market LLC, including the minimum stockholders’ equity requirement of $
| F-18 |
NOTE 4 — REVENUE RECOGNITION
The Company’s revenue for the three and six months ended June 30, 2026 and 2025 was generated principally from two streams: (i) digital advertising and media-monetization services delivered through the Eva Platform and the Eva XML Platform; and (ii) AI-driven marketing services provided to Nasdaq-listed and non-U.S. listed corporate customers under agreements that include both cash and non-cash consideration.
Advertising revenue is recognized when the Company satisfies its performance obligations under each insertion order with the customer, generally over the campaign delivery period. Marketing services revenue is recognized over time on a straight-line basis over the contract service period, consistent with the integrated and continuous nature of the services.
Disaggregation of Revenue
The following table disaggregates revenue by service stream:
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
| Revenue stream | 2026 | 2025 | 2026 | 2025 | ||||||||||||
| Digital advertising and media monetization | $ | $ | $ | $ | ||||||||||||
| AI-driven marketing services | ||||||||||||||||
| Total revenue | $ | $ | $ | $ | ||||||||||||
AI-driven
marketing services, which generated no revenue in either prior-year period, represented approximately
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
| Arrangement | 2026 | 2025 | 2026 | 2025 | ||||||||||||
| Jet.AI, Inc. — January 2026 agreement | $ | $ | $ | $ | ||||||||||||
| Jet.AI, Inc. — April 2026 agreement | ||||||||||||||||
| Braiin Limited — March 2026 agreement | ||||||||||||||||
| Total marketing services revenue | $ | $ | $ | $ | ||||||||||||
JTAI Investor Relations Contract
On
January 1, 2026, the Company entered into an AI-driven marketing services agreement with Jet.AI, Inc. (“JTAI”), a Nasdaq-listed
issuer. The agreement provided for a 91-day service window from January 16, 2026 through April 16, 2026, with cash consideration of $
The
Company concluded that the agreement contained a single performance obligation — the provision of integrated AI-driven marketing
services over the contract service period — satisfied over time under ASC 606-10-25-27.
Jet.AI, Inc. — April 2026 Agreement
On
April 10, 2026, the Company entered into a further AI-driven marketing services arrangement with JTAI, evidenced by Invoice No. 5868,
providing for a 31-day service window from April 10, 2026 through May 10, 2026. Consideration comprised $
| F-19 |
NOTE 4 — REVENUE RECOGNITION (continued)
Braiin Limited Investor Relations Contract
On
March 5, 2026, the Company entered into an AI-driven marketing services agreement with Braiin Limited (“Braiin”), a Western
Australia-based issuer trading on Nasdaq under the symbol “BRAI.” The agreement provided for a 9-month service period from
March 12, 2026 through December 12, 2026 (276 days), with cash consideration of $
The
agreement was terminated by mutual agreement of the parties effective April 30, 2026. The Company had received cash consideration of
$
Contract Liabilities (Deferred Revenue)
The Company had no contract liabilities at June 30, 2026 or December 31, 2025, as all performance obligations under the arrangements described above had been satisfied or extinguished at the reporting date. Activity in contract liabilities for the six months ended June 30, 2026, was as follows:
Six Months Ended June 30, 2026 | ||||
| Balance, December 31, 2025 | $ | |||
| Cash consideration received | ||||
| Non-cash consideration received (equity securities) | ||||
| Cash consideration returned | ( | ) | ||
| Revenue recognized | ( | ) | ||
| Balance, June 30, 2026 | $ | |||
No
contract liability existed at December 31, 2025, and accordingly no revenue recognized during the six months ended June 30, 2026, was included in the contract liability balance at the beginning of that period. Revenue recognized during the three months ended June 30, 2026, that was included in the contract liability balance at March 31, 2026, was $
Equity Securities Received as Non-Cash Consideration
The restricted shares of JTAI and Braiin common stock received as non-cash consideration under the arrangements described above are accounted for as investments in equity securities under FASB Accounting Standards Codification (“ASC”) 321, Investments—Equity Securities. The Company has not elected the measurement alternative under ASC 321-10-35-2 or the net asset value practical expedient under ASC 820-10-35-59. Accordingly, the securities are measured at fair value with changes in fair value recognized in earnings under ASC 321-10-35-1.
At
contract inception the securities are recorded at fair value, which also represents the non-cash consideration component of the transaction
price under ASC 606-10-32-21, with an offsetting credit to the related contract liability. At each subsequent reporting date the securities
are remeasured to fair value using unadjusted quoted market prices on the principal exchange on which the underlying common stock trades,
with the resulting unrealized gain or loss recognized in the consolidated statements of operations. During the six months ended June 30, 2026, the Company received equity securities with an aggregate fair value at contract inception of $
| Issuer / Symbol | Shares held at 6/30/26 | Cost basis | Fair value at 6/30/26 | Cumulative unrealized gain (loss) | ||||||||||||
| Jet.AI, Inc. / JTAI | $ | $ | $ | ( | ) | |||||||||||
| Braiin Limited / BRAI | ||||||||||||||||
| Total | $ | $ | $ | |||||||||||||
The
JTAI position comprises shares received under the January 2026 agreement, being shares before the reverse stock split described
below, and shares received under the April 2026 agreement, valued at the June 30, 2026, closing price of $ per share.
| F-20 |
NOTE 4 — REVENUE RECOGNITION (continued)
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
| Issuer / Symbol | 2026 | 2025 | 2026 | 2025 | ||||||||||||
| Jet.AI, Inc. / JTAI | $ | $ | $ | ( | ) | $ | ||||||||||
| Braiin Limited / BRAI | ||||||||||||||||
| Total unrealized gain | $ | $ | $ | $ | ||||||||||||
The unrealized gains reported above are included within other income (expense), net in the accompanying consolidated statements of operations. The fair values reported above represent quoted market prices for identical instruments traded in active markets and are accordingly classified as Level 1 measurements within the fair value hierarchy under ASC 820.
Stock Splits Affecting Securities Held
During
the three months ended June 30, 2026, both issuers effected changes in capital structure affecting the securities held by the Company.
On April 8, 2026, JTAI effected a
Restricted Equity Securities — Rule 144 Holding Period
The shares of JTAI and Braiin common stock held by the Company at June 30, 2026, are restricted securities subject to a six-month holding period under SEC Rule 144(d)(1)(i). Each share certificate, or book-entry equivalent, bears a customary Rule 144 restrictive legend and may not be resold by the Company without registration unless and until the conditions of Rule 144 are satisfied. Each issuer is a reporting company under the Securities Exchange Act of 1934, and the Company is not an affiliate of either issuer. No lock-up, leak-out or other contractual transfer restriction beyond Rule 144 applies to any of the holdings.
Under ASC 820-10-35-6B, the fair value of an asset reflects characteristics that market participants would take into account, considered from the perspective of the entity that holds the asset. Restrictions that are specific to the holder, or that derive from the manner in which the holder acquired the asset, are not characteristics of the asset itself and therefore do not affect its fair value. The Rule 144 holding period applicable to the Company’s holdings is a holder-specific restriction; it derives from the unregistered manner in which the shares were issued, not from any characteristic of the underlying common stock. This conclusion is reinforced by ASU 2022-03, Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions, which clarified that a contractual sale restriction is not a characteristic of an equity security and should not be considered in measuring its fair value under Topic 820. Accordingly, no discount for lack of marketability has been applied; the carrying values reported above reflect unadjusted quoted market prices on the respective measurement dates.
The following disclosures are made pursuant to ASC 820-10-50-6A:
| Issuer / Symbol | Shares | Fair value at 6/30/26 | Acquisition date | Remaining duration of restriction at June 30, 2026 | ||||||||
| Jet.AI, Inc. / JTAI | $ | Lapses on or about July 1, 2026 | ||||||||||
| Jet.AI, Inc. / JTAI | Approximately three and one-half months; lapses on or about October 14, 2026 | |||||||||||
| Braiin Limited / BRAI | Approximately two months; lapses on or about September 5, 2026 | |||||||||||
| Total | $ | |||||||||||
| F-21 |
NOTE 5 — FURNITURE & FIXTURES
The restrictions would lapse upon (i) continuous holding of the shares by the Company for six months from the respective acquisition dates, satisfying Rule 144(d)(1)(i), and (ii) at the time of any proposed resale, satisfaction of the current-public-information requirement of Rule 144(c)(1). The shares received as non-cash consideration were issued in unregistered transactions and were not, as at June 30, 2026, subject to any registration rights agreement.
Furniture and fixtures are stated at cost, net of accumulated depreciation. Costs include all expenditures directly attributable to the acquisition, including shipping, installation, and setup costs.
Depreciation Method:
Depreciation is calculated using the straight-line method over the estimated useful lives of the respective assets.
Estimated Useful Lives:
Furniture
and Fixtures:
Commencement of Depreciation:
Depreciation begins when the asset is placed into service and continues through the end of its estimated useful life or until it is disposed of or retired.
Review of Useful Lives and Residual Value:
The estimated useful lives and residual values of furniture and fixtures are reviewed at least annually. Adjustments are made prospectively when the expected pattern of economic benefits changes.
Disposals and Retirements:
Upon disposal or retirement of furniture and fixtures, the asset cost and related accumulated depreciation are removed from the accounts. Any resulting gain or loss is recognized in the statement of operations.
Impairment:
Furniture and fixtures are evaluated for impairment when events or changes in circumstances indicate that their carrying value may not be recoverable. An impairment loss is recognized if the asset’s carrying amount exceeds its estimated future cash flows.
As
of June 30, 2026, the gross carrying amount of furniture and equipment was $
| F-22 |
NOTE 6 — COMMITMENTS AND CONTINGENCIES
Office Facility
The
Company’s corporate office is located at The Plaza, 1800 Century Park East, Suite 600, Los Angeles, California 90067 (the “California
Office”). The Company occupies the California Office on a month-to-month basis, entitling it to use office and conference space
as needed, at a rate of $
On
April 20, 2026, the Company entered into a Membership Subscription Agreement with Kiln Las Vegas LLC for a two-person private office
at 8488 Rozita Lee Avenue, Building 3, Suite 100, Las Vegas, Nevada 89113 (the “Las Vegas Office”). The agreement has a fixed
term commencing May 4, 2026 and expiring April 30, 2027, and provides for a membership fee of $
Under the terms of the Las Vegas Office agreement, the provider retains the right to relocate or alter the assigned office space at its discretion, and the agreement expressly states that it creates no tenancy interest or leasehold estate and constitutes a revocable, limited license to access and use the facility. Because the provider holds a substantive right to substitute the space and the Company therefore does not have the right to control the use of an identified asset, management concluded that the arrangement does not meet the definition of a lease under ASC 842. Membership fees are recognized in general and administrative expenses as incurred. The security deposit is recorded in prepaid expenses and other current assets and is refundable upon termination of the agreement, net of any amounts owed to the provider.
