Health In Tech, Inc 10-Q for FY2026 Q2
Health In Tech, Inc. (HIT)
About this 10-Q
Health In Tech, Inc filed this 10-Q on August 13, 2026, covering the quarter ended June 30, 2026 (FY2026 Q2).
Headline figures
Quarter ended June 30, 2026, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Revenue
- $8.06M
- down 13.5% from $9.31M a year earlier
- Net loss
- $2.51M
- compared with net income of $630.63K a year earlier
- Diluted EPS
- -$0.04
- compared with $0.01 a year earlier
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
For the quarterly period ended
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For the transition period from _________to___________
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As of August 12, 2026, there were
TABLE OF CONTENTS
i
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This quarterly report, including, without limitation, statements under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”) and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). These forward-looking statements can be identified by the use of forward-looking terminology, including the words “believes,” “estimates,” “anticipates,” “expects,” “intends,” “plans,” “may,” “will,” “potential,” “projects,” “predicts,” “continue,” or “should,” or, in each case, their negative or other variations or comparable terminology.
We have based these forward-looking statements largely on our current expectations and projections about future events and trends that we believe may affect our financial condition, results of operations, business strategy short-term and long-term business operations and objectives and financial needs. These forward-looking statements are subject to known and unknown risks, uncertainties and assumptions, including risks described in the section titled “Risk Factors” set forth in Part II, Item 1A of this Quarterly Report on Form 10-Q and in our other filings with the Securities and Exchange Commission (the “SEC”). It is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. In light of these risks, uncertainties and assumptions, the future events and trends discussed in this Quarterly Report on Form 10-Q may not occur, and actual results may differ materially and adversely from those anticipated or implied in the forward-looking statements. Forward-looking statements contained in this Quarterly Report on Form 10-Q include, but are not limited to, statements about:
| ● | our financial performance; |
| ● | our ability to obtain funding for our operations, including funding necessary to enhance our current systems as well as the development of additional functionalities of our systems and to expand our service offerings; |
| ● | the success, cost and timing of our system offering development activities; |
| ● | our ability to attract and retain key personnel; |
| ● | our ability to hire and retain necessary qualified employees to expand our operations; |
| ● | our ability to attract new customers to utilize our platforms; |
| ● | our ability to develop new and enhance products and services to attract and retain customers, and to successfully monetize them; |
ii
| ● | the impact of competition in our industry and innovation by our competitors; |
| ● | risks related to cybersecurity incidents or other network disruptions; |
| ● | risks related to the use of third-party artificial intelligence; |
| ● | our ability to stay abreast of and comply with new or modified laws and regulations that currently apply or become applicable to our business, including with respect to the insurance services industry and data privacy requirements; |
| ● | our ability to protect our intellectual property rights and maintain and build our brand; |
| ● | the scope of protection we are able to establish and maintain for intellectual property rights covering our platform and technology; |
| ● | the future trading prices of our Class A common stock; and |
| ● | potential claims relating to our intellectual property. |
We caution you that the foregoing list may not contain all of the forward-looking statements made in this Quarterly Report on Form 10-Q. You should not rely upon forward-looking statements as predictions of future events. The events and circumstances reflected in the forward-looking statements may not be achieved or occur. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance, or achievements. Except as required by law, we do not intend to update any of these forward-looking statements after the date of this Quarterly Report on Form 10-Q or to conform these statements to actual results or revised expectations.
Because some of these risks and uncertainties cannot be predicted or quantified and may be beyond our control, you should read this Quarterly Report on Form 10-Q with the understanding that our actual future results, levels of activity, performance and events and circumstances may be materially different from what we expect.
This Quarterly Report on Form 10-Q contains estimates, projections and other information concerning our industry, our business and the markets for our products and services. We obtained the industry, market and similar data set forth in this report from our own internal estimates and research and from academic and industry research, publications, surveys and studies conducted by third parties, including governmental agencies. Information that is based on estimates, forecasts, projections, market research or similar methodologies is inherently subject to uncertainties and actual events or circumstances may differ materially from events and circumstances that are assumed in this information. While we believe that the data we use from third parties are reliable, we have not separately verified these data. Further, while we believe our internal research is reliable, such research has not been verified by any third party. You are cautioned not to give undue weight to any such information, projections and estimates.
iii
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements.
Health In Tech, Inc.
Consolidated Balance Sheets
(Unaudited)
| June 30, 2026 | December 31, 2025 | |||||||
| Assets | ||||||||
| Current assets | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Accounts receivable, net | ||||||||
| Loans receivable, net | ||||||||
| Other receivables, net | ||||||||
| Deferred offering costs | ||||||||
| Prepaid expenses and other current assets | ||||||||
| Total current assets | ||||||||
| Non-current assets | ||||||||
| Software | ||||||||
| Operating lease – right of use assets | ||||||||
| Long-term prepaid expenses | ||||||||
| Deferred tax assets, net | ||||||||
| Total non-current assets | ||||||||
| Total assets | $ | $ | ||||||
| Liabilities and stockholders’ equity | ||||||||
| Current liabilities | ||||||||
| Accounts payable and accrued expenses | $ | $ | ||||||
| Operating lease liabilities – current | ||||||||
| Other current liabilities | ||||||||
| Total current liabilities | ||||||||
| Non-current liabilities | ||||||||
| Deferred tax liabilities | ||||||||
| Operating lease liabilities – non-current | ||||||||
| Total non-current liabilities | ||||||||
| Total liabilities | ||||||||
| Commitments and contingencies (Note 5) | ||||||||
| Stockholders’ equity | ||||||||
| Common stock, $ | ||||||||
| Common stock, $ | ||||||||
| Additional paid-in capital | ||||||||
| Retained earnings | ||||||||
| Noncontrolling interests | ||||||||
| Total stockholders’ equity | ||||||||
| Total liabilities and stockholders’ equity | $ | $ | ||||||
The accompanying notes are an integral part of these unaudited consolidated financial statements.
1
Health In Tech, Inc.
Consolidated Statements of Operations
(Unaudited)
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Revenues | ||||||||||||||||
| Revenues from underwriting modeling (ICE) | $ | $ | $ | $ | ||||||||||||
| Revenues from fees (SMR) | ||||||||||||||||
| Total revenues | ||||||||||||||||
| Cost of revenues | ||||||||||||||||
| Gross profit | $ | $ | $ | $ | ||||||||||||
| Operating expenses | ||||||||||||||||
| Sales and marketing expenses | ||||||||||||||||
| General and administrative expenses | ||||||||||||||||
| Research and development expenses | ||||||||||||||||
| Total operating expenses | ||||||||||||||||
| Other income (expense): | ||||||||||||||||
| Interest income | ||||||||||||||||
| Other income | ||||||||||||||||
| Other expense | ( | ) | ( | ) | ||||||||||||
| Total other income, net | ||||||||||||||||
| (Loss) income before income tax expense | $ | ( | ) | $ | $ | ( | ) | $ | ||||||||
| Income tax benefit (expense) | ( | ) | ( | ) | ||||||||||||
| Net (loss) income | $ | ( | ) | $ | $ | ( | ) | $ | ||||||||
| Net loss attributable to noncontrolling interests | $ | ( | ) | $ | $ | ( | ) | $ | ||||||||
| Net (loss) income attributable to common stockholders | $ | ( | ) | $ | $ | ( | ) | $ | ||||||||
| Net (loss) income per share: | ||||||||||||||||
| Basic | $ | ( | ) | $ | $ | ( | ) | $ | ||||||||
| Diluted | $ | ( | ) | $ | $ | ( | ) | $ | ||||||||
| Weighted average common shares outstanding: | ||||||||||||||||
| Basic | ||||||||||||||||
| Diluted | ||||||||||||||||
The accompanying notes are an integral part of these unaudited consolidated financial statements.
2
Health In Tech, Inc.
Consolidated Statements of Changes in Stockholders’ Equity
For the Three and Six months ended June 30, 2026 and 2025
(Unaudited)
| Common Stock | Additional | Total | ||||||||||||||||||||||||||||||
| Class A | Class B | Paid-in | Retained | Noncontrolling | Stockholders’ | |||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Capital | Earnings | Interests | Equity | |||||||||||||||||||||||||
| Balance as of December 31, 2025 | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||
| Issuance of common stock in connection with private investment in public equity financing, net of offering costs and placement agent fees | — | |||||||||||||||||||||||||||||||
| Stock-based compensation | — | |||||||||||||||||||||||||||||||
| Net loss | — | — | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Balance as of March 31, 2026 | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||
| Shares surrendered for settlement of minimum statutory tax withholdings | ( | ) | ( | ) | — | ( | ) | ( | ) | |||||||||||||||||||||||
| Offering costs related to resale registration statement reclassified to additional paid-in capital | — | — | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Stock-based compensation | — | |||||||||||||||||||||||||||||||
| Contributions from noncontrolling interests | — | — | ||||||||||||||||||||||||||||||
| Net loss | — | — | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||
| Balance as of June 30, 2026 | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||
| Common Stock | Additional | Total | ||||||||||||||||||||||||||
| Class A | Class B | Paid-in | Retained | Stockholders’ | ||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Capital | Earnings | Equity | ||||||||||||||||||||||
| Balance as of December 31, 2024 | $ | $ | $ | $ | $ | |||||||||||||||||||||||
| Stock-based compensation | — | |||||||||||||||||||||||||||
| Net income | — | — | ||||||||||||||||||||||||||
| Balance as of March 31, 2025 | $ | $ | $ | $ | $ | |||||||||||||||||||||||
| Stock-based compensation | — | |||||||||||||||||||||||||||
| Net income | — | — | ||||||||||||||||||||||||||
| Balance as of June 30, 2025 | $ | $ | $ | $ | $ | |||||||||||||||||||||||
The accompanying notes are an integral part of these unaudited consolidated financial statements.
3
Health In Tech, Inc.
Consolidated Statements of Cash Flows
(Unaudited)
| Six Months Ended June 30, | ||||||||
| 2026 | 2025 | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
| Net (loss) income | $ | ( | ) | $ | ||||
| Adjustments to reconcile net (loss) income to net cash (used in) provided by operating activities: | ||||||||
| Bad debt (recovery) expense | ( | ) | ||||||
| Amortization expense | ||||||||
| Provision for refund liability | ||||||||
| Provision for credit losses on other receivables | ||||||||
| Deferred tax benefit | ( | ) | ( | ) | ||||
| Interest income | ( | ) | ( | ) | ||||
| Stock-based compensation expense | ||||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | ( | ) | ||||||
| Other receivables | ( | ) | ( | ) | ||||
| Prepaid expenses and other assets | ( | ) | ||||||
| Operating lease right-of-use assets and liabilities, net | ( | ) | ||||||
| Accounts payable and accrued expenses | ||||||||
| Income taxes payable | ( | ) | ||||||
| Other current liabilities | ( | ) | ||||||
| Net cash (used in) provided by operating activities | ( | ) | ||||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
| Development of software | ( | ) | ( | ) | ||||
| Net cash used in investing activities | ( | ) | ( | ) | ||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
| Proceeds from issuance of common stock in connection with private investment in public equity financing, net of placement agent fees and escrow agent fees | ||||||||
| Payments of deferred offering costs | ( | ) | ( | ) | ||||
| Contributions from noncontrolling interests | ||||||||
| Taxes paid related to net share settlement of equity awards | ( | ) | ||||||
| Net cash provided by (used in) financing activities | ( | ) | ||||||
| (Decrease) increase in cash and cash equivalents | ( | ) | ||||||
| Cash and cash equivalents, beginning of period | ||||||||
| Cash and cash equivalents, end of period | $ | $ | ||||||
| Supplemental disclosures of cash flow information: | ||||||||
| Cash paid for interest | $ | $ | ||||||
| Cash paid for income taxes | $ | $ | ||||||
| Summary of noncash investing and financing activities: | ||||||||
| Accrued deferred offering costs included in accounts payable and accrued expenses | $ | $ | ||||||
| Accrued development of software included in accounts payable and accrued expenses | $ | $ | ||||||
| Reclassification of deferred offering costs to additional paid-in capital upon private investment in public equity financing | $ | $ | ||||||
| Stock-based compensation capitalized for software development | $ | $ | ||||||
The accompanying notes are an integral part of these unaudited consolidated financial statements
4
Health In Tech, Inc.
Notes to Consolidated Financial Statements
(Unaudited)
1. Organization
Description of Business
Health in Tech, Inc. (collectively with SMR, Hi Card, ICE, and, beginning April 10, 2026, HITChain (defined below), “HIT” or the “Company”) through its subsidiaries, simplifies sales, service processes and reduces sales cycle time for third-party administrators and brokers. HIT was incorporated in November 2021 in the State of Nevada, and is based in Stuart, Florida. The Company was created with the intention of consolidating each of three standalone entities into a single organization: Stone Mountain Risk, LLC (“SMR”), Health Intelligence Card, LLC (“Hi Card”), and International Captive Exchange, LLC (“ICE”) (the “subsidiaries”).
HITChain Inc. (“HITChain”), was incorporated as a Delaware
corporation on
The Company’s unaudited consolidated financial statements include the accounts of HIT, its wholly owned subsidiaries, and HITChain beginning April 10, 2026, for which the Company has been deemed to be the primary beneficiary under ASC 810 (see Note 2).
2. Summary of Significant Accounting Policies
Basis of Presentation
The Company’s unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) regarding interim financial information. Certain information and note disclosures normally included in the consolidated financial statements prepared in accordance with GAAP have been or omitted pursuant to such rules and regulations. As such, the information included in this quarterly report on Form 10-Q should be read in conjunction with the consolidated financial statements and accompanying notes included in the Annual Report on Form 10-K for the year ended December 31, 2025.
The consolidated balance sheet as of December 31, 2025 included herein was derived from the audited financial statements as of that date, but does not include all disclosures including notes required by GAAP.
The accompanying consolidated financial statements reflect all normal recurring adjustments that are necessary to present fairly the results for the interim periods presented. Interim results are not necessarily indicative of the results for the full year ending December 31, 2026.
5
Health In Tech, Inc.
Notes to Consolidated Financial Statements
2. Summary of Significant Accounting Policies (cont.)
Segments
The Company’s chief operating decision maker (“CODM”), the and executive committee, manages the Company’s business activities as a single operating and reportable segment at the consolidated level. Accordingly, the CODM uses consolidated net income to measure segment profit or loss, allocate resources and assess performance. Further, the CODM reviews and utilizes functional expenses (cost of revenues, sales and marketing, research and development, and general and administrative expenses) at the consolidated level to manage the Company’s operations. As of June 30, 2026 and December 31, 2025, the Company did not have a material balance of long-lived assets located outside of the United States.
Use of Estimates
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Making estimates requires management to exercise significant judgment. Significant items subject to such estimates and assumptions include, but are not limited to, accounts receivable allowance for revenue billing changes driven by headcount changes during the billable period, allowance for credit losses, useful lives of software, variable consideration of revenues from underwriting modeling and stock-based compensation expense. It is at least reasonably possible that the estimates of the effect of conditions, situations or sets of circumstances that existed at the date of the financial statements, which management considered in formulating its estimates, could change in the near term due to one or more future confirming events. Actual results could differ from those estimates.
Variable Interest Entity (“VIE”)
The Financial Accounting Standards Board (“FASB”) provides guidance in ASC 810, Consolidation (“ASC 810”) for determining whether an entity is a VIE. VIE’s are defined as entities in which equity investors of the entity do not have the characteristics of a controlling financial interest or do not have sufficient equity at risk for the entity to finance its activities without additional subordinated financial support. A VIE is required to be consolidated by its primary beneficiary, which is the party that (i) has the power to control the activities that most significantly impact the VIE’s economic performance and (ii) has the obligation to absorb losses, or the right to receive benefits, of the VIE that could potentially be significant to the VIE.
The Company determined that HITChain is VIE because its equity investment at risk is not sufficient to finance its expected activities without additional subordinated financial support.
The Company also determined that it is the primary beneficiary of HITChain. This conclusion was based on the following:
| ● | The Company holds |
| ● | The Company has the obligation to absorb losses or the right to receive benefits that could potentially be significant to HITChain. |
| ● | Among the members of the related-party group, the Company is the party most closely associated with HITChain, as it holds the substantial majority of HITChain’s economic interest. |
6
Health In Tech, Inc.
Notes to Consolidated Financial Statements
2. Summary of Significant Accounting Policies (cont.)
HITChain did not meet the definition of a business as of April 10,
2026. Upon initial consolidation of HITChain, the Company recognized a loss of
By the end of May 2026, following an internal business review, the
Company transferred certain in-development software assets with a carrying amount of $
The following table summarizes the carrying amounts of the assets and liabilities of HITChain included in the Company’s unaudited consolidated financial statements as of June 30, 2026:
| June 30, 2026 |
||||
| Assets | ||||
| Cash and cash equivalents | $ | |||
| Software | ||||
| Deferred tax assets, net | ||||
| Total assets | $ | |||
| Liabilities | ||||
| Accounts payable and accrued expenses | $ | |||
| Total liabilities | $ | |||
The assets of HITChain can only be used to settle the obligations of HITChain and are not available to satisfy the obligations of the Company. The creditors of HITChain have no recourse to the general credit of the Company.
The Company consolidated HITChain beginning April 10, 2026. The remaining
Cash and Cash Equivalents
Cash and cash equivalents consist of demand deposit with original maturities less than three months, which are unrestricted as to withdrawal or use.
Concentration of Credit Risk
Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash, accounts receivable and loans receivable for financial periods ended June 30, 2026 and December 31, 2025. The Company further manages its credit risk on liquid funds through diversification of investment type and credit exposures. For cash, the Company places cash deposits with large financial institutions. For accounts receivable, the credit risk is managed through the use of mitigating controls, including the use of credit checks and credit limits on customers. For loans receivable, the Company monitors the exposures and counterparty credit risk on a regular basis.
Concentration of customers
Revenues from Stop-Loss Insurance Carriers
For the three and six months ended June 30, 2026 and 2025, one stop-loss
insurance carrier (“Carrier A”) individually represented greater than 10% of Company’s total gross revenues. Revenue
from Carrier A accounted for
7
Health In Tech, Inc.
Notes to Consolidated Financial Statements
2. Summary of Significant Accounting Policies (cont.)
Revenues from Business Employer Customers
The Company does not have significant concentration of revenues from
any of its business employer customers. The Company has a diversified customer base and did not have any business employer that accounted
for more than
Concentration of Cost of Revenues Service Providers
For the three months ended June 30, 2026, the Company’s three
primary service providers represented
Concentration of Data Service Providers from Third Party Artificial Intelligence Providers
The Company currently utilizes one third-party Artificial Intelligence
(“AI”) data service provider. For the three and six months ended June 30, 2026, this provider accounted for
Leases
The Company accounts for its leases under the Financial Accounting Standards Board’s (“FASB”) Accounting Standards Codification (“ASC”) ASC 842, Leases (“ASC 842”).
The Company assesses its contracts at inception to determine whether
the contract contains a lease, including evaluation of whether the contract conveys the right to control an explicitly or implicitly identified
asset for a period of time. The Company recognizes right-of-use assets and lease liabilities that represent the net present value of future
lease payments utilizing a discount rate corresponding to the Company’s incremental borrowing rate and amortizing over the
remaining terms of the leases, which was determined to be
8
Health In Tech, Inc.
Notes to Consolidated Financial Statements
2. Summary of Significant Accounting Policies (cont.)
Accounts Receivable and Allowance for Credit Losses and for Revenue Billing Adjustments
Accounts receivable are carried at original invoice amount, less any
estimate made for doubtful accounts or credit losses. In accordance with ASC 326, Financial Instruments — Credit Losses,
the allowance for credit losses is the Company’s best estimate of the amount of expected credit losses in the Company’s existing
receivables over the contractual term. The Company evaluates its exposure to credit loss on both a collective and individual basis. The
Company evaluates such receivables on an individual customer basis and takes into account any relevant available information, which begins
with historical credit loss experience and consideration of current and expected conditions and market trends (such as general economic
conditions, other microeconomic and macroeconomic considerations, etc.) and reasonable and supportable forecasts that could impact the
collectability of such receivables over the contractual term individually or in the aggregate. Changes in circumstances relating to these
factors may result in the need to increase or decrease the allowance for credit losses in the future. The allowance for credit losses
was $
The Company also makes the allowance for revenue billing adjustments,
under the consideration of the revenues associated with enrolled customers would have changed during the
| ● | There is a revenue adjustment that is driven by enrollment changes. It is based upon the actual individuals enrolled in a plan throughout the term compared to the initial employees enrolled in the first month. |
| ● | There is a revenue adjustment that is determined at the cancellation of a policy due to delayed payment. Specifically, a Carrier may cancel a plan when the customer does not remit payment in accordance with the respective agreement for a certain period of time (approximately three months). This may be adjusted if there is a slight delay in the completion and execution of required legal documents. |
| ● | There is a revenue adjustment and change triggered by re-underwrite of stop loss insurance policy, as defined by the Carrier’s underwriting guideline. |
Other Receivables
Certain business customers elect to receive a discount on premiums
payable to carriers. In return, carriers can collect and retain these customers’ positive claim fund balance amounts. The positive
claim fund is maintained in a designated account specifically earmarked for claims, held by the employer, known as “Deferred Administrative
Surplus.” As the platform company, the Company tracks and processes claims for carriers. With necessary information for collection
available on our platform, the Company signed an agreement on December 28, 2023 with the third-party Roscommon Captive Management and
Roscommon Insurance Company (collectively the “Carrier”), to purchase the rights, title, interest, and collection rights to
fees totaling $
9
Health In Tech, Inc.
Notes to Consolidated Financial Statements
2. Summary of Significant Accounting Policies (cont.)
When entering into a stop-loss insurance policy, a business employer
can elect to purchase discounted stop-loss insurance policies premiums from the Carrier by agreeing to return any positive balance in
claim fund. These claim funds are held in the name of the business employer, and the Carrier has no claim to these funds until the policy
and the policy run-out period ends, which is
As part of the Company’s services to the Carrier, ICE contracted with the Carrier to collect premium and process claims expense. Therefore, in its internal system, the Company can calculate the approximate amount of positive balance in the claims fund. The exact amount will be determined after full reconciliation of the claims fund after completion of the run-out period.
In the case of the 2023 Purchase, the Company purchased the policies with related run-out periods that had lapsed and had positive claim fund balances according to the Company’s internal system. As such, the Company knows the value of the Deferred Administrative Surplus purchased. The 2025 Purchase includes all the remaining policies with deferred administrative surplus as a product feature from the Carrier. Collectively, the Carrier and HIT platform stopped offering this feature in August 2024. Thus, 2025 purchased policies are in different periods and stages, including in the policy coverage period, in the run-out period and the out of run-out periods. For policies in the coverage period and in the run-out periods, the final Deferred Administrative Surplus cannot be determined until the policy completes the run-out period and finalizes the reconciliation. Following the purchase, the Deferred Administrative Surplus was transferred to the Company for collection. After the transfer, the Company performs the relevant reconciliations to demonstrate to the business employers the amount of the Deferred Administrative Surplus now owed to the Company from the claim fund balance. The Company asks the business owners to pay back the Deferred Administrative Surplus within 30 days of the collection requests sent.
The key risks associated with the collection of the Deferred Administrative
Surplus relate to the Company’s limited collections experience related to the Deferred Administrative Surplus at the time of purchase
from the Carrier. To reduce the Company’s collection risk, the Company negotiated with the Carrier to purchase the Deferred Administrative
Surplus at
The purchase of the Deferred Administrative Surplus does not represent
a purchase of a financial asset with credit deterioration as defined in accordance with ASC 326, Financial Instruments —
Credit Losses. Furthermore, the Company only has approximately three months of historical collection success rates at the time of
entering into the 2023 Purchase contract. These collection success rates are based upon limited experience given the Company has only
collected on these types of assets for a short period of time. Moreover, the historical collection success rates for the 2023 Purchase
were not applicable for the 2025 Purchase at contract inception, due to the differing components of the two purchases, such as active
policies in the 2025 Purchase. As such, the Company has accounted for these assets under a nonaccrual approach. The Company will continue
to assess this policy as additional collection information is received and collection trends are identified. The Company recorded the
consideration as other receivables both as of June 30, 2026 and as of December 31, 2025. The Company collected $
10
Health In Tech, Inc.
Notes to Consolidated Financial Statements
2. Summary of Significant Accounting Policies (cont.)
Set forth below is an illustrative roll-forward based on actual figures for the three and six months ended June 30, 2026.
| 2023 Purchase | 2025 Purchase | Total | ||||||||||
| Purchases | $ | $ | $ | |||||||||
| Accumulated Collections | ( | ) | ( | ) | ( | ) | ||||||
| Provision and write-offs | ( | ) | ( | ) | ||||||||
| Balance as of December 31, 2025, net | $ | $ | $ | |||||||||
| Purchases | ||||||||||||
| Collections | ( | ) | ( | ) | ||||||||
| Provision and write-offs | ||||||||||||
| Balance as of March 31, 2026, net | $ | $ | $ | |||||||||
| Purchases | ||||||||||||
| Collections | ||||||||||||
| Provision and write-offs | ( | ) | ( | ) | ||||||||
| Balance as of June 30, 2026, net | $ | $ | $ | |||||||||
The Company separately assessed if an allowance for credit losses was
necessary for this Other Receivables. In estimating the allowance, the Company considers factors including the aging and collection history
of the receivables, the length of time amounts have remained outstanding, information obtained through the collection process, and other
relevant facts and circumstances affecting expected collectability. Other Receivables are written off after all collection attempts have
been exhausted. Credit loss expense recognized on Deferred Administrative Surplus, which is presented in General and administrative expenses
in the Company’s Consolidated Statements of Operations, was $
Loans Receivable, Net
On October 10, 2023, the Company entered into a Promissory Note Agreement
with Kang Youle Limited, which constitutes an unsecured lending arrangement. Under this Promissory Note Agreement, the Company agreed
to lend $
Software Capitalization
The Company incurs certain costs associated with the development of
its Hi-Card, eDIYBS systems and other systems. In accordance with ASC 350-40, Intangibles — Goodwill and Other: Internal-Use
Software, the Company capitalizes certain costs associated with the development of its internal-use software after the preliminary
project stage is complete and until the design, coding, installation, and testing of the software have been completed. Upgrades and enhancements
are capitalized if they will result in added functionality. Capitalized costs are amortized over an expected three-year period. In May
of 2023, the Company determined that its eDIYBS system was ready for its intended use. In September 2025, an expansion of the eDIYBS system
was also completed and placed into service. As such, the Company has entered the eDIYBS system in the post-implementation phase. The Company
has amortized $
Impairment of Long Lived Assets
In accordance with ASC 360, Property, Plant, and Equipment, the Company evaluates the recoverability of amortizable long-lived assets whenever events or changes in circumstances indicate the carrying value of such asset may not be recoverable. Should there be an indication of impairment, the Company tests recoverability by comparing the estimated undiscounted future cash flows expected to result from the use of the asset to the carrying amount of the asset or asset group. If the asset or asset group is determined to be impaired, any excess of the carrying value of the asset or asset group over its estimated fair value is recognized as an impairment loss. There were impairment losses recognized on long-lived assets during the three and six months ended June 30, 2026 and 2025.
11
Health In Tech, Inc.
Notes to Consolidated Financial Statements
2. Summary of Significant Accounting Policies (cont.)
Revenue Recognition
The objective of ASC 606, Revenue from Contracts with customers (“ASC 606”) is to establish the principles that an entity shall apply to report useful information to users of the financial statements about the nature, amount, timing, and uncertainty of revenue and cash flows arising from a contract with a customer. An entity shall recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services, as defined in ASC 606-10-10-1 and ASC 606-10-10-2.
This evaluation under ASC 606 follows a five-step model, including:
| Step 1: | Identify the contract(s) with a customer | |
| Step 2: | Identify the performance obligations in the contract | |
| Step 3: | Determine the transaction price | |
| Step 4: | Allocate the transaction price to the performance obligations in the contract | |
| Step 5: | Recognize revenue when (or as) the entity satisfies a performance obligation |
In general, ASC 606’s core principle is to recognize revenue in a manner that depicts the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Required disclosures under ASC 606 include qualitative and quantitative information about contracts with customers and significant judgments and estimates as to the application of the 5-step revenue recognition analysis, among others.
The Company accounts for its revenue under the accounting guidance of ASC 606. The Company’s contracts that are within the scope of ASC 606 specifically relate to the services that are associated with customers who purchase self-funded benefits plans. These plans are facilitated through a network of brokers, TPAs, MGUs, carriers, and other third-party agents.
Identification of the Performance Obligations
The Company analyzes each of the deliverables pursuant to its contracts with customers. For each of the deliverables, the Company performs a detailed analysis to determine whether the deliverables are separately identifiable. The Company notes that although the deliverables can vary from day to day, all specifically relate to one kind of service, representing one performance obligation that is provided by each of its subsidiaries (SMR and ICE), as further described below.
SMR Specific Considerations
Program and Platform Management Services (Legacy)
Under SMR’s Program and platform management services, the Company’s insurance marketplace allows brokers to customize an employer’s self-funded benefits plan and stop loss insurance policies. When licensed brokers log in to the Company’s platform, they upload an employee census representing the employee base of the business employer, select which network they wish to use, what plan designs they want to offer to the business employer and then quickly obtain a bindable self-funded medically underwritten stop loss quote they can provide to their business customers. The chosen vendors provide benefit services as outlined on the platform. The fees that the Company and others charge for the service offerings within the quote are outlined and expressly agreed to by the employer. The employer customizes their health insurance plan and executes an annual agreement. This agreement includes a sold case breakdown (SCB) that outlines the individual stop loss insurance and benefits service offerings selected by the employer and the cost of each, including any optional services offered by the Company or other vendors. Through this, the Company is aware of the services that the broker is offering to the employer for the health insurance plan period, which is normally twelve (12) months. This includes each of the performance obligations provided by its subsidiaries as further outlined below. Subsequent to the execution of the initial bindable SCB with its customers, the Company may modify the health insurance plan during the plan period when a non qualified event occurs based on the definition provided by the carriers. For example, if there is a significant fluctuation or changes of enrolled employees (EEs) from the first month.
12
Health In Tech, Inc.
Notes to Consolidated Financial Statements
2. Summary of Significant Accounting Policies (cont.)
The Company has business relationships with licensed brokers, as licensed brokers register on the Company’s platform to select and sell benefits plans and stop loss policies to employers as discussed above. However, there is no contractual relationship between the Company or any of its subsidiaries and the brokers. The Company’s platform provides credentialing for licensed brokers, allowing them to access its marketplace to select and sell self-funded benefits plans for the business employer at no cost. Brokers are paid by the businesses, with no contractual relationship between the Company and the brokers, only a credentialing process, and free access is provided.