As
of June 30, 2026, remaining committed payments under the Las Vegas Office agreement totaled approximately $
Office
facility costs included in general and administrative expenses were $
Employment and Director Agreements
Chief Executive Officer Employment Agreement
On
May 31, 2025, the Company entered into an Employment Agreement with David Boulette, the Company’s Chief Executive Officer. Key
economic terms of the agreement include: (i) an annual base salary of $
The
first vested tranche of options was exercised in full on February 17, 2026. The aggregate exercise price of $
For
the three and six months ended June 30, 2026, the Company recognized base salary expense of $
Settlement of accrued compensation
On
June 10, 2026, the Company and Mr. Boulette settled accrued but unpaid compensation owed to Mr. Boulette through the issuance of shares
of the Company’s common stock in lieu of cash. The Company issued shares of common stock at $
| F-23 |
NOTE 6 — COMMITMENTS AND CONTINGENCIES (continued)
Board of Directors Agreements — Messrs. Walser and Aspin
Effective
September 28, 2021, the Company entered into substantially identical Board of Directors Agreements with Mr. Daryl Walser and Mr. Phil
Aspin. Each agreement provides for:
For
the three and six months ended June 30, 2026, the Company recognized aggregate compensation expense under these agreements of $
On
June 10, 2026, accrued but unpaid fees owed to Mr. Walser and Mr. Aspin were settled through the issuance of and shares
of common stock, respectively, at $ per share, extinguishing $
Independent Director Agreements — Messrs. Jamal and Shadman
On
May 27, 2025, the Company entered into an Independent Director Agreement with Mr. Rizvan Jamal providing for an annual fee of $
No
cash payments were made under these agreements from their respective effective dates through the settlement described below. On June
10, 2026, all fees accrued and unpaid under these agreements were settled through the issuance of an aggregate of shares of common
stock at $ per share ( shares to each of Mr. Jamal and Mr. Shadman), extinguishing $
Independent Contractor Agreement — Ms. Ramos
Ms. Carolina V. Ramos, the spouse of Mr. Boulette, the Company’s Chief Executive Officer, provides marketing services to the Company. Ms. Ramos originally provided services under an employment agreement dated September 28, 2021. On December 31, 2024, the Company and Ms. Ramos entered into an Independent Contractor Agreement Ratification, effective as of January 1, 2023, which ratified and replaced the original employment agreement and reflected the reclassification of Ms. Ramos’s status from employee to independent contractor. Under the ratified agreement, Ms. Ramos is compensated as specified in mutually agreed written statements of work or engagement letters, and is solely responsible for all taxes arising from her compensation; the Company does not withhold or remit payroll taxes on her behalf. The agreement remains in effect until terminated by either party on thirty days’ written notice. Because Ms. Ramos is an immediate family member of an executive officer of the Company, this arrangement constitutes a related-party arrangement (see Note 8 — Related Party Transactions).
For the three and six months ended June 30, 2026, the Company recognized compensation expense in respect of Ms. Ramos’s services of $ and $, respectively, within general and administrative expenses.
On
June 10, 2026, accrued but unpaid compensation owed to Ms. Ramos was settled through the issuance of shares of common stock at
$ per share, extinguishing $
| F-24 |
NOTE 6 — COMMITMENTS AND CONTINGENCIES (continued)
Interim Chief Financial Officer Engagement
On
September 22, 2025, the Board of Directors appointed Mr. Imran Firoz as Interim Chief Financial Officer at a monthly base fee of $
No
shares of common stock were issued to Mr. Firoz or to Spark Capital Investments, LLC in connection with the settlements described in
this Note. As of June 30, 2026, accrued but unpaid compensation under this engagement was $
Settlement of Related-Party Accrued Compensation
On
June 10, 2026, the Company issued an aggregate of shares of common stock at $ per share, the closing price of the Company’s
common stock on that date, valued at $
| Related Party | Shares Issued | Value of Shares Issued | ||||||
| David Boulette, Chief Executive Officer and Director | $ | |||||||
| Daryl Walser, Director | ||||||||
| Phil Aspin, Director | ||||||||
| Rizvan Jamal, Independent Director | ||||||||
| Ali Shadman, Independent Director | ||||||||
| Carolina V. Ramos, independent contractor (spouse of the Chief Executive Officer) | ||||||||
| Total | $ | |||||||
Differences
of less than $
The
shares issued in settlement were recorded at the fair value of the Company’s common stock on June 10, 2026, which approximated
the carrying amount of the liabilities extinguished. Accordingly, no gain or loss was recognized on these settlements for the three months
ended June 30, 2026. The $
As
a result of these settlements, together with other settlements and payments made during the period, no accrued but unpaid compensation
was owed to the Company’s Chief Executive Officer, to any of the directors named above, or to Ms. Ramos as of June 30, 2026. Accrued
expenses were $ as of June 30, 2026, compared with $
Separately, on June 10, 2026, the Company issued shares of common stock at $ per share, valued at $, to Hottest Media LLC in settlement of accounts payable. That issuance is presented in the accompanying consolidated statements of stockholders’ equity (deficit) as “Shares issued to settle accounts payable at $ per share,” is not included in the amounts described in this Note, and has not been classified as a related-party transaction.
| F-25 |
NOTE 6 — COMMITMENTS AND CONTINGENCIES (continued)
Global Alliance Consulting Agreement
On
January 1, 2026, the Company entered into a Business Consulting Agreement with Global Alliance Consulting Group (“Global Alliance”)
for a three-year term ending December 31, 2028. The agreement provides for (i) cash consideration of $
Because January 1, 2026, was a market holiday and the principal trading market was closed on the grant date, the Company used the closing price of $ per share on December 31, 2025, the immediately preceding trading day, to measure the grant-date fair value of the equity component, consistent with ASC 718-10-30-2. The grant-date fair value of $ ( shares × $ per share) is being recognized as stock-based compensation expense on a straight-line basis over the 36-month requisite service period.
For
the three and six months ended June 30, 2026, the Company recognized stock-based compensation expense under this agreement of $
and $, respectively, and cash consulting expense of $
Future
minimum cash payments under this agreement, assuming continuation through the stated three-year term, are approximately $
See Note 7 — Stock-Based Compensation for additional information regarding the equity component of this arrangement, including the unrecognized stock-based compensation expense expected to be recognized over the remaining service period.
Indemnification Arrangements
Pursuant to the Company’s Articles of Incorporation, Bylaws, and individual indemnification agreements with its directors and officers, the Company has agreed to indemnify, to the fullest extent permitted by Section 78.7502 of the Nevada Revised Statutes, its directors, officers, and certain other agents against expenses, judgments, fines, and amounts paid in settlement actually and reasonably incurred in connection with any threatened, pending, or completed action, suit, or proceeding by reason of the fact that the indemnitee is or was a director, officer, employee, or agent of the Company. The Company maintains directors’ and officers’ liability insurance coverage to mitigate exposure under these indemnification arrangements. As of June 30, 2026, no material indemnification claims have been asserted, and the Company has not recorded a liability in respect of these obligations.
Pending Litigation
From
time to time, the Company may become subject to legal proceedings, claims, and litigation arising in the ordinary course of business.
The Company is not currently a party to any legal proceedings the outcome of which, in the opinion of management, would have a material
adverse effect on the Company’s business, financial condition, results of operations, or cash flows. The Company is not aware of
any environmental proceedings to which a governmental authority is a party that would be required to be disclosed under Item 103(c)(3)
of Regulation S-K (including any such proceedings that involve potential monetary sanctions of $
| F-26 |
The grant-date fair value of the equity component was determined using the closing market price of the Company’s common stock on December 31, 2025, of $ per share, used because the Nasdaq Global Market was closed on January 1, 2026, for the federal holiday. This produced an aggregate grant-date fair value of $. The award is a graded-vesting service-only award containing no performance or market conditions; the Company’s accounting policy under ASC 718-10-35-8 is to recognize compensation cost for graded-vesting service-only awards on a straight-line basis over the requisite service period. Because the monthly tranches are equal in size, the straight-line and graded-vesting attribution methods produce the same result of $ of stock-based compensation expense per month over the 36-month requisite service period.
| Shares | Grant-Date FV | |||||||
| Granted on January 1, 2026 | $ | |||||||
| Vested through June 30, 2026 | ( | ) | $ | ( | ) | |||
| Unvested at June 30, 2026 | $ | |||||||
For
the three and six months ended June 30, 2026, the Company recognized $ and $, respectively, of stock-based compensation
expense related to this award, which is included in general and administrative expense in the accompanying consolidated statements of
operations. As of June 30, 2026, total unrecognized compensation cost related to the unvested portion of the award was $
The
cash component of the Consultant’s compensation is recognized as services are rendered. For the three and six months ended June
30, 2026, the Company recognized $
Total Stock-Based Compensation Expense.
Total stock-based compensation expense recognized in the accompanying consolidated statements of operations was $ and $ for the three and six months ended June 30, 2026, respectively. Each component is included in general and administrative expense. The following table summarizes stock-based compensation expense by recipient:
| Recipient | Three Months Ended June 30, 2026 | Six Months Ended June 30, 2026 | ||||||
| David Boulette — Chief Executive Officer | $ | $ | ||||||
| Global Alliance Consulting Group () | ||||||||
| Total stock-based compensation expense | $ | $ | ||||||
In
the accompanying consolidated statements of stockholders’ equity (deficit) for the six months ended June 30, 2026, the foregoing
$ is presented across two captions: (i) the line “Increase in additional paid-in capital for officer’s stock-based
compensation,” reflecting the $
For
the three months ended June 30, 2026, the consolidated statements of stockholders’ equity (deficit) reflect only the amortization
of deferred stock-based compensation of $, which reduced the deferred stock-based compensation balance from $
| F-27 |
NOTE 8 — RELATED PARTY TRANSACTIONS
The Company’s related-party transactions for the three and six months ended June 30, 2026, consist principally of compensation arrangements with the Company’s executive officers and directors, a consulting arrangement with the spouse of the Chief Executive Officer, a consulting engagement with the firm of which the Company’s Interim Chief Financial Officer is the managing principal, and consulting and financing arrangements with Global Alliance Consulting Group, an entity wholly owned by an officer of the Company. The principal economic terms of these arrangements are described in Note 6 — Commitments and Contingencies; this note describes the related-party character of the arrangements, the activity for the periods presented, and the related accrued balances at the reporting date.
Controlling Stockholder and “Controlled Company” Status
As
of June 30, 2026, Mr. David Boulette, the Company’s Chief Executive Officer and Chairman of the Board, beneficially owned approximately
Compensation Arrangements with Officers and Directors
Chief Executive Officer
Pursuant
to the Employment Agreement dated May 31, 2025, between the Company and Mr. Boulette (the “CEO Employment Agreement”), Mr.
Boulette serves as Chief Executive Officer of the Company at an annual base salary of $
For
the three and six months ended June 30, 2026, the Company recognized base salary expense of $
Amounts
accrued and owed to Mr. Boulette have accumulated since January 2018 under successive compensation arrangements, at monthly rates that
increased from $ in 2018 to $ in 2020, $ in 2024, and $ from August 2025 under the CEO Employment Agreement. During
the six months ended June 30, 2026, the balance owed to Mr. Boulette was reduced by (i) cash payments of $
Spouse of the Chief Executive Officer
Mrs.
Carolina V. Ramos, the spouse of Mr. Boulette, provides marketing services to the Company at an annual rate of $
| F-28 |
NOTE 8 — RELATED PARTY TRANSACTIONS (continued)
Directors
The
Company’s Board of Directors as of June 30, 2026, consisted of Mr. Boulette, Mr. Daryl Walser, Mr. Phil Aspin, Mr. Rizvan Jamal,
and Mr. Ali Shadman. Each of Messrs. Walser, Aspin, Jamal, and Shadman is a related person within the meaning of Item 404(a) of Regulation
S-K. Messrs. Walser and Aspin serve under written Board of Directors Agreements providing for cash compensation of $
On
June 10, 2026, all accrued but unpaid director compensation was settled through the issuance of an aggregate of shares of common
stock at $ per share, comprising shares to Mr. Walser ($
Interim Chief Financial Officer Services Through Spark Capital Investments, LLC
Mr.