TPAs are contracted and authorized by the business employers to enter into service contracts with SMR on behalf of the business employers. ASC 606 defines a customer as a party that has contracted with an entity to obtain goods or services that are an output of the ordinary activities of the company in exchange for consideration. SMR is not providing services to the TPAs, but instead, has contracts to collaborate with the TPAs to facilitate the administration of health benefit plans and stop-loss insurance policies to its customers, which are the business employers. The TPA will administer the purchased health benefits plan and manage the multiple service providers associated with the health benefits plan and stop-loss insurance policy. Such service providers are listed on the bindable quotes via the bindable sold case breakdown, which outlines the individual stop loss insurance and benefits service offerings selected by the business and the cost of each. Only the business employer can start or terminate the relationship with SMR. The TPA cannot start or terminate the relationship with SMR. As such, the Company has concluded that the TPAs are not customers and that the business employers are the customers of SMR pursuant to ASC 606.
Effective January 1, 2026, the Company has pivoted its services to offer pre-designed self-funded plans to employers, leveraging years of experience in selecting and managing the vendors that are essential to the plan.
Self-funded Plan Administration Services (Effective January 1, 2026)
SMR develops pre-configured, self-funded health benefit plans that integrate full administrative services and then are bundled with stop-loss insurance for employer clients. SMR delivers a comprehensive, end-to-end self-funded health plan solution spanning plan design and ongoing administration.
SMR curates and onboards a network of specialized administrative vendors, contracting directly and tailoring service configurations based on deep operational experience and sector expertise. This enables consistent execution while maintaining flexibility to meet the specific needs of employers and distribution partners.
As of June 30, 2026, SMR includes more than 100 pre-designed plans that can be efficiently configured and bundled with stop-loss coverage, significantly streamlining implementation.
This model simplifies the complexity of self-funded plan administration, materially improves operational efficiency, and provides a differentiated, flexible solution for both employers and sales agents.
ICE Specific Considerations
ICE has contractual relationships with carriers. ICE underwrites a stop-loss insurance policy and processes claims per the respective carrier’s underwriting guideline and claims processing guideline. In these instances, the carrier is the Company’s customer.
The Company’s performance obligations related to its revenue can be summarized as follows:
Underwriting modeling and risk services: As a part of the Company’s overall insurance marketplace, ICE provides underwriting modelling, machine learning-driven underwriting services, and risk services to its customers. Through its web-based SaaS quoting platform, eDIYBS (Enhance Do It Yourself Benefit System), brokers log in to eDIYBS, upload census, select plans and generate bindable quotes. eDIYBS medically underwrites each employer. ICE continues to assess risks and may re-underwrite based on underwriting risk guidelines provided by carriers. Any enrollment changes in a business can have large fluctuations during a policy period that may trigger a re-underwrite. ICE not only monitors and manages these activities but also facilitates insurance reporting. Revenue related to these services are included in the “Revenues from underwriting modeling” within the Consolidated Statements of Operations. These services are provided by ICE for carriers. Unlike the Company’s other performance obligations, the Company’s agreements for its underwriting modeling and risk performance obligations are with stop loss carriers. Under these agreements, the Company develops and maintains all underwriting models, defines risk criteria based on risk guidelines provided by carriers, manages underwriting of risk, manages claims activity, ensures reinsurance reporting, and handles monthly reinsurance filings. The purpose of these services is to ensure that the stop loss carrier is assuming an appropriate amount of risk when taking on a new insurance policy, and further that the premiums being charged are appropriate based upon the population of the new insurance policy (age, demographic, etc.).
13
Health In Tech, Inc.
Notes to Consolidated Financial Statements
2. Summary of Significant Accounting Policies (cont.)
Program and platform management services: As a part of the Company’s overall insurance marketplace, SMR is a program manager specializing in customized self-funded benefits programs for businesses. SMR’s expertise in health benefits enables the Company to analyze, review and select vendors that have sufficient experience, which is an essential component of a health plan that is constantly evolving with its business employers based on factors such as employee headcount and a specific employee’s geographic location. SMR will then design health plans, select networks, and sets up the benefits plan for the business employers. Licensed brokers log in to the marketplace to select and sell self-funded benefits plans to businesses. The Company throughout the contract period is actively working with the TPA to assist administration of the plan specifically due to headcount changes. The Company’s service offerings encompass reference-based pricing, group insurance captives, community health plans, and association health programs. This service is performed for employers to ensure that they have access to a customized health benefits program. For these Program and Platform Management Services, the Company acts as a facilitator and does not control the underlying services prior to transfer to customers. The Company accounts for these services under ASC 606-10-25-14(b) as a series of distinct services that are substantially the same per enrolled employee and have the same pattern of transfer as the delivery of the specified services is satisfied over time, and each service is substantially the same and has the same measure of progress. Revenue related to these services are included in the “Revenues from fees” within the Consolidated Statements of Operations.
Self-funded plan administration services: SMR delivers a comprehensive, end-to-end self-funded health plan solution to business employers, spanning plan design and ongoing administration. SMR establishes independent pricing for services, and acts as the primary party responsible for service fulfillment. The Company acts as the principal under ASC 606 for these Plan administration services, as it controls the services prior to transfer to employers and is primarily responsible for fulfillment. These services are accounted for under ASC 606-10-25-14(b) as a series of distinct services that are substantially the same per enrolled employee and have the same pattern of transfer. Revenue related to these services are included in the “Revenues from fees” within the Consolidated Statements of Operations.
Each of the services above allows for the customers to simultaneously receive and consume the benefits of the Company’s performance as it performs. Services provided by SMR (either program and platform management or self-funded plan administration) and underwriting modeling and risk services provided by ICE (including eDIYBS) are interdependent, as they cannot function effectively without being combined.
As such, the Company has determined that it is appropriate to recognize revenue over a period of the defined contractual term. The Company has determined that the pattern of transfer of control to the customers is commensurate with its right to invoice given the fact that at the end of each reporting period, all performance obligations of the Company have been satisfied and provided to the Company’s customers, and as such, the Company records its revenue based on the sold policy enrollment.
Payments required throughout the duration of the policy start once a policy has become effective, and are subsequently due on policy effective date of the month through the duration of the policy. Given the Company’s policy terms, there are no performance obligations that remain unperformed at the end of each reporting period.
Disaggregation of Revenue
A summary of the Company’s disaggregated revenues is as follows:
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Revenues: | ||||||||||||||||
| Revenues from underwriting modeling (ICE) | $ | $ | ||||||||||||||
| Revenues from fees (SMR) | ||||||||||||||||
| Program and platform management fees | ||||||||||||||||
| Self-funded plan administration fees | ||||||||||||||||
| Subtotal | ||||||||||||||||
| Contra revenue for billing adjustments | ( | ) | ( | ) | ( | ) | ||||||||||
| Contra revenue for refund liability | ( | ) | ( | ) | ( | ) | ||||||||||
| Total revenues | $ | $ | ||||||||||||||
14
Health In Tech, Inc.
Notes to Consolidated Financial Statements
2. Summary of Significant Accounting Policies (cont.)
Variable Consideration
With the exception of its business relationship with one stop-loss insurance carrier, the Company does not have variable consideration that would require constraint from the transaction price of its contracts with customers as the Company receives monthly payments either based on a fixed percentage of the monthly premiums paid by the carrier, or a fixed dollar amount based on the end users serviced during a given month paid by employers. The Company has reviewed all contracts with its customers and determined that, other than the contract described below, none include terms that could result in the Company refunding amounts to a carrier or receiving variable cash flows.
For this stop-loss insurance carrier, with which the Company’s
new policy underwriting otherwise ended in 2024, ICE entered into a Program Manager Agreement (the “Agreement”), effective
August 1, 2023. Under the Agreement, ICE provides underwriting modeling and risk program services in connection with self-funded stop-loss
policies issued by the carrier and charges the carrier a Manager Fee of up to
The Agreement covers 11 consecutive policy batches from August 2023
through June 2024 (each group of policies sharing the same effective date month, a “policy batch”). Each policy batch passes
through three stages: (i) a
At agreement inception and through December 31, 2024, none of the policy
batches had completed their run-out period. Based on the Company’s industry experience and ongoing monitoring of each policy batch’s
performance, the performance of the underlying policies was favorable at each reporting date. Accordingly, the Company assessed the probability
of any meaningful Adjustment as remote, and the estimated transaction price for each policy batch equaled the full Manager Fee of
During 2025, as each policy batch completed its run-out period, the claims data for that batch became substantially complete, providing the Company with updated information to reflect in its transaction price estimates. For policy batches where the updated information indicated adverse performance, the Company concluded that the probability of a meaningful Adjustment was no longer remote and reduced the estimated transaction price accordingly. The Company updates its transaction price estimates at each reporting date to reflect the information then available.
15
Health In Tech, Inc.
Notes to Consolidated Financial Statements
2. Summary of Significant Accounting Policies (cont.)
For the three and six months ended June 30, 2026, the Company estimated
contra revenue of $
Contract Assets and Contract Liabilities
Contract assets represent the Company’s right to consideration in exchange for goods or services that the entity has transferred to a customer when that right is conditioned on something other than the passage of time. Contract liabilities represent the Company’s obligation to transfer goods or services to a customer for which the entity has received consideration. As of June 30, 2026 and December 31, 2025, the Company did not have contract assets or liabilities.
Costs to Obtain a Contract
Under ASC 340-40, Other Assets and Deferred Costs — Contracts with Customers (“ASC 340”) incremental costs of obtaining a contract, such as sales commissions and bonus programs afforded to brokers, are capitalized if they are expected to be recovered. The Company elected the practical expedient under ASC 340 to expense the costs to obtain a contract as incurred when the expected amortization period is one year or less. As of June 30, 2026 and December 31, 2025, there were no such capitalized costs. All eligible contract acquisition costs expensed by the Company have been included in sales and marketing expenses on the Company’s Consolidated Statements of Operations for the three and six months ended June 30, 2026 and 2025.
Significant Financing Components
The Company elected the practical expedient that allows the Company to not assess a contract for a significant financing component if the period between the customer’s payment and the transfer of the goods or services is one year or less. There were no significant financing components during the three and six months ended June 30, 2026 and 2025, respectively.
16
Health In Tech, Inc.
Notes to Consolidated Financial Statements
2. Summary of Significant Accounting Policies (cont.)
Cost of Revenues
The Company’s cost of revenues primarily consists of direct costs attributable to operating its platform and delivering platform-enabled services, many of which vary with the volume of services delivered, (i) infrastructure costs to operate its platform, such as hosting fees, fees paid to various third-party partners for access to their technology and services, and amortization expenses of the Company’s capitalized internal-use software related to its platform, (ii) costs of plan administrative services provided by the TPA designated in each pre-designed plan and other vendors assigned to each TPA, and (iii) costs related to the captive management activities. The captive management activities include introducing new carriers, conducting due diligence on carriers, conducting feasibility studies to determine the viability to be a stop-loss carrier on the platform, negotiating terms and contracts, coordinating audit requests, managing relationship with unrelated carriers and their regulators and auditor firms to ensure that the risk associated with the Company’s service offerings is minimized. Personnel costs associated with underwriting oversight, claims management, enrollment support and other operational functions are classified as general and administrative expenses. These employees support the Company’s overall operating platform and service infrastructure across its portfolio of carrier and employer relationships, rather than performing activities that are directly identifiable to a specific revenue contract or separately priced service deliverable.
Stock-Based Compensation Expense
In accordance with ASC 718, Compensation — Stock Compensation, the Company’s share-based compensation program provides for the grant of stock options, restricted stock awards (“RSAs”) and unrestricted stock awards to officers, employees, directors and non-employees. The fair value of stock options granted in July 2023 and August 2024 was determined using the binomial option-pricing model. The fair value of RSAs granted before the Company’s initial public offering (the “initial public offering” or the “IPO”) was based on the fair value of the Company’s common stock on the date of the grant, using the discounted cash flow method and back-solve method, respectively. The fair value of unrestricted and restricted stock granted after the IPO is based on the closing market price on the date of the grant.
Effective April 10, 2026, following the consolidation of HITChain, the Company’s stock-based compensation expense also includes equity awards granted under HITChain’s equity incentive plan. HITChain’s share-based compensation program grant awards include stock options and RSAs to officers, directors and non-employees. The fair value of stock options granted was determined using the binomial option-pricing model. The fair value of RSAs granted was based on the fair value of HITChain’s common stock on the date of the grant. See Note 7 for further details.
The Company grants stock options and RSAs that are subject to either service or service and performance-based vesting conditions. Compensation expense for awards to officers, employees and directors with service-based vesting conditions is recognized using the straight-line method over the requisite service period, which is generally the vesting period of the respective award. Forfeitures are estimated at the time of grant and revised in subsequent periods if actual forfeitures differ from those estimates. The Company uses historical data to estimate awards’ forfeitures and records stock-based compensation expense only for those awards that are expected to vest. Compensation expense for awards to non-employees with service-based vesting conditions is recognized in the same manner as if the Company had paid cash in exchange for services, which is generally over the vesting period of the award. Should the Company terminate any of its consulting agreements, the unvested options and RSAs underlying the agreements would be cancelled. Compensation expense for awards to officers, employees, directors and non-employees with service and performance-based vesting conditions is recognized based on the grant-date fair value over the requisite service period on a straight-line basis to the extent achievement of the performance condition is probable. The Company reassesses the probability of achieving the performance condition at each reporting date and begins recognizing expense only when it is probable that the condition will be met.
The Company’s expected stock price volatility assumption is based
on the volatility of comparable public companies. The expected term of a stock option granted to employees and directors (including non-employee
directors) is based on the average of the contractual term (generally
Net Income (Loss) Per Share
Net income (loss) per share is provided in accordance with ASC 260,
Earnings per Share. The Company computes basic net income (loss) per share by dividing net income (loss) attributable to common
stockholders by the weighted-average number of shares of common stock outstanding during the period. The Company’s Class A Common
Stock and Class B common stock, $
17
Health In Tech, Inc.
Notes to Consolidated Financial Statements
2. Summary of Significant Accounting Policies (cont.)
Diluted net income (loss) per share includes the potential dilutive
effect of common stock equivalents as if such securities were converted or exercised during the period, when the effect is dilutive, including
unvested RSAs and outstanding stock options. For the purpose of computing diluted net income (loss) per share, RSAs and options with a
performance-based vesting condition are considered contingently issuable, and such contingent shares are included in the denominator for
computing diluted net income (loss) per share only once the performance condition is met, and only to the extent such RSAs and options
are dilutive. For the three and six months ended June 30, 2026, diluted shares attributable to RSAs or options were included in the
calculation of net loss per share. For the three months ended June 30, 2025, diluted shares attributable to
The following table sets forth the computation of basic and diluted net income (loss) per share of common stock for the three and six months ended June 30, 2026 and 2025:
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Net (loss) income attributable to common stockholders | $ | ( | ) | $ | $ | ( | ) | $ | ||||||||
| Weighted average shares outstanding | ||||||||||||||||
| Basic | ||||||||||||||||
| Total dilutive effect of outstanding equity awards | ||||||||||||||||
| Diluted | ||||||||||||||||
| Net (loss) income per share attributable to common stockholders | ||||||||||||||||
| Basic | $ | ( | ) | $ | $ | ( | ) | $ | ||||||||
| Diluted | $ | ( | ) | $ | $ | ( | ) | $ | ||||||||
The following outstanding stock awards were not considered in the computation of diluted net income (loss) per share attributable to holders of common stock as they had antidilutive effects for the three and six months ended June 30, 2026 and 2025:
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Restricted stock awards | ||||||||||||||||
| Option awards | ||||||||||||||||
| Total | ||||||||||||||||
18
Health In Tech, Inc.
Notes to Consolidated Financial Statements
2. Summary of Significant Accounting Policies (cont.)
Recently Issued Accounting Standards Not Yet Adopted
In November 2024, the FASB issued ASU 2024-03 Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses. This standard calls for enhanced disclosures about components of expense captions on the face of the income statement. This standard will be effective for fiscal years beginning after December 15, 2026, with the option to apply it retrospectively. Early adoption is allowed. Currently, the Company is assessing the potential impact of this guidance on its consolidated financial statement disclosures.
In September 2025, the FASB issued ASU 2025-06 Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software, which amends certain aspects of the accounting for and disclosure of software costs under ASC 350-40. The new standard is effective for annual periods beginning after December 15, 2027, and interim reporting periods within those annual reporting periods. Early adoption is allowed. The new standard may be applied prospectively, retrospectively, or via a modified prospective transition method. Currently, the Company is assessing the potential impact of this guidance on its consolidated financial statement disclosures.
3. Loans Receivable, Net
On October 10, 2023, the Company entered into a Promissory Note Agreement
with Kang Youle Limited, which constitutes an unsecured lending arrangement. Under this Promissory Note Agreement, the Company agreed
to lend $
Although not part of HIT’s core business, the Company will strategically invest its assets in a manner to maximize risk-adjusted return and promote shareholder wealth. The Company provided the promissory note to Kang Youle Limited, an independent third party with access to a network of insurance sectors internationally.
4. Stockholders’ Equity
The Company has three classes of stock: (1) Class A Common Stock; (2) Class B Common Stock, and (3) Series A Preferred Stock.
The total number of shares of stock that the Company has authority
to issue is
Holders of Class B Common Stock are entitled to
Holders of Class A Common Stock and Class B Common Stock are entitled to dividends when, and if, declared at the discretion of the Company. However, holders of Series A Preferred Stock are entitled to receive non-cumulative dividends prior and in priority to any dividends declared on the common stock. Accordingly, no dividends may be paid on common stock unless all declared dividends on the Series A Preferred Stock have been paid or set aside for payment.
On March 27, 2026, the Company completed a public equity financing
(the “PIPE”) through which it issued and sold
On June 15, 2026, the Company issued
As of June 30, 2026 and December 31, 2025,
From time to time, the Company issues shares of common stock in connection with the granting of RSAs and the exercise of stock options under its equity incentive plans. For a detailed summary of these issuances and related stock-based compensation, please refer to Note 7.
19
Health In Tech, Inc.
Notes to Consolidated Financial Statements
5. Commitments and Contingencies
Legal Proceedings
From time to time, the Company is party to various litigation matters incidental to the conduct of its business. The Company is not presently party to any legal proceedings the resolution of which it believes would have a material adverse effect on its business, prospects, financial condition, liquidity, results of operation, cash flows or capital levels.
Leases
The Company entered into a five-year lease for its corporate headquarters
in Stuart, Florida, commencing in November of 2022. The Company’s real estate lease also includes executory costs such as common
area maintenance (non-lease component) and real estate taxes (not considered a component of the Company’s lease). As a practical
expedient permitted under ASC 842, the Company has elected to account for the lease and non-lease components as a single lease component.
For the three and six months ended June 30, 2026 and 2025, the rent-related expenses for this lease were $
The Company’s office lease is classified as an operating lease.
At the inception date of the office lease, the Company recorded a right-of-use asset of $
During the three and six months ended June 30, 2026, the Company
made cash payments of $
The following table reconciles the undiscounted lease liabilities to the total lease liabilities recognized on the Consolidated Balance Sheet as of June 30, 2026:
| 2026 | ||||
| 2027 | ||||
| Total undiscounted lease liabilities | $ | |||
| Less effects of discounting | ( | ) | ||
| Total lease liabilities | $ |
The remaining lease term was
The discount rate used to determine the operating lease liability was
20
Health In Tech, Inc.
Notes to Consolidated Financial Statements
6. Income Taxes
(Loss) income before income taxes consists of the following:
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Federal | $ | ( | ) | $ | ( | ) | ||||||||||
| Foreign | ||||||||||||||||
| (Loss) income before income taxes | $ | ( | ) | $ | ( | ) | ||||||||||
During the three and six months ended June 30, 2026, the Company recognized
an income tax benefit of $
The Company’s income tax provision consists of the following for the three and six months ended June 30, 2026 and 2025:
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Current income tax expense | ||||||||||||||||
| Federal | $ | $ | $ | $ | ||||||||||||
| State | ||||||||||||||||
| Total current income tax expense | $ | $ | $ | $ | ||||||||||||
| Deferred income tax benefit | ||||||||||||||||
| Federal | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| State | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Total deferred income tax benefit | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Total income tax provision | $ | ( | ) | $ | $ | ( | ) | $ | ||||||||
Beginning in its 2025 annual financial reporting, the Company adopted
ASU 2023-09 on a prospective basis.
| Three Months Ended June 30, 2026 | Six Months Ended June 30, 2026 | |||||||||||||||
| Amount | Rate | Amount | Rate | |||||||||||||
| Statutory federal income tax rate | ( | ) | % | ( | ) | % | ||||||||||
| State taxes (net of federal benefit) | ( | ) | ( | ) | ||||||||||||
| Permanent difference | ( | ) | ( | ) | ||||||||||||
| Other | ( | ) | ( | ) | ||||||||||||
| Effective tax rate | ( | ) | % | ( | ) | % | ||||||||||
The following table presents the reconciliation of income taxes computed at the U.S. federal statutory tax rate to income tax provision for the three and six months ended June 30, 2025 prior to the adoption of ASU 2023-09:
| Three Months Ended June 30, 2025 | Six Months Ended June 30, 2025 | |||||||
| Statutory federal income tax rate | % | % | ||||||
| State taxes (net of federal benefit) | ||||||||
| Permanent difference | ||||||||
| Effective tax rate | % | % | ||||||
21
Health In Tech, Inc.
Notes to Consolidated Financial Statements
6. Income Taxes (cont.)
The Company’s net deferred tax assets and liabilities consisted of the following as of June 30, 2026 and December 31, 2025:
| June 30, | December 31, | |||||||
| 2026 | 2025 | |||||||
| Deferred tax assets: | ||||||||
| Net Operating Loss | ||||||||
| Stock-based compensation | ||||||||
| Bad debt allowance | ||||||||
| Accrued liability | ||||||||
| Gross deferred tax assets | $ | $ | ||||||
| Deferred tax liabilities: | ||||||||
| Research & Development credits | ( | ) | ( | ) | ||||
| Right of use assets/Lease Liability | ( | ) | ( | ) | ||||
| Total Deferred Tax Liabilities | $ | ( | ) | $ | ( | ) | ||
| Net deferred tax assets (liabilities): | $ | $ | ( | ) | ||||
As of June 30, 2026, the Company had federal net operating loss carryforwards
of approximately $
In general, under Section 382 of the U.S. Internal Revenue Code of 1986, as amended, a corporation that undergoes an “ownership change” is subject to limitations on its ability to utilize its pre-change net operating loss carryforwards (“NOLs”) to offset future taxable income. As of June 30, 2026, the Company has not performed such an analysis evaluation the potential limitation of the Company’s net operating loss carryforwards due to the “Change in ownership” as defined under Section 382 of the Internal Revenue Code.
The Company evaluates the realizability of its deferred tax assets and the need for a valuation allowance at the end of each fiscal quarter. Based on all available positive and negative evidence, including forecasts of future taxable income and statutory carryforward periods, management concluded that it is more likely than not that its deferred tax assets will be realized. Accordingly, no valuation allowance was required as of June 30, 2026.
On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was signed into law, introducing significant changes to the U.S. federal tax system. Among other provisions, the OBBBA restored immediate expensing for certain domestic research and experimental (“R&E” ) expenditures, provided potential retroactive relief or accelerated deductions for previously capitalized R&E costs, reinstated EBITDA-based limitations for interest expense deductions, and made certain business tax incentives permanent. The OBBBA did not have a material impact on the Company¡¯s income tax benefit or expense, or related tax assets and liabilities, for the period ended June 30, 2026. The Company plans to expense qualifying domestic R&E costs beginning in 2025 and accelerate the amortization of previously capitalized and unamortized R&E costs. The Company does not intend to apply retroactive treatment to prior tax periods.
The amounts of cash income taxes paid by the Company were as follows:
| Six Months Ended June 30, 2026 | ||||
| Federal | ||||
| State | ||||
| Foreign | ||||
| Total | $ | |||
22
Health In Tech, Inc.
Notes to Consolidated Financial Statements
7. Stock-Based Compensation
HIT Equity Awards
2022 Equity Incentive Plan
On December 21, 2022, the Company adopted and approved the Health
in Tech Equity Incentive Plan (the “2022 Plan”), which provides for the issuance of
2024 Equity Incentive Plan
On December 24, 2024, the Company adopted and approved the 2024 Plan.
The 2024 Plan is a comprehensive incentive compensation plan under which the Company can grant
Some RSAs granted under the 2024 Plan have service-based vesting conditions
and vest over a period from
23
Health In Tech, Inc.
Notes to Consolidated Financial Statements
7. Stock-Based Compensation (cont.)
Restricted Stock Awards
Service-based RSAs
The table below identifies service-based RSA activity under the 2024 Plan and certain awards granted outside of the Company’s equity incentive plans for the relevant periods presented:
| Numbers of RSAs | Weighted Average Fair Value Per RSA | |||||||
| Unvested as of December 31, 2025 | $ | |||||||
| Granted (1) | ||||||||
| Vested | ( | ) | ||||||
| Canceled/Forfeited | ( | ) | ||||||
| Unvested as of June 30, 2026 | $ | |||||||
(1)
As of June 30, 2026, there was $
Service and performance-based RSAs
The table below identifies service and performance-based RSA activity under the 2022 Plan and the 2024 Plan for the relevant periods presented:
| Numbers of RSAs | Weighted Average Fair Value Per RSA | |||||||
| Unvested as of December 31, 2025 | $ | |||||||
| Granted | | |||||||
| Vested | ( | ) | ||||||
| Canceled/Forfeited | ( | ) | ||||||
| Unvested as of June 30, 2026 | $ | |||||||
As of June 30, 2026, there was $
During the six months ended June 30, 2026 and 2025, the Company cancelled
and retired
24
Health In Tech, Inc.
Notes to Consolidated Financial Statements
7. Stock-Based Compensation (cont.)
Options
The table below identifies stock options activity under the 2022 Plan for the relevant periods presented:
| Outstanding stock options | Weighted average exercise price | Weighted average remaining contractual life (years) | Aggregate intrinsic value | |||||||||||||
| Balance as of December 31, 2025 | $ | $ | ||||||||||||||
| Granted | ||||||||||||||||
| Exercised | ||||||||||||||||
| Canceled/Forfeited | ( | ) | ||||||||||||||
| Balance as of June 30, 2026 | $ | $ | ||||||||||||||
| Vested as of June 30, 2026 | $ | $ | ||||||||||||||
| Vested and expected to vest as of June 30, 2026 | $ | $ | ||||||||||||||
The intrinsic value of a stock option is calculated as the difference
between the per share exercise price of the underlying stock option award and the closing stock price on the last trading day in fiscal
quarter. There were stock options granted or exercised during the six months ended June 30, 2026 and 2025. The total fair
value of options vested during the six months ended June 30, 2026 and 2025 was $
As of June 30, 2026, there was $
HITChain Equity Awards
2026 Equity Incentive Plan
On April 10, 2026, HITChain adopted and approved the 2026 Equity Incentive
Plan (the “2026 Plan”), which provides for the issuance of
25
Health In Tech, Inc.
Notes to Consolidated Financial Statements
7. Stock-Based Compensation (cont.)
Restricted Stock Awards
Service and performance-based RSAs
The table below identifies service and performance-based RSA activity for shares of Class A Common Stock under the 2026 Plan for the relevant periods presented:
| Numbers of RSAs | Weighted Average Fair Value Per RSA | |||||||
| Unvested as of December 31, 2025 | $ | |||||||
| Granted | ||||||||
| Vested | ||||||||
| Canceled/Forfeited | ||||||||
| Unvested as of June 30, 2026 | $ | |||||||
As of June 30, 2026, there was no unrecognized compensation cost, adjusted
for estimated forfeitures based on historical data, related to non-vested service and performance-based RSAs that were considered probable
of achievement. As of June 30, 2026, there was $
Options
The table below identifies the stock options activity for shares of Class B Common Stock granted to the Company’s Chief Executive Officer and Chief Financial Officer under the 2026 Plan for the relevant periods presented:
| Outstanding stock options | Weighted average exercise price | Weighted average remaining contractual life (years) | Aggregate intrinsic value | |||||||||||||
| Balance as of December 31, 2025 | $ | $ | ||||||||||||||
| Granted | ||||||||||||||||
| Exercised | ||||||||||||||||
| Canceled/Forfeited | ||||||||||||||||
| Balance as of June 30, 2026 | $ | $ | ||||||||||||||
| Vested as of June 30, 2026 | $ | $ | ||||||||||||||
| Vested and expected to vest as of June 30, 2026 | $ | $ | ||||||||||||||
The intrinsic value of a stock option is calculated as the difference
between the per share exercise price of the underlying stock option award and the estimated per share fair value of the HITChain’s
common stock at the measurement date. There were no stock options exercised during the six months ended June 30, 2026. The weighted-average
fair value of options granted during the six months ended June 30, 2026 was $
26
Health In Tech, Inc.
Notes to Consolidated Financial Statements
7. Stock-Based Compensation (cont.)
The estimated fair value of stock options was calculated using the binomial option-pricing model, based on the following range of assumptions:
| Six Months Ended June 30, 2026 | ||||
| Expected volatility | % | |||
| Risk-free interest rate | % | |||
| Exercise multiples | ||||
| Expected dividend yield | % | |||
| Forfeited rates | % | |||
| Fair market value per common share | ||||
Expected volatilities are based on historical volatilities of the similar public companies’ common shares over the respective expected term of the share-based awards. Risk-free interest rate is based on the yield of U.S. Treasury Strips with maturity terms similar to the expected term on the share-based awards. The exercise multiples are the share price multiples upon which the employees are likely to exercise share options. Fair market value per common share is the market value of HITChain’s stocks on the grant date. The shares of common stock to be issued upon the exercise of stock options are made available from authorized and unissued common stock.
8. Subsequent Events
Equity Awards and Share Cancellation
On July 8, 2026, the Company granted an aggregate of
On July 15, 2026, the Company cancelled and retired
Board Changes
On August 10, 2026, Sanjay Shrestha, a member of the Board of Directors of the Company (the “Board”) resigned from the Board, effective immediately. In connection with his resignation from the Board, Mr. Shrestha also resigned from all committees of the Board on which he served, including the Audit Committee, Nominating and Governance Committee and Compensation Committee of the Board. Mr. Shrestha’s resignation was in relation to other professional and personal commitments and not due to any disagreement with the Company on any matter relating to the Company’s operations, policies or practices.