Imran Firoz serves as Interim Chief Financial Officer of the Company pursuant to the engagement described in Note 6 — Commitments
and Contingencies. Mr. Firoz provides his services to the Company through Spark Capital Investments, LLC, a Delaware limited liability
company of which Mr. Firoz is the Managing Principal and which Mr. Firoz controls. Spark Capital Investments, LLC is a related person
within the meaning of Item 404(a) of Regulation S-K by virtue of Mr. Firoz’s position as an executive officer of the Company. For
the three and six months ended June 30, 2026, the Company recognized $ and $, respectively, of compensation expense in respect
of Mr. Firoz’s services under this engagement, accrued at $
Global Alliance Consulting Group
Mr. Javanshir (“Javan”) Khazali serves as the Company’s Vice President, Corporate Finance, Compliance and Investor Relations. Mr. Khazali is the sole shareholder and owner of Global Alliance Consulting Group (“Global Alliance”) and serves as a director of that entity. Global Alliance is therefore a related party of the Company within the meaning of ASC 850-10-20 as an entity that is controlled by, and in which a material ownership interest is held by, a member of the Company’s management. The transactions between the Company and Global Alliance described below were entered into while Mr. Khazali held his position with the Company. Mr. Khazali receives no compensation from the Company in his individual capacity; his compensation consists solely of the amounts payable to Global Alliance under the Business Consulting Agreement described below.
Business Consulting Agreement
On
January 1, 2026, the Company entered into a Business Consulting Agreement with Global Alliance for a term of ending December
31, 2028, providing for cash compensation of $ in the first year, escalating
The shares granted on January 1, 2026, are presented in the accompanying consolidated statements of stockholders’ equity (deficit) under the caption “Shares issued for services, consultant, valued at $ per share.”
| F-29 |
NOTE 8 — RELATED PARTY TRANSACTIONS (continued)
Convertible Promissory Note
Global
Alliance holds a convertible promissory note of the Company with a face value of $
Aggregate Related-Party Balances and Settlement
Accrued but unpaid compensation owed to the Company’s officers and directors, to the spouse of the Chief Executive Officer, and to Spark Capital Investments, LLC was as follows for the six months ended June 30, 2026:
| Related Party | Balance December 31, 2025 | Expense Recognized | Cash Payments | Non-Cash Settlements | Balance June 30, 2026 | |||||||||||||||
| David Boulette | $ | ( | ) | ( | ) | $ | ||||||||||||||
| Carolina V. Ramos | ( | ) | ||||||||||||||||||
| Daryl Walser | ( | ) | ||||||||||||||||||
| Phil Aspin | ( | ) | ||||||||||||||||||
| Rizvan Jamal | ( | ) | ||||||||||||||||||
| Ali Shadman | ( | ) | ||||||||||||||||||
| Subtotal | ( | ) | ( | ) | ||||||||||||||||
| Spark Capital Investments, LLC | ( | ) | ||||||||||||||||||
| Total | $ | ( | ) | ( | ) | $ | ||||||||||||||
Non-cash
settlements comprise $ satisfied on February 17, 2026 through the cancellation of accrued base salary upon exercise of the first
tranche of the CEO option award, and $ settled on June 10, 2026 through the issuance of common stock. Amounts settled in common
stock are presented above at the recorded carrying amount of the liabilities extinguished. The shares issued had an aggregate
value of $ based on the $ per share settlement price, and the corresponding issuance is recorded at $ in the accompanying
consolidated statements of stockholders’ equity (deficit); the differences of less than $
No accrued but unpaid compensation owed to the Company’s officers and directors, to the spouse of the Chief Executive Officer, or to Spark Capital Investments, LLC remained outstanding at June 30, 2026.
Cash Payments and Share Issuances to Related Parties During the Period
During
the six months ended June 30, 2026, the Company’s cash payments and share issuances to related parties consisted of:
| F-30 |
NOTE 9 — DEBT FINANCING
As of June 30, 2026, the Company’s outstanding indebtedness consisted of (i) convertible promissory notes payable to 1800 Diagonal Lending, LLC, (ii) convertible promissory notes payable to Boot Capital LLC, (iii) a non-convertible promissory note payable to D. Allison, (iv) a convertible promissory note payable to Global Alliance Consulting Group, and (v) a senior secured convertible promissory note payable to Streeterville Capital, LLC. The accounting policies applicable to the Company’s debt instruments are described in Note 2 to the Company’s audited consolidated financial statements included in its Annual Report on Form 10-K for the year ended December 31, 2025. There have been no material changes to those policies during the six months ended June 30, 2026, except as discussed in subsection (e) below with respect to the Streeterville Initial Note, which represents a new class of senior secured convertible promissory debt issued during the period and is accounted for with a bifurcated compound embedded derivative under ASC 815-15.
The following table summarizes the carrying value of the Company’s debt instruments as of June 30, 2026 and December 31, 2025:
| June 30, 2026 | December 31, 2025 | |||||||
| (Unaudited) | (Audited) | |||||||
| Convertible promissory notes — 1800 Diagonal Lending, LLC, face value | ||||||||
| Convertible promissory notes — Boot Capital LLC, face value | ||||||||
| Note payable — D. Allison (non-convertible), face value | ||||||||
| Convertible note payable — Global Alliance Consulting Group, face value | ||||||||
| Senior secured convertible promissory note — Streeterville Capital, LLC (a): | ||||||||
| Convertible note payable, face value | ||||||||
| Less: Unamortized debt discount | ( | ) | ||||||
| Net carrying value, Streeterville | ||||||||
| Total debt, net of discount | ||||||||
| Less: current portion | ( | ) | ( | ) | ||||
| Long-term debt, net of current portion | ||||||||
| (a) |
All
convertible notes outstanding at June 30, 2026, other than the Streeterville Initial Note, mature within
(a) Convertible promissory notes — 1800 Diagonal Lending, LLC
During
the period from March 17, 2025 through January 29, 2026, the Company issued seven (7) convertible promissory notes to 1800 Diagonal Lending,
LLC (“Diagonal”), aggregating $
During
the three months ended March 31, 2026, the Company issued two additional notes to Diagonal. Note 6 (DLL-1917) was issued on January 15, 2026, with a face value of $
| F-31 |
NOTE 9 — DEBT FINANCING (continued)
Also
during the three months ended March 31, 2026, the holder elected to convert Notes 2 and 3 in full into shares of the Company’s
common stock at the contractual fixed conversion price of $
During
the three months ended June 30, 2026, the Company issued one additional note to Diagonal. Note 8 was issued on May 6, 2026, with a face value of $
The following table presents the rollforward of the Company’s Diagonal convertible notes payable for the six months ended June 30, 2026:
| Face Value | Unamortized OID | Unamortized Deferred Financing Costs | Net
Carrying Value | |||||||||||||
| Balance, December 31, 2025 | $ | $ | ( | ) | $ | ( | ) | $ | ||||||||
| Issuance of Notes 6, 7 and 8 | ( | ) | ( | ) | ||||||||||||
| Cash payments — principal portion | ( | ) | ( | ) | ||||||||||||
| Conversion of Notes 2, 3, 4 and 5 to common stock | ( | ) | ( | ) | ||||||||||||
| Amortization of OID and DFC | ||||||||||||||||
| Balance, June 30, 2026 | $ | $ | ( | ) | $ | ( | ) | $ | ||||||||
On
April 28 and April 29, 2026, the holder converted the entire remaining balance of Note 4 (DLL-1889) at a conversion price of $
(b) Convertible promissory notes — Boot Capital LLC
During
the period from March 18, 2025 through January 30, 2026, the Company issued four (4) convertible promissory notes to Boot Capital LLC
(“Boot”), aggregating $
During
the three months ended March 31, 2026, the Company issued two additional notes to Boot. Boot Note #3 was issued on January 15, 2026,
with a face value of $
During
the three months ended June 30, 2026, no additional notes were issued to Boot and no conversions occurred. The Company made three monthly
installment payments, applying $
| F-32 |
NOTE 9 — DEBT FINANCING (continued)
During
the six months ended June 30, 2026, the Company also recorded a face value adjustment of $
The following table presents the rollforward of the Company’s Boot convertible notes payable for the six months ended June 30, 2026:
| Face Value | Unamortized OID | Net Carrying Value | ||||||||||
| Balance, December 31, 2025 | $ | $ | ( | ) | $ | |||||||
| Issuance of Boot Notes #3 and #4, including OID gross-up to contractual face | ( | ) | ||||||||||
| Cash payments — principal portion | ( | ) | ( | ) | ||||||||
| Reclassification of mis-coded 2025 wires (Boot #1) | ( | ) | ( | ) | ||||||||
| Conversion and extinguishment (Boot Note #1 final tranche and Boot Note #2) | ( | ) | ( | ) | ||||||||
| OID amortization | ||||||||||||
| Balance, June 30, 2026 | $ | $ | ( | ) | $ | |||||||
(c) Note Payable — D. Allison
On
June 21, 2024, the Company issued a non-convertible promissory note to D. Allison (the “Allison Note”) in the original principal
amount of $
Through
December 31, 2025, the Company had made four prepayments of $
During
the six months ended June 30, 2026, no further prepayments were made and the outstanding principal balance remained $
(d) Convertible Note Payable — Global Alliance
On
December 10, 2025, the Company issued a convertible promissory note (the “Global Alliance Note”) to Global Alliance Consulting
Group in the original principal amount of $
The
Global Alliance Note is accounted for as a single debt instrument under ASC 470-20, as amended by ASU 2020-06. The Company evaluated
the embedded conversion feature and concluded: (i) the conversion option satisfies the fixed-for-fixed criterion (a fixed dollar amount
of debt converts into a fixed number of shares at a fixed price) and is therefore not bifurcated as an embedded derivative under ASC
815-15; (ii) ASU 2020-06 eliminated the beneficial conversion feature (“BCF”) separation model, and accordingly no portion
of the proceeds is allocated to additional paid-in capital, notwithstanding that the conversion price of $
The
$
| F-33 |
NOTE 9 — DEBT FINANCING (continued)
(e) Senior Secured Convertible Promissory Note — Streeterville Capital, LLC
On
February 26, 2026, the Company issued a senior secured convertible promissory note (the “Streeterville Initial Note”) to
Streeterville Capital, LLC (“Streeterville”) in the original principal amount of $
In
connection with the issuance, the Company incurred and paid (or netted against the proceeds at closing) the following debt issuance costs:
a Maxim placement agent fee of $
The Company evaluated the embedded conversion feature of the Streeterville Initial Note under ASC 815-15 and concluded that the conversion option is required to be bifurcated from the host debt and accounted for separately as a derivative liability at fair value. Because the conversion strike resets to a fixed percentage of the lowest 10-day VWAP of the Company’s common stock preceding each conversion, the conversion feature does not satisfy the fixed-for-fixed indexation test under ASC 815-40-15 and accordingly does not qualify for equity classification. The bifurcated instrument (the “Compound Embedded Derivative”) is measured at fair value at each reporting date, with changes in fair value recognized in earnings as a non-operating gain or loss in the line item “Change in fair value of derivative liability.”
At
issuance on February 26, 2026, the Compound Embedded Derivative was valued at $
During
the six months ended June 30, 2026, the Company recognized $
During
the three months ended June 30, 2026, the holder completed nine conversions, converting $
The
Compound Embedded Derivative was remeasured at each reporting date, resulting in a fair value of $
The
aggregate impact of the Streeterville Initial Note on the Company’s condensed consolidated statements of operations for the six
months ended June 30, 2026, was a net pre-tax loss of $
| F-34 |
NOTE 9 — DEBT FINANCING (continued)
The following table presents the rollforward of the Streeterville Initial Note and the related Compound Embedded Derivative for the six months ended June 30, 2026:
| Face Value | Unamortized Discount | Accrued Interest | Compound Derivative (FV) | |||||||||||||
| Balance, December 31, 2025 | ||||||||||||||||
| Issuance, February 26, 2026 (face value) | ||||||||||||||||
| Aggregate discount established at issuance | ( | ) | ||||||||||||||
| Initial fair value of Compound Embedded Derivative | ||||||||||||||||
| Conversions into common stock (nine conversions) | ( | ) | ( | ) | ||||||||||||
| Discount amortization | ||||||||||||||||
| Stated interest accreted to Outstanding Balance | ||||||||||||||||
| Mark-to-market remeasurement, net | ( | ) | ||||||||||||||
| Balance, June 30, 2026 | $ | $ | ( | ) | $ | $ | ||||||||||
The Compound Embedded Derivative is presented as a separate non-current liability on the Company’s condensed consolidated balance sheet at June 30, 2026. The Streeterville Initial Note is the only Level 3 fair value instrument outstanding at the balance sheet date. There were no transfers into or out of Level 3 during the six months ended June 30, 2026.
(f) Interest Expense
Total interest expense recognized in the Company’s condensed consolidated statements of operations for the six months ended June 30, 2026 and June 30, 2025, with respect to the debt instruments described above was as follows:
| Six Months Ended June 30, 2026 | Six
Months Ended June 30, 2025 | |||||||||||||||||||
| Stated Interest | OID / Discount Amort. | DFC / Other Amort. | Total | Total | ||||||||||||||||
| Diagonal convertible notes | $ | $ | $ | $ | $ | |||||||||||||||
| Boot convertible notes | ||||||||||||||||||||
| D. Allison Note (2026 stated interest less prior-period over-accrual correction) | ( | ) | ( | ) | ||||||||||||||||
| Global Alliance Note (stated interest and OID amortization, net of correction) | ( | ) | ||||||||||||||||||
| Streeterville Initial Note | ||||||||||||||||||||
| Total interest expense | $ | $ | $ | $ | $ | |||||||||||||||
Amortization
of OID and DFC for the Diagonal and Boot convertible notes for the six months ended June 30, 2026, includes accelerated discount write-offs
recognized on the conversion or extinguishment of Diagonal Notes 2, 3, 4 and 5 and Boot Notes #1 and #2. With respect to the Boot notes
and Diagonal Notes 4, 5 and 8, the column captioned “DFC / Other Amortization” includes the amortization of one-time interest
required by the respective note agreements, including amounts accelerated upon conversion. With respect to the Streeterville Initial
Note, the $
For
the six months ended June 30, 2025, the Company’s outstanding debt was limited to (i) the D. Allison Note, which was outstanding
for the full period and contributed $
The disclosures in this footnote should be read in conjunction with Note 2 (Summary of Significant Accounting Policies) and Note 8 (Debt Financing) included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025.
We
have authorized capital stock consisting of shares of common stock, par value $ per share, and
As of June 30, 2026, shares of common stock were issued and outstanding, compared with shares issued and outstanding at December 31, 2025. All share counts and per-share amounts reflect the 4-to-1 reverse stock split effective February 11, 2025.
| F-35 |
NOTE 10 — STOCKHOLDERS’ EQUITY
Issuances of Common Stock
During
the six months ended June 30, 2026, the Company issued shares of common stock — shares during the three months
ended March 31, 2026, and shares during the three months ended June 30, 2026 — increasing common stock by $
Three Months Ended March 31, 2026
| ● | On
January 1, 2026, shares of restricted common stock were issued to Global Alliance Consulting Group as additional consideration
under a Business Consulting Agreement, valued at $ |
| ● | On
February 5, 2026, shares were issued to Hottest Media LLC in settlement of accounts payable of $ |
| ● | On
February 17, 2026, shares were issued to David Boulette, the Company’s Chief Executive Officer, upon his exercise
of the first vesting tranche of his stock options at the contractual exercise price of $ |
| ● | On
conversion dates between January 28, 2026 and January 30, 2026, an aggregate of shares were issued to 1800 Diagonal Lending
LLC ( shares) and Boot Capital LLC ( shares) in settlement of four Diagonal and Boot notes converted at $ per share,
valued at $ |
| ● | On
March 23, 2026, shares were issued to Maxim Group LLC in settlement of advisory services rendered under the Letter of Engagement
dated June 12, 2024, valued at $ |
Three Months Ended June 30, 2026
| ● | Between
April 17, 2026 and May 28, 2026, shares were sold under the Company’s at-the-market equity distribution program for
net proceeds of $ | |
| ● | Between
April 20, 2026 and June 22, 2026, shares were issued upon nine conversions of the Company’s senior secured convertible
promissory note, credited to equity at $ | |
| ● | On
April 29, April 30 and May 27, 2026, an aggregate of shares were issued to 1800 Diagonal Lending LLC upon conversion in full
of two notes, credited to equity at $ | |
| ● | On
June 10, 2026, shares were issued to Hottest Media LLC at $ per share, valued at $ | |
| ● | On
June 10, 2026, shares were issued at $ per share, valued at $ |
Differences
of less than $
| F-36 |
NOTE 10 — STOCKHOLDERS’ EQUITY (continued)
At-the-Market Offering
On
April 14, 2026, the Company entered into an Equity Distribution Agreement with Maxim Group LLC, as sales agent, and filed a prospectus
supplement covering the offer and sale of up to $
During
the three and six months ended June 30, 2026, the Company sold shares under the program at an average gross price of approximately
$ per share, for gross proceeds of $
Conversions of Convertible Notes
Senior Secured Convertible Promissory Note
Between
April 20, 2026 and June 22, 2026, the holder of the Company’s senior secured convertible promissory note effected nine conversions,
converting $
1800 Diagonal Lending Notes
During
the three months ended June 30, 2026, 1800 Diagonal Lending LLC converted the outstanding balances of two notes in three separate conversions.
The two remaining tranches of Note 4 were converted into and shares issued on April 29 and April 30, 2026, respectively,
and Note 5 was converted in full into shares issued on May 27, 2026, at conversion prices ranging from $
Hottest Media Settlements
On
February 5, 2026, the Company’s Board of Directors, by Written Consent in Lieu of a Meeting, approved a settlement of $
The
Company applied ASC 470-50, Modifications and Extinguishments, and measured the equity issued at a fair value of $
On
June 10, 2026, the Company issued a further shares of common stock to Hottest Media at $ per share, valued at $
The
$
| F-37 |
NOTE 10 — STOCKHOLDERS’ EQUITY (continued)
Settlement of Accrued Compensation with Related Parties
On
June 10, 2026, the Company issued shares of common stock at $ per share, valued at $
The shares were recorded at the fair value of the Company’s common stock on the settlement date, which approximated the carrying amount of the liabilities extinguished; accordingly, no gain or loss was recognized on these settlements. As a result of these settlements, together with other settlements and payments made during the period, no accrued but unpaid compensation was owed to the Company’s officers or directors at June 30, 2026. See Note 8 — Related Party Transactions for the allocation of the shares issued among the individual recipients.
Deferred Stock-Based Compensation
The
restricted shares issued to Global Alliance Consulting Group on January 1, 2026, valued at $, are recognized as stock-based
compensation on a straight-line basis over the 36-month requisite service period. The Company recognized $
CEO Stock Option Grant
On May 31, 2025, pursuant to the CEO’s Employment Agreement and the Company’s equity incentive plan, the Company granted to David Boulette, Chief Executive Officer, options to purchase shares of the Company’s common stock at an exercise price of $ per share (the “CEO Award”). The CEO Award is equity-classified under ASC 718-10-25-7, vests in five equal cliff tranches of options each (20% per tranche), and is contingent on continued service through each cliff vesting date. The first tranche of options vested on January 1, 2026.
The Company recognized stock-based compensation expense in fiscal 2025 in respect of the first vesting tranche; the Company’s applied recognition policy is to recognize compensation cost for short-duration cliff-vesting awards upon satisfaction of the requisite service condition. The position has been concurred upon by LAO Professionals as the Company’s PCAOB-registered auditor in connection with the fiscal year ended December 31, 2025, audit. Cumulative compensation cost recognized through the vesting date is mathematically identical to the result that would have been produced under straight-line attribution; the methodologies differ only in inter-period allocation.
Upon
completion of the requisite service period on January 1, 2026, the Company recognized cumulative compensation cost of $
No
compensation cost in respect of the CEO Award was recognized during the three months ended June 30, 2026. Compensation cost of $
On
February 17, 2026, the CEO exercised the first vesting tranche by means of an offset against accrued but unpaid CEO compensation of $
( shares × $ strike). The exercise was non-cash, increased equity by $
The remaining unvested options, with unrecognized grant-date fair value of $ measured at $ per option, will be recognized as stock-based compensation expense in subsequent reporting periods over their respective requisite service periods, subject to forfeiture if the CEO does not render service through each subsequent cliff date.
| F-38 |
NOTE 10 — STOCKHOLDERS’ EQUITY (continued)
Maxim Group Advisory Award
Pursuant to a Letter of Engagement dated June 12, 2024 (the “LOE”), the Company had agreed to issue Maxim Group LLC (“Maxim”), a FINRA- and SIPC-registered broker-dealer, an aggregate of shares of common stock under a two-tranche schedule ( upon execution and upon listing on a national exchange) as compensation for advisory services in connection with a contemplated equity-based capital raise via Form S-1. The implicit performance condition tied the share-based compensation to a successful equity-based capital raise; that capital raise was not pursued, and the original -share entitlement was waived by mutual agreement of the parties.
In
recognition of the advisory services that Maxim had nonetheless rendered in connection with the abandoned equity raise, the parties agreed
to a renegotiated settlement of shares as full and final consideration for advisory services rendered through the date of issuance.
The shares were issued on March 23, 2026, at a grant-date fair value of $
Maxim
is the Company’s sales agent under the Equity Distribution Agreement dated April 14, 2026, described under “At-the-Market
Offering” above, and received commissions of $
Reverse Stock Split
In February 2025, the Company announced a 4-to-1 reverse stock split effective February 11, 2025, as part of its strategy to uplist to a national securities exchange. Under the reverse split, every four shares of outstanding common stock were converted into one share. Shareholders entitled to fractional shares received one full share instead. All share counts and per-share amounts in these consolidated financial statements reflect the reverse split on a retroactive basis.
NOTE 11 — OFF-BALANCE SHEET ARRANGEMENTS
We have no off-balance sheet arrangements affecting our liquidity, capital resources, market risk support, credit risk support, or other benefits.