Convertible Financing
On August 12, 2026 (the “Effective Date”), the Company
entered into a Standby Equity Purchase Agreement (the “SEPA”) with YA II PN, Ltd. (the “Investor”) pursuant to
which the Company has the right, but not the obligation, to sell up to $
27
Health In Tech, Inc.
Notes to Consolidated Financial Statements
8. Subsequent Events (cont.)
Pursuant to the SEPA, the Investor has agreed to provide the Company
with pre-paid advances (each, a “Pre-Paid Advance”) in an aggregate principal amount of up to $
Each Pre-Paid Advance will be funded at a
Pursuant to the SEPA, the Company has agreed, among other things, (i)
to enter into the Registration Rights Agreement, (ii) to, within 90 calendar days of the Effective Date, subject to applicable Nasdaq
rules and regulations, seek approval by the Company’s shareholders of (A) the issuance of Common Shares in an amount up to the Commitment
Amount (without regard to the Exchange Cap) and (B) the issuance of the maximum number of shares of Class A common stock issuable upon
conversion of the Promissory Notes (without regard to the Exchange Cap), and (iii) until the Promissory Notes have been paid in full,
not to (A) repay any loans to any of its executives or employees or make any payments in respect of related party debt, (B) other than
with the Investor, enter into any Variable Rate Transaction (as defined in the SEPA), including the issuance or sale of Class A common
stock or securities convertible into, exchangeable or exercisable therefor, at a conversion, exchange or exercise price that varies with
the trading price of the Class A common stock or is subject to being reset at some date after such securities’ initial issuance,
(C) enter into any at-the-market agreement unless a specified affiliate of the Investor is the sole executing broker on such facility,
with said specified affiliate additionally granted a participation right of at least
Pursuant to the Registration Rights Agreement, and subject to certain exceptions contained therein, the Company will be required to file a Registration Statement with the SEC to register the Common Shares issuable under the SEPA for resale within twenty one (21) calendar days of the Effective Date, to use its commercially reasonable efforts to have such Registration Statement declared effective within the time period set forth therein, and to keep the Registration Statement effective until (i) the date that all registrable securities covered by the Registration Statement have been sold, thereunder or pursuant to Rule 144 promulgated under the Securities Act (“Rule 144”), or (ii) termination of the SEPA, which SEPA shall terminate automatically on the earlier of (x) 36 months from the Effective Date, provided all outstanding Promissory Notes have been repaid, and (y) the date on which the Investor shall have made an aggregate of Pre-Paid Advances to the Company for a number of Common Shares equal to the Commitment Amount.
The SEPA provides for a commitment fee, which is earned as of the
Effective Date, equal to
As of the date of this filing, the Company had not received any proceeds under or issued any Common Shares or Promissory Notes pursuant to the SEPA.
28
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
You should read the following discussion of our financial condition and results of operations in conjunction with our consolidated financial statements and the related notes included elsewhere in this Quarterly Report on Form 10-Q and with our audited consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2025, as filed with the Securities and Exchange Commission. In addition to our historical consolidated financial information, the following discussion contains forward-looking statements that reflect our plans, estimates, and beliefs. Our actual results could differ materially from those discussed in the forward-looking statements. Factors that could cause or contribute to these differences include those discussed below and elsewhere in this Quarterly Report on Form 10-Q, particularly in Part II, Item 1A, “Risk Factors.”
Overview
Health In Tech (“HIT”) is an insurance technology platform company, which offers a marketplace that aims to improve processes in the healthcare industry through vertical integration, process simplification, and automation. By removing friction and complexities, we streamline the underwriting, sales and service process for insurance companies, licensed brokers, Managing General Underwriters (MGUs) and TPAs.
Marketplace: We are a health insurance marketplace where insurance companies can list various stop-loss policy options for self-funded benefits plans. Licensed brokers registered on our platform can log in, upload certain required information, select policy plans, obtain a bindable quote and sell them to businesses. In most cases, our technology enables us to medically underwrite insurance policies and produce bindable quotes within about two minutes for small employers (10-100 employees) and about two weeks for larger employers (exceeding 100 employees), allowing us to deliver an integrated and seamless sales cycle.
Customizable Solutions: Beyond policy underwriting and sales, our marketplace offers customization of health benefits plans, vendors, claims, and network services. Brokers can select customized plans that suit their customers.
Accessibility and Savings: We make self-funded benefits plans and stop loss insurance accessible online for businesses. We aim to deliver meaningful cost savings for low-risk employers with comparatively healthy employees through a digital medical underwriting process. We seek to deliver time savings for employers, brokers, TPAs, and carriers, by leveraging both external and internally developed technology.
As of June 30, 2026, we had 396 business clients in 38 states, with our services and platforms actively utilized by 629 brokers, 10 Third-Party Administrators (TPAs), and 294 additional third-party agencies. For the first half of 2026, total revenues were $16.8 million, a slight decrease of approximately 3% compared to $17.3 million for the same period in 2025. The decrease was primarily attributable to the onboarding of a new stop-loss insurance carrier, which caused sales delays to later months. The onboarding of the new carrier and certain portfolio transfers between carriers were designed to provide greater options and flexibility to employers. Because we recognize revenue ratably over the contractual term of each policy beginning on its effective date, this represents a timing shift in revenue recognition rather than a reduction in underlying business volume and moving a portion of expected 2026 revenue recognition into 2027. The new carrier was onboarded during the second quarter of 2026, and we expect the transition to be substantially complete by September 2026 and the business volume to recover during the third quarter of 2026 as the transition progresses. The carrier transition also resulted in an increase in the balance of accounts receivable and accounts payable as of June 30, 2026, as further discussed below.
We currently generate most of our revenue from service fees and underwriting fees, that are associated with customers who purchase self-funded benefits plans and stop loss insurance. These plans are facilitated through a network of brokers, TPAs, MGUs, carriers, and other third-party agents. These agencies either directly engage our services or provide valuable client referrals.
29
Key Factors Affecting our Performance
Our ability to retain and expand our network of brokers, TPAs, MGUs and other third-party agents.
While we generate our revenue primarily from employers and insurance carriers, we currently derive substantially all of our business through brokers, TPAs, and other third-party agents who provide referrals. As a result, the size of our network is critical to our success. We have experienced significant network growth since we commenced operations, and we believe we have the opportunity to continue to grow our network by providing superior innovation in automation, great client experience, competitive pricing, access to quality providers, and competitive insurance coverage relative to other insurers in the same geographic and insurance markets.
Our ability to enter into more collaborations with insurance carriers and offer new products and plans
Our business growth will depend on our ability to collaborate with a diverse range of insurance carriers to service the excess coverage needs of our clients. These collaborations are essential for expanding our portfolio of products and services. Our growth strategy is heavily reliant on our capability to introduce innovative insurance products and plans. By collaborating with multiple insurance carriers, we can leverage their expertise and resources to develop a broader range of offerings. This not only enables us to meet the specific requirements of our clients but also helps in staying competitive in a rapidly changing market.
Our ability to accurately perform underwriting procedures
Our growth is significantly dependent on our ability to accurately perform underwriting procedures and maintain strong relationships with brokers, TPAs, carriers, MGUs, and other third-party agents who utilize our platforms. A failure to conduct precise underwriting actuarial reviews and adjustments to our underwriting tools could result in increased costs and pricing for health plans.
While we are not bound by any agreements that would necessitate paying fees exceeding estimated insurance costs, nor do we have agreements that require indemnification of the carrier, such a failure could cause reputational harm to our eDIYBS platform. This could lead to increased premiums for plans accessed through our platform, potentially affecting our financial standing and market competitiveness.
Our ability to continue invest in technology and innovation
Our ongoing commitment to investing in technology is crucial for driving advancements in automation and enhancing operational efficiency across all aspects of our business. We are dedicated to regularly updating and developing new technology. This continuous investment in technology and innovation will position us at the forefront of the insurance technology.
30
Seasonality
Our business is generally affected by the seasonal patterns of our enrollment and medical expenses. Usage of our underwriting and quoting platform is seasonal, primarily due to the common renewal of health plan policies in December and January. While we believe we have visibility into the seasonality of our business, our rapid growth rate over the last couple years may have made seasonal fluctuations more difficult to detect. If our rate of growth slows over time, seasonal or cyclical variations in our operations may become more pronounced, and our business, results of operations and financial position may be adversely affected.
Key Financial and Operating Performance Metrics
We regularly monitor a number of financial and operating metrics in order to measure our current performance and project our future performance. These metrics help us develop and refine our growth strategies and make strategic decisions. We discuss revenues, cost of revenues, and the components of operating expenses. We utilize other key metrics as described below.
Contracted Revenue
Contracted Revenue represents the total revenue expected to be generated over the contractual term of self-funded health plan policies placed through our platform. Standard self-funded plan policies generally have a contractual term of 12 months, while our Three-Year Rate Stabilization Program is designed with a 36-month contractual term. Revenue is recognized under U.S. GAAP on a straight-line basis over the policy term, beginning on the policy’s effective date. Accordingly, Contracted Revenue represents revenue that has been contractually secured but has not yet been fully recognized under U.S. GAAP, providing an indication of future revenue expected from existing contracts.
Contracted Revenue totaled $32.3 million for the first half of 2026, of which $17.3 million was recognized as GAAP revenue in the first half of 2026. The remaining $14.0 million and $1.0 million are expected to be recognized as GAAP revenue in the second half of 2026 and in 2027, respectively.
Contracted revenue is presented prior to the impact of monthly adjustments, including changes in enrolled participants, plan mix, and other factors that may affect premium and fees. Accordingly, actual revenue recognized in future periods may differ from contracted revenue.
Pipeline Revenue
Pipeline Revenue represents revenue from self-funded plan policies that are being quoted, are in binding status, or have been contracted subsequent to the end of the reporting period. This metric reflects the entire contractual term of the underlying policies, some of which may not ultimately convert to revenue.
As of July 31, 2026, we had approximately $66.3 million Pipeline Revenue, of which $1.9 million was contracted, while the remaining $64.4 million is in the quoting or binding stage.
Platform Placed Plan Value (PPPV)
Platform Placed Plan Value represents the aggregate contractual value of self-funded health plans with stop-loss insurance (self-funded stop-loss plans) placed through our platform during the fiscal year through the applicable fiscal quarter end, measured over each plan’s full contractual term of typically 12 or 36 months from the plan’s effective date. PPPV reflects the total economic value flowing through the platform, including premium, claim funding, and administrative fees, and is a measure of platform transaction volume rather than an indication of our own revenue or take rate.
As of June 30, 2026, the platform placed $84.0 million of self-funded stop-loss plans.
Adjusted EBITDA
Adjusted EBITDA represents our net income (loss) attributable to common stockholders before net interest income, taxes and amortization expense, adjusted to eliminate stock-based compensation expense, including employer payroll taxes related to stock-based awards, provision for credit losses on other receivables and other non-recurring items. Adjusted EBITDA is not a measure calculated in accordance with United States Generally Accepted Accounting Principles, or GAAP. Please refer to “Results of Operations” in this item for a discussion of the limitations of adjusted EBITDA and reconciliations of adjusted EBITDA to net income (loss) attributable to common stockholders, the most comparable GAAP measurements, respectively, for the three and six months ended June 30, 2026 and 2025. We exclude certain non-recurring or non-cash items when calculating Adjusted EBITDA, and we believe this approach provides a more meaningful measure by offering a clearer view of our underlying operational performance.
31
Components of Operating Results
Revenues
While we generate our revenue primarily from employers and insurance carriers, we grow our business primarily from offering solutions that streamline sales processes, enhance service delivery, and reduce the sales cycle. We offer our services through our subsidiaries. Program and platform management services and self-funded plan administration services provided by SMR and MGU activities provided by ICE (including eDIYBS) are interdependent, as they cannot function effectively without being combined. Currently ICE does not offer underwriting services as a standalone service. In the future, we may consider offering standalone service based on different functionalities and technology deliveries.
| (i) |
SMR is a program manager specializing in customized self-funded benefits programs and pre-designed bundled plan options for businesses. Under its legacy program and platform management services, it creates the program, selects networks and adds vendors, and sets up benefits plans on the marketplace after the vendors are selected by the brokers for the plan, including benefits structures, coverage options, and provider networks. Licensed brokers log in to the marketplace to select and sell self-funded benefits plans for businesses. SMR collaborates with TPAs and licensed brokers to design health plans that meet the specific needs of employers.
Starting January 1, 2026, SMR has expanded its service scope and launched the new self-funded plan administration services, enhancing its service model to deliver pre-configured, end-to-end self-funded health benefit solutions. Leveraging long-term vendor management experience, SMR develops a full suite of pre-designed customized plans bundled with stop-loss insurance coverage. The distribution partners, mainly brokers for now, are presented with over 100 configured plans. The Company curates and directly contracts with a dedicated network of specialized administrative vendors, tailoring service setups to fit employer and distribution partner needs with balanced standardization and flexibility. As of June 2026, over 100 configurable pre-designed plan options are available, which are rapidly implemented and combined with stop-loss coverage, greatly reducing plan administration complexity and driving overall operational efficiency. This enhanced service model provides employers and sales with more streamlined, differentiated and flexible self-funded plan arrangements.
The revenue from SMR is derived from a set fee charged per enrolled employee (EE) per month (PEPM). The fee varies depending on the type of plans selected by the broker or other distribution partner. These fees may vary based on plan design, covered population. SMR’s fees are part of self-funded stop loss plan payments, paid by employers. |
| (ii) | ICE develops and maintains all underwriting models. It defines risk criteria based on risk guidelines provided by carriers, manages underwriting of risk, manages claims activity, ensures reinsurance reporting, and handles monthly reinsurance filings. The revenue from ICE is derived as a specific percentage from the premium received, in our capacity as the Managing General Underwriter (MGU) of insurance companies (Carriers). ICE’s fees are paid by carriers. |
32
The following table sets forth the components of our revenues by subsidiaries and percentages of our total revenues for the periods presented:
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||||||||||||
| 2026 | % of revenue | 2025 | % of revenue | 2026 | % of revenue | 2025 | % of revenue | |||||||||||||||||||||||||
| Revenues | ||||||||||||||||||||||||||||||||
| Revenues from underwriting modeling (ICE) | $ | 1,272,647 | 15.8 | % | $ | 2,090,576 | 22.4 | % | $ | 2,741,461 | 16.3 | % | $ | 4,442,560 | 25.6 | % | ||||||||||||||||
| Revenues from fees (SMR) | 6,783,973 | 84.2 | % | 7,223,273 | 77.6 | % | 14,086,805 | 83.7 | % | 12,886,273 | 74.4 | % | ||||||||||||||||||||
| Total revenues | 8,056,620 | 100.0 | % | 9,313,849 | 100.0 | % | 16,828,266 | 100.0 | % | 17,328,833 | 100.0 | % | ||||||||||||||||||||
Cost of revenues
Cost of revenues primarily consists of direct costs attributable to operating its platform and delivering platform-enabled services, many of which vary with the volume of services delivered, (i) infrastructure costs to operate our platform, such as hosting fees, fees paid to various third-party partners for access to their technology and services, and amortization expenses of our capitalized internal-use software related to the platform, (ii) costs of plan administrative services provided by the TPA designated in each pre-designed plan and other vendors assigned to each TPA, and (iii) costs related to the captive management activities. We mainly outsource captive management services and data services from the third-party companies. Our internal proprietary system seeks to consistently improve underwriting and services results through machine learning and data feeds. The captive management activities include introducing new carriers, conducting due diligence on carriers, conducting feasibility studies to determine the viability to be a stop-loss carrier on the platform, negotiating terms and contracts, coordinating audit requests, managing relationship with unrelated carriers and their regulators and auditor firms to ensure that our risk associated with our service offerings is minimized. Personnel costs associated with underwriting oversight, claims management, enrollment support and other operational functions are classified as general and administrative expenses. These employees support the our overall operating platform and service infrastructure across our portfolio of carrier and employer relationships, rather than performing activities that are directly identifiable to a specific revenue contract or separately priced service deliverable. See Part II, “Item 1A. Risk Factors — Risks Related to our Business and Industry” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025 filed with the SEC on March 25, 2026 for additional information on the risks associated with our service offerings.
Sales and marketing expenses
Sales and marketing expenses primarily consist of (i) costs associated with expanding our distribution channels through third-party agents, which are variable and based on policies sold and fees collected, and (ii) costs related to the internal sales team responsible for onboarding agencies and agents onto the platform. These expenses include commissions, incentive compensation, salaries and benefits, and other related selling costs. Sales and marketing expenses also include the costs for advertising, promotional and other marketing activities, as well as certain fees paid to various third-party for sales and customer acquisition.
General and administrative expenses
General and administrative expenses primarily consist of personnel-related costs and related expenses for our executives, finance, legal, human resources, technical support, and operations personnel, as well as the costs associated with professional fees for external legal, accounting, and other consulting services, and insurance premiums. Personnel in the operations division, including those providing underwriting oversight, claims management, enrollment support and other operational functions, are classified as general and administrative because they support our overall operating platform and service infrastructure across our portfolio of carrier and employer relationships, rather than performing activities directly attributable to specific revenue contracts or separately priced service deliverables.
Research and development expenses
Research and development expenses primarily consist of personnel-related costs, including salaries, stock-based compensation expense and benefits for our research and development personnel. Additional expenses include costs related to research, design, and preliminary planning of new technology, as well as routine maintenance of its existing platform.
Income tax benefit (expense)
Income tax benefit (expense) consists primarily of changes to our current and deferred federal and state tax assets and liabilities. Deferred income taxes are recognized for the tax consequences of temporary differences between financial statement carrying amounts and the tax basis of assets and liabilities. Our deferred tax assets and liabilities are calculated by applying the current tax rates and laws to taxable years in which such differences are expected to reverse.
We continually review the need for, and the adequacy of, valuation allowances, and recognize benefits from our deferred tax assets only when an analysis of both positive and negative factors indicates that it is more likely than not such benefits will be realized.
33
Results of Operations
The following table sets forth our consolidated statements of operations for the periods presented, both in absolute amount and as a percentage of our total revenues for the periods presented:
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||||||||||||
| 2026 | % of revenue | 2025 | % of revenue | 2026 | % of revenue | 2025 | % of revenue | |||||||||||||||||||||||||
| Revenues | ||||||||||||||||||||||||||||||||
| Revenues from underwriting modeling (ICE) | $ | 1,272,647 | 15.8 | % | $ | 2,090,576 | 22.4 | % | $ | 2,741,461 | 16.3 | % | $ | 4,442,560 | 25.6 | % | ||||||||||||||||
| Revenues from fees (SMR) | 6,783,973 | 84.2 | % | 7,223,273 | 77.6 | % | 14,086,805 | 83.7 | % | 12,886,273 | 74.4 | % | ||||||||||||||||||||
| Total revenues | 8,056,620 | 100.0 | % | 9,313,849 | 100.0 | % | 16,828,266 | 100.0 | % | 17,328,833 | 100.0 | % | ||||||||||||||||||||
| Cost of revenues | 4,134,127 | 51.3 | % | 3,003,979 | 32.3 | % | 8,396,374 | 49.9 | % | 5,663,564 | 32.7 | % | ||||||||||||||||||||
| Gross profit | $ | 3,922,493 | 48.7 | % | $ | 6,309,870 | 67.7 | % | $ | 8,431,892 | 50.1 | % | $ | 11,665,269 | 67.3 | % | ||||||||||||||||
| Operating expenses | ||||||||||||||||||||||||||||||||
| Sales and marketing expenses | 2,215,889 | 27.5 | % | 1,226,738 | 13.2 | % | 4,507,490 | 26.8 | % | 2,316,993 | 13.4 | % | ||||||||||||||||||||
| General and administrative expenses | 4,269,094 | 53.0 | % | 3,775,453 | 40.5 | % | 7,724,652 | 45.9 | % | 7,022,218 | 40.5 | % | ||||||||||||||||||||
| Research and development expenses | 875,811 | 10.9 | % | 582,609 | 6.3 | % | 1,796,206 | 10.7 | % | 1,120,330 | 6.5 | % | ||||||||||||||||||||
| Total operating expenses | 7,360,794 | 91.4 | % | 5,584,800 | 60.0 | % | 14,028,348 | 83.4 | % | 10,459,541 | 60.4 | % | ||||||||||||||||||||
| Other income (expense): | ||||||||||||||||||||||||||||||||
| Interest income | 69,568 | 0.9 | % | 108,198 | 1.2 | % | 137,039 | 0.8 | % | 193,564 | 1.2 | % | ||||||||||||||||||||
| Other income | 100,000 | 1.2 | % | — | — | % | 122,334 | 0.7 | % | 118,399 | 0.7 | % | ||||||||||||||||||||
| Other expense | (52,341 | ) | (0.6 | )% | — | — | % | (52,341 | ) | (0.3 | )% | — | — | % | ||||||||||||||||||
| Total other income, net | 117,227 | 1.5 | % | 108,198 | 1.2 | % | 207,032 | 1.2 | % | 311,963 | 1.9 | % | ||||||||||||||||||||
| (Loss) Income before income tax expense | $ | (3,321,074 | ) | (41.2 | )% | $ | 833,268 | 8.9 | % | $ | (5,389,424 | ) | (32.1 | )% | $ | 1,517,691 | 8.8 | % | ||||||||||||||
| Income tax benefit (expense) | 809,888 | 10.1 | % | (202,637 | ) | (2.2 | )% | 1,289,957 | 7.7 | % | (388,468 | ) | (2.2 | )% | ||||||||||||||||||
| Net (loss) income | $ | (2,511,186 | ) | (31.1 | )% | $ | 630,631 | 6.7 | % | $ | (4,099,467 | ) | (24.4 | )% | $ | 1,129,223 | 6.6 | % | ||||||||||||||
| Net loss attributable to noncontrolling interests | (162 | ) | — | % | — | — | % | (162 | ) | — | % | — | — | % | ||||||||||||||||||
| Net (loss) income attributable to common stockholders | (2,511,024 | ) | (31.1 | )% | 630,631 | 6.7 | % | (4,099,305 | ) | (24.4 | )% | 1,129,223 | 6.6 | % | ||||||||||||||||||
| Other Financial Data: | ||||||||||||||||||||||||||||||||
| Adjusted EBITDA(1) | $ | (1,333,077 | ) | (16.5 | )% | $ | 1,569,016 | 16.8 | % | $ | (2,621,592 | ) | (15.6 | )% | $ | 2,797,227 | 16.1 | % | ||||||||||||||
| (1) | We define adjusted EBITDA as net (loss) income attributable to common stockholders before net interest income, taxes and amortization expense, adjusted to eliminate stock-based compensation expense, including employer payroll taxes related to stock-based awards, provision for credit losses on other receivables and other non-recurring items. See “Adjusted EBITDA” below for more information and for a reconciliation of adjusted EBITDA to net income (loss) attributable to common stockholders, the most directly comparable financial measure calculated and presented in accordance with GAAP. |
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Adjusted EBITDA
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Reconciliation from Net (Loss) Income Attributable to Common Stockholders to Adjusted EBITDA: | ||||||||||||||||
| Net (loss) income attributable to common stockholders | $ | (2,511,024 | ) | $ | 630,631 | $ | (4,099,305 | ) | $ | 1,129,223 | ||||||
| Interest income | (69,568 | ) | (108,198 | ) | (137,039 | ) | (193,564 | ) | ||||||||
| Amortization expense | 320,320 | 135,983 | 723,787 | 271,966 | ||||||||||||
| Income tax (benefit) expense | (809,888 | ) | 202,637 | (1,289,957 | ) | 388,468 | ||||||||||
| Stock-based compensation expense, including employer payroll taxes related to stock-based awards | 959,969 | 707,963 | 1,403,808 | 1,201,134 | ||||||||||||
| Provision for credit losses on other receivables | 739,773 | — | 739,773 | — | ||||||||||||
| Other non-recurring items | 37,341 | — | 37,341 | — | ||||||||||||
| Total net adjustments | 1,177,947 | 938,385 | 1,477,713 | 1,668,004 | ||||||||||||
| Adjusted EBITDA | $ | (1,333,077 | ) | $ | 1,569,016 | $ | (2,621,592 | ) | $ | 2,797,227 | ||||||
Consolidated Balance Sheet Data
| June 30, 2026 | December 31, 2025 | |||||||
| Cash and cash equivalents | $ | 6,514,813 | $ | 7,669,754 | ||||
| Accounts receivable, net | 8,546,307 | 756,288 | ||||||
| Other receivables, net | 3,392,082 | 3,467,814 | ||||||
| Software | 7,197,718 | 6,530,894 | ||||||
| Total assets | 29,634,680 | 23,089,961 | ||||||
| Total liabilities | 10,010,308 | 5,977,896 | ||||||
| Total stockholders’ equity | 19,624,372 | 17,112,065 | ||||||
Cash and cash equivalents
As of June 30, 2026, cash and cash equivalents decreased by $1,154,941 to $6,514,813, from $7,669,754 as of December 31, 2025. This decrease was mainly attributable to the net cash used in operating activities, partially offset by proceeds from a private investment in the PIPE during the six months ended June 30, 2026.
Accounts receivable, net
As of June 30, 2026, the net accounts receivable increased by $7,790,019 to $8,546,307, from $756,288 as of December 31, 2025. This increase was mainly attributable to delayed collections from the prior carrier during the transition period. We expect collections to normalize as the carrier transition is completed in the third quarter of 2026.
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Software
As of June 30, 2026, the balance of software increased by $666,824 to $7,197,718, from $6,530,894 as of December 31, 2025. This increase was mainly attributable to a $1,390,611 investment in software development, partially offset by a $723,787 increase in accumulated amortization for the six months ended June 30, 2026.
Total liabilities
As of June 30, 2026, the balance of total liabilities increased by $4,032,412 to $10,010,308, from $5,977,896 as of December 31, 2025. This increase was mainly attributable to the growth in accounts payable and accrued expenses, driven by delayed payments to vendors resulting from the temporary slowdown in collections from the prior carrier during the transition period, consistent with our back-to-back payment structure.
Total stockholders’ equity
As of June 30, 2026, the balance of total stockholders’ equity increased by $2,512,307 to $19,624,372, from $17,112,065 as of December 31, 2025. This increase was mainly attributable to our net proceeds of $5,928,120 from our PIPE, after deducting offering costs and placement agent fees. Please refer to our unaudited Consolidated Statements of Changes in Stockholders’ Equity for additional information.
Comparison of Three months ended June 30, 2026 and 2025
Revenues
| Three months ended June 30, | ||||||||||||||||||||||||
| 2026 | 2025 | Period-to-Period Change | ||||||||||||||||||||||
| Amount | Percentage of Revenue | Amount | Percentage of Revenue | Amount | Percentage | |||||||||||||||||||
| Revenues from underwriting modeling (ICE) | 1,272,647 | 15.8 | % | 2,090,576 | 22.4 | % | (817,929 | ) | (39.1 | )% | ||||||||||||||
| Revenues from fees (SMR) | 6,783,973 | 84.2 | % | 7,223,273 | 77.6 | % | (439,300 | ) | (6.1 | )% | ||||||||||||||
| Program and platform management fees | 1,825,226 | 22.7 | % | 7,223,273 | 77.6 | % | (5,398,047 | ) | (74.7 | )% | ||||||||||||||
| Self-funded plan administration fee | 4,958,747 | 61.5 | % | — | — | % | 4,958,747 | NM | ||||||||||||||||
| Total revenues | 8,056,620 | 100.0 | % | 9,313,849 | 100.0 | % | (1,257,229 | ) | (13.5 | )% | ||||||||||||||
“NM” denotes that the percentage change is not meaningful.
Total revenues for the three months ended June 30, 2026 were $8.1 million, a decrease of 13.5% from $9.3 million in the same period of 2025. The decline was primarily attributable to the onboarding of a new stop-loss insurance carrier, as the operational transition and coordination between new and existing carrier caused temporary delays in sales. The onboarding of the new carrier and certain portfolio transfers between carriers were designed to provide greater options and flexibility to employers. Because we recognize revenue ratably over the 12 or 36-month contract term of each policy beginning on its effective date, this represents a timing shift in revenue recognition rather than a reduction in underlying business volume and moving a portion of expected 2026 revenue recognition into 2027. The new carrier was onboarded during the second quarter of 2026, and we expect the transition to be substantially complete by September 2026.
Although the services provided by SMR and ICE are delivered as an interdependent and integrated solution and we evaluate their performance based on the total revenues generated, we provide the following breakdown for transparency. Revenues from underwriting modeling generated from ICE decreased by $0.8 million to $1.3 million, and revenues from fees generated from SMR decreased by $0.4 million to $6.8 million.
The decrease in revenues from underwriting modeling was larger than the decrease in revenues from fees, as SMR launched the pre-designed self-funded plan administration services effective on January 1, 2026. SMR enhances its services to offer pre-designed self-funded plans to employers, leveraging years of experience selecting and managing the vendors that are essential to the plan. This new service model provides employers with more streamlined, differentiated and flexible self-funded plan arrangements.
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Cost of revenues
| Three months ended June 30, | Period-to-Period | |||||||||||||||||||||||
| 2026 | 2025 | Change | ||||||||||||||||||||||
| Amount | Percentage of Revenue | Amount | Percentage of Revenue | Amount | Percentage of Revenue | |||||||||||||||||||
| Cost of revenues | 4,134,127 | 51.3 | % | 3,003,979 | 32.3 | % | 1,130,148 | 19.0 | % | |||||||||||||||
Cost of revenues increased by $1.1 million to $4.1 million for the three months ended June 30, 2026, from $3.0 million for the three months ended June 30, 2025. As a percentage of revenue, cost of revenues increased to 51.3% for the three months ended June 30, 2026, from 32.3% for the same period in 2025.
The increase was primarily attributable to costs of plan administrative services provided by the TPA and other vendors assigned to each TPA, as we continued to enhance our services and launched the pre-designed plan offerings in January 2026, which gave rise to the related plan administrative costs.
Sales and marketing expenses
| Three months ended June 30, | Period-to-Period | |||||||||||||||||||||||
| 2026 | 2025 | Change | ||||||||||||||||||||||
| Amount | Percentage of Revenue | Amount | Percentage of Revenue | Amount | Percentage of Revenue | |||||||||||||||||||
| Sales and marketing expenses | 2,215,889 | 27.5 | % | 1,226,738 | 13.2 | % | 989,151 | 14.3 | % | |||||||||||||||
Sales and marketing expenses were $2.2 million for the three months ended June 30, 2026, compared to $1.2 million for the three months ended June 30, 2025. As a percentage of revenue, sales and marketing expenses increased to 27.5% for the three months ended June 30, 2026, compared to 13.2% for the same period in 2025, primarily due to the increase in sales distribution fees with agencies, which drives revenue growth without the need for a large in-house sales force.