NOTE 12 — SUBSEQUENT EVENTS
The Company has evaluated subsequent events from July 1, 2026 through the date these consolidated financial statements were issued, and identified the following events requiring disclosure:
Conversion of Streeterville Note
On
July 1, 2026, Streeterville Capital, LLC (the “Holder”) delivered a conversion notice electing to convert $
After
giving effect to the conversion, the Holder reported a remaining outstanding balance under the Streeterville Note of $
On July 20, 2026, the Holder delivered a further conversion
notice electing to convert $
After giving effect to the conversion, the Holder
reported a remaining outstanding balance under the Streeterville Note of $
On July 24, 2026, the Holder delivered a further conversion
notice electing to convert $
After giving effect to the conversion,
the Holder reported a remaining outstanding balance under the Streeterville Note of $
The shares issued upon conversion were issued in reliance on the exemption from registration provided by Section 3(a)(9) of the Securities Act of 1933, as amended, as an exchange by the issuer with an existing security holder where no commission or other remuneration was paid or given directly or indirectly for the solicitation. Following these conversions, shares of common stock were issued and outstanding.
| F-39 |
NOTE 12 — SUBSEQUENT EVENTS (continued)
Securities Purchase Agreement with Streeterville Capital, LLC
On
July 21, 2026, the Company entered into a securities purchase agreement (the “Purchase Agreement”) with Streeterville Capital,
LLC, an accredited investor (the “Investor”), pursuant to which the Company agreed to sell, and the Investor agreed to purchase,
a secured convertible note in the aggregate original principal amount of $
Under
the Purchase Agreement, the Investor also has the right, for a period of 24 months after the closing, to purchase one additional note
in the principal amount of $
Terms of the Initial Note
| ● | The
Initial Note will be issued at an original issue discount of | |
| ● | The
Initial Note is convertible at the option of the Investor into common stock at a conversion price equal to | |
| ● | The Company may prepay the outstanding balance upon ten trading days’ prior written notice to the Investor, at an amount in cash equal to 110% of the portion of the outstanding balance the Company elects to prepay. | |
| ● | If the Nasdaq official closing price of the Company’s common stock is below the floor price for ten consecutive trading days, the Investor has the right, exercisable at any time in its sole and absolute discretion, to redeem up to the maximum monthly redemption amount defined in the Initial Note per calendar month. | |
| ● | Following the occurrence of a major trigger event or a minor trigger event, each as defined in the Initial Note, the Investor may, upon prior written notice, increase the outstanding balance by 10% for each major trigger event and 5% for each minor trigger event. The trigger effect may be applied no more than three times in respect of major trigger events and three times in respect of minor trigger events. | |
| ● | A trigger event that is not cured within five trading days following written demand by the Investor automatically becomes an event of default. Upon an event of default, the Investor may accelerate the Initial Note, with the outstanding balance becoming immediately due and payable in cash at the mandatory default amount defined in the Initial Note, and interest accruing on the outstanding balance from the date of the event of default at 15% per annum. |
Security Agreement
In connection with the Purchase Agreement and the Initial Note, at closing the Company and the Investor will enter into a security agreement pursuant to which the Company will grant a security interest in the collateral defined therein. The collateral includes, among other assets, all equity interests in the Company’s wholly or partially owned subsidiaries, all customer accounts, rights under insurance contracts and rights relating to clients underlying such insurance contracts, and all goods and equipment now owned or hereafter acquired by the Company.
Registration
The conversion shares issuable upon conversion of the Initial Note were registered pursuant to the Company’s shelf registration statement on Form S-3 (File No. 333-294416), filed with the Securities and Exchange Commission on March 18, 2026, and declared effective on March 24, 2026, and a prospectus supplement to the base prospectus forming a part of that registration statement, filed with the Commission on July 23, 2026.
Accounting
The Purchase Agreement was executed after the balance sheet date and is a non-recognized (Type II) subsequent event under ASC 855-10-25-3. No amounts relating to the Initial Note are reflected in the accompanying consolidated financial statements. The Company is evaluating the embedded conversion and redemption features of the Initial Note under ASC 815-15-25-1 to determine whether bifurcation from the host contract is required, consistent with the accounting applied to the Streeterville Note issued in February 2026, which resulted in the recognition of a compound embedded derivative liability at issuance. The results of that evaluation, including any day-one loss on issuance, will be reflected in the period in which the Initial Note is issued.
At-the-Market Offering
On July 20, 2026, the Company sold shares of
common stock under its at-the-market offering program at a weighted average price of $ per share, resulting in gross proceeds of
$
Conversion of 1800 Diagonal Lending Note 7
On July 30, 2026, 1800 Diagonal Lending, LLC delivered
a notice of conversion electing to convert $
Shares Outstanding
After giving effect to the transactions described above, shares of common stock were issued and outstanding.
Other than as disclosed above, management evaluated all other subsequent events through the date these consolidated financial statements were issued and concluded that there were no other events requiring adjustment to or disclosure in the consolidated financial statements.
| F-40 |
| ITEM 2. | MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
Forward-Looking Statements
This Quarterly Report Form 10-Q contains forward-looking statements. For this purpose, any statements contained in this Form 10-Q that are not statements of historical fact may be deemed to be forward-looking statements. Without limiting the foregoing, words such as “may,” “will,” “expect,” “believe,” “anticipate,” “estimate,” “continue,” or comparable terminology are intended to identify forward-looking statements. These statements by their nature involve substantial risks and uncertainties, and actual results may differ materially depending on a variety of factors, many of which are not within our control. Our actual results could differ materially from those set forth as a result of general economic conditions and changes in the assumptions used in making such forward-looking statements. The following discussion and analysis of our financial condition and results of operations should be read together with the unaudited condensed financial statements and accompanying notes and the other financial information appearing elsewhere in this report. The analysis set forth below is provided pursuant to applicable Securities and Exchange Commission regulations and is not intended to serve as a basis for projections of future events. All forward-looking statements speak only as of the date they are made. We undertake no obligation to update such statements to reflect events or circumstances that exist after the date on which they are made.
Our Company
Eva Live Inc. (the “Company”) was incorporated under the laws of the State of Nevada on August 27, 2002, as International Pit Boss Gaming, Inc. On October 1, 2002, the Company merged with Pro Roads Systems, Inc. (a Florida corporation), a public shell company traded on the Pink Sheets. Pro Roads Systems, Inc. had no operations before the merger. The purpose of the merger was to change the Company’s domicile from Florida to Nevada. From its inception to 2006, the Company designed and developed software for the gaming industry. The Company changed its name on February 14, 2006, to Logo Industries Corporation and, on November 18, 2008, to Malwin Ventures Inc. On February 11, 2014, the Company announced negotiations with Impact Future Media LLC, and its President/Founder, Francois Garcia, acquired 100% of Impact Future Media LLC and its media and entertainment assets. The Company announced the closing of this transaction on March 25, 2014. From March 2014 to September 28, 2021, the Company was involved in the entertainment, publishing, and interactive industries.
On September 28, 2021 (the “Acquisition Date”), the Company merged into EvaMedia Corp. (“EvaMedia”). Upon completion of the reverse merger, the Company acquired all issued and outstanding shares of EvaMedia’s capital stock. As a result, the Company issued 110,192,177 shares of the Company’s common stock to shareholders of EvaMedia, and immediately following the Acquisition, 111,169,525 shares of common stock were issued and outstanding. As a result, EvaMedia’s shareholders control 99.12% of the issued and outstanding shares of the Company on a fully diluted basis. Following the Acquisition, David Boulette of EvaMedia became the company’s CEO, director, and controlling shareholder. He appointed two additional board members from EvaMedia, Phil Aspin and Daryl Walser. Terry Fields remained the only board member of the Company.
We deemed EvaMedia as an accounting acquirer based on the following facts: (i) after the reverse merger, former shareholders of EvaMedia held a majority of the voting interest of the combined company; (ii) former Board of Directors of EvaMedia possess majority control of the Board of Directors of the combined company; (iii) members of the management of EvaMedia are responsible for the management of the combined company. As such, we have treated the financial statements of EvaMedia as the historical financial statements of the combined company, and (iv) EvaMedia’s relative size, measured in assets and revenues, is significantly larger than that of the Company.
We have identified the Company as the legal acquirer, as it is the entity that issued securities. Comparatively, we have identified EvaMedia as the legal acquiree, the entity whose equity interests are acquired.
Since September 28, 2021, the Company has operated at the junction of digital marketing and media monetization.
| 1 |
On September 9, 2021, the Company completed a reverse split in the amount of 1-for-150, changed the Company’s name to Eva Live Inc., changed the Company’s trading symbol from “MLWN” to “GOAI,” and executed an Acquisition Agreement resulting in a change of control of the Company. On September 10, 2021, the Financial Industry Regulatory Authority (“FINRA”) announced the effectiveness of a change in the Company’s name from “Malwin Ventures, Inc.” to “Eva Live, Inc.” and a change in the Company’s ticker symbol from “MLWN” to the new trading symbol “GOAI”. Trading under the new ticker symbol began at market opening on July 11, 2021.
We execute our business through the Eva Platform based on Artificial Intelligence, or AI, to match advertising campaigns to specific ad spots one at a time. Our system creates conversion mapping tables that allow us to increase conversion rates by analyzing those trends with optimized historical conversion rates and further capitalizing on and improving those rates. We leverage “big data,” an accumulation of data that is too large and complex for traditional database management tools to process. Since more companies are attempting to leverage big data to make strategic business decisions, we have built automated tools that analyze the data and feed the relevant information into our decision logic. We have designed our solution to optimize brand campaigns to create brand awareness and direct response campaigns with a fixed conversion point.
Corporate Information
The Company’s principal office is The Plaza, 1800 Century Park East, Suite 600. Our telephone number is (310) 229-5981, and our corporate website is www.eva.live.
Going Concern
Although our financial statements have been prepared on a going concern basis, we must raise additional capital in order to continue as a going concern. See “Risk Factors – Risks Related to the Company - There is doubt that the Company can continue as a “going concern” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025, and Note 3 — Going Concern in this report.
PLAN OF OPERATIONS
The Company’s near-term plan of operations focuses on: (i) continued execution of the Eva Platform digital advertising and media monetization business, which comprises all revenue other than the AI-driven marketing services described below and generated revenue of $3,042,487 and $6,294,021 for the three and six months ended June 30, 2026, compared with $4,138,712 and $7,820,232 for the comparative prior-year periods; (ii) growth of the AI-driven marketing services line of business introduced in the first quarter of 2026, which comprises solely the Jet.AI, Inc. and Braiin Limited service contracts described in Note 4 and generated revenue of $1,161,903 and $1,813,600 for the three and six months ended June 30, 2026, with no comparable revenue in either prior-year period; (iii) deployment of the cash proceeds received from the Streeterville Initial Note ($6,405,000 net of debt issuance costs) toward working capital and growth initiatives; and (iv) continued reduction of legacy convertible note obligations through scheduled cash repayments and holder-elected conversions, as described in Note 9.
As of June 30, 2026, the Company had 39,252,186 shares of common stock issued and outstanding and approximately $2,238,216 of unrestricted cash. The Company entered into an Equity Distribution Agreement with Maxim Group LLC on April 14, 2026, supporting an at-the-market offering of up to $100,000,000 in common stock under the Company’s effective Form S-3 shelf registration statement (Registration No. 333-294416, declared effective March 24, 2026). Sales under the Equity Distribution Agreement are at the Company’s discretion and may be used to fund operations, working capital needs, and other general corporate purposes.
Financial Conditions at June 30, 2026 and December 31, 2025
The following discussion compares the Company’s financial position at June 30, 2026, to its financial position at December 31, 2025.
| 2 |
Total Assets
Total assets increased by $8,059,262, from $16,315,862 at December 31, 2025, to $24,375,124 at June 30, 2026. The increase reflects $2,035,692 of cash generated principally from financing activities, the $3,000,000 equity interest in PSQUARED Inc. received in settlement of a receivable, $1,209,005 of marketable securities received as customer consideration and remeasured to fair value, $1,458,391 of growth in net accounts receivable, and $311,852 of capitalized website development costs.
Cash and Cash Equivalents
Cash and cash equivalents increased by $2,035,692, from $202,524 at December 31, 2025, to $2,238,216 at June 30, 2026. The increase was funded by financing activities rather than by operations; operating activities used cash of $5,229,216 during the six months ended June 30, 2026.
Accounts Receivable, Net
Accounts receivable, net increased by $1,458,391, from $16,006,624 at December 31, 2025, to $17,465,015 at June 30, 2026, net of an allowance for doubtful accounts of $1,379,519 at each date. Realization of this balance in cash is central to funding operations. Balances aged more than 90 days from invoice date were $15,408,659, or approximately 88% of the net balance, net of the $(3,000,000) credit arising from the settlement of Psquared Inc. receivables in equity; balances aged 90 days or less totaled $2,056,356. See Note 2 — Summary of Significant Accounting Policies for the full aging schedule.
Marketable Securities
The Company recorded marketable securities of $1,209,005 at June 30, 2026 (none at December 31, 2025). The marketable securities represent common shares of customers received as non-cash consideration under investor relations services contracts, carried at fair value. The Company recognized an unrealized gain of $495,405 on these securities for the six months ended June 30, 2026. In addition, the Company holds a $3,000,000 non-marketable equity interest in PSQUARED Inc. received in settlement of accounts receivable, which is classified as a non-current asset.