General and administrative expenses
| Three months ended June 30, | Period-to-Period | |||||||||||||||||||||||
| 2026 | 2025 | Change | ||||||||||||||||||||||
| Amount | Percentage of Revenue | Amount | Percentage of Revenue | Amount | Percentage of Revenue | |||||||||||||||||||
| General and administrative expenses: | ||||||||||||||||||||||||
| Operations division | 741,391 | 9.2 | % | 1,555,462 | 16.7 | % | (814,071 | ) | (7.5 | )% | ||||||||||||||
| Administrative division | 3,527,703 | 43.8 | % | 2,219,991 | 23.8 | % | 1,307,712 | 20.0 | % | |||||||||||||||
| Total General and administrative expenses | 4,269,094 | 53.0 | % | 3,775,453 | 40.5 | % | 493,641 | 12.5 | % | |||||||||||||||
We bifurcate general and administrative expenses as follows:
Operations division — The operations division mainly consists of payroll, stock-based compensation expense and benefits expenses incurred related to our underwriting, claims management, operations development, enrollment, nursing and strategic program development personnel.
Administrative division — The administrative division mainly represents payroll, stock-based compensation expense and benefits expenses incurred related to Executives, Human Resources, Accounting, Finance and Legal related personnel.
37
General and administrative expenses increased by $0.5 million to $4.3 million for the three months ended June 30, 2026, from $3.8 million for the three months ended June 30, 2025. The increase was primarily attributable to a provision for credit losses on other receivables of $0.7 million related to the Deferred Administrative Surplus, partially offset by lower operations division personnel costs resulting from workforce optimization initiatives. As a percentage of revenue, general and administrative expenses increased to 53.0% for the three months ended June 30, 2026, from 40.5% for the same period in 2025, primarily reflecting the credit loss provision and temporarily lower revenues due to the operational transitioning and readiness of onboarding a new carrier in the period.
Research and development expenses
| Three months ended June 30, | Period-to-Period | |||||||||||||||||||||||
| 2026 | 2025 | Change | ||||||||||||||||||||||
| Amount | Percentage of Revenue | Amount | Percentage of Revenue | Amount | Percentage of Revenue | |||||||||||||||||||
| Research and development expenses | 875,811 | 10.9 | % | 582,609 | 6.3 | % | 293,202 | 4.6 | % | |||||||||||||||
Research and development expenses increased by $0.3 million to $0.9 million for the three months ended June 30, 2026, from $0.6 million for the three months ended June 30, 2025. As a percentage of revenue, research and development expenses increased to 10.9% for the three months ended June 30, 2026, from 6.3% for the same period in 2025.
The increase was primarily attributable to our continued investment in technology development, driven by higher personnel costs as we expanded the development team.
As development activities progressed, a greater portion of work during the three months ended June 30, 2026 was directed toward earlier-stage research and new feature exploration, which does not meet the criteria for capitalization. Accordingly, the personnel-related costs associated with capitalized software development decreased by $0.3 million to $0.2 million for the three months ended June 30, 2026, from $0.5 million for the same period in 2025. During the three months ended June 30, 2026, our IT remained focused on developing new functionalities and features for our next-generation platform.
(Loss) income before income taxes
| Three months ended June 30, | Period-to-Period | |||||||||||||||||||||||
| 2026 | 2025 | Change | ||||||||||||||||||||||
| Amount | Percentage of Revenue | Amount | Percentage of Revenue | Amount | Percentage of Revenue | |||||||||||||||||||
| (Loss) income before income taxes | (3,321,074 | ) | (41.2 | )% | 833,268 | 8.9 | % | (4,154,342 | ) | (50.1 | )% | |||||||||||||
Income before income taxes decreased by $4.1 million to a loss of $3.3 million for the three months ended June 30, 2026, from income of $0.8 million for the three months ended June 30, 2025. This decrease was primarily attributable to temporarily lower revenues due to the onboarding of a new carrier, the plan administrative service costs associated with the pre-designed self-funded plan administration services launched in January 2026, and increased investment in sales, marketing and technology to support long-term growth.
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Income tax benefit (expense)
| Three months ended June 30, | Period-to-Period | |||||||||||||||||||||||
| 2026 | 2025 | Change | ||||||||||||||||||||||
| Amount | Percentage of Revenue | Amount | Percentage of Revenue | Amount | Percentage of Revenue | |||||||||||||||||||
| Income tax benefit (expense) | 809,888 | 10.1 | % | (202,637 | ) | (2.2 | )% | 1,012,525 | 12.3 | % | ||||||||||||||
Provision for income taxes decreased by $1.0 million to an income tax benefit of $0.8 million for the three months ended June 30, 2026, from an income tax expense of $0.2 million for the three months ended June 30, 2025. The decrease in provision for income taxes was primarily attributable to the loss before income taxes, driven by temporarily lower revenues due to the onboarding of a new carrier, higher plan administrative service costs, and increased investment in sales, marketing and technology.
Adjusted EBITDA
| Three months ended June 30, | Period-to-Period | |||||||||||||||||||||||
| 2026 | 2025 | Change | ||||||||||||||||||||||
| Amount | Percentage of Revenue | Amount | Percentage of Revenue | Amount | Percentage of Revenue | |||||||||||||||||||
| Adjusted EBITDA | (1,333,077 | ) | (16.5 | )% | 1,569,016 | 16.8 | % | (2,902,093 | ) | (33.3 | )% | |||||||||||||
Adjusted EBITDA decreased by $2.9 million to negative $1.3 million for the three months ended June 30, 2026, from $1.6 million for the three months ended June 30, 2025. As a percentage of revenue, adjusted EBITDA decreased to negative 16.5% for the three months ended June 30, 2026, from 16.8% for the same period in 2025. The decrease in adjusted EBITDA was primarily attributable to temporarily lower revenues due to the onboarding of a new carrier, the plan administrative service costs associated with the pre-designed self-funded plan administration services launched in January 2026, and increased investment in sales, marketing and technology to support long-term growth.
Comparison of Six months ended June 30, 2026 and 2025
Revenues
| Six months ended June 30, | ||||||||||||||||||||||||
| 2026 | 2025 | Period-to-Period Change | ||||||||||||||||||||||
| Amount | Percentage of Revenue | Amount | Percentage of Revenue | Amount | Percentage | |||||||||||||||||||
| Revenues from underwriting modeling (ICE) | 2,741,461 | 16.3 | % | 4,442,560 | 25.6 | % | (1,701,099 | ) | (38.3 | )% | ||||||||||||||
| Revenues from fees (SMR) | 14,086,805 | 83.7 | % | 12,886,273 | 74.4 | % | 1,200,532 | 9.3 | % | |||||||||||||||
| Program and platform management fees | 4,675,902 | 27.8 | % | 12,886,273 | 74.4 | % | (8,210,371 | ) | (63.7 | )% | ||||||||||||||
| Self-funded plan administration fee | 9,410,903 | 55.9 | % | — | — | % | 9,410,903 | NM | ||||||||||||||||
| Total revenues | 16,828,266 | 100.0 | % | 17,328,833 | 100.0 | % | (500,567 | ) | (2.9 | )% | ||||||||||||||
“NM” denotes that the percentage change is not meaningful.
Total revenues for the six months ended June 30, 2026 reached $16.8 million, down 2.9% from $17.3 million in the same period of 2025. The decline was primarily attributable to onboarding of a new stop-loss insurance carrier, as the operational transition and coordination between new and existing carrier caused temporary delays in sales. The onboarding of the new carrier and certain portfolio transfers between carriers were designed to provide greater options and flexibility to employers. Because we recognize revenue ratably over the 12 or 36-month contract term of each policy beginning on its effective date, this represents a timing shift in revenue recognition rather than a reduction in underlying business volume and moving a portion of expected 2026 revenue recognition into 2027. The new carrier was onboarded during the second quarter of 2026, and we expect the transition to be substantially complete by September 2026.
Although the services provided by SMR and ICE are delivered as an interdependent and integrated solution and we evaluate their performance based on the total revenues generated, we provide the following breakdown for transparency. While revenues from underwriting modeling generated from ICE decreased by $1.7 million to $2.7 million, this decline was partially offset by a $1.2 million increase in revenues from fees generated from SMR, resulting in a net decrease of $0.5 million in total revenues from the integrated solution.
Revenues from fees continue to outpace revenues from underwriting modeling as SMR launched the pre-designed self-funded plan administration services effective on January 1, 2026. SMR enhances its services to offer pre-designed self-funded plans to employers, leveraging years of experience selecting and managing the vendors that are essential to the plan. This new service model provides employers with more streamlined, differentiated and flexible self-funded plan arrangements.
39
Cost of revenues
| Six months ended June 30, | Period-to-Period | |||||||||||||||||||||||
| 2026 | 2025 | Change | ||||||||||||||||||||||
| Amount | Percentage of Revenue | Amount | Percentage of Revenue | Amount | Percentage of Revenue | |||||||||||||||||||
| Cost of revenues | 8,396,374 | 49.9 | % | 5,663,564 | 32.7 | % | 2,732,810 | 17.2 | % | |||||||||||||||
Cost of revenues increased by $2.7 million to $8.4 million for the six months ended June 30, 2026, from $5.7 million for the six months ended June 30, 2025. As a percentage of revenue, cost of revenues increased to 49.9% for the six months ended June 30, 2026, from 32.7% for the same period in 2025.
The increase was primarily attributable to costs of plan administrative services provided by the TPA and other vendors assigned to each TPA, as we continued to enhance our services and launched the pre-designed plan offerings in January 2026, which gave rise to the related plan administrative costs.
Sales and marketing expenses
| Six months ended June 30, | Period-to-Period | |||||||||||||||||||||||
| 2026 | 2025 | Change | ||||||||||||||||||||||
| Amount | Percentage of Revenue | Amount | Percentage of Revenue | Amount | Percentage of Revenue | |||||||||||||||||||
| Sales and marketing expenses | 4,507,490 | 26.8 | % | 2,316,993 | 13.4 | % | 2,190,497 | 13.4 | % | |||||||||||||||
Sales and marketing expenses were $4.5 million for the six months ended June 30, 2026, nearly doubled compared to $2.3 million for the six months ended June 30, 2025. As a percentage of revenue, sales and marketing expenses increased to 26.8% for the six months ended June 30, 2026, compared to 13.4% for the same period in 2025, primarily due to the increase in sales distribution fees with agencies, which drives revenue growth without the need for a large in-house sales force.
General and administrative expenses
| Six months ended June 30, | Period-to-Period | |||||||||||||||||||||||
| 2026 | 2025 | Change | ||||||||||||||||||||||
| Amount | Percentage of Revenue | Amount | Percentage of Revenue | Amount | Percentage of Revenue | |||||||||||||||||||
| General and administrative expenses: | ||||||||||||||||||||||||
| Operations division | 1,990,253 | 11.8 | % | 2,786,464 | 16.1 | % | (796,211 | ) | (4.3 | )% | ||||||||||||||
| Administrative division | 5,734,399 | 34.1 | % | 4,235,754 | 24.4 | % | 1,498,645 | 9.7 | % | |||||||||||||||
| Total General and administrative expenses | 7,724,652 | 45.9 | % | 7,022,218 | 40.5 | % | 702,434 | 5.4 | % | |||||||||||||||
We bifurcate general and administrative expenses as follows:
Operations division — The operations division mainly consists of payroll, stock-based compensation expense and benefits expenses incurred related to our underwriting, claims management, operations development, enrollment, nursing and strategic program development personnel.
Administrative division — The administrative division mainly represents payroll, stock-based compensation expense and benefits expenses incurred related to Executives, Human Resources, Accounting, Finance and Legal related personnel.
40
General and administrative expenses increased by $0.7 million to $7.7 million for the six months ended June 30, 2026, from $7.0 million for the six months ended June 30, 2025. The increase was primarily attributable to a provision for credit losses on other receivables of $0.7 million related to the Deferred Administrative Surplus, partially offset by lower operations division personnel costs resulting from workforce optimization initiatives. As a percentage of revenue, general and administrative expenses increased to 45.9% for the six months ended June 30, 2026, from 40.5% for the same period in 2025, primarily reflecting the credit loss provision and temporarily lower revenues due to the operational transitioning and readiness of onboarding a new carrier in the period.
Research and development expenses
| Six months ended June 30, | Period-to-Period | |||||||||||||||||||||||
| 2026 | 2025 | Change | ||||||||||||||||||||||
| Amount | Percentage of Revenue | Amount | Percentage of Revenue | Amount | Percentage of Revenue | |||||||||||||||||||
| Research and development expenses | 1,796,206 | 10.7 | % | 1,120,330 | 6.5 | % | 675,876 | 4.2 | % | |||||||||||||||
Research and development expenses increased by $0.7 million to $1.8 million for the six months ended June 30, 2026, from $1.1 million for the six months ended June 30, 2025. As a percentage of revenue, research and development expenses increased to 10.7% for the six months ended June 30, 2026, from 6.5% for the same period in 2025.
The increase was primarily attributable to our continued investment in technology development, driven by higher personnel costs as we expanded the development team.
As development activities progressed, a greater portion of work during the six months ended June 30, 2026 was directed toward earlier-stage research and new feature exploration, which does not meet the criteria for capitalization. Accordingly, the personnel-related costs associated with capitalized software development decreased by $0.6 million to $0.5 million for the six months ended June 30, 2026, from $1.1 million for the same period in 2025. During the six months ended June 30, 2026, our IT remained focused on developing new functionalities and features for our next-generation platform.
(Loss) income before income taxes
| Six months ended June 30, | Period-to-Period | |||||||||||||||||||||||
| 2026 | 2025 | Change | ||||||||||||||||||||||
| Amount | Percentage of Revenue | Amount | Percentage of Revenue | Amount | Percentage of Revenue | |||||||||||||||||||
| (Loss) income before income taxes | (5,389,424 | ) | (32.1 | )% | 1,517,691 | 8.8 | % | (6,907,115 | ) | (40.9 | )% | |||||||||||||
Income before income taxes decreased by $6.9 million to a loss of $5.4 million for the six months ended June 30, 2026, from income of $1.5 million for the six months ended June 30, 2025. This decrease was primarily attributable to temporarily lower revenues due to the onboarding of a new carrier, the plan administrative service costs associated with the pre-designed self-funded plan administration services launched in January 2026, and increased investment in sales, marketing and technology to support long-term growth.
41
Income tax benefit (expense)
| Six months ended June 30, | ||||||||||||||||||||||||
| 2026 | 2025 | Period-to-Period Change | ||||||||||||||||||||||
| Amount | Percentage of Revenue | Amount | Percentage of Revenue | Amount | Percentage of Revenue | |||||||||||||||||||
| Income tax benefit (expense) | 1,289,957 | 7.7 | % | (388,468 | ) | (2.2 | )% | 1,678,425 | 9.9 | % | ||||||||||||||
Provision for income taxes decreased by $1.7 million to an income tax benefit of $1.3 million for the six months ended June 30, 2026, from an income tax expense of $0.4 million for the six months ended June 30, 2025. The decrease in provision for income taxes was primarily attributable to the loss before income taxes, driven by temporarily lower revenues due to the onboarding of a new carrier, higher plan administrative service costs, and increased investment in sales, marketing and technology.
Adjusted EBITDA
| Six months ended June 30, | Period-to-Period | |||||||||||||||||||||||
| 2026 | 2025 | Change | ||||||||||||||||||||||
| Amount | Percentage of Revenue | Amount | Percentage of Revenue | Amount | Percentage of Revenue | |||||||||||||||||||
| Adjusted EBITDA | (2,621,592 | ) | (15.6 | )% | 2,797,227 | 16.1 | % | (5,418,819 | ) | (31.7 | )% | |||||||||||||
Adjusted EBITDA decreased by $5.4 million to negative $2.6 million for the six months ended June 30, 2026, from $2.8 million for the six months ended June 30, 2025. As a percentage of revenue, adjusted EBITDA decreased to negative 15.6% for the six months ended June 30, 2026, from 16.1% for the same period in 2025. The decrease in adjusted EBITDA was primarily attributable to temporarily lower revenues due to the onboarding of a new carrier, the plan administrative service costs associated with the pre-designed self-funded plan administration services launched in January 2026, and increased investment in sales, marketing and technology to support long-term growth.
Liquidity and Capital Resources
Sources of Liquidity
To date, we have funded our operations primarily through cash generated from operating activities, our IPO completed in December 2024, and our PIPE financing completed in March 2026.
Our cash and cash equivalents as of June 30, 2026 were held in order to fund our working capital needs. We do not enter into investments for trading or speculative purposes. Our policy is to invest any cash in excess of our immediate requirements in investments designed to preserve the principal balance and provide liquidity.
Accordingly, our cash and cash equivalents are invested primarily in demand deposit and money market accounts that are currently providing minimal returns. We believe our existing cash reserves, together with cash generated from our operating activities, will allow us to continue as a going concern at least twelve months from the date of this Quarterly Report on Form 10-Q.
Summary of Cash Flows
| Six Months Ended June 30, | ||||||||
| 2026 | 2025 | |||||||
| Cash (used in) provided by: | ||||||||
| Operating activities | $ | (6,231,567 | ) | $ | 2,008,629 | |||
| Investing activities | (959,123 | ) | (1,613,372 | ) | ||||
| Financing activities | 6,035,749 | (106,339 | ) | |||||
| (Decrease) Increase in cash and cash equivalents | $ | (1,154,941 | ) | $ | 288,918 | |||
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Operating Activities
Net cash used in operating activities was $6.2 million for the six months ended June 30, 2026, compared to $2.0 million of net cash provided by operating activities for the same period in 2025. This shift was primarily due to the net loss in the six months ended June 30, 2026, compared to net income in the same period in 2025, along with increased working capital requirements.
Cash used in operating activities for the six months ended June 30, 2026, principally resulted from a net loss of $4.1 million, offset by $1.6 million in adjustments for non-cash items primarily related to amortization, deferred tax benefit, stock-based compensation expense, and provision for credit losses on other receivables. This also included $3.7 million of cash used to fund changes in working capital, including an increase in accounts receivable of $7.8 million, a decrease in prepaid expenses and other assets of $0.8 million, an increase in accounts payable and accrued expenses of $4.3 million and a decrease in other current liabilities of $1.0 million.
Cash provided by operating activities for the six months ended June 30, 2025, principally resulted from our net income of $1.1 million, $2.3 million in adjustments for non-cash items primarily related to amortization, provision for refund liability and stock-based compensation expense, and offset by $1.4 million of cash used to fund changes in working capital, including a decrease in accounts receivable of $0.4 million, an increase in other receivables of $3.4 million, an increase in prepaid expenses and other current assets of $0.2 million, an increase in long-term prepaid expenses of $0.4 million, an increase in accounts payable and accrued expenses of $2.3 million and a decrease in income taxes payable of $0.1 million.
Investing Activities
Cash used in investing activities decreased by $0.6 million to $1.0 million for the six months ended June 30, 2026, compared to $1.6 million for the same period in 2025. The decrease was partially attributable to the timing of payments for capitalized software development costs. The primary use of cash in investing activities for the six months ended June 30, 2026 and 2025 were both related to the development of our proprietary AI-enabled platform, reflecting our continued investment in enhancing our technology platforms.
Financing Activities
Net cash provided by financing activities was $6.0 million for the six months ended June 30, 2026, compared to $0.1 million of net cash used in financing activities for the same period in 2025. The increase was primarily attributable to proceeds from the issuance of Class A Common Stock in connection with our PIPE financing. For the six months ended June 30, 2025, the primary use of cash in financing activity was related to the payments of deferred offering cost for our public offering.
Contractual Obligations and Commitments
Our principal commitments consist of obligations under our non-cancellable lease for our office. The following table summarizes the contractual obligations as of June 30, 2026. Future events could cause actual payments to differ from these estimates.
| Payment due by period | ||||||||||||||||||||
| Total | Less than 1 year | 1 – 3 years | 3 – 5 years | More than 5 years | ||||||||||||||||
| Operating lease obligations | 109,657 | 87,597 | 22,060 | — | — | |||||||||||||||
Critical Accounting Policies and Estimate
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amount of assets and liabilities, the disclosure of contingent assets and liabilities and the reported amounts of revenue and expenses during the reported periods. The critical accounting estimate discussed below is one we believe involves a significant level of estimation uncertainty and has had a material impact on our results of operations during the current period. Although management believes its assumptions and estimates are reasonable, actual results could differ from those estimates.
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Allowance for Credit Losses on Other Receivables
During the second quarter of 2026, we identified the allowance for credit losses on Other Receivables as a critical accounting estimate because the estimate involves significant management judgment and uncertainty in assessing expected collectability based on information available as of each balance sheet date.
The allowance for credit losses represents our estimate of expected credit losses on Other Receivables as of each balance sheet date. In estimating the allowance, we consider factors including the aging and collection history of the receivables, the length of time amounts has remained outstanding, information obtained through the collection process, and other relevant facts and circumstances affecting expected collectability.
During the second quarter of 2026, we updated our assessment of the collectability of certain Other Receivables based on collection experience and information obtained through the collection process. As of June 30, 2026 and December 31, 2025, the allowance for credit losses were $1,094,156 and $377,587, respectively.
The determination of the allowance requires significant management judgment, particularly with respect to the timing and amount of expected collections. Changes in collection experience, the availability of information necessary to support collection efforts, or other facts and circumstances affecting collectability could result in changes to our estimate of expected credit losses and could materially affect our results of operations. See Note 2 to the unaudited consolidated financial statements for additional information regarding the allowance for credit losses.
Recent Accounting Pronouncements
In November 2024, the FASB issued ASU 2024-03 Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses. This standard calls for enhanced disclosures about components of expense captions on the face of the income statement. This standard will be effective for fiscal years beginning after December 15, 2026, with the option to apply it retrospectively. Early adoption is allowed. Currently, we are assessing the potential impact of this guidance on our consolidated financial statement disclosures.
In September 2025, the FASB issued ASU 2025-06 Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software, which amends certain aspects of the accounting for and disclosure of software costs under ASC 350-40. The new standard is effective for annual periods beginning after December 15, 2027, and interim reporting periods within those annual reporting periods. Early adoption is allowed. The new standard may be applied prospectively, retrospectively, or via a modified prospective transition method. Currently, we are assessing the potential impact of this guidance on our consolidated financial statement disclosures.
We do not believe that any other recently issued but not yet effective accounting pronouncements are expected to have a material effect on our consolidated financial statements.
JOBS Act
We are an emerging growth company, as defined in the Jumpstart Our Business Startups Act of 2012, or the JOBS Act. Under the JOBS Act, emerging growth companies can delay adopting new or revised accounting standards issued subsequent to the enactment of the JOBS Act until such time as those standards apply to private companies. We have elected to use this extended transition period for complying with new or revised accounting standards that have different effective dates for public and private companies until the earlier of the date that we (i) are no longer an emerging growth company or (ii) affirmatively and irrevocably opt out of the extended transition period provided in the JOBS Act. We have elected to early adopt certain new accounting standards, as disclosed herein. As a result, these financial statements may not be comparable to companies that comply with the new or revised accounting pronouncements as of public company effective dates.
We will remain an emerging growth company until the earlier of (1) the last day of the fiscal year (a) following the fifth anniversary of the completion of our initial public offering, (b) in which we have total annual gross revenue of at least $1.235 billion, or (c) in which we are deemed to be a large accelerated filer, which means the market value of our Class A Common Stock that is held by non-affiliates exceeds $700 million as of the prior June 30, and (2) the date on which we have issued more than $1.0 billion in non-convertible debt securities during the prior three-year period. References herein to emerging growth company will have the meaning associated with it in the JOBS Act.
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Item 3. Quantitative and Qualitative Disclosures about Market Risk
We are a smaller reporting company, as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information required by this Item.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
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 time 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 Chief Executive Officer and Chief Financial Officer (together, the “Certifying Officers”), or persons performing similar functions, as appropriate, to allow timely decisions regarding required disclosure.
Under the supervision and with the participation of our Management, including our 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 effective as of the end of the period covered by this Quarterly Report on Form 10-Q. Accordingly, Management believes that the financial statement contained elsewhere in this Report present fairly in all material respects our financial position, results of operations and cash flows for the period presented.
Changes in Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting, as defined in Rules 13a-15(f) and 15(d)-15(f) promulgated under the Securities Exchange Act of 1934, during the period ended June 30, 2026 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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Part II. OTHER INFORMATION
Item 1. Legal Proceedings
We are not party to any material legal proceedings. We have in the past, and from time to time may be in the future, involved in legal proceedings or subject to claims incident to the ordinary course of business. Regardless of the outcome, such proceedings or claims can have an adverse impact on us because of defense and settlement costs, diversion of resources and other factors, and there can be no assurances that favorable outcomes will be obtained.
Item 1A. Risk Factors
Risk factors that may affect our business and financial results are discussed within Item 1A “Risk Factors” of our Annual Report on Form 10-K for the fiscal year ended December 31, 2025 filed with the SEC on March 25, 2026, and our subsequent filings with the SEC. In addition to those in our prior filings, the following is an additional risk factor to consider:
Our ability to accurately perform underwriting procedures
Our growth is significantly dependent on our ability to accurately perform underwriting procedures and maintain strong relationships with brokers, TPAs, carriers, MGUs and other third-party agents who utilize our platforms. A failure to conduct precise underwriting actuarial reviews and adjustments to our underwriting tools could result in increased costs and pricing for health plans.
While our agreements with brokers, TPAs, carriers, MGUs and other third-party agents generally do not necessitate our payment of fees exceeding estimated insurance costs, nor do we have agreements that require indemnification of any carrier, such a failure could cause reputational harm to our eDIYBS platform. This could lead to increased premiums for plans accessed through our platform, potentially affecting our financial standing and market competitiveness.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
| (a) | Recent Sales of Unregistered Equity Securities |
On June 15, 2026, we issued 95,238 RSAs outside of our equity incentive plans to a consulting firm in exchange for the firm’s consulting services. The Company issued such restricted stock in reliance upon the exemption from the securities registration requirements of the Securities Act of 1933, as amended, afforded by the provisions of Section 4(a)(2) thereof and the rules and regulations promulgated thereunder.
| (b) | Use of Proceeds |
None.
| (c) | Issuer Purchases of Equity Securities |
None.
Item 3. Defaults Upon Senior Securities
None.
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Item 4. Mine Safety Disclosures
Not applicable.
Item 5. Other Information
(a)
Board Changes
On August 10, 2026, Sanjay Shrestha, a member of the Board of Directors of the Company (the “Board”) resigned from the Board, effective immediately. In connection with his resignation from the Board, Mr. Shrestha also resigned from all committees of the Board on which he served, including the Audit Committee, Nominating and Governance Committee and Compensation Committee of the Board. Mr. Shrestha’s resignation was in relation to other professional and personal commitments and not due to any disagreement with the Company on any matter relating to the Company’s operations, policies or practices.
Convertible Financing
On August 12, 2026 (the “Effective Date”), the Company entered into a Standby Equity Purchase Agreement (the “SEPA”) with YA II PN, Ltd. (the “Investor”), pursuant to which the Company has the right, but not the obligation, to sell up to $20 million (the “Commitment Amount”) of shares of the Company’s Class A common stock (such shares issuable under the SEPA, “Common Shares”) to the Investor, subject to certain conditions and limitations set forth in the SEPA, including a resale registration statement covering the Common Shares (a “Registration Statement”) having been filed by the Company and declared effective by the SEC pursuant to the terms of a related registration rights agreement (the “Registration Rights Agreement”) to be entered into between the Company and the Investor in connection with the funding and closing of the first Pre-Paid Advance (as defined below) under the SEPA on or about August 18, 2026. Common Share issuances under the SEPA are subject to a 4.99% beneficial ownership limitation and an exchange cap of 13,100,378 shares (the “Exchange Cap”), representing approximately 19.99% of the Company’s outstanding Class A and Class B common stock, subject to adjustment in accordance with the SEPA and applicable Nasdaq requirements.
Pursuant to the SEPA, the Investor has agreed to provide the Company with pre-paid advances (each, a “Pre-Paid Advance”) in an aggregate principal amount of up to $15 million, to be evidenced by convertible promissory notes (the “Promissory Notes”). The Pre-Paid Advances are expected to be funded in three tranches consisting of a first tranche of $7 million, a second tranche of $3 million and a third tranche of up to $5 million, subject to the satisfaction of specified conditions. The first tranche is expected to be advanced on the fourth trading day following the filing of this Quarterly Report on Form 10-Q for the quarter ended June 30, 2026, and the second tranche is expected to be advanced on the later of October 21, 2026 and the second trading day following the initial Registration Statement first becoming effective. The third tranche, if requested by the Company, is subject to the Investor’s agreement in its sole and absolute discretion and may be funded in a principal amount of up to $5 million.
Each Pre-Paid Advance will be funded at a 5% purchase price discount to the principal amount of the applicable Promissory Note. The Promissory Notes will bear interest at 8.75% per annum (increasing to 18% upon certain events of default as specified therein) and will mature 18 months from the closing date of the first $7 million Pre-Paid Advance. The Promissory Notes are convertible into shares of the Company’s Class A common stock at a fixed conversion price of $1.5735 per share, subject to certain anti-dilution and price-adjustment provisions and a floor price of $0.204 per share. The Promissory Notes are subject to scheduled installment payments beginning 60 days after issuance, consisting of principal, a 4% payment premium, and accrued and unpaid interest. Installment payments may be satisfied in cash or through the application of net proceeds from sales of Common Shares under the SEPA, in which case the 4% payment premium does not apply.
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Pursuant to the SEPA, the Company has agreed, among other things, (i) enter into the Registration Rights Agreement, (ii) to, within 90 calendar days of the Effective Date, subject to applicable Nasdaq rules and regulations, seek approval by the Company’s shareholders of (A) the issuance of Common Shares in an amount up to the Commitment Amount (without regard to the Exchange Cap) and (B) the issuance of the maximum number of shares of Class A common stock issuable upon conversion of the Promissory Notes (without regard to the Exchange Cap), and (iii) until the Promissory Notes have been paid in full, not to (A) repay any loans to any of its executives or employees or make any payments in respect of related party debt, (B) other than with the Investor, enter into any Variable Rate Transaction (as defined in the SEPA), including the issuance or sale of Class A common stock or securities convertible into, exchangeable or exercisable therefor, at a conversion, exchange or exercise price that varies with the trading price of the Class A common stock or is subject to being reset at some date after such securities’ initial issuance, (C) enter into any at-the-market agreement unless a specified affiliate of the Investor is the sole executing broker on such facility, with said specified affiliate additionally granted a participation right of at least 33% of any such facility for a period ending 12 months from the date of the first Pre-Paid Advance closing, or (D) without the prior written consent of the Investor, enter into any Indebtedness or Liens, each as defined in the SEPA, other than as permitted therein.
Pursuant to the Registration Rights Agreement, and subject to certain exceptions contained therein, the Company will be required to file a Registration Statement with the SEC to register the Common Shares issuable under the SEPA for resale within twenty one (21) calendar days of the Effective Date, to use its commercially reasonable efforts to have such Registration Statement declared effective within the time period set forth therein, and to keep the Registration Statement effective until (i) the date that all registrable securities covered by the Registration Statement have been sold, thereunder or pursuant to Rule 144 promulgated under the Securities Act (“Rule 144”), or (ii) termination of the SEPA, which SEPA shall terminate automatically on the earlier of (x) 36 months from the Effective Date, provided all outstanding Promissory Notes have been repaid, and (y) the date on which the Investor shall have made an aggregate of Pre-Paid Advances to the Company for a number of Common Shares equal to the Commitment Amount.
The SEPA provides for a commitment fee, which is earned as of the Effective Date, equal to 1.0% of the Commitment Amount, or $200,000, of which one half, due within three days of the Effective Date, is payable in cash or through issuance of a number of shares of Class A common stock calculated using such shares’ daily volume-weighted average price during the three trading days preceding the Effective Date, and the remaining one-half is payable by the six-month anniversary of the Effective Date, as well as a $25,000 structuring fee. In connection with entry into the SEPA, on August 10, 2026, the Company entered into an engagement agreement with Independent Investment Bankers, Corp. (“IIB”), pursuant to which IIB is entitled to a success fee equal to 6.5% of the gross principal amount of each Pre-Paid Advance, payable at the respective closing thereof. Certain of the Company’s subsidiaries, including SMR, ICE and Hi Card, will guarantee the Company’s obligations under the SEPA, the Promissory Notes and the other related transaction documents pursuant to a Global Guaranty Agreement to be entered into concurrently with the closing of the first Pre-Paid Advance.
The SEPA, the Registration Rights Agreement, the Promissory Notes and the Global Guaranty Agreement contain representations, warranties, covenants, indemnification and other provisions customary for transactions of this nature. Such representations, warranties, covenants and agreements reflect negotiations between the parties thereto and are not intended as statements of fact to be relied upon by stockholders, or any individual or other entity other than the parties. In particular, the representations, warranties, covenants and agreements in the SEPA, the Registration Rights Agreement, the Promissory Notes and the Global Guaranty Agreement may be subject to limitations agreed by the parties, including having been modified or qualified by certain confidential disclosures that were made between the parties in connection with the negotiation of such agreements, and having been made for purposes of allocating risk among the parties rather than establishing matters of fact. In addition, the parties may apply standards of materiality in a way that is different from what may be viewed as material by investors. As such, the representations and warranties in the SEPA, the Registration Rights Agreement, the Promissory Notes and the Global Guaranty Agreement may not describe the actual state of affairs at the date they were made or at any other time and you should not rely on them as statements of fact. Moreover, information concerning the subject matter of the representations and warranties may change after the dates thereof, and unless required by applicable law, the Company undertakes no obligation to update such information.
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As of the date of this filing, the Company had not received any proceeds under or issued any Common Shares or Promissory Notes pursuant to the SEPA. The Company intends to use the net proceeds from this financing arrangement under the SEPA for sales and distribution expansion, technology and product development, and operations and working capital.
The shares issuable under the SEPA are being issued pursuant to the exemption from the registration requirements of the Securities Act, pursuant to Section 4(a)(2) of the Securities Act thereof, because, among other things, the transaction did not involve a public offering, the Investor represented that it is an “accredited investor” and is purchasing the shares issuable under the SEPA as principal for its own account and not with a view to or for distributing or reselling such shares and the Company took appropriate measures to restrict the transfer such shares. The shares issuable under the SEPA were offered without any general solicitation by the Company or its representatives. These shares have not been registered under the Securities Act or any state securities laws and may not be offered or sold in the United States absent registration with the SEC or an applicable exemption from the registration requirements of the Securities Act.
The foregoing descriptions of the SEPA, the Registration Rights Agreement, the Promissory Notes and the Global Guaranty Agreement are qualified in their entirety by reference to the full text or forms, as applicable, of each document, copies of which are filed hereto as Exhibit 10.1, Exhibit 10.2, Exhibit 4.1 and Exhibit 10.3, respectively.
(b) Not applicable.
(c)
Rule 10b5-1 Trading Arrangements
During the quarter ended June 30, 2026,
On June 10, 2026, Julia (Linlin) Qian, Chief Financial Officer and a director of the Company, adopted a trading plan intended to satisfy the conditions under Rule 10b5-1(c) of the Exchange Act, effective as of September 10, 2026. Ms. Qian’s plan is for the sale of up to 946,395 shares of the Company’s Class A common stock, net of shares withheld to satisfy applicable taxes. The foregoing sales will be made in accordance with the prices and formulas set forth in the plan and such plan terminates on the earlier of the date all the shares under the plan are sold and September 10, 2027.
On June 11, 2026, Zain Hasan, Chief Growth Officer of the Company, adopted a trading plan intended to satisfy the conditions under Rule 10b5-1(c) of the Exchange Act, effective as of September 11, 2026. Mr. Hasan’s plan is for the sale of up to 220,000 shares of the Company’s Class A common stock, inclusive of 100,000 shares subject to withholding to satisfy applicable taxes. The foregoing sales will be made in accordance with the prices and formulas set forth in the plan and such plan terminates on the earlier of the date all the shares under the plan are sold and September 11, 2027.
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Item 6. Exhibits
| * | Filed herewith. |
| ** | Exhibits 32.1 and 32.2 are being furnished to the SEC pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liability of that section, nor shall they be deemed to be incorporated by reference in any registration statement or other document filed under the Securities Act of 1933, as amended, or the Exchange Act, except as otherwise specifically stated in such filing. |
| (1) | Filed as an exhibit to the registrant’s Annual Report on Form 10-K filed with the SEC on March 17, 2025. |
| (2) | Filed as an exhibit to the registrant’s Current Report on Form 8-K filed with the SEC on February 27, 2025. |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
| Health In Tech, Inc. | ||
| Date: August 13, 2026 | By: | /s/ Tim Johnson |
| Tim Johnson | ||
| Chief Executive Officer (Principal Executive Officer) | ||
| Date: August 13, 2026 | By: | /s/ LinLin Qian |
| LinLin Qian | ||
| Chief Financial Officer (Principal Financial and Accounting Officer) | ||
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Exhibit 4.1
NEITHER THIS NOTE NOR THE SECURITIES INTO WHICH THIS NOTE IS CONVERTIBLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE. THESE SECURITIES HAVE BEEN SOLD IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS. NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES.
Health in Tech, Inc.
Convertible Promissory Note
Original Principal Amount: [$_________]
Issuance Date: [_________]
Number: HIT-[1][2][3]
FOR VALUE RECEIVED, Health in Tech, Inc., an entity organized under the laws of the State of Nevada (the “Company”), hereby promises to pay to the order of YA II PN, LTD., or its registered assigns (the “Holder”), the amount set out above as the Original Principal Amount (or such lesser amount as reduced pursuant to the terms hereof pursuant to repayment, redemption, conversion or otherwise, the “Principal”) and the Payment Premium or the Redemption Premium, as applicable, in each case when due, and to pay interest (“Interest”) on any outstanding Principal at the applicable Interest Rate (as defined below) from the date set out above as the Issuance Date (the “Issuance Date”) until the same becomes due and payable, whether upon the Maturity Date or acceleration, conversion, redemption or otherwise (in each case in accordance with the terms hereof). Certain capitalized terms used herein are defined in Section (12). The Issuance Date is the date of the first issuance of this Convertible Promissory Note (as amended, amended and restated, extended, supplemented or otherwise modified in writing from time to time, this “Note”) regardless of the number of transfers and regardless of the number of instruments, which may be issued to evidence such Note. This Note was issued with a 5% purchase discount. The Company and the Holder are referred to herein at times, collectively, as the “Parties,” and each, a “Party.”
This Note is being issued pursuant to Section 2.01 of the Standby Equity Purchase Agreement, dated August 12, 2026 (as may be amended, amended and restated, extended, supplemented or otherwise modified in writing from time to time, the “SEPA”), by and between the Company and YA II PN, Ltd., as the Investor.
(1) GENERAL TERMS
(a) Maturity Date. On the Maturity Date, the Company shall pay to the Holder an amount in cash representing all outstanding Principal, accrued and unpaid Interest, and any other amounts outstanding pursuant to the terms of this Note. The “Maturity Date” shall be [________], 202[_]1, as may be extended at the option of the Holder. Other than as specifically permitted by this Note and/or pursuant to part (iii) of the definition of “Permitted Indebtedness” set forth in the SEPA, the Company may not prepay or redeem any portion of the outstanding Principal and accrued and unpaid Interest.
(b) Interest Rate and Payment of Interest. Interest shall accrue on the outstanding Principal balance hereof at an annual rate equal to 8.75% (“Interest Rate”), which Interest Rate shall increase to an annual rate of 18% upon the occurrence of an Event of Default (for so long as such event remains uncured). Interest shall be calculated based on a 365-day year and the actual number of days elapsed, to the extent permitted by applicable law.
| 1 | Note to Draft: Shall be the date that is 18 months from the closing date of the First Pre-Paid Advance. |
(c) Monthly Installment Payments. On or before each date (each, an “Installment Date”) set forth on the repayment schedule attached hereto as Exhibit II (the “Repayment Schedule”), the Company shall repay a portion of the outstanding balance of this Note in an amount equal (i) the installment principal amount set forth on the Repayment Schedule as of such Installment Date (or the outstanding Principal if less than such amount (the “Installment Principal Amount”)), plus (ii) the Payment Premium in respect of such Installment Principal Amount (if applicable), plus (iii) accrued and unpaid interest hereunder as of each Installment Date (collectively, the “Installment Amount”). With respect to the payment of any applicable Installment Amount by the Company hereunder, the Company shall, at its own option, repay each applicable Installment Amount either (i) in cash on or before the Installment Date, or (ii) by applying net cash proceeds due to be paid to the Company under the SEPA from sales of Common Shares thereunder (“Net Proceeds”) as set forth in Section 1(d) hereof, or any combination of (i) or (ii) as determined by the Company. In respect of any applicable Installment Amount, or portion thereof, to be repaid by the Company in cash, the Company shall pay such applicable Installment Amount to the Holder by wire transfer of immediately available funds in cash on or before such Installment Date. The Payment Premium shall not apply to any payment made under this Note by the application of Net Proceeds under Section 1(d).
(d) Application of Advance Proceeds. For so long as this Note is outstanding, unless otherwise agreed by the Holder, any time prior to the first Installment Date, and thirty (30) days prior to each subsequent Installment Date, 100% of Net Proceeds or proceeds from usages of an At-the-Market Agreement permitted under the SEPA (“Permitted ATM Proceeds”) shall be applied by the Company to the payment of the Installment Principal Amount due on the next Installment Date (such Installment Date, the “Next Installment Date”) and accrued and unpaid interest thereon to the date of such payment, until such Net Proceeds or Permitted ATM Proceeds equal the sum of such Installment Principal Amount and accrued and unpaid interest thereon to the date of prepayment. If the amount of Net Proceeds or Permitted ATM Proceeds received after the immediately preceding Installment Date (or after the Issuance Date, as applicable) and prior to the Next Installment Date exceeds the Installment Amount due on the Next Installment Date, after payment in full of the Installment Amount due on the Next Installment Date, 30% of the Net Proceeds may be retained by the Company and 70% of the Net Proceeds, or Permitted ATM Proceeds, as applicable, shall be retained by the Holder, or paid to the Holder in the case of Permitted ATM Proceeds, and applied to future Installment Principal Amounts coming due in reverse chronological order (and shall have the effect of adjusting the Repayment Schedule by reducing the Installment Principal Amount of future payments coming due in reverse chronological order (i.e., starting with the latest payments first)). For the avoidance of doubt, if the Company delivers an Advance Notice under the SEPA, the Company shall be deemed to have elected to use the Net Proceeds to make payments to the Note as set forth in this Section 1(d) until this Note is fully repaid.
(e) Optional Redemption. The Company at its option shall have the right, but not the obligation, to redeem (“Optional Redemption”) early a portion or all amounts outstanding under this Note as described in this Section; provided, that the Company provides the Holder with written notice (each, a “Redemption Notice”) of its desire to exercise an Optional Redemption, which Redemption Notice (i) shall be delivered to the Holder after the close of regular trading hours on a Trading Day, and (ii) may only be given if the VWAP of the Common Shares was less than the Fixed Price on the date such Redemption Notice is delivered, unless otherwise agreed by the Holder. Each Redemption Notice shall be irrevocable and shall specify the outstanding balance of the Note to be redeemed and the Redemption Amount. The “Redemption Amount” shall be an amount equal to (a) the outstanding Principal balance being redeemed by the Company plus (b) the Redemption Premium in respect of such Principal amount plus (c) all accrued and unpaid interest hereunder as of the date of such redemption. After receipt of a Redemption Notice, the Holder shall have five (5) Trading Days (beginning with the Trading Day immediately following the date such Redemption Notice is delivered to the Holder in accordance with this term of this Section 1(d)) to elect to convert all or any portion of this Note. On the sixth (6th) Trading Day following the delivery of the applicable Redemption Notice, the Company shall deliver to the Holder the Redemption Amount with respect to the Principal amount redeemed to the extent not converted and otherwise after giving effect to conversions or other payments made during such five (5) Trading Day period. Any Optional Redemption pursuant to this Section 1(e) paid in cash on or before any Installment Date shall have the effect of adjusting the Repayment Schedule by reducing the Installment Amount of future payments coming due in reverse chronological order (i.e., starting with the latest payments first).
(f) Payment Dates. Whenever any payment or other obligation hereunder shall be due on a day other than a Business Day, such payment shall be made on the next succeeding Business Day.
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(2) EVENTS OF DEFAULT.
(a) An “Event of Default”, wherever used herein, means any one of the following events (whatever the reason and whether it shall be voluntary or involuntary or effected by operation of law or pursuant to any judgment, decree or order of any court, or any order, rule or regulation of any administrative or governmental body) shall have occurred:
(i) (A) A Payment Failure has occurred, provided that the applicable Installment Amount remains unpaid thirty (30) days following the applicable Installment Date, or (B) the Company’s failure to pay to the Holder any amount of Principal, Redemption Amount, Payment Premium, Interest, or other amounts otherwise due and payable this Note or any other Transaction Document within five (5) Trading Days after such payment is due;
(ii) (A) The Company or any Subsidiary of the Company shall commence, or there shall be commenced against the Company or any Subsidiary of the Company any proceeding under any applicable bankruptcy or insolvency laws as now or hereafter in effect or any successor thereto, or the Company or any Subsidiary of the Company commences any other proceeding under any reorganization, arrangement, adjustment of debt, relief of debtors, dissolution, insolvency or liquidation or similar law of any jurisdiction, whether now or hereafter in effect relating to the Company or any Subsidiary of the Company, in any such bankruptcy, insolvency or other proceeding which remains undismissed for a period of sixty one (61) days; (B) the Company or any Subsidiary of the Company is adjudicated insolvent or bankrupt; or any order of relief or other order approving any such case or proceeding is entered; (C) the Company or any Subsidiary of the Company suffers any appointment of any custodian, private or court appointed receiver or the like for it or all or substantially all of its property which continues undischarged or unstayed for a period of sixty one (61) days; (D) the Company or any Subsidiary of the Company makes a general assignment of all or substantially all of its assets for the benefit of creditors; (E) the Company or any Subsidiary of the Company shall fail to pay, or shall state that it is unable to pay, or shall be unable to pay, its debts generally as they become due; (F) the Company or any Subsidiary of the Company shall call a meeting of its creditors with a view to arranging a composition, adjustment or restructuring of its debts; (G) the Company or any Subsidiary of the Company shall by any act or failure to act expressly indicate its consent to, approval of or acquiescence in any of the foregoing; or (H) any corporate or other action is taken by the Company or any Subsidiary of the Company for the purpose of effecting any of the foregoing;
(iii) The Company or any Subsidiary of the Company shall default, in any of its obligations under any note, debenture, mortgage, credit agreement or other facility, indenture agreement, factoring agreement or other instrument under which there may be issued, or by which there may be secured or evidenced any indebtedness for borrowed money or money due under any long term leasing or factoring arrangement of the Company or any Subsidiary of the Company in an amount exceeding $1,000,000, whether such indebtedness now exists or shall hereafter be created, and such default is not cured within the time prescribed by the documents governing such indebtedness or if no time is prescribed, within ten (10) Trading Days, and as a result, such indebtedness becomes or is declared due and payable;
(iv) A final judgment or judgments for the payment of money in excess of $1,000,000 in the aggregate are rendered against the Company and/or any of its Subsidiaries and which judgments are not, within thirty (30) days after the entry thereof, bonded, discharged, settled or stayed pending appeal, or are not discharged within thirty (30) days after the expiration of such stay; provided, however, any judgment which is covered by insurance or an indemnity from a creditworthy party shall not be included in calculating the $1,000,000 amount set forth above so long as the Company provides the Holder a written statement from such insurer or indemnity provider (which written statement shall be reasonably satisfactory to the Holder) to the effect that such judgment is covered by insurance or an indemnity and the Company or such Subsidiary (as the case may be) will receive the proceeds of such insurance or indemnity within thirty (30) days of the issuance of such judgment;
(v) The Common Shares shall cease to be quoted or listed for trading, as applicable, on any Principal Market for a period of ten (10) consecutive Trading Days;
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(vi) The Company or any Subsidiary of the Company, other than HITchain, Inc., shall be a party to any Change of Control Transaction unless in connection with such Change of Control Transaction this Note is retired;
(vii) The Company’s (A) failure to deliver the required number of Common Shares to the Holder within two (2) Trading Days after the applicable Share Delivery Date or (B) notice, written or oral, to any holder of this Note, including by way of public announcement, at any time, of its intention not to comply with a request for conversion of all or a portion of this Note into Common Shares that is tendered in accordance with the provisions of this Note;
(viii) The Company shall fail for any reason to deliver the payment in cash pursuant to a Buy-In (as defined below) within seven (7) Business Days after such payment is due;
(ix) The Company’s failure to timely file with the Commission any Periodic Report on or before the due date of such filing as established by the Commission, it being understood, for the avoidance of doubt, that due date includes any permitted filing deadline extension under Rule 12b-25 under the Exchange Act;
(x) Any representation or warranty made or deemed to be made by or on behalf of the Company in or in connection with any Transaction Document, or any waiver hereunder or thereunder, shall prove to have been incorrect in any material respect (or, in the case of any such representation or warranty already qualified by materiality, such representation or warranty shall prove to have been incorrect) when made or deemed made;
(xi) (A) Any material provision of any Transaction Document, at any time after its execution and delivery and for any reason other than as expressly permitted hereunder or thereunder, ceases to be in full force and effect; (B) the Company or any other Person contests in writing the validity or enforceability of any provision of any Transaction Document; or (C) the Company denies in writing that it has any further liability or obligation under any Transaction Document, or purports in writing to revoke, terminate (other than in accordance with the relevant termination provisions) or rescind any Transaction Document;
(xii) The Company uses the proceeds of the issuance of this Note, whether directly or indirectly, and whether immediately, incidentally or ultimately, to purchase or carry margin stock (within the meaning of Regulations T, U and X of the Federal Reserve Board, as in effect from time to time and all official rulings and interpretations thereunder or thereof), or to extend credit to others for the purpose of purchasing or carrying margin stock or to refund indebtedness originally incurred for such purpose; or
(xiii) Any Event of Default (as defined in the Other Notes or in any Transaction Document other than this Note) occurs with respect to any Other Notes, or any breach of any material term of any other debenture, note, or instrument held by the Holder in the Company or any agreement between or among the Company and the Holder; or
(xiv) The Company shall fail to observe or perform any material covenant, agreement or warranty contained in, or otherwise commit any material breach or default of any provision of this Note (except as may be otherwise covered by Sections (2)(a)(i) through (2)(a)(xiii) hereof) or any other Transaction Document, which is not cured or remedied within the time prescribed or if no time is prescribed within ten (10) Business Days.
(b) During the time that any portion of this Note is outstanding, if any Event of Default has occurred (other than an event with respect to the Company described in Section (2)(a)(ii)), the full unpaid Principal amount of this Note, together with the Payment Premium in respect of such Principal Amount that was due and payable on the date of the Event of Default and all interest and other amounts owing in respect of this Note to the date of acceleration, shall become, at the Holder’s election given by notice pursuant to Section (5), immediately due and payable in cash; provided that, in the case of any event with respect to the Company described in Section (2)(a)(ii), the full unpaid Principal amount of this Note, together with the Payment Premium in respect of such Principal Amount that was due and payable on the date of the Event of Default and all accrued and unpaid interest and other amounts owing in respect of this Note to the date of acceleration, shall automatically become due and payable, in each case without presentment, demand, protest or other notice of any kind, all of which are hereby waived by the Company. The Holder need not provide, and the Company hereby waives, any presentment, demand, protest or other notice of any kind, (other than required notice of conversion) and the Holder may immediately enforce any and all of its rights and remedies hereunder and all other remedies available to it under applicable law. Such declaration may be rescinded and annulled by the Holder in writing at any time prior to payment hereunder. No such rescission or annulment shall affect any subsequent Event of Default or impair any right consequent thereon
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(3) CONVERSION OF NOTE. This Note shall be convertible into Common Shares, on the terms and conditions set forth in this Section (3).
(a) Conversion Right.
(i) Subject to the limitations of Section (3)(c), at any time or times on or after the Issuance Date, for so long as this Note remains outstanding, the Holder shall be entitled to convert any portion of the outstanding and unpaid Conversion Amount into fully paid and nonassessable Common Shares in accordance with Section (3)(b), at $1.5735 per Common Share, subject to adjustment as provided herein (the “Fixed Price”). Any conversion of this Note made by the Holder at the Fixed Price shall have the effect of reducing the amount due on any Installment Date in direct order by the amount of such conversion (and shall have the effect of adjusting the Repayment Schedule by reducing the Installment Principal Amount of future payments coming due in chronological order (i.e., starting with the soonest payments first)).
(ii) “Conversion Amount” means the portion of the Principal, Interest, or other amounts outstanding under this Note to be converted, redeemed or otherwise with respect to which this determination is being made.
(iii) “Conversion Price” means, as of any Conversion Date or other date of determination either the Fixed Price or, with respect to an Alternate Conversion (as defined below) the Variable Price, as applicable.
(iv) The number of Common Shares issuable upon conversion of any Conversion Amount pursuant to this Section (3)(a) shall be determined by dividing (x) such Conversion Amount by (y) the Conversion Price. The Company shall not issue any fraction of a Common Share upon any conversion. All calculations under this Section (3) shall be rounded to the nearest $0.0001. If the issuance would result in the issuance of a fraction of a Common Share, the Company shall round such fraction of a Common Share up to the nearest whole share. The Company shall pay any and all transfer, stamp and similar taxes that may be payable with respect to the issuance and delivery of Common Shares upon conversion of any Conversion Amount.
(b) Mechanics of Conversion.
(i) Optional Conversion. To convert any Conversion Amount into Common Shares on any date (a “Conversion Date”), the Holder shall (A) transmit by email (or otherwise deliver), for receipt on or prior to 11:59 p.m., New York Time, on such date, a copy of an executed notice of conversion in the form attached hereto as Exhibit I (the “Conversion Notice”) to the Company and (B) if required by Section (3)(b)(iii), surrender this Note to a nationally recognized overnight delivery service for delivery to the Company (or an indemnification undertaking reasonably satisfactory to the Company with respect to this Note in the case of its loss, theft or destruction). On or before the first (1st) Trading Day following the date of receipt of a Conversion Notice (the “Share Delivery Date”), the Company shall (X) if legends are not required to be placed on certificates or the book-entry position of the Common Shares and provided that the Transfer Agent is participating in the Depository Trust Company’s (“DTC”) Fast Automated Securities Transfer Program, instruct such transfer agent to credit such aggregate number of Common Shares to which the Holder shall be entitled to the Holder’s or its designee’s balance account with DTC through its Deposit Withdrawal Agent Commission system or (Y) if the Transfer Agent is not participating in the DTC Fast Automated Securities Transfer Program, issue and deliver to the address as specified in the Conversion Notice, a certificate or book-entry position, registered in the name of the Holder or its designee, for the number of Common Shares to which the Holder shall be entitled which certificates shall not bear any restrictive legends unless required pursuant to rules and regulations of the Commission. If this Note is physically surrendered for conversion and the outstanding Principal of this Note is greater than the Principal portion of the Conversion Amount being converted, then the Company shall as soon as practicable and in no event later than three (3) Business Days after receipt of this Note and at its own expense, issue and deliver to the holder a new Note representing the outstanding Principal not converted. The Person or Persons entitled to receive the Common Shares issuable upon a conversion of this Note shall be treated for all purposes as the record holder or holders of such Common Shares upon the transmission of a Conversion Notice.
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(ii) Company’s Failure to Timely Convert. If the Company shall fail, for any reason or for no reason, on or prior to the applicable Share Delivery Date to issue and deliver a certificate to the Holder or credit the Holder’s balance account with DTC for the number of Common Shares to which the Holder is entitled upon such Holder’s conversion of any Conversion Amount (a “Conversion Failure”), and if on or after such Trading Day the Holder purchases (in an open market transaction or otherwise) Common Shares to deliver in satisfaction of a sale by the Holder of Common Shares issuable upon such conversion that the Holder anticipated receiving from the Company (a “Buy-In”), then the Company shall, within three (3) Business Days after the Holder’s request and in the Holder’s discretion, either (i) pay cash to the Holder in an amount equal to the Holder’s total purchase price (including brokerage commissions and other out of pocket expenses, if any) for the Common Shares so purchased (the “Buy-In Price”), at which point the Company’s obligation to deliver such certificate (and to issue such Common Shares) shall terminate, or (ii) promptly honor its obligation to deliver to the Holder a certificate or certificates representing such Common Shares to which the Holder is entitled with respect to such Conversion Notice and pay cash to the Holder in an amount equal to the excess (if any) of the Buy-In Price over the product of (A) such number of Common Shares multiplied by (B) the Closing Price on the Conversion Date. For the avoidance of doubt, nothing herein shall limit the Holder’s right to pursue any other remedies available hereunder, at law or in equity, including, without limitation, a decree of specific performance or injunctive relief.
(iii) Book-Entry. Notwithstanding anything to the contrary set forth herein, upon conversion of any portion of this Note in accordance with the terms hereof, the Holder shall not be required to physically surrender this Note to the Company unless (A) the full Conversion Amount represented by this Note is being converted or (B) the Holder has provided the Company with prior written notice (which notice may be included in a Conversion Notice) requesting reissuance of this Note upon physical surrender of this Note. The Holder and the Company shall maintain records showing the Principal and Interest converted and the dates of such conversions or shall use such other method, reasonably satisfactory to the Holder and the Company, so as not to require physical surrender of this Note upon conversion.
(c) Limitations on Conversions.
(i) Beneficial Ownership. The Holder shall not have the right to convert any portion of this Note to the extent that after giving effect to such conversion, the Holder, together with any affiliate thereof, would beneficially own (as determined in accordance with Section 13(d) of the Exchange Act and the rules promulgated thereunder) in excess of 4.99% of the number of Common Shares outstanding immediately after giving effect to such conversion. Since the Holder will not be obligated to report to the Company the number of Common Shares it may hold at the time of a conversion hereunder, unless the conversion at issue would result in the issuance of Common Shares in excess of 4.99% of the then outstanding Common Shares without regard to any other shares which may be beneficially owned by the Holder or an affiliate thereof, the Holder shall have the authority and obligation to determine whether the restriction contained in this Section will limit any particular conversion hereunder and to the extent that the Holder determines that the limitation contained in this Section applies, the determination of which portion of the Principal amount of this Note is convertible shall be the responsibility and obligation of the Holder. If the Holder has delivered a Conversion Notice for a Principal amount of this Note that, without regard to any other shares that the Holder or its affiliates may beneficially own, would result in the issuance in excess of the permitted amount hereunder, the Company shall notify the Holder of this fact and shall honor the conversion for the maximum Principal amount permitted to be converted on such Conversion Date in accordance with Section (3)(a) and, any Principal amount tendered for conversion in excess of the permitted amount hereunder shall remain outstanding under this Note. The provisions of this Section may be waived by a Holder (but only as to itself and not to any other Holder) upon not less than 65 days prior notice to the Company. Other Holders shall be unaffected by any such waiver.
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(ii) Principal Market Limitation. Notwithstanding anything in this Note to the contrary, the Company shall not issue any Common Shares upon conversion of this Note, or otherwise, if the issuance of such Common Shares, together with any Common Shares issued in connection the SEPA and any other related transactions that may be considered part of the same series of transactions, would exceed the aggregate number Common Shares that the Company may issue in a transaction in compliance with the Company’s obligations under the rules or regulations of The Nasdaq Stock Market LLC (“Nasdaq”) and shall be referred to as the “Exchange Cap,” except that such limitation shall not apply if the Company’s stockholders have approved such issuances on such terms in excess of the Exchange Cap in accordance with the rules and regulations of Nasdaq. For the avoidance of doubt, the Exchange Cap applicable under this clause (ii) equals 13,100,378 Common Shares.
(d) Other Provisions.
(i) All calculations under this Section (3) shall be rounded to the nearest $0.0001 or whole share.
(ii) So long as this Note or any Other Notes remain outstanding, the Company shall have reserved from its duly authorized share capital, and shall have instructed the Transfer Agent to irrevocably reserve, the maximum number of Common Shares issuable upon conversion of this Note and the Other Notes (assuming for purposes hereof that (x) this Note and such Other Notes are convertible at the Floor Price as of the date of determination, and (y) any such conversion shall not take into account any limitations on the conversion of the Note or Other Notes set forth herein or therein (the “Required Reserve Amount”)), provided that at no time shall the number of Common Shares reserved pursuant to this Section (3)(d)(ii) be reduced other than pursuant to the conversion of this Note and the Other Notes in accordance with their terms, and/or cancellation, or reverse stock split. If at any time while this Note or any Other Notes remain outstanding, the Company does not have a sufficient number of authorized and unreserved Common Shares to satisfy the obligation to reserve for the issuance the Required Reserve Amount, the Company will promptly take all corporate action necessary to propose to a meeting of its shareholders an increase of its authorized share capital necessary to meet the Company’s obligations pursuant to this Note, and cause its board of directors to recommend to the shareholders that they approve such proposal.