Original Issue Discount and Deferred Financing Costs, Net
Original issue discount, net increased by $49,997, from $73,482 at December 31, 2025, to $123,479 at June 30, 2026, and deferred financing costs, net decreased by $5,181, from $18,044 to $12,863, in each case reflecting discounts and costs added on notes issued during the period less amortization and amounts written off on conversion. These balances are presented as separate current assets and are not netted against the related notes payable.
Property and Equipment, Net
Property and equipment, net decreased by $494, from $14,919 at December 31, 2025, to $14,425 at June 30, 2026, reflecting depreciation for the period. The Company did not acquire or dispose of significant property and equipment during the period.
Accounts Payable and Payroll Liabilities
Accounts payable and payroll liabilities decreased by $2,933,844, from $2,933,844 at December 31, 2025, to nil at June 30, 2026. The balance was settled substantially in common stock rather than cash, including $4,532,974 of shares issued in settlement of accounts payable during the six months ended June 30, 2026.
| 3 |
Accrued Expenses
Accrued expenses decreased by $2,633,885, from $2,633,885 at December 31, 2025, to nil at June 30, 2026, reflecting the June 10, 2026, settlement of accrued compensation owed to officers, directors and the spouse of the Chief Executive Officer through the issuance of 825,483 shares of common stock valued at $1,882,094, together with cash payments made during the period.
Accrued Interest
Accrued interest increased by $215,331, from $68,601 at December 31, 2025, to $283,932 at June 30, 2026, principally reflecting stated interest on the Streeterville Initial Note that accretes to the outstanding balance rather than being paid in cash.
Notes Payable, Current Portion
Notes payable (current) increased by $340,021, from $985,330 at December 31, 2025, to $1,325,351 at June 30, 2026, comprising Diagonal of $913,211, Boot of $202,140, the D. Allison Note of $100,000 and the Global Alliance Note of $110,000. These are face amounts; unamortized original issue discount of $123,479 and deferred financing costs of $12,863 are presented as separate current assets and are not netted against the notes. The change comprised:
Cash movements during the period:
| ● | $1,043,000 of cash proceeds from the issuance of new convertible promissory notes, comprising Diagonal Note 6 of $100,000 and Note 7 of $350,000 in the first quarter, Diagonal Note 8 of $393,000 in the second quarter, and Boot Notes #3 and #4 aggregating $200,000 in the first quarter. |
| ● | $(298,429) of cash repayments of note principal, comprising $266,069 on the Diagonal notes and $32,360 on the Boot notes; total cash paid to these lenders including interest was $327,406. |
Non-cash movements during the period:
| ● | $(578,326) of principal converted into common stock, comprising Diagonal Notes 2, 3, 4 and 5 of $450,981 and Boot Notes #1 and #2 of $127,345. |
| ● | $207,810 of original issue discount and deferred financing costs added to face value on the notes issued during the period ($186,810 of OID, comprising Diagonal of $152,310 and Boot of $34,500, and $21,000 of deferred financing costs), together with a $34,500 face value adjustment to gross Boot Notes #3 and #4 to their contractual face value. |
| ● | $(34,038) reclassification of payments originally recorded against Traffic Purchase expense in the fourth quarter of 2025 that related to Boot Note #1. The D. Allison Note of $100,000 and the Global Alliance Note of $110,000 were unchanged during the period. |
Deferred Revenue
The contract liability of $549,803 at March 31, 2026, was fully recognized as revenue during the three months ended June 30, 2026, and no deferred revenue remained at June 30, 2026 (none at December 31, 2025).
Convertible Note Payable, Net of Unamortized Discount
The Company recorded a convertible note payable, net of unamortized discount, of $1,099,862 at June 30, 2026 (none at December 31, 2025), representing the $6,475,000 face value of the Streeterville Initial Note outstanding at that date less unamortized discount of $5,375,138. The note matures February 26, 2028, and is classified as a long-term liability.
| 4 |
Derivative Liability
The Company recorded a derivative liability of $4,562,001 at June 30, 2026 (none at December 31, 2025). The derivative liability represents the compound embedded derivative bifurcated from the Streeterville Initial Note under ASC 815-15, initially recognized at $6,662,000 on February 26, 2026, reduced by $706,541 reclassified to additional paid-in capital on conversions during the second quarter and remeasured to fair value at each reporting date. It is classified within Level 3 of the fair value hierarchy.
Stockholders’ Equity
Total stockholders’ equity increased by $7,409,776, from $9,694,202 at December 31, 2025, to $17,103,978 at June 30, 2026.
| ● | Common stock and additional paid-in capital increased by an aggregate of $19,598,609, reflecting $11,269,169 of stock-based compensation and shares issued for services (including $7,611,669 of officer stock-based compensation recognized with no shares issued), shares issued in settlement of accounts payable, accrued related-party liabilities and convertible notes, and $456,166 of net proceeds from at-the-market sales of common stock. |
| ● | Deferred stock-based compensation of $(1,875,000) was recognized as a contra-equity balance representing the unvested portion of equity awards granted during the period. |
| ● | Accumulated deficit increased by $10,313,833, reflecting the net loss for the six months ended June 30, 2026, from $20,342,362 at December 31, 2025 to $30,656,195 at June 30, 2026. |
Working Capital
The Company’s working capital increased from $9,679,283 at December 31, 2025, to $19,439,564 at June 30, 2026, an increase of $9,760,281, reflecting total current assets of $21,048,847 and total current liabilities of $1,609,283. Working capital is composed principally of non-cash assets: net accounts receivable of $17,465,015 represented approximately 83% of total current assets and marketable securities a further $1,209,005, while cash represented approximately 11%. See Note 3 — Going Concern.
RESULTS OF OPERATIONS
Three Months Ending June 30, 2026 and 2025
The following table summarizes the Company’s results of operations for the three months ended June 30, 2026, compared to the three months ended June 30, 2025:
| Three Months Ended | Three Months Ended | $ Change | % Change | |||||||||||||
| June 30, 2026 | June 30, 2025 | (2026 vs 2025) | (2026 vs 2025) | |||||||||||||
| Revenue | ||||||||||||||||
| Total revenue | $ | 4,204,390 | $ | 4,138,712 | $ | 65,678 | 1.6 | % | ||||||||
| Operating expenses | ||||||||||||||||
| General and administrative | 2,017,316 | 331,451 | 1,685,865 | 508.6 | % | |||||||||||
| Media traffic purchase | 3,049,042 | 1,175,780 | 1,873,262 | 159.3 | % | |||||||||||
| Amortization and depreciation | 245 | 380 | (135 | ) | -35.5 | % | ||||||||||
| Total operating expenses | 5,066,603 | 1,507,611 | 3,558,992 | 236.1 | % | |||||||||||
| Operating income (loss) | (862,213 | ) | 2,631,101 | (3,493,314 | ) | -132.8 | % | |||||||||
| Other income (expense) | ||||||||||||||||
| Interest expense | (1,178,007 | ) | (6,000 | ) | (1,172,007 | ) | 19,533.5 | % | ||||||||
| Unrealized gain (loss) on marketable securities | 636,005 | - | 636,005 | NM | ||||||||||||
| Change in fair value of derivative liability | (345,542 | ) | - | (345,542 | ) | NM | ||||||||||
| Loss on settlement of payable | - | - | - | NM | ||||||||||||
| Loss on issuance of convertible note | - | - | - | NM | ||||||||||||
| Total other income (expense) | (887,544 | ) | (6,000 | ) | (881,544 | ) | 14,692.4 | % | ||||||||
| Net loss | $ | (1,749,757 | ) | $ | 2,625,101 | $ | (4,374,858 | ) | -166.7 | % | ||||||
| 5 |
Six Months Ending June 30, 2026 and 2025
The following table summarizes the Company’s results of operations for the six months ended June 30, 2026, compared to the six months ended June 30, 2025:
Six Months Ended June 30, 2026 | Six Months Ended June 30, 2025 | $ Change (2026 vs 2025) | % Change (2026 vs 2025) | |||||||||||||
| Total revenue | $ | 8,107,621 | $ | 7,820,232 | $ | 287,389 | 3.7 | % | ||||||||
| Operating expenses | ||||||||||||||||
| General and administrative | 11,297,250 | 708,836 | 10,588,414 | 1,493.8 | % | |||||||||||
| Media traffic purchase | 6,778,484 | 2,476,546 | 4,301,938 | 173.7 | % | |||||||||||
| Amortization and depreciation | 494 | 787 | (293 | ) | -37.2 | % | ||||||||||
| Total operating expenses | 18,076,228 | 3,186,169 | 14,890,059 | 467.3 | % | |||||||||||
| Operating income (loss) | (9,968,607 | ) | 4,634,063 | (14,602,670 | ) | -315.1 | % | |||||||||
| Other income (expense) | ||||||||||||||||
| Interest expense | (1,677,089 | ) | (13,268 | ) | (1,663,821 | ) | 12,539.7 | % | ||||||||
| Unrealized gain on marketable securities | 495,405 | - | 495,405 | NM | ||||||||||||
| Change in fair value of derivative liability | 1,393,458 | - | 1,393,458 | NM | ||||||||||||
| Loss on settlement of payable | (310,000 | ) | - | (310,000 | ) | NM | ||||||||||
| Loss on issuance of convertible note | (247,000 | ) | - | (247,000 | ) | NM | ||||||||||
| Total other income (expense) | (345,226 | ) | (13,268 | ) | (331,958 | ) | 2,501.9 | % | ||||||||
| Net income (loss) | $ | (10,313,833 | ) | $ | 4,620,795 | $ | (14,934,628 | ) | -323.2 | % | ||||||
Revenue
Total revenue was $4,204,390 for the three months ended June 30, 2026, compared to $4,138,712 for the three months ended June 30, 2025, an increase of $65,678, or 1.6%. For the six months ended June 30, 2026, total revenue was $8,107,621, compared to $7,820,232 for the six months ended June 30, 2025, an increase of $287,389, or 3.7%. While total revenue was substantially flat between periods, the composition of revenue changed materially. Brand marketing revenue was $4,204,390 for the three months ended June 30, 2026, compared to $48,000 in the comparative quarter, and $6,781,329 for the six months ended June 30, 2026, compared to $142,074 for the six months ended June 30, 2025. XML revenue was nil for the three months ended June 30, 2026, compared to $4,090,712 in the comparative quarter, and $1,326,292 for the six months ended June 30, 2026, compared to $7,678,158 for the six months ended June 30, 2025. The Company’s revenue base has therefore shifted almost entirely from XML syndication to brand marketing and customer acquisition campaigns, and the Company generated no XML revenue during the second quarter of fiscal 2026. Presented on the disaggregated basis in Note 4, digital advertising and media monetization revenue — comprising all revenue other than the Jet.AI and Braiin arrangements — was $3,042,487 and $6,294,021 for the three and six months ended June 30, 2026, compared with $4,138,712 and $7,820,232 in the prior-year periods, while AI-driven marketing services revenue, comprising solely those two customers, was $1,161,903 and $1,813,600, with no comparable prior-year revenue. Revenue is generated primarily from media buying, customer acquisition campaigns, and investor relations services. A portion of revenue was settled in non-cash consideration: equity securities with a fair value at receipt of $713,600 were received under customer contracts during the six months ended June 30, 2026.
| 6 |
General & Administrative Costs
General and administrative expense was $2,017,316 for the three months ended June 30, 2026, compared to $331,451 for the three months ended June 30, 2025, an increase of $1,685,865, or 508.6%. For the six months ended June 30, 2026, general and administrative expense was $11,297,250, compared to $708,836 for the six months ended June 30, 2025, an increase of $10,588,414, or 1,493.8%. The prior-year amounts group professional fees with general and administrative expense to conform to the current-period caption.