(iii) Nothing herein shall limit a Holder’s right to pursue actual damages or declare an Event of Default pursuant to Section (2) herein for the Company’s failure to deliver certificates representing Common Shares upon conversion within the period specified herein and such Holder shall have the right to pursue all remedies available to it at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief, in each case without the need to post a bond or provide other security. The exercise of any such rights shall not prohibit the Holder from seeking to enforce damages pursuant to any other Section hereof or under applicable law.
(iv) Legal Opinions. The Company is obligated to cause its legal counsel to deliver legal opinions to the Company’s transfer agent in connection with any legend removal upon the expiration of any holding period or other requirement for which the Underlying Shares may bear legends restricting the transfer thereof. To the extent that a legal opinion is not provided (either timely or at all), then, in addition to being an Event of Default hereunder, the Company agrees to reimburse the Holder for all reasonable costs incurred by the Holder in connection with any legal opinions paid for by the Holder in connection with the sale or transfer of the Underlying Common Shares. The Holder shall notify the Company of any such costs and expenses it incurs that are referred to in this section from time to time and all amounts owed hereunder shall be paid by the Company with reasonable promptness.
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(e) Adjustment of Conversion Price upon Subdivision or Combination of Common Shares. If the Company, at any time while this Note is outstanding, shall (i) pay a stock dividend or otherwise make a distribution or distributions on shares of its Common Shares or any other equity or equity equivalent securities payable in Common Shares, (ii) subdivide outstanding Common Shares into a larger number of shares, (iii) combine (including by way of reverse stock split) outstanding Common Shares into a smaller number of shares, or (iv) issue by reclassification of Common Shares any shares of capital stock of the Company, then each of the Fixed Price and the Floor Price shall be multiplied by a fraction of which the numerator shall be the number of Common Shares (excluding treasury shares, if any) outstanding before such event and of which the denominator shall be the number of Common Shares outstanding after such event. Any adjustment made pursuant to this Section shall become effective, in the case of a dividend distribution, immediately after the record date for the determination of stockholders entitled to receive such dividend or distribution or, in the case of a subdivision, combination or re-classification, and shall become effective immediately after the effective date of such subdivision, combination or re-classification.
(f) Adjustment of Conversion Price upon Issuance of Common Stock. If the Company, at any time while this Note is outstanding, issues or sells any Common Shares or Convertible Securities (other than shares issued or sold by the Company in connection with any Excluded Securities), for a consideration per share (the “New Issuance Price”) less than a price equal to the Fixed Price in effect immediately prior to such issue or sale (such price the “Applicable Price”) (the foregoing, a “Dilutive Issuance”), then immediately after such Dilutive Issuance the Fixed Price then in effect shall be reduced to an amount equal to the New Issuance Price. For the purposes hereof, if the Company in any manner issues or sells any Convertible Securities (other than shares issued or sold by the Company in connection with any Excluded Securities) and the lowest price per share for which one Common Share is issuable upon such conversion or exchange or exercise thereof is less than the Applicable Price, then such Common Share shall be deemed to be outstanding and to have been issued and sold by the Company at the time of the issuance or sale of such Convertible Securities for such price per share. No further adjustment of the Conversion Price shall be made upon the actual issuance of such Common Share upon conversion or exchange or exercise of such Convertible Securities.
(g) Other Corporate Events. In addition to and not in substitution for any other rights hereunder, prior to the consummation of any Fundamental Transaction pursuant to which holders of Common Shares are entitled to receive securities or other assets with respect to or in exchange for Common Shares (a “Corporate Event”), the Company shall make appropriate provision to ensure that the Holder will thereafter have the right to receive upon a conversion of this Note, at the Holder’s option, (i) in addition to the Common Shares receivable upon such conversion, such securities or other assets to which the Holder would have been entitled with respect to such Common Shares had such Common Shares been held by the Holder upon the consummation of such Corporate Event (without taking into account any limitations or restrictions on the convertibility of this Note) or (ii) in lieu of the Common Shares otherwise receivable upon such conversion, such securities or other assets received by the holders of Common Shares in connection with the consummation of such Corporate Event in such amounts as the Holder would have been entitled to receive had this Note initially been issued with conversion rights for the form of such consideration (as opposed to Common Shares) at a conversion rate for such consideration commensurate with the Conversion Price. Provision made pursuant to the preceding sentence shall be in a form and substance satisfactory to the Required Holders. The provisions of this Section shall apply similarly and equally to successive Corporate Events and shall be applied without regard to any limitations on the conversion or redemption of this Note.
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(h) Whenever the Conversion Price is adjusted pursuant to Section (3) hereof, the Company shall promptly provide the Holder with a written notice setting forth the Conversion Price after such adjustment and setting forth a brief statement of the facts requiring such adjustment.
(i) In case of any (1) merger or consolidation of the Company or any Subsidiary of the Company with or into another Person, or (2) sale by the Company or any Subsidiary of the Company of more than one-half of the assets of the Company in one or a series of related transactions, a Holder shall have the right to (A) exercise any rights under Section (3)(b), (B) convert the aggregate amount of this Note then outstanding into the shares of stock and other securities, cash and property receivable upon or deemed to be held by holders of Common Shares following such merger, consolidation or sale, and such Holder shall be entitled upon such event or series of related events to receive such amount of securities, cash and property as the Common Shares into which such aggregate Principal amount of this Note could have been converted immediately prior to such merger, consolidation or sales would have been entitled, or (C) in the case of a merger or consolidation, require the surviving entity to issue to the Holder a convertible Note with a Principal amount equal to the aggregate Principal amount of this Note then held by such Holder, plus all accrued and unpaid interest and other amounts owing thereon, which such newly issued convertible Note shall have terms identical (including with respect to conversion) to the terms of this Note, and shall be entitled to all of the rights and privileges of the Holder of this Note set forth herein and the agreements pursuant to which this Note was issued. In the case of clause (C), the conversion price applicable for the newly issued shares of convertible preferred stock or convertible debentures shall be based upon the amount of securities, cash and property that each Common Shares would receive in such transaction and the Conversion Price in effect immediately prior to the effectiveness or closing date for such transaction. The terms of any such merger, sale or consolidation shall include such terms so as to continue to give the Holder the right to receive the securities, cash and property set forth in this Section upon any conversion or redemption following such event. This provision shall similarly apply to successive such events.
(j) Alternate Conversions. In addition to any other remedies, the Holder shall have the right (but not the obligation): (i) in the case of a Payment Failure, to convert, on one or more occasions all or part of the applicable Installment Amount at any time after such Payment Failure has occurred at the Variable Price and (ii) in the case of any Event of Default, if such Event of Default has not been cured or waived in writing by the Holder within 30 days after the occurrence thereof (such 30th day after the occurrence of the Event of Default, the “Trigger Date”), to convert, on one or more occasions all or part of the Note at any time after the Trigger Date and so long as the applicable Event of Default is continuing at the Variable Price until all amounts outstanding under this Note have been repaid in full (in each case of (i) and (ii), an “Alternate Conversion”). Any Alternate Conversion shall be effected in accordance with Section (3) (and subject to the limitations set out in Section (3)(c)(i) and Section (3)(c)(ii)), but replacing the “Fixed Price” with the “Variable Price”, by designating in the Conversion Notice delivered that the Holder is electing to use the Variable Price for such conversion. For the avoidance of doubt, the Holder’s exercise of its right to effect Alternate Conversion under this Section 3(j) shall not be deemed an election of remedies with respect to a Payment Failure or other Event of Default and shall not limit the Holder’s right to pursue any other remedies available to it under this Note, the other Transaction Documents or under applicable laws
(4) REISSUANCE OF THIS NOTE.
(a) Transfer. If this Note is to be transferred, the Holder shall surrender this Note to the Company, whereupon the Company will forthwith issue and deliver upon the order of the Holder a new Note (in accordance with Section (4)(d)), registered in the name of the registered transferee or assignee, representing the outstanding Principal being transferred by the Holder (along with any accrued and unpaid interest thereof) and, if less than the entire outstanding Principal is being transferred, a new Note (in accordance with Section (4)(d)) to the Holder representing the outstanding Principal not being transferred. The Holder and any assignee, by acceptance of this Note, acknowledge and agree that, by reason of the provisions of Section (3)(b)(iii) following conversion or redemption of any portion of this Note, the outstanding Principal represented by this Note may be less than the Principal stated on the face of this Note.
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(b) Lost, Stolen or Mutilated Note. Upon receipt by the Company of evidence reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of this Note, and, in the case of loss, theft or destruction, of any indemnification undertaking by the Holder to the Company in customary form and substance and, in the case of mutilation, upon surrender and cancellation of this Note, the Company shall execute and deliver to the Holder a new Note (in accordance with Section (4)(d)) representing the outstanding Principal.
(c) Note Exchangeable for Different Denominations. This Note is exchangeable, upon the surrender hereof by the Holder at the principal office of the Company, for a new Note or Notes (in accordance with Section (4)(d)) representing in the aggregate the outstanding Principal of this Note, and each such new Note will represent such portion of such outstanding Principal as is designated by the Holder at the time of such surrender.
(d) Issuance of New Notes. Whenever the Company is required to issue a new Note pursuant to the terms hereof, such new Note (i) shall be of like tenor with this Note, (ii) shall represent, as indicated on the face of such new Note, the Principal remaining outstanding (or in the case of a new Note being issued pursuant to Section (4)(a) or Section (4)(c), the Principal designated by the Holder which, when added to the Principal represented by the other new Note(s) issued in connection with such issuance, does not exceed the Principal remaining outstanding under this Note immediately prior to such issuance of such new Note), (iii) shall have an issuance date, as indicated on the face of such new Note, which is the same as the Issuance Date of this Note, (iv) shall have the same rights and conditions as this Note, and (v) shall represent accrued and unpaid Interest from the Issuance Date.
(5) NOTICES. Any notices, consents, waivers or other communications required or permitted to be given under the terms hereof must be in writing by letter or electronic mail (“e-mail”) and will be deemed to have been delivered (i) upon receipt, when delivered personally, (ii) one (1) Business Day after deposit with an overnight courier service with next day delivery specified, as applicable or (iii) receipt, when sent by e-mail, and, in each case of the foregoing clauses (i), (ii) and (iii), properly addressed to the party to receive the same. The addresses and e-mail addresses for such communications shall be:
| If to the Company, to: | Health in Tech, Inc. |
|
701 S. Colorado Ave, Suite 1 Stuart, FL 34994 | |
|
With copies (which shall not constitute notice or delivery of process) to: |
Loeb & Loeb LLP 345 Park Ave New York, NY 10154 Attn: Alexandria E. Kane, Esq. E-mail: akane@loeb.com |
| If to the Holder: | YA II PN, Ltd |
|
c/o Yorkville Advisors Global, LLC 1012 Springfield Avenue | |
| Mountainside, NJ 07092 | |
| Attention: Mark Angelo | |
| Email: Legal@yorkvilleadvisors.com |
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or at such other address and/or e-mail address and/or to the attention of such other person as the recipient party has specified by written notice given to each other party in accordance with this Section at least three (3) Business Days prior to the effectiveness of such change. Written confirmation of receipt (a) given by the recipient of such notice, consent, waiver or other communication, (b) electronically generated by the sender’s email service provider containing the time, date, recipient email address or (c) provided by a nationally recognized overnight delivery service, shall be rebuttable evidence of personal service, receipt from a nationally recognized overnight delivery service or receipt by e-mail in accordance with clause (i), (ii) or (iii) above, respectively.
(6) Except as expressly provided herein, no provision of this Note shall alter or impair the obligations of the Company, which are absolute and unconditional, to pay the Principal of, and interest and other charges (if any) on, this Note at the time, place, and rate, and in the currency, herein prescribed. This Note is a direct obligation of the Company. As long as this Note is outstanding, the Company shall not and shall cause each of its Subsidiaries not to, without the consent of the Holder, (i) amend its certificate of incorporation, bylaws or other charter documents so as to adversely affect any rights of the Holder; (ii) repay, repurchase or offer to repay, repurchase or otherwise acquire shares of its Common Shares or other equity securities; (iii) enter into any agreement with respect to any of the foregoing, or (iv) enter into any agreement, arrangement or transaction in or of which the terms thereof would restrict, materially delay, conflict with or impair the ability of the Company to perform its obligations under the this Note, including, without limitation, the obligation of the Company to make cash payments hereunder.
(7) This Note shall not entitle the Holder to any of the rights of a stockholder of the Company, including without limitation, the right to vote, to receive dividends and other distributions, or to receive any notice of, or to attend, meetings of stockholders or any other proceedings of the Company, unless and to the extent converted into Common Shares in accordance with the terms hereof.
(8) CHOICE OF LAW; VENUE; WAIVER OF JURY TRIAL
(a) Governing Law. This Note and the rights and obligations of the Parties hereunder shall, in all respects, be governed by, and construed in accordance with, the laws (excluding the principles of conflict of laws) of the State of New York (the “Governing Jurisdiction”) (including Section 5-1401 and Section 5-1402 of the General Obligations Law of the State of New York), including all matters of construction, validity and performance.
(b) Jurisdiction; Venue; Service.
(i) The Company hereby irrevocably consents to the non-exclusive personal jurisdiction of the state courts of the Governing Jurisdiction and, if a basis for federal jurisdiction exists, the non-exclusive personal jurisdiction of any United States District Court for the Governing Jurisdiction.
(ii) The Company agrees that venue shall be proper in any court of the Governing Jurisdiction selected by the Holder or, if a basis for federal jurisdiction exists, in any United States District Court in the Governing Jurisdiction selected by the Holder. The Company waives any right to object to the maintenance of any suit, claim, action, litigation or proceeding of any kind or description, whether in law or equity, whether in contract or in tort or otherwise, in any of the state or federal courts of the Governing Jurisdiction on the basis of improper venue or inconvenience of forum.
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(iii) Any suit, claim, action, litigation or proceeding of any kind or description, whether in law or equity, whether in contract or tort or otherwise, brought by the Company against the Holder arising out of or based upon this Note or any matter relating to this Note, or any other Transaction Document, or any contemplated transaction, shall be brought in a court only in the Governing Jurisdiction. The Company shall not file any counterclaim against the Holder in any suit, claim, action, litigation or proceeding brought by the Holder against the Company in a jurisdiction outside of the Governing Jurisdiction unless under the rules of the court in which the Holder brought such suit, claim, action, litigation or proceeding the counterclaim is mandatory, and not permissive, and would be considered waived unless filed as a counterclaim in the suit, claim, action, litigation or proceeding instituted by the Holder against the Company. The Company agrees that any forum outside the Governing Jurisdiction is an inconvenient forum and that any suit, claim, action, litigation or proceeding brought by the Company against the Holder in any court outside the Governing Jurisdiction should be dismissed or transferred to a court located in the Governing Jurisdiction. Furthermore, the Company irrevocably and unconditionally agrees that it will not bring or commence any suit, claim, action, litigation or proceeding of any kind or description, whether in law or equity, whether in contract or in tort or otherwise, against the Holder arising out of or based upon this Note or any matter relating to this Note, or any other Transaction Document, or any contemplated transaction, in any forum other than the courts of the State of New York sitting in New York County, and the United States District Court of the Southern District of New York, and any appellate court from any thereof, and each of the parties hereto irrevocably and unconditionally submits to the jurisdiction of such courts and agrees that all claims in respect of any such suit, claim, action, litigation or proceeding may be heard and determined in such New York State Court or, to the fullest extent permitted by applicable law, in such federal court. The Company and the Holder agree that a final judgment in any such suit, claim, action, litigation or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law.
(iv) The Company and the Holder irrevocably consent to the service of process out of any of the aforementioned courts in any such suit, claim, action, litigation or proceeding by e-mail or the mailing of copies thereof by registered or certified mail postage prepaid, to it at the e-mail address or physical address, as applicable, provided for notices in this Note, such service to become effective thirty (30) days after the date of such e-mail or mailing, as applicable. The Company and the Holder each irrevocably waive any defense it may have on the grounds of insufficient or improper service with respect to service of process effected in accordance with this Section (8)(b)(iv).
(v) Nothing herein shall affect the right of the Holder to serve process in any other manner permitted by law or to commence legal proceedings or to otherwise proceed against the Company or any other Person in the Governing Jurisdiction or in any other jurisdiction.
(c) THE PARTIES MUTUALLY WAIVE ALL RIGHT TO TRIAL BY JURY OF ALL CLAIMS OF ANY KIND ARISING OUT OF OR BASED UPON THIS NOTE OR ANY MATTER RELATING TO THIS NOTE, OR ANY OTHER TRANSACTION DOCUMENT, OR ANY CONTEMPLATED TRANSACTION. THE PARTIES ACKNOWLEDGE THAT THIS IS A WAIVER OF A LEGAL RIGHT AND THAT THE PARTIES EACH MAKE THIS WAIVER VOLUNTARILY AND KNOWINGLY AFTER CONSULTATION WITH COUNSEL OF THEIR RESPECTIVE CHOICE. THE PARTIES AGREE THAT ALL SUCH CLAIMS SHALL BE TRIED BEFORE A JUDGE OF A COURT HAVING JURISDICTION, WITHOUT A JURY.
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(d) The Company expressly acknowledges and agrees that this Note constitutes an instrument for the payment of money only within the meaning of section 3213 of the New York Civil Practice Law and Rules (“CPLR §3213”), and that upon any default under or breach of the terms of this Note, the Holder may immediately commence an action by motion for summary judgment in lieu of complaint without any further notice or demand. The Company irrevocably waives (i) any right to require the Holder to commence any action by summons and complaint, (ii) any right to assert defenses, setoffs, counterclaims or delays in any CPLR §3213 proceeding (other than the defense of full payment of any amount that the Holder seeks to recover), and (iii) any right to object to the sufficiency of this Note as an instrument for the payment of money only within the meaning of CPLR §3213 and agrees not to assert that this Note is not such an instrument. The Company agrees that all amounts due under this Note shall be deemed liquidated, unconditional and immediately due and payable for purposes of CPLR §3213.
(9) If the Company fails to strictly comply with the terms of this Note, then the Company shall reimburse the Holder promptly for all fees, costs and expenses, including, without limitation, attorneys’ fees and expenses incurred by the Holder in any action in connection with this Note, including, without limitation, those incurred: (i) during any workout, attempted workout, and/or in connection with the rendering of legal advice as to the Holder’s rights, remedies and obligations, (ii) collecting any sums which become due to the Holder, (iii) defending or prosecuting any proceeding or any counterclaim to any proceeding or appeal; or (iv) the protection, preservation or enforcement of any rights or remedies of the Holder.
(10) Any waiver by the Holder of a breach of any provision of this Note shall not operate as or be construed to be a waiver of any other breach of such provision or of any breach of any other provision of this Note. The failure of the Holder to insist upon strict adherence to any term of this Note on one or more occasions shall not be considered a waiver or deprive that party of the right thereafter to insist upon strict adherence to that term or any other term of this Note. No provision of this Note may be waived or amended other than by a written agreement signed by the parties to this Agreement.
(11) If any provision of this Note is invalid, illegal or unenforceable, the balance of this Note shall remain in effect, and if any provision is inapplicable to any person or circumstance, it shall nevertheless remain applicable to all other persons and circumstances. If it shall be found that any interest or other amount deemed interest due hereunder shall violate applicable laws governing usury, the applicable rate of interest due hereunder shall automatically be lowered to equal the maximum permitted rate of interest. The Company covenants (to the extent that it may lawfully do so) that it shall not at any time insist upon, plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay, extension or usury law or other law which would prohibit or forgive the Company from paying all or any portion of the Principal of or interest on this Note as contemplated herein, wherever enacted, now or at any time hereafter in force, or which may affect the covenants or the performance of this Note, and the Company (to the extent it may lawfully do so) hereby expressly waives all benefits or advantage of any such law, and covenants that it will not, by resort to any such law, hinder, delay or impede the execution of any power herein granted to the Holder, but will suffer and permit the execution of every such power as though no such law has been enacted.
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(12) CERTAIN DEFINITIONS. For purposes of this Note, the following terms shall have the following meanings:
(a) “Applicable Price” shall have the meaning set forth in Section (3)(f).
(b) “Approved Stock Plan” means any employee benefit plan or share incentive plan which has been approved by the Board of Directors of the Company, pursuant to which the Company’s securities may be issued to any employee, officer or director for services provided to the Company.
(c) “Bloomberg” means Bloomberg Financial Markets.
(d) “Business Day” means any day except Saturday, Sunday and any day which shall be a federal legal holiday in the United States or a day on which banking institutions are authorized or required by law or other government action to close.
(e) “Buy-In” shall have the meaning set forth in Section (3)(b)(ii).
(f) “Buy-In Price” shall have the meaning set forth in Section (3)(b)(ii).
(g) “Change of Control Transaction” means the occurrence of (a) an acquisition after the date hereof by an individual or legal entity or “group” (as described in Rule 13d-5(b)(1) promulgated under the Exchange Act) of effective control (whether through legal or beneficial ownership of capital stock of the Company, by contract or otherwise) of in excess of fifty percent (50%) of the voting power of the Company (except that the acquisition of voting securities by the Holder or any other current holder of convertible securities of the Company shall not constitute a Change of Control Transaction for purposes hereof), (b) a replacement at one time or over time of more than one-half of the members of the board of directors of the Company (other than as due to the death or disability of a member of the board of directors) which is not approved by a majority of those individuals who are members of the board of directors on the date hereof (or by those individuals who are serving as members of the board of directors on any date whose nomination to the board of directors was approved by a majority of the members of the board of directors who are members on the date hereof), (c) the merger, consolidation or sale of fifty percent (50%) or more of the assets of the Company or any Subsidiary of the Company in one or a series of related transactions with or into another entity, or (d) the execution by the Company of an agreement to which the Company is a party or by which it is bound, providing for any of the events set forth above in (a), (b) or (c). No transfer to a wholly-owned Subsidiary shall be deemed a Change of Control Transaction under this provision.
(h) “Closing Price” means the price per share in the last reported trade of the Common Shares on a Principal Market or on the exchange which the Common Shares are then listed as quoted by Bloomberg.
(i) “Commission” means the Securities and Exchange Commission.
(j) “Common Shares” means the shares of Class A common stock, par value $0.001, of the Company and stock of any other class into which such shares may hereafter be changed or reclassified.
(k) “Conversion Amount” shall have the meaning set forth in Section 3(a)(ii).
(l) “Conversion Date” shall have the meaning set forth in Section (3)(b)(i).
(m) “Conversion Failure” shall have the meaning set forth in Section (3)(b)(ii).
(n) “Conversion Notice” shall have the meaning set forth in Section (3)(b)(i).
(o) “Conversion Price” shall have the meaning set forth in Section 3(a)(iii).
(p) “Convertible Securities” means any stock or securities directly or indirectly convertible into or exercisable or exchangeable for Common Shares.
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(q) “Dilutive Issuance” shall have the meaning set forth in Section (3)(f).
(r) “Exchange Act” means the Securities Exchange Act of 1934, as amended.
(s) “Excluded Securities” means any Common Shares issued or issuable or deemed to be issued by the Company: (i) under any Approved Stock Plan, (ii) upon conversion of any securities issued pursuant to the SEPA (including Common Shares issued in connection with this Note and any of the Other Notes); (iii) upon conversion, exercise or exchange of any Options or Convertible Securities which are outstanding on the day immediately preceding the date of the SEPA; provided, that such issuance of Common Shares upon exercise of such Options or Convertible Securities is made pursuant to the terms of such Options or Convertible Securities in effect on such date and such Options or Convertible Securities are not amended, modified or changed on or after such date, (iv) upon a stock split, reverse stock split, distribution of bonus shares, combination or other recapitalization events, or (v) issued as full or partial consideration in connection with any bona fide acquisition, merger, consolidation, or purchase of assets, securities, or business by the Company, provided that such securities are issued to Persons who are not, at the time of such issuance, Affiliates of the Company solely as a result of such acquisition.
(t) “Floor Price” solely with respect to the Variable Price, shall mean $0.204 per Common Share.
(u) “Fundamental Transaction” means any of the following: (1) the Company effects any merger or consolidation of the Company with or into another Person and the Company is the non-surviving company (other than a merger or consolidation with a wholly owned Subsidiary of the Company for the purpose of redomiciling the Company), (2) the Company effects any sale of all or substantially all of its assets in one or a series of related transactions, (3) any tender offer or exchange offer (whether by the Company or another Person) is completed pursuant to which holders of Common Shares are permitted to tender or exchange their shares for other securities, cash or property, or (4) the Company effects any reclassification of the Common Shares or any compulsory share exchange pursuant to which the Common Shares is effectively converted into or exchanged for other securities, cash or property.
(v) “Installment Amount” shall have the meaning set forth in Section 1(c).
(w) “Installment Date” shall have the meaning set forth in Section 1(c).
(x) “Installment Principal Amount” shall have the meaning set forth in Section 1(c).
(y) “New Issuance Price” shall have the meaning set forth in Section (3)(f).
(z) “Other Notes” means any other notes issued pursuant to the SEPA and any other debentures, notes, or other instruments issued in exchange, replacement, or modification of the foregoing.
(aa) “Payment Failure” means the Company’s failure to pay any Installment Amount on the applicable Installment Date.
(bb) “Payment Premium” means 4% of the Principal amount being paid.
(cc) “Periodic Reports” shall mean all of the Company’s reports required to be filed by the Company with the Commission under applicable laws and regulations (including, without limitation, Regulation S-K), including annual reports (on Form 10-K), quarterly reports (on Form 10-Q), and current reports (on Form 8-K), for so long as any amounts are outstanding under this Note or any Other Note; provided that all such Periodic Reports shall include, when filed, all information, financial statements, audit reports (when applicable) and other information required to be included in such Periodic Reports in compliance with all applicable laws and regulations.
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(dd) “Person” means a corporation, an association, a partnership, organization, a business, an individual, a government or political subdivision thereof or a governmental agency.
(ee) “Principal Market” means any of The New York Stock Exchange, the NYSE American, the Nasdaq Capital Market, the Nasdaq Global Market or the Nasdaq Global Select Market, and any successor to any of the foregoing markets or exchanges.
(ff) “Redemption Premium” means 5% of the Principal amount being redeemed.
(gg) “Registration Rights Agreement” means the registration rights agreement entered into between the Company and the Holder on the date hereof.
(hh) “Registration Statement” means a registration statement meeting the requirements set forth in the Registration Rights Agreement, covering among other things the resale of the Underlying Shares and naming the Holder as a “selling stockholder” thereunder.
(ii) “Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.
(jj) “Share Delivery Date” shall have the meaning set forth in Section (3)(b)(i).
(kk) “Subsidiary” shall mean any Person in which the Company, directly or indirectly, (x) owns a majority of the outstanding capital stock or holds a majority of the equity or similar interest of such Person or (y) controls or operates all or substantially all of the business, operations or administration of such Person, and the foregoing are collectively referred to herein as “Subsidiaries.”
(ll) “Trading Day” means a day on which the Common Shares are quoted or traded on a Principal Market on which the Common Shares are then quoted or listed; provided, that in the event that the Common Shares are not listed or quoted, then Trading Day shall mean a Business Day.
(mm) “Transaction Document” means this Note, the Other Notes, the SEPA, the Registration Rights Agreement and any and all other documents, agreements, instruments or other items executed or delivered in connection with this Note or any of the foregoing.
(nn) “Underlying Shares” means the Common Shares issuable upon conversion of this Note or as payment of interest in accordance with the terms hereof.
(oo) “Variable Price” means the lower of (A) the Fixed Price and (B) a price per share equal to 95% of the lowest daily VWAP during the five consecutive Trading Days immediately preceding the Conversion Date, but not lower than the Floor Price.
(pp) “VWAP” means, for any Trading Day, the daily volume weighted average price of the Common Shares for such Trading Day on the Principal Market during regular trading hours as reported by Bloomberg L.P.
[Signature Page Follows]
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IN WITNESS WHEREOF, the Company has caused this Convertible Promissory Note to be duly executed by a duly authorized officer as of the date set forth above.
| COMPANY: | ||
| Health in Tech, Inc. | ||
| By: | ||
| Name: | Tim Johnson | |
| Title: | Chief Executive Officer | |
EXHIBIT I
CONVERSION NOTICE
(To be executed by the Holder in order to Convert the Note)
TO: Health in Tech, Inc.
Via Email:
The undersigned hereby irrevocably elects to convert a portion of the outstanding and unpaid Conversion Amount of Note No. HIT-[1][2] into Common Shares of Health in Tech, Inc., according to the conditions stated therein, as of the Conversion Date written below.
Conversion Date:
Principal Amount to be Converted:
Accrued Interest to be Converted:
Total Conversion Amount to be converted:
Fixed Price:
Variable Price:
Applicable Conversion Price:
Number of Common Shares to be issued:
Please issue the Common Shares in the following name and deliver them to the following account:
Issue to:
Broker DTC Participant Code:
Account Number:
| Authorized Signature: | |
| Name: | |
| Title: |
EXHIBIT II
REPAYMENT SCHEDULE*
| Installment Date | Installment Principal Amount | |||
| [+60 Days] | $ | 250,000.00 | ||
| [+ 1 Month] | $ | 609,000.00 | ||
| [+ 1 Month] | $ | 609,000.00 | ||
| [+ 1 Month] | $ | 609,000.00 | ||
| [+ 1 Month] | $ | 609,000.00 | ||
| [+ 1 Month] | $ | 609,000.00 | ||
| [+ 1 Month] | $ | 609,000.00 | ||
| [+ 1 Month] | $ | 609,000.00 | ||
| [+ 1 Month] | $ | 609,000.00 | ||
| [+ 1 Month] | $ | 609,000.00 | ||
| [+ 1 Month] | $ | 609,000.00 | ||
| [+ 1 Month] | $ | 609,000.00 | ||
| [+ 1 Month] | $ | 609,000.00 | * | |
| [+ 1 Month] | $ | 609,000.00 | * | |
| [+ 1 Month] | $ | 609,000.00 | * | |
| [+ 1 Month] | $ | 609,000.00 | * | |
| [+ 1 Month] | $ | 615,000.00 | * | |
[Note: Installment Principal Amount reflected for the first $10m of Notes.]
| * | Assumes and reflects the second tranche of $3m of Notes. |
Exhibit 10.1
STANDBY EQUITY PURCHASE AGREEMENT
THIS STANDBY EQUITY PURCHASE AGREEMENT (this “Agreement”) dated as of August 12, 2026 is made by and between YA II PN, LTD., a Cayman Islands exempt limited company (the “Investor”), and HEALTH IN TECH, INC., a company incorporated under the laws of the State of Nevada (the “Company”). The Investor and the Company may be referred to herein individually as a “Party” and collectively as the “Parties.”
WHEREAS, the Parties desire that, upon the terms and subject to the conditions contained herein, the Company shall have the right to issue and sell to the Investor, from time to time as provided herein, and the Investor shall purchase from the Company, up to $20 million of the Company’s shares of Class A common stock, par value $0.001 per share (the “Common Shares”);
WHEREAS, the Common Shares are listed for trading on the Nasdaq Stock Market under the symbol “HIT;”
WHEREAS, the offer and sale of the Common Shares issuable hereunder will be made in reliance upon Section 4(a)(2) under the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder (the “Securities Act”), or upon such other exemption from the registration requirements of the Securities Act as may be available with respect to any or all of the transactions to be made hereunder;
WHEREAS, the Parties are concurrently entering into a Registration Rights Agreement in the form attached as Exhibit A hereto (the “Registration Rights Agreement”), pursuant to which the Company shall register the resale of the Registrable Securities (as defined in the Registration Rights Agreement), upon the terms and subject to the conditions set forth therein; and
WHEREAS, in consideration of the Investor’s execution and delivery of this Agreement, the Company shall issue to the Investor the Commitment Shares (as defined herein) pursuant to and in accordance with Section 12.04.
NOW, THEREFORE, the Parties hereto agree as follows:
Article I.
Certain Definitions
Capitalized terms used in this Agreement shall have the meanings ascribed to such terms in Annex I hereto, and hereby made a part hereof, or as otherwise set forth in this Agreement.
Article II.
Pre-Paid Advances
Section 2.01 Pre-Paid Advances. Subject to the satisfaction of the conditions set forth in Annex II attached hereto, the Investor shall advance to the Company the principal amount of $15,000,000 (the “Pre-Paid Advance”), which shall be evidenced by convertible promissory notes in the form attached hereto as Exhibit B (each, a “Promissory Note”) in tranches. The first tranche of the Pre-Paid Advance shall be in a principal amount of $7,000,000 and, subject to the satisfaction of the conditions set forth in Annex II attached hereto, advanced following the filing of Company’s quarterly report on Form 10-Q for the quarterly period ended June 30, 2026 (the “June Form 10-Q”) (the “First Pre-Advance Closing”), the second tranche of the Pre-Paid Advance shall be in a principal amount of $3,000,000 and, subject to the satisfaction of the conditions set forth in Annex II attached hereto, advanced on the later of (i) October 21, 2026 or (ii) the second Trading Day following the initial Registration Statement first becoming effective (the “Second Pre-Advance Closing”), and the third tranche of the Pre-Paid Advance, if requested by the Company and agreed upon in writing by the Investor in its sole and absolute discretion, shall be in a principal amount of up to $5,000,000 (the “Third Pre-Advance Closing”) (each of the First Pre-Advance Closing, Second Pre-Advance Closing and Third Pre-Advance Closing individually referred to as a “Pre-Advance Closing” and collectively referred to as the “Pre-Advance Closings”).
Section 2.02 Pre-Advance Closing. Each Pre-Advance Closing shall occur remotely by conference call and electronic delivery of documentation. The First Pre-Advance Closing shall take place at 10:00 a.m., New York time, on the fourth Trading Day following the filling of the June Form 10-Q, provided that the conditions set forth on Annex II have been satisfied (or such other date as is mutually agreed to by the Company and the Investor). The Second Pre-Advance Closing shall take place at 10:00 a.m., New York time, on the later of (i) October 21, 2026 or (ii) the second Trading Day following the initial Registration Statement first becoming effective, provided that the conditions set forth on Annex II have been satisfied (or such other date as is mutually agreed to by the Company and the Investor). The Third Pre-Advance Closing shall take place on such date as is mutually agreed to by the Company and the Investor. At each Pre-Advance Closing, the Investor shall advance to the Company the principal amount of the applicable tranche of the Pre-Paid Advance, less a discount in the amount equal to 5% of the principal amount of such tranche of the Pre-Paid Advance netted from the Purchase Price due with respect to such tranche (such discount amount, the “Purchase Price Discount”), in immediately available funds to an account designated by the Company in writing, and the Company shall deliver a Promissory Note with a principal amount equal to the full amount of the applicable tranche of the Pre-Paid Advance, duly executed on behalf of the Company.
Article III.
Advances
Section 3.01 Advances; Mechanics. Upon the terms and subject to the conditions of this Agreement, during the Commitment Period, the Company, at its sole discretion, shall have the right, but not the obligation, to issue and sell to the Investor, and the Investor shall subscribe for and purchase from the Company, Advance Shares by the delivery to the Investor of Advance Notices, provided (x) no balance is outstanding under a Promissory Note, or, (y) if there is a balance outstanding under a Promissory Note, then in accordance with Section 3.01(a)(iii) hereof, on the following terms:
| (a) | Advance Notice. At any time during the Commitment Period, the Company may require the Investor to purchase Shares by delivering an Advance Notice to the Investor, subject to the satisfaction or waiver by the Investor of the conditions set forth in Annex III, and in accordance with the following provisions: |
| (i) | The Company shall, in its sole discretion, select the number of Advance Shares, not to exceed the Maximum Advance Amount (unless otherwise agreed to in writing by the Company and the Investor), it desires to issue and sell to the Investor in each Advance Notice, and the time it desires to deliver each Advance Notice. |
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| (ii) | There shall be no mandatory minimum Advances and there shall be no non-usage fee for not utilizing the Commitment Amount or any part thereof. |
| (iii) | For so long as any amount remains outstanding under a Promissory Note, without the prior written consent of the Investor, the net proceeds from each Advance shall be used in accordance with Section 1(d) of the Promissory Notes. |
| (b) | [RESERVED] |
| (c) | Date of Delivery of Advance Notice. Advance Notices shall be delivered in accordance with the instructions set forth on the bottom of Exhibit C attached hereto. An Advance Notice shall be deemed delivered on (i) the day it is received by the Investor if such notice is received by e-mail at or before 9:00 a.m. New York City time (or at such later time if agreed to by the Investor in its sole discretion), or (ii) the immediately succeeding day if it is received by e-mail after 9:00 a.m. New York City time. An Advance Notice deemed delivered pursuant to an Investor Notice shall be deemed delivered on the same date upon which the Investor Notice is received by the Company. Upon receipt of an Advance Notice, the Investor shall promptly provide written confirmation (which may be by e-mail) of receipt of such Advance Notice. |
Section 3.02 Advance Limitations, Regulatory. Regardless of the Advance requested in an Advance Notice, and notwithstanding any provision to the contrary herein, the final number of Shares to be issued and sold pursuant to such Advance Notice shall be reduced (if at all) in accordance with each of the following limitations:
| (a) | Ownership Limitation; Commitment Amount. At the request of the Company, the Investor shall inform the Company of the number of Common Shares the Investor beneficially owns. Notwithstanding anything to the contrary contained in this Agreement, the Investor shall not be obligated to purchase or acquire, and shall not purchase or acquire, any Common Shares under this Agreement which, when aggregated with all other Common Shares beneficially owned by the Investor and its Affiliates (as calculated pursuant to Section 13(d) of the Exchange Act and Rule 13d-3 promulgated thereunder), would result in the beneficial ownership by the Investor and its Affiliates (on an aggregated basis) of a number of Common Shares exceeding 4.99% of the then outstanding voting power or number of Common Shares (the “Ownership Limitation”). Upon the request of the Investor, the Company shall promptly (but no later than the next Business Day on which the transfer agent for the Common Shares is open for business) confirm orally or in writing to the Investor the number of Common Shares then outstanding. In connection with each Advance Notice, any portion of an Advance that would (i) cause the Investor to exceed the Ownership Limitation or (ii) cause the aggregate number of Shares issued and sold to the Investor hereunder to exceed the Commitment Amount shall automatically be withdrawn with no further action required by the Company, and such Advance Notice shall be deemed automatically modified to reduce the Advance by an amount equal to such withdrawn portion; provided that in the event of any such automatic withdrawal and automatic modification, the Investor will promptly notify the Company of such event. |
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| (b) | Registration Limitation. In no event shall an Advance exceed the number of Common Shares registered in respect of the transactions contemplated hereby under the Registration Statement then in effect (the “Registration Limitation”). In connection with each Advance Notice, any portion of an Advance that would exceed the Registration Limitation shall automatically be withdrawn with no further action required by the Company and such Advance Notice shall be deemed automatically modified to reduce the aggregate amount of the requested Advance by an amount equal to such withdrawn portion; provided that in the event of any such automatic withdrawal and automatic modification, the Investor will promptly notify the Company of such event. |
| (c) | Compliance with Rules of Principal Market. Notwithstanding anything to the contrary herein, the Company shall not effect any sales under this Agreement and the Investor shall not have the obligation to purchase Common Shares under this Agreement to the extent (but only to the extent) that after giving effect to such purchase and sale the aggregate number of Common Shares issued under this Agreement (including, without limitation, any Commitment Shares and Common Shares underlying the Promissory Notes) would exceed 13,100,378 (representing 19.99% of the aggregate number of Common Shares and shares of the Company’s Class B common stock, par value $0.001 per share, issued and outstanding as of the signing of this Agreement (subject to adjustment for any stock splits, combinations or the like)), calculated in accordance with the rules of the Principal Market, which number shall be reduced, on a share-for-share basis, by the number of Common Shares issued or issuable pursuant to any transaction or series of transactions that may be aggregated with the transactions contemplated by this Agreement under the applicable rules of the Principal Market (such maximum number of shares, the “Exchange Cap”) provided that, the Exchange Cap will not apply if the Company’s stockholders have approved the issuance of Common Shares pursuant to this Agreement in excess of the Exchange Cap in accordance with the applicable rules of the Principal Market. In connection with each Advance Notice, any portion of an Advance that would exceed the Exchange Cap shall automatically be withdrawn with no further action required by the Company and such Advance Notice shall be deemed automatically modified to reduce the aggregate amount of the requested Advance by an amount equal to such withdrawn portion in respect of each Advance Notice. |
Section 3.03 Advance Limitations, Minimum Acceptable Price.
| (a) | With respect to each Advance Notice the Company may notify the Investor of the Minimum Acceptable Price with respect to such Advance by indicating a Minimum Acceptable Price on such Advance Notice. If no Minimum Acceptable Price is specified in an Advance Notice, then no Minimum Acceptable Price shall be in effect in connection with such Advance. Each Trading Day during a Pricing Period for which (A) with respect to each Advance Notice with a Minimum Acceptable Price, the VWAP of the Common Shares is below the Minimum Acceptable Price in effect with respect to such Advance Notice or (B) there is no VWAP (each such day set forth in (A) and (B) above, an “Excluded Day”), shall result in an automatic reduction to the number of Advance Shares set forth in such Advance Notice by one third (1/3) (the resulting amount of each Advance being the “Adjusted Advance Amount”), and each Excluded Day shall be excluded from the Pricing Period for purposes of determining the Market Price. |
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| (b) | The total Advance Shares in respect of each Advance with any Excluded Day(s) (after reductions have been made to arrive at the Adjusted Advance Amount) shall be automatically increased by such number of Common Shares (the “Additional Shares”) equal to the greater of (a) the number of Common Shares sold by the Investor on such Excluded Day(s), if any, or (b) such number of Common Shares elected to be subscribed for by the Investor, and the subscription price per share for each Additional Share shall be equal to the Minimum Acceptable Price in effect with respect to such Advance Notice multiplied by 97%, provided that this increase shall not cause the total Advance Shares to exceed the amount set forth in the applicable Advance Notice or any limitations set forth in Section 3.02. |
Section 3.04 Unconditional Contract. Notwithstanding any other provision in this Agreement, the Company and the Investor acknowledge and agree that upon the Investor’s receipt of a valid Advance Notice from the Company the Parties shall be deemed to have entered into an unconditional contract binding on both Parties for the purchase and sale of the applicable number of Advance Shares pursuant to such Advance Notice in accordance with the terms of this Agreement and (i) subject to Applicable Laws and (ii) subject to Section 3.05(d) Section 7.24, the Investor may sell Common Shares during the Pricing Period for such Advance Notice (including with respect to any Advance Shares subject to such Pricing Period).
Section 3.05 Closings. The closing of each Advance and each sale and purchase of Advance Shares (each, a “Closing”) shall take place as soon as practicable on or after each applicable Advance Date in accordance with the procedures set forth below. The Company acknowledges that the Purchase Price is not known at the time an Advance Notice is delivered (at which time the Investor is irrevocably bound) but shall be determined on each Closing based on the daily prices of the Common Shares that are the inputs to the determination of the Purchase Price. In connection with each Closing, the Company and the Investor shall fulfill each of its obligations as set forth below:
| (a) | On or prior to each Advance Date, the Investor shall deliver to the Company a Settlement Document along with a report by Bloomberg L.P. (or, if not reported on Bloomberg L.P., another reporting service reasonably agreed to by the parties) indicating the VWAP for each of the Trading Days during the Pricing Period or period for determining the applicable Conversion Price, in each case in accordance with the terms and conditions of this Agreement. |
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| (b) | Promptly after receipt of the Settlement Document with respect to each Advance (and, in any event, not later than one Trading Day after such receipt), the Company will, or will cause its transfer agent to, electronically transfer such number of Advance Shares to be purchased by the Investor (as set forth in the Settlement Document) by crediting the Investor’s account or its designee’s account at the Depository Trust Company through its Deposit Withdrawal at Custodian System or by such other means of delivery as may be mutually agreed upon by the parties hereto, and transmit notification to the Investor that such share transfer has been requested. Promptly upon receipt of such notification, the Investor shall pay to the Company the aggregate Purchase Price of the Shares (as set forth in the Settlement Document) either (i) in the case of an Advance Notice when no Promissory Notes remain outstanding, in cash in immediately available funds to an account designated by the Company in writing and transmit notification to the Company that such funds transfer has been requested, or (ii) in the case of an Advance Notice submitted while any amount remains outstanding under a Promissory Note, as set forth in Section 1(d) of the Promissory Notes. No fractional shares shall be issued, and any fractional shares that would otherwise be issued in connection with an Advance shall be rounded to the next higher whole number of shares. To facilitate the transfer of the Common Shares by the Investor, the Common Shares will not bear any restrictive legends so long as there is an effective Registration Statement covering the resale of such Common Shares (it being understood and agreed by the Investor that notwithstanding the lack of restrictive legends, the Investor may only sell such Common Shares pursuant to the Plan of Distribution set forth in the Prospectus included in the applicable Registration Statement and otherwise in compliance with the requirements of the Securities Act (including any applicable prospectus delivery requirements) or pursuant to an available exemption). |
| (c) | On or prior to the Advance Date, each of the Company and the Investor shall deliver to the other all documents, instruments and writings expressly required to be delivered by either of them pursuant to this Agreement in order to implement and effect the transactions contemplated herein. |
| (d) | Notwithstanding anything to the contrary in this Agreement, if on any day during the Pricing Period (i) the Company notifies Investor that a Material Outside Event has occurred, or (ii) the Company notifies the Investor of a Black Out Period, the parties agree that any pending Advance shall end and the final number of Advance Shares to be purchased by the Investor at the Closing for such Advance shall be equal to the number of Common Shares sold by the Investor during the applicable Pricing Period prior to the notification from the Company of a Material Outside Event or Black Out Period. |
Section 3.06 Hardship. In the event the Company fails to perform its obligations as mandated in this Agreement after the Investor’s receipt of an Advance Notice, the Company agrees that in addition to and in no way limiting the rights and obligations set forth in Article VI hereto and in addition to any other remedy to which the Investor is entitled at law or in equity, including, without limitation, specific performance, it will hold the Investor harmless against any loss, claim, damage, or expense (including reasonable legal fees and expenses), as incurred, arising out of or in connection with such default by the Company and acknowledges that irreparable damage may occur in the event of any such default. It is accordingly agreed that the Investor shall be entitled to an injunction or injunctions to prevent such breaches of this Agreement and to specifically enforce (subject to Applicable Laws and the rules of the Principal Market), without the posting of a bond or other security, the terms and provisions of this Agreement.
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Article IV.
Representations
and Warranties of the Investor
The Investor represents, warrants, and covenants to the Company, as of the date hereof, as of each Advance Notice Date and as of each Advance Date that:
Section 4.01 Organization and Authorization. The Investor is duly organized, validly existing and in good standing under the laws of the Cayman Islands and has the requisite corporate power and authority to enter into and perform its obligations under the Transaction Documents to which it is a party and to purchase or acquire the Shares in accordance with the terms hereof. The decision to invest and the execution and delivery of the Transaction Documents to which it is a party by the Investor, the performance by the Investor of its obligations hereunder and the consummation by the Investor of the transactions contemplated hereby have been duly authorized and require no other proceedings on the part of the Investor. The undersigned has the right, power and authority to execute and deliver the Transaction Documents to which it is a party and all other instruments on behalf of the Investor or its shareholders. This Agreement and the Transaction Documents to which it is a party have been duly executed and delivered by the Investor and, assuming the execution and delivery hereof and acceptance thereof by the Company, will constitute the legal, valid and binding obligations of the Investor, enforceable against the Investor in accordance with its terms.
Section 4.02 Evaluation of Risks. The Investor has such knowledge and experience in financial, tax and business matters as to be capable of evaluating the merits and risks of, and bearing the economic risks entailed by, an investment in the Common Shares and of protecting its interests in connection with the transactions contemplated hereby. The Investor acknowledges and agrees that its investment in the Company involves a high degree of risk, and that the Investor may lose all or a part of its investment.
Section 4.03 No Legal, Investment or Tax Advice from the Company. The Investor acknowledges that it had the opportunity to review the Transaction Documents, and the transactions contemplated by the Transaction Documents with its own legal counsel and investment and tax advisors. The Investor is relying solely on such counsel and advisors and not on any statements or representations of the Company or any of the Company’s representatives or agents for legal, tax, investment or other advice with respect to the Investor’s acquisition of Common Shares hereunder, the transactions contemplated by this Agreement or the laws of any jurisdiction, and the Investor acknowledges that the Investor may lose all or a part of its investment.
Section 4.04 Investment Purpose. The Investor is acquiring the Common Shares and any Promissory Note for its own account, for investment purposes and not with a view towards, or for resale in connection with, the public sale or distribution thereof, except pursuant to sales registered under or exempt from the registration requirements of the Securities Act; provided, however, that by making the representations herein, the Investor does not agree, or make any representation or warranty, to hold any of the Shares for any minimum or other specific term and reserves the right to dispose of the Shares at any time in accordance with, or pursuant to, a Registration Statement filed pursuant to this Agreement or an applicable exemption under the Securities Act. The Investor does not presently have any agreement or understanding, directly or indirectly, with any Person to sell or distribute any of the Shares. The Investor acknowledges that it will be disclosed as an “underwriter” and a “selling stockholder” in each Registration Statement and in any Prospectus contained therein to the extent required by applicable law and to the extent any such Prospectus is related to the resale of Shares issuable pursuant to Advance Notices. The Investor is acquiring the Shares and the Promissory Notes hereunder in the ordinary course of its business.
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Section 4.05 Accredited Investor. The Investor is an “Accredited Investor” as that term is defined in Rule 501(a)(3) of Regulation D.
Section 4.06 Information. The Investor and its advisors (and its counsel), if any, have been furnished with all materials relating to the business, finances and operations of the Company and information the Investor deemed material to making an informed investment decision. The Investor and its advisors (and its counsel), if any, have been afforded the opportunity to ask questions of the Company and its management and have received answers to such questions. Neither such inquiries nor any other due diligence investigations conducted by such Investor or its advisors (and its counsel), if any, or its representatives shall modify, amend or affect the Investor’s right to rely on the Company’s representations and warranties contained in this Agreement. The Investor acknowledges and agrees that the Company has not made to the Investor, and the Investor acknowledges and agrees it has not relied upon, any representations and warranties of the Company, its employees or any third party other than the representations and warranties of the Company contained in this Agreement. The Investor understands that its investment involves a high degree of risk. The Investor has sought such accounting, legal and tax advice, as it has considered necessary to make an informed investment decision with respect to the transactions contemplated hereby.
Section 4.07 Not an Affiliate. The Investor is not an officer, director or a person that directly, or indirectly through one or more intermediaries, controls or is controlled by, or is under common control with the Company or any “Affiliate” of the Company (as that term is defined in Rule 405 promulgated under the Securities Act).
Section 4.08 General Solicitation. Neither the Investor, nor any of its affiliates, nor any person acting on its or their behalf, has engaged or will engage in any form of general solicitation or general advertising (within the meaning of Regulation D) in connection with any offer or sale of the Common Shares by the Investor.
Section 4.09 Trading Activities. The Investor has not directly or indirectly, nor has any Person acting on behalf of or pursuant to any understanding with the Investor, engaged in any transactions in the securities of the Company (including, without limitation, any Short Sale (as defined below) involving the Company’s securities) during the period commencing as of the time that the Investor first contacted the Company or the Company’s agents regarding the specific investment in the Company contemplated by this Agreement and ending upon the filing of the Current Report and the June Form 10-Q.
Article V.
Representations
and Warranties of the Company
Except as set forth in the SEC Documents, the Company represents and warrants to the Investor that, as of the date hereof, each Advance Notice Date and each Advance Date (other than representations and warranties which address matters only as of a certain date, which shall be true and correct as written as of such certain date):
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Section 5.01 Organization and Qualification. The Company and each of its Subsidiaries are entities duly organized and validly existing and in good standing under the laws of their respective jurisdiction of organization and has the requisite power and authority to own its properties and to carry on its business as now being conducted. Each of the Company and its Subsidiaries is duly qualified to do business and is in good standing in every jurisdiction in which the nature of the business conducted by it makes such qualification necessary, except to the extent that the failure to be so qualified or be in good standing has not had and would not be reasonably expected to have, individually or in the aggregate, a Material Adverse Effect.
Section 5.02 Authorization, Enforcement, Compliance with Other Instruments. The Company has the requisite corporate power and authority to enter into and perform its obligations under this Agreement and the other Transaction Documents and to issue the Shares in accordance with the terms hereof and thereof. The execution and delivery by the Company of this Agreement and the other Transaction Documents, and the consummation by the Company of the transactions contemplated hereby and thereby (including, without limitation, the issuance of the Shares) have been or (with respect to consummation) will be duly authorized by the Company’s board of directors and no further consent or authorization will be required by the Company, its board of directors or its shareholders. This Agreement and the other Transaction Documents to which the Company is a party have been (or, when executed and delivered, will be) duly executed and delivered by the Company and, assuming the execution and delivery thereof and acceptance by the Investor, constitute (or, when duly executed and delivered, will be) the legal, valid and binding obligations of the Company, enforceable against the Company in accordance with their respective terms, except as such enforceability may be limited by general principles of equity or applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or other laws relating to, or affecting generally, the enforcement of applicable creditors’ rights and remedies and except as rights to indemnification and to contribution may be limited by federal or state securities law.
Section 5.03 Authorization of the Shares. The Shares to be issued under this Agreement have been, or with respect to Shares to be purchased by the Investor pursuant to an Advance Notice, will be, when issued and delivered pursuant to the terms approved by the board of directors of the Company or a duly authorized committee thereof, or a duly authorized executive committee, against payment therefor as provided herein, duly and validly authorized and issued and fully paid and nonassessable, free and clear of any pledge, lien, encumbrance, security interest or other claim, including any statutory or contractual preemptive rights, resale rights, rights of first refusal or other similar rights, and will be registered pursuant to Section 12 of the Exchange Act. The Shares, when issued, will conform to the description thereof set forth in or incorporated into the Prospectus. As of the date of each Pre-Advance Closing, and at all times thereafter, the Company shall have reserved from its duly authorized capital stock not less than the number of shares of Common Shares issuable upon conversion of all Promissory Notes (assuming for purposes hereof that (x) such Promissory Note is convertible at a conversion price equal to the Floor Price as of the date of determination, and (y) any such conversion shall not take into account any limitations on the conversion of the Promissory Note set forth therein).
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Section 5.04 No Conflict. The execution, delivery and performance of the Transaction Documents by the Company and the consummation by the Company of the transactions contemplated hereby and thereby (including, without limitation, the issuance of the Shares) will not (i) result in a violation of the articles of incorporation or other organizational documents of the Company or its Subsidiaries (with respect to consummation, as the same may be amended prior to the date on which any of the transactions contemplated hereby are consummated), (ii) conflict with, or constitute a default (or an event which with notice or lapse of time or both would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation of, any agreement, indenture or instrument to which the Company or its Subsidiaries is a party, (iii) violate the terms and conditions of the securities purchase agreement dated March 25, 2026 between the Company and the purchasers identified on the signature page thereto, or (iv) result in a violation of any law, rule, regulation, order, judgment or decree (including federal and state securities laws and regulations) applicable to the Company or its Subsidiaries or by which any property or asset of the Company or its Subsidiaries is bound or affected except, in the case of clause (iv) above, to the extent such violations have not had and would not be reasonably expected to have, individually or in the aggregate, a Material Adverse Effect.
Section 5.05 Acknowledgment. The Company understands and acknowledges that the number of Common Shares issuable upon conversion of the Promissory Notes will increase in certain circumstances. The Company further acknowledges its obligation to issue the Common Shares upon conversion of the Promissory Notes in accordance with the terms thereof or upon delivery of an Advance Notice is absolute and unconditional regardless of the dilutive effect that such issuance may have on the ownership interests of other stockholders of the Company.
Section 5.06 SEC Documents; Financial Statements. Since the Company has been subject to the requirements of Section 12 of the Exchange Act, the Company has filed all reports, schedules, forms, statements and other documents required to be filed by it with the SEC pursuant to the Exchange Act, including, without limitation, the Current Report, each Registration Statement, as the same may be amended from time to time, the Prospectus contained therein and each Prospectus Supplement thereto, and all information contained in such filings and all documents and disclosures that have been or may in the future be incorporated by reference therein (all such documents hereinafter referred to as the “SEC Documents”) and all such filings required to be filed within the last 12 months (or since the Company has been subject to the requirements of Section 12 of the Exchange Act, if shorter) have been made on a timely basis (giving effect to permissible extensions in accordance with Rule 12b-25 under the Exchange Act). The Company has delivered or made available to the Investor through the SEC’s website at http://www.sec.gov, true and complete copies of the SEC Documents, as applicable. Except as disclosed in amendments or subsequent filings to the SEC Documents, as of its filing date (or, if amended or superseded by a filing prior to the date hereof, on the date of such amended or superseded filing), each of the SEC Documents complied in all material respects with the requirements of the Exchange Act or the Securities Act, as applicable, and the rules and regulations of the SEC promulgated thereunder applicable to the SEC Documents, and did not contain any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading.
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Section 5.07 Financial Statements. The consolidated financial statements of the Company included or incorporated by reference in the SEC Documents, together with the related notes and schedules, present fairly, in all material respects, the consolidated financial position of the Company and the Subsidiaries as of the dates indicated and the consolidated results of operations, cash flows and changes in stockholders’ equity of the Company for the periods specified and have been prepared in compliance with the requirements of the Securities Act and Exchange Act and in conformity with generally accepted accounting principles in the United States (“GAAP”) applied on a consistent basis (except for (i) such adjustments to accounting standards and practices as are noted therein, (ii) in the case of unaudited interim financial statements, to the extent such financial statements may not include footnotes required by GAAP or may be condensed or summary statements and (iii) such adjustments which are not material, either individually or in the aggregate) during the periods involved; the other financial and statistical data with respect to the Company and the Subsidiaries contained or incorporated by reference in the SEC Documents are accurately and fairly presented and prepared on a basis consistent with the financial statements and books and records of the Company; there are no financial statements (historical or pro forma) that are required to be included or incorporated by reference in the SEC Documents that are not included or incorporated by reference as required; the Company and the Subsidiaries do not have any material liabilities or obligations, direct or contingent (including any off-balance sheet obligations), not described in the SEC Documents (excluding the exhibits thereto); and all disclosures contained or incorporated by reference in the SEC Documents regarding “non-GAAP financial measures” (as such term is defined by the rules and regulations of the SEC) comply in all material respects with Regulation G of the Exchange Act and Item 10 of Regulation S-K under the Securities Act, to the extent applicable. The interactive data in eXtensible Business Reporting Language included or incorporated by reference in the SEC Documents fairly presents the information called for in all material respects and has been prepared in accordance with the SEC’s rules and guidelines applicable thereto.
Section 5.08 Registration Statement and Prospectus. The Company and the transactions contemplated by this Agreement meet the requirements for and comply with the conditions for the use of Form S-1 under the Securities Act. Each Registration Statement and the offer and sale of Shares as contemplated hereby, if and when filed, will meet the requirements of Rule 415 under the Securities Act and comply in all material respects with said rule. Any statutes, regulations, contracts or other documents that are required to be described in a Registration Statement or a Prospectus, or any amendment or supplement thereto, or to be filed as exhibits to a Registration Statement have been so described or filed. Copies of each Registration Statement, any Prospectus, and any such amendments or supplements thereto and all documents incorporated by reference therein that were filed with the SEC on or prior to the Effective Date have been delivered, or are available through EDGAR, to the Investor and its counsel. The Company has not distributed and, prior to the later to occur of each Advance Notice Date and completion of the distribution of the Shares, will not distribute any offering material in connection with the offering or sale of the Shares other than a Registration Statement, the Prospectus contained therein, and any required prospectus supplement, in each case as reviewed and consented to by the Investor.
Section 5.09 No Misstatement or Omission. Each Registration Statement, when it became or becomes effective, and any Prospectus, on the date of such Prospectus or any amendment or supplement thereto, conformed and will conform in all material respects with the requirements of the Securities Act. At each Advance Notice Date and applicable Advance Date, the Registration Statement, and the Prospectus, as of such date, will conform in all material respects with the requirements of the Securities Act. Each Registration Statement, when it became or becomes effective, did not, and will not, contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading. Each Prospectus did not, or will not, include an untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. The documents incorporated by reference in a Prospectus or any Prospectus Supplement did not, and any further documents filed and incorporated by reference therein will not, when filed with the SEC, contain an untrue statement of a material fact or omit to state a material fact required to be stated in such document or necessary to make the statements in such document, in light of the circumstances under which they were made, not misleading. The foregoing shall not apply to statements in, or omissions from, any such document made in reliance upon, and in conformity with, information furnished to the Company by the Investor specifically for use in the preparation thereof.