The six-month increase is predominantly non-cash. It includes $7,611,669 of stock-based compensation recognized on the January 1, 2026, vesting of the first tranche of the Chief Executive Officer’s option award. Excluding that charge, general and administrative expense for the six months ended June 30, 2026, was $3,685,581, comprising principally professional and consulting fees of approximately $2,529,686 (consulting fees of $1,491,647, professional fees of $799,864, legal fees of $189,801 and review and audit fees of $48,375), advertising and promotion of $624,208, salaries and wages of $411,000, payroll expenses of $46,380, insurance of $30,351, office supplies of $18,809 and rent of $8,887, with the balance comprising bank service charges, server fees and other administrative costs.
For the three months ended June 30, 2026, no stock-based compensation was recognized in respect of the option award, and general and administrative expense of $2,017,316 comprised principally professional and consulting fees of approximately $1,202,525 (consulting fees of $573,610, professional fees of $428,364, legal fees of $189,801 and review and audit fees of $10,750), advertising and promotion of $509,733 and salaries and wages of $205,500. Sequentially, general and administrative expense declined from $9,279,934 in the first quarter of fiscal 2026 to $2,017,316 in the second quarter, principally reflecting the non-recurrence of the option-award charge and of the professional and consulting fees associated with the fiscal 2025 Annual Report on Form 10-K and the Streeterville Note placement.
Media Traffic Purchase
Media traffic purchase expense was $3,049,042 for the three months ended June 30, 2026, compared to $1,175,780 for the three months ended June 30, 2025, an increase of $1,873,262, or 159.3%. For the six months ended June 30, 2026, media traffic purchase expense was $6,778,484, compared to $2,476,546 for the six months ended June 30, 2025, an increase of $4,301,938, or 173.7%. The increase reflects an expansion in media buying and customer acquisition activity through Hottest Media LLC, Advertala PTE, Wise Ltd., and other media partners in support of the higher revenue base. Media traffic purchase expense generally moves directionally with revenue, and the year-over-year increase also reflects a change in the mix of customer acquisition channels.
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Amortization and Depreciation
Amortization and depreciation expense was $245 for the three months ended June 30, 2026, compared to $380 for the three months ended June 30, 2025, a decrease of $135, or 35.5%. For the six months ended June 30, 2026, amortization and depreciation expense was $494, compared to $787 for the six months ended June 30, 2025, a decrease of $293, or 37.2%. The decrease reflects the continuing depreciation of property and equipment that is approaching the end of its useful life. The Company did not acquire or dispose of significant property and equipment during the period.
Operating Income (Loss)
The Company recognized an operating loss of $862,213 for the three months ended June 30, 2026, compared to operating income of $2,631,101 for the three months ended June 30, 2025, an unfavorable variance of $3,493,314. For the six months ended June 30, 2026, the Company recognized an operating loss of $9,968,607, compared to operating income of $4,634,063 for the six months ended June 30, 2025, an unfavorable variance of $14,602,670. The change in operating results primarily reflects the non-cash equity-based compensation recognized within general and administrative expense in the first quarter of 2026, together with higher media traffic purchase expense supporting the revenue base, partially offset by a modest increase in revenue.
Interest Expense
Interest expense was $1,178,007 for the three months ended June 30, 2026, compared to $6,000 for the three months ended June 30, 2025. For the six months ended June 30, 2026, interest expense was $1,677,089, compared to $13,268 for the six months ended June 30, 2025, an increase of $1,663,821. Of the six-month amount, $1,388,768 represents amortization of debt discount, original issue discount and deferred financing costs, including accelerated amortization recognized on notes converted during the period, consistent with the add-backs presented in the condensed consolidated statements of cash flows, and $288,321 represents stated and other interest, of which $201,670 relates to the senior secured convertible promissory note issued to Streeterville Capital, LLC that accretes to the outstanding balance rather than being paid in cash. Only a small portion of interest expense for the period was paid in cash. See Note 9 — Debt Financing for further details.
Unrealized Gain (Loss) on Marketable Securities
The Company recognized an unrealized gain on marketable securities of $636,005 for the three months ended June 30, 2026, and an unrealized gain of $495,405 for the six months ended June 30, 2026 (no comparable amounts in the prior-year periods). The amounts reflect the mark-to-market adjustment of common shares of Jet.AI Inc. and Braiin Limited received as non-cash consideration under investor relations services contracts.
Change in Fair Value of Derivative Liability
The Company recognized a loss on the change in fair value of derivative liability of $345,542 for the three months ended June 30, 2026, and a net gain of $1,393,458 for the six months ended June 30, 2026 (no comparable amounts in the prior-year periods). The amounts reflect the mark-to-market remeasurement of the compound embedded derivative bifurcated from the senior secured convertible promissory note issued to Streeterville Capital, LLC in February 2026. The derivative was initially recognized at a fair value of $6,662,000 on the issuance date, was remeasured to $4,923,000 at March 31, 2026 and to $4,562,001 at June 30, 2026, and was reduced by $706,541 reclassified to additional paid-in capital on conversions during the second quarter. The fair value measurement is sensitive to changes in the Company’s common stock price, volatility, and the conversion-trigger probability. See Note 2 — Summary of Significant Accounting Policies for further detail.
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Loss on Settlement of Payable
The Company recognized a loss on settlement of payable of $310,000 for the six months ended June 30, 2026, and no such loss for the three months ended June 30, 2026 (no comparable amounts in the prior-year periods). The loss reflects the issuance of 500,000 shares of common stock to Hottest Media LLC in February 2026 in settlement of outstanding trade accounts payable. The shares were issued at 80% of the closing price of the Company’s common stock on February 5, 2026; the loss reflects the difference between the carrying value of the settled payable ($1,240,000) and the fair value of the common stock issued ($1,550,000).
Loss on Issuance of Convertible Note
The Company recognized a loss on issuance of convertible note of $247,000 for the six months ended June 30, 2026, and no such loss for the three months ended June 30, 2026 (no comparable amounts in the prior-year periods). The loss reflects the excess of the initial fair value of the compound embedded derivative bifurcated from the Streeterville Capital senior secured convertible promissory note ($6,662,000) over the available debt discount allocation ($6,415,000) on the issuance date of February 26, 2026. See Note 9 — Debt Financing for further details.
Net Loss
The Company recognized a net loss of $1,749,757, or $(0.05) per basic and diluted share, for the three months ended June 30, 2026, compared to net income of $2,625,101, or $0.08 per basic and diluted share, for the three months ended June 30, 2025. For the six months ended June 30, 2026, the Company recognized a net loss of $10,313,833, or $(0.28) per basic and diluted share, compared to net income of $4,620,795, or $0.15 per basic and diluted share, for the six months ended June 30, 2025. The change from net income to net loss is driven predominantly by non-cash charges rather than cash costs: $11,269,169 of stock-based compensation and shares issued for services recognized within general and administrative expense, and $1,388,768 of debt discount, original issue discount and deferred financing cost amortization within interest expense. Cash used in operating activities for the six months was $5,229,216. The weighted-average number of common shares outstanding, basic and diluted, was 37,331,301 for the three months and 36,676,809 for the six months ended June 30, 2026, compared to 31,341,436 in each of the prior-year periods.
LIQUIDITY AND CAPITAL RESOURCES
As of June 30, 2026, the Company had cash and cash equivalents of $2,238,216, compared to $202,524 at December 31, 2025. At June 30, 2026, the Company had total current assets of $21,048,847, total current liabilities of $1,609,283 and working capital of $19,439,564. Accounts receivable, net of an allowance for doubtful accounts of $1,379,519, was $17,465,015, and realization of that balance is central to funding operations. The principal source of liquidity during the six months ended June 30, 2026, was the senior secured convertible promissory note issued to Streeterville Capital, LLC in February 2026 (the “Streeterville Initial Note”), which generated net cash proceeds of approximately $6,970,000. The Streeterville Initial Note has a face value of $7,560,000; cash proceeds at issuance were reduced by an original issue discount of $560,000, an investor closing expense reimbursement of $30,000, placement agent fees of $402,500 paid to Maxim Group LLC, and legal fees of $152,500 paid to Sichenzia Ross Ference Carmel LLP, in each case netted from the wire at closing or paid promptly thereafter. The Company also received $1,043,000 of proceeds from other promissory notes and $456,166 of net proceeds from at-the-market sales of common stock during the period. See Note 9 — Debt Financing for further information regarding the terms of these notes.
Net cash used in operating activities was $5,229,216 for the six months ended June 30, 2026, compared to net cash provided by operating activities of $2,341 for the six months ended June 30, 2025. The increase in operating cash usage primarily reflects the increase in accounts receivable arising from the timing of customer collections and the settlement of previously accrued obligations, partially offset by non-cash add-backs in the reconciliation of net loss to operating cash flow, including stock-based compensation of $8,011,669, shares issued for services of $3,257,500, amortization of debt discount, original issue discount and deferred financing costs of $1,388,768 and stated interest accreted to the Streeterville Initial Note of $201,670, less the $1,393,458 net gain on remeasurement of the compound embedded derivative and $1,209,005 of marketable securities received as consideration.
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Net cash used in investing activities was $311,852 for the six months ended June 30, 2026, compared to $7,581 for the six months ended June 30, 2025.
Net cash provided by financing activities was $7,576,760 for the six months ended June 30, 2026, compared to $189,963 for the six months ended June 30, 2025. Financing activities comprised $6,970,000 of net proceeds from the Streeterville Initial Note, $1,043,000 of proceeds from other promissory notes and $456,166 of net proceeds from the at-the-market equity program, less $327,406 of note repayments and $565,000 of debt issuance costs paid. Net cash increased $2,035,692 during the six months ended June 30, 2026, to $2,238,216 at period end, compared to an increase of $184,723 to $261,079 in the prior-year period.
Approximately 88% of the Company’s net accounts receivable balance at June 30, 2026, was outstanding for more than 90 days from the invoice date. Management is actively engaged with the Company’s largest counterparties regarding the collection of these balances and, based on counterparty confirmations received to date, the Company’s historical collection experience with these counterparties, and the absence of disputes regarding amounts owed, management expects substantially all of these balances to be collected within the look-forward period.
On April 14, 2026, the Company entered into an Equity Distribution Agreement with Maxim Group LLC providing for the offer and sale, from time to time and at the Company’s discretion, of shares of the Company’s common stock having an aggregate offering price of up to $100,000,000 in transactions deemed to be “at-the-market offerings” under Rule 415 promulgated under the Securities Act of 1933. Sales under the Equity Distribution Agreement are conducted under the Company’s effective Form S-3 shelf registration statement (Registration No. 333-294416). Maxim is entitled to a fixed commission of 3.0% of the gross sales price of shares sold. The Equity Distribution Agreement has a term of twelve months from execution. From execution through June 30, 2026, the Company sold 114,384 shares under the agreement for gross proceeds of approximately $470,274 and net proceeds of $456,166. Because the Company’s public float is below $75,000,000, sales under the Form S-3 are limited by General Instruction I.B.6 thereto; see Note 3 — Going Concern.
GOING CONCERN CONSIDERATION
Although the accompanying unaudited condensed consolidated financial statements have been prepared on a going concern basis, management has evaluated, in accordance with FASB Accounting Standards Codification 205-40, whether the conditions and events described in Note 3 — Going Concern, considered in the aggregate, raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date these financial statements are issued. Management has concluded that the conditions and events described in Note 3 — including the operating loss and negative operating cash flow for the six months ended June 30, 2026, an accumulated deficit of $30,656,195 at June 30, 2026, the concentration of working capital in aged accounts receivable, elevated media traffic purchase costs as a percentage of revenue, and the contingent redemption right of the Streeterville Initial Note — raise substantial doubt, and that management’s plans do not alleviate that substantial doubt. See Note 3 — Going Concern for the full going-concern discussion.
CRITICAL ACCOUNTING POLICIES AND SIGNIFICANT JUDGMENTS AND ESTIMATES
We have based our management’s discussion and analysis of our financial condition and results of operations on our financial statements, prepared in accordance with U.S. generally accepted accounting principles. In preparing our financial statements, we are required to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities as of the date of the financial statements, and the reported amounts of revenues and expenses for the reporting periods. Our actual results may differ from these estimates, and such differences could be material and uncertain, particularly in the current economic environment.
In more detail, we have described significant accounting policies in Note 2 of our annual financial statements included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025. We evaluate our critical accounting estimates and judgments, as required by our policies, on an ongoing basis and update them as necessary in response to changing conditions.
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JOBS ACT ACCOUNTING ELECTION
We are an “emerging growth company,” as defined in the JOBS Act. Under the JOBS Act, emerging growth companies can delay adopting new or revised accounting standards issued after the enactment of the JOBS Act until those standards apply to private companies. As an emerging growth company, we have elected to use the extended transition period; as a result, the Company may delay the adoption of certain accounting standards until the standards apply to private companies.
OFF-BALANCE SHEET ARRANGEMENTS AND CONTRACTUAL OBLIGATIONS
We have not engaged in any off-balance sheet arrangements as defined in Item 303(b) of the SEC’s Regulation S-K. We did not have any relationships with unconsolidated organizations or financial partnerships, such as structured finance or special purpose entities that would have been established to facilitate off-balance sheet arrangements or other contractually narrow or limited purposes.
RECENT ACCOUNTING PRONOUNCEMENTS
The amendments in the ASU are effective for fiscal years beginning after January 1, 2020, including interim periods within those fiscal years. Early adoption of the standard is permitted, including adoption in interim or annual periods for which financial statements have not yet been issued. We have adopted this ASU as of January 1, 2020, for ASC 606, Revenue Recognition, and Amended ASU 2016-02, Leases (Topic 840). The ASU is currently not expected to have a material impact on our consolidated financial statements. While we have described significant accounting policies in more detail in Note 2 of our annual financial statements included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025, we believe the accounting policies as described in Note 2 to be critical to the judgments and estimates used in the preparation of our financial statements.
| ITEM 3. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS. |
Pursuant to Item 305(e) of Regulation S-K (§ 229.305(e)), the Company is not required to provide the information required by this Item as it is a “smaller reporting company,” as defined by Item 10(f)(1) of Regulation S-K (17 C.F.R. § 229.10(f)(1)).
| ITEM 4. | CONTROLS AND PROCEDURES. |
Evaluation of Disclosure Controls and Procedures
Under the supervision and with the participation of our management, including our Chief Executive Officer and our Chief Financial Officer (together, the “Certifying Officers”), we carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act. Based on the foregoing, our Certifying Officers concluded that our disclosure controls and procedures were not effective as of the end of the period covered by this Report.
Disclosure controls and procedures are controls and other procedures designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is recorded, processed, summarized, and reported within the periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is accumulated and communicated to management, including our Certifying Officers, or persons performing similar functions, as appropriate, to allow timely decisions regarding required disclosure.
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Management’s Report on Internal Controls over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rule 13a -15(f) under the Securities Exchange Act, as amended. Management, with the participation of the Chief Executive Officer, evaluated the effectiveness of the Company’s internal control over financial reporting as of June 30, 2026. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control – Integrated Framework (2013 Framework). Our internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of our consolidated financial statements for external reporting purposes in accordance with GAAP. Our internal control over financial reporting includes those policies and procedures that:
(1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of our company,
(2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of consolidated financial statements in accordance with GAAP, and that our receipts and expenditures are being made only in accordance with authorizations of our management and directors, and
(3) provide reasonable assurance regarding the prevention or timely detection of unauthorized acquisition, use, or disposition of our assets that could have a material effect on the consolidated financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect errors or misstatements in our consolidated financial statements. Additionally, projections of any evaluation of effectiveness in future periods are subject to the risk that controls may become inadequate due to changes in conditions or that the degree of compliance with policies or procedures may deteriorate. Management assessed the effectiveness of our internal control over financial reporting as of June 30, 2026. Based on our assessments, management determined that we did not maintain effective internal control over financial reporting as of June 30, 2026, due to the material weakness in our internal controls, due to inadequate segregation of duties within account processes, due to limited personnel, and insufficient written policies and procedures for accounting, IT, and financial reporting and record keeping.
Management intends to implement remediation steps to improve internal controls, addressing inadequate segregation of duties within account processes, limited personnel resources, and insufficient written policies and procedures for accounting, IT, financial reporting, and record-keeping. We plan to further improve this process by enhancing the size and composition of our board upon the closing of the business, identifying third-party professionals with whom to consult regarding complex accounting applications, and considering additional staff with the requisite experience and training to supplement existing accounting professionals, and implementing additional layers of reviews in the internal controls and financial reporting process.
This Report does not include an attestation report from our independent registered public accounting firm, as we are an emerging growth company under the JOBS Act.
Changes in Internal Control over Financial Reporting
There have been no changes in our internal control over financial reporting identified in connection with the evaluation required by paragraph (d) of Rule 13a-15 or Rule 15d-15 under the Exchange Act that occurred during the three months ended June 30, 2026, that have materially affected, or are reasonably likely to affect, our internal control over financial reporting materially.
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PART II.
| ITEM 1. | LEGAL PROCEEDINGS. |
There are no pending legal proceedings against the Company, and the Company is not aware of any proceedings that may be contemplated against it.
| Item 1A. | Risk Factors. |
In accordance with the requirements of Form 10-Q, the Company, as a smaller reporting company, is not required to disclose this item.
| Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds. |
The following securities were issued in reliance on an exemption from registration under Section 4(a)(2) of the Securities Act of 1933, as amended, during the three months ended June 30, 2026. Shares sold under the Company’s at-the-market equity distribution program were registered on the Company’s Form S-3 shelf registration statement and are accordingly not included below. Unregistered sales completed during the three months ended March 31, 2026, were previously reported in the Company’s Quarterly Report on Form 10-Q for that period. Unregistered issuances effected after June 30, 2026 and through the date of this report, which were made in reliance on the exemption provided by Section 3(a)(9) of the Securities Act of 1933, as amended, are described under “Issuances Subsequent to June 30, 2026” below.
Between April 20, 2026 and June 22, 2026, the holder of the Company’s senior secured convertible promissory note effected nine conversions, converting $1,085,000 of face value into an aggregate of 397,777 shares of common stock, credited to stockholders’ equity at $832,453. Face value of $6,475,000 remained outstanding at June 30, 2026. See Note 9 — Debt Financing.
On April 29, April 30 and May 27, 2026, an aggregate of 70,831 shares of common stock were issued to 1800 Diagonal Lending LLC upon the conversion in full of two convertible promissory notes, at conversion prices ranging from $2.1905 to $2.3075 per share, credited to stockholders’ equity at $159,732. Neither note had any balance outstanding at June 30, 2026. See Note 9 — Debt Financing.
On June 10, 2026, 1,308,322 shares of common stock were issued to Hottest Media LLC at $2.28 per share, valued at $2,982,974, in settlement of accounts payable. The shares were recorded at the fair value of the Company’s common stock on the settlement date, which approximated the carrying amount of the liability extinguished, and no gain or loss was recognized. See Note 10 — Stockholders’ Equity.
On June 10, 2026, an aggregate of 825,483 shares of common stock were issued at $2.28 per share, valued at $1,882,094, to officers, directors and an immediate family member of the Chief Executive Officer in settlement of accrued but unpaid compensation. See Note 8 — Related Party Transactions and Note 10 — Stockholders’ Equity.
Issuances Subsequent to June 30, 2026
Between July 1, 2026 and July 24, 2026, the holder of the Company’s senior secured convertible promissory note issued February 26, 2026, effected three additional conversions, converting an aggregate of $925,000 of the outstanding balance into an aggregate of 454,072 shares of common stock at conversion prices ranging from $1.6355 to $2.1287 per share. Following the July 24, 2026, conversion, the holder reported a remaining outstanding balance under that note of $5,786,106. The shares were issued in reliance on the exemption from registration provided by Section 3(a)(9) of the Securities Act of 1933, as amended. See Note 12 — Subsequent Events.
On July 30, 2026, 33,520 shares of common stock were issued to 1800 Diagonal Lending, LLC upon the conversion of $45,000 of principal outstanding under a convertible promissory note issued January 29, 2026, at a conversion price of $1.3425 per share. Principal of $94,905.48 remained outstanding under that note following the conversion. The shares were issued in reliance on the exemption from registration provided by Section 3(a)(9) of the Securities Act of 1933, as amended. See Note 12 — Subsequent Events.
The 9,700 shares of common stock sold on July 20, 2026, under the Company’s at-the-market equity distribution program, and the conversion shares issuable upon conversion of the secured convertible note in the original principal amount of $2,160,000 issued on July 23, 2026, were registered under the Company’s shelf registration statement on Form S-3 (File No. 333-294416) and the related prospectus supplements and are accordingly not included above.
Securities Purchase Agreement
On February 23, 2026, we entered into a securities purchase agreement with Streeterville Capital, LLC. Pursuant to the purchase agreement, the Company agreed to sell, and the investor agreed to purchase, a senior secured convertible note of the Company, in the aggregate original principal amount of $7,560,000 (the “Initial Note”), which is convertible into common stock of the Company. On closing, the Company issued the Initial Note and received cash proceeds of $6,970,000, being the $7,560,000 original principal amount less a $560,000 original issue discount and a $30,000 investor closing expense reimbursement. The purchase agreement was entered into during the three months ended March 31, 2026, and was previously reported; the conversions of the Initial Note described above occurred during the three months ended June 30, 2026. The securities were issued in reliance on an exemption from registration under Section 4(a)(2) of the Securities Act of 1933, as amended. Pursuant to the Purchase Agreement, the Investor shall also have the right, for a period of 24 months after the Closing, to purchase up to $4,320,000.00 of principal amount of additional notes (the “Additional Notes”) in one or more tranches. The Initial Note is convertible at the option of the investor into common shares of the Company at a conversion rate equal to the Outstanding Balance, as defined in the Initial Note, being converted divided by the Conversion Price, as defined in the Initial Note. The Conversion Price is equal to 87% of the lowest daily VWAP for the ten (10) Trading Day period immediately preceding the applicable measurement date; provided, however, that in no event will the Conversion Price be lower than the Floor Price, as defined in the Initial Note, which is $0.90.
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| Item 3. | Defaults Upon Senior Securities. |
None
| Item 4. | Mine Safety Disclosures. |
None
| Item 5. | Other Information. |
During
the three months ended June 30, 2026, no director or officer of the Company
| Item 6. | Exhibits. |
(a) Exhibits.
| Exhibit | Item | |
| 31.1 | Certification of Chief Executive Officer pursuant to Section 302(a) of the Sarbanes-Oxley Act of 2002 | |
| 31.2 | Certification of Chief Financial Officer pursuant to Section 302(a) of the Sarbanes-Oxley Act of 2002 | |
| 32.1 | Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | |
| 101.INS | Inline XBRL Instance Document | |
| 101.SCH | Inline XBRL Taxonomy Extension Schema Document | |
| 101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document | |
| 101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document | |
| 101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document | |
| 101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document | |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
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SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant has caused this report to be signed on its behalf by the undersigned, who is duly authorized thereto.
| EVA LIVE INC. | |
| Date: August 3, 2026 | /s/ David Boulette |
David Boulette, President and CEO (Principal Executive Officer) |
| Date: August 3, 2026 | /s/ Imran Firoz |
Imran Firoz, CFO (Principal Accounting Officer) |
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