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Section 5.10 Conformity with Securities Act and Exchange Act. Each Registration Statement, each Prospectus, or any amendment or supplement thereto, and the documents incorporated by reference in each Registration Statement, Prospectus or any amendment or supplement thereto, when such documents were or are filed with the SEC under the Securities Act or the Exchange Act or became or become effective under the Securities Act, as the case may be, conformed or will conform in all material respects with the requirements of the Securities Act and the Exchange Act, as applicable.
Section 5.11 Equity Capitalization.
(a) Authorized and Outstanding Capital Stock. As of the date hereof, the authorized capital stock of the Company consists of 200,000,000 shares of common stock, $0.001 par value, of which 150,000,000 are designated as Class A Common Stock and 50,000,000 are designated as Class B common stock, and 20,000,0000 shares of Preferred Stock. As of the date hereof, 53,834,658 shares of Class A common stock and 11,700,000 shares of Class B common stock are issued and outstanding. As of the date hereof, the Company has reserved 1,900,825 Common Shares for issuance to parties or Persons other than the Investor.
(b) Valid Issuance; Available Shares. All of such outstanding shares are duly authorized and have been validly issued and are fully paid and nonassessable.
(C) Existing Securities; Obligations. Except as disclosed in the SEC Documents: (A) none of the Company’s or any Subsidiary’s shares, interests or capital stock is subject to preemptive rights or any other similar rights or liens suffered or permitted by the Company or any Subsidiary; (B) there are no outstanding options, warrants, scrip, rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities or rights convertible into, or exercisable or exchangeable for, any shares, interests or capital stock of the Company or any of its Subsidiaries, or contracts, commitments, understandings or arrangements by which the Company or any of its Subsidiaries is or may become bound to issue additional shares, interests or capital stock of the Company or any of its Subsidiaries or options, warrants, scrip, rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities or rights convertible into, or exercisable or exchangeable for, any shares, interests or capital stock of the Company or any of its Subsidiaries; (C) there are no agreements or arrangements under which the Company or any of its Subsidiaries is obligated to register the sale of any of their securities under the Securities Act (except pursuant to this Agreement); (D) there are no outstanding securities or instruments of the Company or any of its Subsidiaries which contain any redemption or similar provisions, and there are no contracts, commitments, understandings or arrangements by which the Company or any of its Subsidiaries is or may become bound to redeem a security of the Company or any of its Subsidiaries; (E) there are no securities or instruments containing anti-dilution or similar provisions that will be triggered by the issuance of the Shares; and (F) neither the Company nor any Subsidiary has entered into any Variable Rate Transaction.
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Section 5.12 Intellectual Property Rights. The Company and its Subsidiaries own or possess adequate rights or licenses to use all material trademarks, trade names, service marks, service mark registrations, service names, patents, patent rights, copyrights, inventions, licenses, approvals, governmental authorizations, trade secrets and rights, if any, necessary to conduct their respective businesses as now conducted, except as has not had and would not be reasonably expected to have, individually or in the aggregate, a Material Adverse Effect. The Company and its Subsidiaries have not received written notice of any infringement by the Company or its Subsidiaries of trademark, trade name rights, patents, patent rights, copyrights, inventions, licenses, service names, service marks, service mark registrations, or trade secrets, except as has not had and would not be reasonably expected to have, individually or in the aggregate, a Material Adverse Effect. To the knowledge of the Company, there is no claim, action or proceeding being made or brought against, or to the Company’s knowledge, being threatened against the Company or its Subsidiaries regarding trademark, trade name, patents, patent rights, invention, copyright, license, service names, service marks, service mark registrations, trade secret or other infringement; and, except as has not had and would not be reasonably expected to have, individually or in the aggregate, a Material Adverse Effect, the Company is not aware of any facts or circumstances which might give rise to any of the foregoing.
Section 5.13 Employee Relations. Except as disclosed on Schedule 5.13, neither the Company nor any of its Subsidiaries is involved in any labor dispute nor, to the knowledge of the Company or any of its Subsidiaries, has any such dispute threatened.
Section 5.14 Environmental Laws. The Company and its Subsidiaries (i) have not received written notice alleging any failure to comply in all material respects with all Environmental Laws (as defined below), (ii) have received all permits, licenses or other approvals required of them under applicable Environmental Laws to conduct their respective businesses and (iii) have not received written notice alleging any failure to comply with all terms and conditions of any such permit, license or approval, except, in each of the foregoing clauses (i), (ii) and (iii), as has not had and would not be reasonably expected to have, individually or in the aggregate, a Material Adverse Effect. The term “Environmental Laws” means all applicable federal, state and local laws relating to pollution or protection of human health or the environment (including, without limitation, ambient air, surface water, groundwater, land surface or subsurface strata), including, without limitation, laws relating to emissions, discharges, releases or threatened releases of chemicals, pollutants, contaminants, or toxic or hazardous substances or wastes (collectively, “Hazardous Materials”) into the environment, or otherwise relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of Hazardous Materials, as well as all authorizations, codes, decrees, demands or demand letters, injunctions, judgments, licenses, notices or notice letters, orders, permits, plans or regulations issued, entered, promulgated or approved thereunder.
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Section 5.15 Title. Except as has not had and would not be reasonably expected to have, individually or in the aggregate, a Material Adverse Effect, the Company (or its Subsidiaries) has indefeasible fee simple or leasehold title to its properties and material assets owned by it, free and clear of any pledge, lien, security interest, encumbrance, claim or equitable interest other than such as are not material to the business of the Company. Any real property and facilities held under lease by the Company and its Subsidiaries are held by them under valid, subsisting and enforceable leases with such exceptions as are not material and do not interfere with the use made and proposed to be made of such property and buildings by the Company and its Subsidiaries.
Section 5.16 Insurance. The Company and each of its Subsidiaries are insured by insurers of recognized financial responsibility against such losses and risks and in such amounts as management of the Company believes to be prudent and customary in the businesses in which the Company and its Subsidiaries are engaged. The Company has no reason to believe that it will not be able to renew its existing insurance coverage as and when such coverage expires or to obtain similar coverage from similar insurers as may be necessary to continue its business at a cost that would not be reasonably expected to have, individually or in the aggregate, a Material Adverse Effect.
Section 5.17 Regulatory Permits. Except as has not had and would not be reasonably expected to have, individually or in the aggregate, a Material Adverse Effect, the Company and its Subsidiaries possess all material certificates, authorizations and permits issued by the appropriate federal, state or foreign regulatory authorities necessary to own their respective businesses, and neither the Company nor any such Subsidiary has received any written notice of proceedings relating to the revocation or modification of any such certificate, authorization or permits.
Section 5.18 Internal Accounting Controls. The Company maintains a system of internal accounting controls designed to provide reasonable assurance that (i) transactions are executed in accordance with management’s general or specific authorizations, (ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with generally accepted accounting principles and to maintain asset accountability, (iii) access to assets is permitted only in accordance with management’s general or specific authorization and (iv) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences, and management is not aware of any material weaknesses that are not disclosed in the SEC Documents as and when required.
Section 5.19 Absence of Litigation. There is no action, suit, proceeding, inquiry or investigation before or by any court, public board, government agency, self-regulatory organization or body pending against or affecting the Company, the Common Shares or any of the Company’s Subsidiaries, wherein an unfavorable decision, ruling or finding would have or be reasonably expected to have, individually or in the aggregate, a Material Adverse Effect.
Section 5.20 Absence of Certain Changes. Since the date of the Company’s most recent audited financial statements contained in a Form 10-K, there has been no Material Adverse Effect, nor any event or occurrence specifically affecting the Company or its Subsidiaries that would be reasonably expected to result, individually or in the aggregate, in a Material Adverse Effect. Since the date of the Company’s most recent audited financial statements contained in a Form 10-K, neither the Company nor any of its Subsidiaries has (i) declared or paid any dividends, (ii) sold any material assets, individually or in the aggregate, outside of the ordinary course of business, or (iii) made any material capital expenditures, individually or in the aggregate, outside of the ordinary course of business. Neither the Company nor any of its Subsidiaries has taken any steps to seek protection pursuant to any law or statute relating to bankruptcy, insolvency, reorganization, receivership, liquidation or winding up, nor does the Company or any Subsidiary have any knowledge or reason to believe that any of their respective creditors intend to initiate involuntary bankruptcy proceedings. The Company is Solvent.
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Section 5.21 Subsidiaries. Except as set forth in the SEC Documents, the Company does not own or control, directly or indirectly, any interest in any other corporation, partnership, association or other business entity.
Section 5.22 Tax Status. Each of the Company and its Subsidiaries (i) has timely filed all foreign, federal and state income and all other tax returns, reports and declarations required by any jurisdiction to which it is subject, (ii) has timely paid all taxes and other governmental assessments and charges that are material in amount, shown or determined to be due on such returns, reports and declarations, except those being contested in good faith and (iii) has set aside on its books provision reasonably adequate for the payment of all taxes for periods subsequent to the periods to which such returns, reports or declarations apply. The Company has not received written notification of any unpaid taxes in any material amount claimed to be due by the taxing authority of any jurisdiction, and the officers of the Company and its Subsidiaries know of no basis for any such claim where the failure to pay would have or would be reasonably expected to have, individually or in the aggregate, a Material Adverse Effect.
Section 5.23 Certain Transactions. Except as not required to be disclosed pursuant to Applicable Laws, none of the officers or directors of the Company is presently a party to any transaction with the Company (other than for services as employees, officers and directors), including any contract, agreement or other arrangement providing for the furnishing of services to or by, providing for rental of real or personal property to or from, or otherwise requiring payments to or from any officer or director, or to the knowledge of the Company, any corporation, partnership, trust or other entity in which any officer or director has a substantial interest or is an officer, director, trustee or partner.
Section 5.24 Rights of First Refusal. The Company is not obligated to offer the Common Shares or the Promissory Notes offered hereunder on a right of first refusal basis or otherwise to any third parties including, but not limited to, current or former stockholders of the Company, underwriters, brokers, agents or other third parties.
Section 5.25 Dilution. The Company is aware and acknowledges that issuance of Common Shares hereunder could cause dilution to existing stockholders and could significantly increase the outstanding number of Common Shares.
Section 5.26 Acknowledgment Regarding Investor’s Purchase of Shares. The Company acknowledges and agrees that the Investor is acting solely in the capacity of an arm’s length investor with respect to this Agreement and the transactions contemplated hereunder. The Company further acknowledges that the Investor is not acting as a financial advisor or fiduciary of the Company (or in any similar capacity) with respect to this Agreement and the transactions contemplated hereunder and any advice given by the Investor or any of its representatives or agents in connection with this Agreement and the transactions contemplated hereunder is merely incidental to the Investor’s purchase of the Shares hereunder or the Promissory Note. The Company is aware and acknowledges that it shall not be able to request Advances under this Agreement if a Registration Statement is not effective or if any issuances of Common Shares pursuant to any Advances would violate any rules of the Principal Market. The Company acknowledges and agrees that it is capable of evaluating and understanding, and understands and accepts, the terms, risks and conditions of the transactions contemplated by this Agreement.
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Section 5.27 Finder’s Fees. Except as set forth on Schedule 5.27, neither the Company nor any of the Subsidiaries has incurred any liability for any finder’s fees, brokerage commissions or similar payments in connection with the transactions herein contemplated.
Section 5.28 Relationship of the Parties. Neither the Company, nor any of its Subsidiaries, affiliates, nor any person acting on its or their behalf is a client or customer of the Investor or any of its affiliates and neither the Investor nor any of its affiliates has provided, or will provide, any services to the Company or any of its affiliates, its subsidiaries, or any person acting on its or their behalf. The Investor’s relationship to Company is solely as investor as provided for in the Transaction Documents.
Section 5.29 Operations. The operations of the Company and its Subsidiaries are and have been conducted at all times in compliance with Applicable Law and neither the Company nor the Subsidiaries, nor any director, officer, or employee of the Company or any Subsidiary nor, to the Company’s knowledge, any agent, affiliate or other person acting on behalf of the Company or any Subsidiary has, not complied with Applicable Law; and no action, suit or proceeding by or before any governmental authority involving the Company or any of its Subsidiaries with respect to Applicable Laws is pending or, to the knowledge of the Company, threatened.
Section 5.30 Forward-Looking Statements. No forward-looking statement (within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act) contained in the Registration Statement or a Prospectus has been made or reaffirmed without a reasonable basis or has been disclosed other than in good faith.
Section 5.31 Compliance with Laws. The Company and each of its Subsidiaries are in compliance with Applicable Law; the Company has not received a notice of non-compliance, nor knows of, nor has reasonable grounds to know of, any facts that any director, officer, or employee of the Company or any Subsidiary nor, to the Company’s knowledge, any agent, Affiliate or other person acting on behalf of the Company or any Subsidiary has, has not complied with Applicable Laws, or could give rise to a notice of non-compliance with Applicable Laws, and is not aware of any pending change or contemplated change to any applicable law or regulation or governmental position; in each case that would have or would be reasonably expected to have, individually or in the aggregate, a Material Adverse Effect.
Section 5.32 Sanctions Matters. Neither the Company nor any of its Subsidiaries or, to the knowledge of the Company, any director, officer or controlled Affiliate of the Company or any director or officer of any Subsidiary, is a Person that is, or is owned or controlled by a Person that is (i) the subject of any sanctions administered or enforced by the U.S. Department of Treasury’s Office of Foreign Asset Control (“OFAC”), the United Nations Security Council, the European Union, His Majesty’s Treasury, or other relevant sanctions authorities, including, without limitation, designation on OFAC’s Specially Designated Nationals and Blocked Persons List or OFAC’s Foreign Sanctions Evaders List or other relevant sanctions authority (collectively, “Sanctions”), or (ii) located, organized or resident in a country or territory that is the subject of Sanctions that broadly prohibit dealings with that country or territory (including, without limitation, the Crimea, Zaporizhzhia and Kherson regions of Ukraine, the Donetsk People’s Republic and Luhansk People’s Republic in Ukraine, Cuba, Iran, North Korea, Russia, Sudan and Syria (the “Sanctioned Countries”)). Neither the Company nor any of its Subsidiaries will, directly or indirectly, use the proceeds from the sale of Advance Shares or any Pre-Paid Advance, or lend, contribute or otherwise make available such proceeds to any subsidiary, joint venture partner or other Person (a) for the purpose of funding or facilitating any activities or business of or with any Person or in any country or territory that, at the time of such funding or facilitation, is the subject of Sanctions or is a Sanctioned Country, or (b) in any other manner that will result in a violation of Sanctions or Applicable Laws by any Person (including any Person participating in the transactions contemplated by this Agreement, whether as underwriter, advisor, investor or otherwise). For the past five years, neither the Company nor any of its Subsidiaries has engaged in, and is now not engaged in, any dealings or transactions with any Person, or in any country or territory, that at the time of the dealing or transaction is or was the subject of Sanctions or was a Sanctioned Country. Neither the Company nor any of its Subsidiaries nor any director, officer or controlled Affiliate of the Company or any of its Subsidiaries, has ever had funds blocked by a United States bank or financial institution, temporarily or otherwise, as a result of OFAC concerns.
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Section 5.33 General Solicitation. Neither the Company, nor any of its affiliates, nor any person acting on its or their behalf, has engaged or will engage in any form of general solicitation or general advertising (within the meaning of Regulation D) in connection with the offer or sale of the Common Shares.
Article VI.
Indemnification
The Investor and the Company represent to the other the following with respect to itself:
Section 6.01 Indemnification by the Company. In consideration of the Investor’s execution and delivery of this Agreement and acquiring the Shares hereunder, and in addition to all of the Company’s other obligations under this Agreement, the Company shall defend, protect, indemnify and hold harmless the Investor, its investment manager, Yorkville Advisors Global, LP, and their respective Affiliates, and each of the foregoing’s respective officers, directors, managers, members, partners, employees and agents (including, without limitation, those retained in connection with the transactions contemplated by this Agreement) and each person who controls any of the foregoing within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act (collectively, the “Investor Indemnitees”) from and against any and all actions, causes of action, suits, claims, losses, costs, penalties, fees, liabilities and damages, and reasonable and documented expenses in connection therewith (irrespective of whether any such Investor Indemnitee is a party to the action for which indemnification hereunder is sought), and including reasonable attorneys’ fees and disbursements (the “Indemnified Liabilities”), incurred by the Investor Indemnitees or any of them as a result of, or arising out of, or relating to (a) any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement for the registration of the Shares as originally filed or in any amendment thereof, or in any related prospectus, or in any amendment thereof or supplement thereto, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading; provided, however, that the Company will not be liable in any such case to the extent that any such loss, claim, damage or liability arises out of or is based upon any such untrue statement or alleged untrue statement or omission or alleged omission made therein in reliance upon and in conformity with written information furnished to the Company by or on behalf of the Investor specifically for inclusion therein; (b) any material misrepresentation or breach of any material representation or material warranty made by the Company in this Agreement or any other certificate, instrument or document contemplated hereby or thereby; or (c) any material breach of any material covenant, material agreement or material obligation of the Company contained in this Agreement or any other certificate, instrument or document contemplated hereby or thereby. To the extent that the foregoing undertaking by the Company may be unenforceable under Applicable Law, the Company shall make the maximum contribution to the payment and satisfaction of each of the Indemnified Liabilities, which is permissible under Applicable Law.
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Section 6.02 Indemnification by the Investor. In consideration of the Company’s execution and delivery of this Agreement, and in addition to all of the Investor’s other obligations under this Agreement, the Investor shall defend, protect, indemnify and hold harmless the Company and all of its officers, directors, stockholders, employees and agents (including, without limitation, those retained in connection with the transactions contemplated by this Agreement) and each person who controls the Company within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act (collectively, the “Company Indemnitees”) from and against any and all Indemnified Liabilities incurred by the Company Indemnitees or any of them as a result of, or arising out of, or relating to (a) any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement for the registration of the Shares as originally filed or in any amendment thereof, or in any related prospectus, or in any amendment thereof or supplement thereto, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading; provided, however, that the Investor will only be liable for written information relating to the Investor furnished to the Company by or on behalf of the Investor specifically for inclusion in the documents referred to in the foregoing indemnity, and will not be liable in any such case to the extent that any such loss, claim, damage or liability arises out of or is based upon any such untrue statement or alleged untrue statement or omission or alleged omission made therein in reliance upon and in conformity with written information furnished to the Investor by or on behalf of the Company specifically for inclusion therein; (b) any misrepresentation or breach of any representation or warranty made by the Investor in this Agreement or any instrument or document contemplated hereby or thereby executed by the Investor; or (c) any breach of any covenant, agreement or obligation of the Investor contained in this Agreement or any other certificate, instrument or document contemplated hereby or thereby executed by the Investor. To the extent that the foregoing undertaking by the Investor may be unenforceable under Applicable Laws, the Investor shall make the maximum contribution to the payment and satisfaction of each of the Indemnified Liabilities, which is permissible under Applicable Laws.
Section 6.03 Notice of Claim. Promptly after receipt by an Investor Indemnitee or Company Indemnitee of notice of the commencement of any action or proceeding (including any governmental action or proceeding) involving an Indemnified Liability, such Investor Indemnitee or Company Indemnitee, as applicable, shall, if a claim for an Indemnified Liability in respect thereof is to be made against any indemnifying party under this Article VI, deliver to the indemnifying party a written notice of the commencement thereof; but the failure to so notify the indemnifying party will not relieve it of liability under this Article VI except to the extent the indemnifying party is prejudiced by such failure. The indemnifying party shall have the right to participate in, and, to the extent the indemnifying party so desires, jointly with any other indemnifying party similarly noticed, to assume control of the defense thereof with counsel mutually reasonably satisfactory to the indemnifying party and the Investor Indemnitee or Company Indemnitee, as the case may be; provided, however, that an Investor Indemnitee or Company Indemnitee shall have the right to retain its own counsel with the actual and reasonable third party fees and expenses of not more than one counsel for such Investor Indemnitee or Company Indemnitee to be paid by the indemnifying party, if, in the reasonable opinion of counsel retained by the indemnifying party, the representation by such counsel of the Investor Indemnitee or Company Indemnitee and the indemnifying party would be inappropriate due to actual or potential differing interests between such Investor Indemnitee or Company Indemnitee and any other party represented by such counsel in such proceeding. The Investor Indemnitee or Company Indemnitee shall cooperate fully with the indemnifying party in connection with any negotiation or defense of any such action or claim by the indemnifying party and shall furnish to the indemnifying party all information reasonably available to the Investor Indemnitee or Company Indemnitee which relates to such action or claim. The indemnifying party shall keep the Investor Indemnitee or Company Indemnitee reasonably apprised as to the status of the defense or any settlement negotiations with respect thereto. No indemnifying party shall be liable for any settlement of any action, claim or proceeding effected without its prior written consent, provided, however, that the indemnifying party shall not unreasonably withhold, delay or condition its consent. No indemnifying party shall, without the prior written consent of the Investor Indemnitee or Company Indemnitee, consent to entry of any judgment or enter into any settlement or other compromise which does not include as an unconditional term thereof the giving by the claimant or plaintiff to such Investor Indemnitee or Company Indemnitee of a release from all liability in respect to such claim or litigation. Following indemnification as provided for hereunder, the indemnifying party shall be subrogated to all rights of the Investor Indemnitee or Company Indemnitee with respect to all third parties, firms or corporations relating to the matter for which indemnification has been made. The indemnification required by this Article VI shall be made by periodic payments of the amount thereof during the course of the investigation or defense, as and when bills are received and payment therefor is due.
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Section 6.04 Remedies. The remedies provided for in this Article VI are not exclusive and shall not limit any right or remedy which may be available to any indemnified person at law or equity. The obligations of the parties to indemnify or make contribution under this Article VI shall survive expiration or termination of this Agreement.
Section 6.05 Limitation of liability. Notwithstanding the foregoing, no Party shall seek, nor shall any be entitled to recover from the other Party be liable for, punitive or exemplary damages.
Article VII.
Covenants
The Company covenants with the Investor, and the Investor covenants with the Company, as follows, which covenants of one party are for the benefit of the other party, during the Commitment Period:
Section 7.01 Effective Registration Statement. During the Commitment Period, the Company shall maintain the continuous effectiveness of each Registration Statement filed with the SEC under the Securities Act pursuant to and in accordance with the Registration Rights Agreement; provided, however, that in the event there are no Pre-Paid Advances outstanding, the Company shall only be required to use its commercially reasonable efforts to maintain the continuous effectiveness of the Registration Statement and each subsequent Registration Statement filed with the SEC under the Securities Act pursuant to and in accordance with the Registration Rights Agreement.
Section 7.02 Registration and Listing. The Company shall cause the Common Shares to continue to be registered as a class of securities under Section 12(b) of the Exchange Act, and to comply with its reporting and filing obligations under the Exchange Act, and shall not take any action or file any document (whether or not permitted by the Securities Act or the Exchange Act) to terminate or suspend such registration or to terminate or suspend its reporting and filing obligations under the Exchange Act or Securities Act, except as permitted herein. The Company shall continue the listing and trading of its Common Shares and the listing of the Shares purchased by the Investor hereunder on the Principal Market and to comply with the Company’s reporting, filing and other obligations under the rules and regulations of the Principal Market. If the Company receives any final and non-appealable notice that the listing or quotation of the Common Shares on the Principal Market shall be terminated on a date certain, the Company shall promptly (and in any case within 24 hours) notify the Investor of such fact in writing and shall use its commercially reasonable efforts to cause the Common Shares to be listed or quoted on another Principal Market.
Section 7.03 Blue Sky. The Company shall take such action, if any, as is necessary by the Company in order to obtain an exemption for or to qualify the Shares for sale by the Company to the Investor pursuant to the Transaction Documents, and at the request of the Investor, the subsequent resale of Registrable Securities by the Investor, in each case, under applicable state securities or “Blue Sky” laws and shall provide evidence of any such action so taken to the Investor from time to time during the Commitment Period; provided, however, that the Company shall not be required in connection therewith or as a condition thereto to (x) qualify to do business in any jurisdiction where it would not otherwise be required to qualify, (y) subject itself to general taxation in any such jurisdiction, or (z) file a general consent to service of process in any such jurisdiction. The Company shall promptly notify the Investor of the receipt by the Company of any notification with respect to the suspension of the registration or qualification of any of the Common Shares for sale under the securities or “blue sky” laws of any jurisdiction in the United States or its receipt of actual notice of the initiation or threat of any proceeding for such purpose.
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Section 7.04 Suspension of Registration Statement.
| (a) | Establishment of a Black Out Period. During the Commitment Period, the Company from time to time may suspend the use of a Registration Statement by written notice to the Investor in the event that the Company determines in good faith that such suspension is necessary to amend or supplement the Registration Statement or Prospectus so that such Registration Statement or Prospectus shall not include an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading (a “Black Out Period”). |
| (b) | No Sales by Investor During the Black Out Period. During such Black Out Period, the Investor agrees not to sell any Common Shares of the Company pursuant to such Registration Statement, but may sell shares pursuant to an exemption from registration, if available, subject to the Investor’s compliance with Applicable Laws. |
| (c) | Limitations on the Black Out Period. The Company shall not impose any Black Out Period that is longer than 15 days or in a manner that is more restrictive (including, without limitation, as to duration) than the comparable restrictions that the Company may impose on transfers of the Company’s equity securities by its directors and senior executive officers. In addition, the Company shall not deliver any Advance Notice during any Black Out Period. If the public announcement of such material, nonpublic information is made during a Black Out Period, the Black Out Period shall terminate immediately after such announcement, and the Company shall immediately notify the Investor of the termination of the Black Out Period. |
Section 7.05 Listing of Common Shares. As of each Advance Notice Date and the applicable Advance Date, the Shares to be sold by the Company from time to time hereunder will have been registered under Section 12(b) of the Exchange Act and approved for listing on the Principal Market, subject to official notice of issuance.
Section 7.06 Opinion of Counsel. Prior to the date of the delivery by the Company of the first Advance Notice and the First Pre-Paid Advance, the Investor shall have received an opinion letter from counsel to the Company in form and substance reasonably satisfactory to the Investor.
Section 7.07 Exchange Act Registration. The Company will use file in a timely manner all reports and other documents required of it as a reporting company under the Exchange Act (giving effect to permissible extensions in accordance with Rule 12b-25 under the Exchange Act) and, during the Commitment Period, will not take any action or file any document (whether or not permitted by Exchange Act or the rules thereunder) to terminate or suspend its reporting and filing obligations under the Exchange Act.
Section 7.08 Transfer Agent Instructions. During the Commitment Period and subject to Applicable Laws, the Company shall cause (including, if necessary, by causing legal counsel for the Company to deliver an opinion) the transfer agent for the Common Shares to remove restrictive legends from Common Shares purchased by the Investor pursuant to this Agreement, provided that counsel for the Company shall have been furnished with such documents as they may require for the purpose of enabling them to render the opinions or make the statements requested by the transfer agent, or in order to evidence the accuracy of any of the representations or warranties, or the fulfillment of any of the covenants, obligations or conditions, contained herein.
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Section 7.09 Corporate Existence. The Company will use commercially reasonable efforts to preserve and continue the corporate existence of the Company during the Commitment Period.
Section 7.10 Notice of Certain Events Affecting Registration; Suspension of Right to Make an Advance. The Company will promptly notify the Investor, and confirm in writing, upon its becoming aware of the occurrence of any of the following events in respect of a Registration Statement or related Prospectus: (i) receipt of any request for additional information by the SEC or any other Federal or state governmental authority during the period of effectiveness of the Registration Statement, the response to which would require any post-effective amendments or supplements to the Registration Statement or the Prospectus, or any request for amendments or supplements to the Registration Statement or the Prospectus; (ii) the issuance by the SEC or any other Federal governmental authority of any stop order suspending the effectiveness of the Registration Statement or the initiation of any proceedings for that purpose; (iii) receipt of any notification with respect to the suspension of the qualification or exemption from qualification of any of the Common Shares for sale in any jurisdiction or the initiation or written threat of any proceeding for such purpose; (iv) the happening of any event that makes any statement made in the Registration Statement or related Prospectus or any document incorporated or deemed to be incorporated therein by reference untrue in any material respect or that requires the making of any changes in the Registration Statement, related Prospectus or documents so that, in the case of the Registration Statement, it will not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading, and that in the case of the related Prospectus, it will not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, or of the necessity to amend the Registration Statement or supplement a related Prospectus to comply with the Securities Act or any other law (and the Company will promptly make available to the Investor any such supplement or amendment to the related Prospectus); (v) the Company’s reasonable determination that a post-effective amendment to the Registration Statement would be required under Applicable Law; (vi) the Common Shares shall cease to be authorized for listing on the Principal Market; or (vii) the Company fails to file in a timely manner all reports and other documents required of it as a reporting company under the Exchange Act. The Company shall not deliver to the Investor any Advance Notice, and the Company shall not sell any Shares pursuant to any pending Advance Notice (other than as required pursuant to Section 3.05(d)), during the continuation of any of the foregoing events (each of the events described in the immediately preceding clauses (i) through (vii), inclusive, a “Material Outside Event”).
Section 7.11 Consolidation. If an Advance Notice has been delivered to the Investor, then the Company shall not effect any consolidation of the Company with or into, or a transfer of all or substantially all the assets of the Company to another entity before the transaction contemplated in such Advance Notice has been closed in accordance with Section 3.05 hereof, and all Shares in connection with such Advance have been received by the Investor.
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Section 7.12 Issuance of the Company’s Common Shares. The issuance and sale of the Common Shares hereunder shall be made in accordance with the provisions and requirements of Section 4(a)(2) of the Securities Act and any applicable state securities law.
Section 7.13 Reservation of Shares. As of the date of each Pre-Advance Closing, and at all times thereafter, the Company shall have reserved from its duly authorized capital stock not less than the number of Common Shares issuable upon conversion of all Promissory Notes (assuming for purposes hereof that (x) such Promissory Note is convertible at a conversion price equal to the Floor Price as of the date of determination, and (y) any such conversion shall not take into account any limitations on the conversion of the Promissory Note set forth therein) (the “Maximum Conversion Shares”). Within 90 calendar days of the Effective Date, the Company shall hold a special meeting of stockholders (which may also be at the annual meeting of stockholders) (the “Special Meeting”) for the purpose of seeking the approval by the Company’s stockholders of (i) the issuance of the Common Shares issuable pursuant to the this Agreement (without regard to the Exchange Cap) in compliance with the rules and regulations of the Principal Market, including Rule 5635(d) thereof) (the “SEPA Stockholder Approval”) and (ii) the issuance of the Maximum Conversion Shares issuable upon conversion of the Promissory Notes (without regard to the Exchange Cap) in compliance with the rules and regulations of the Principal Market, including Rule 5635(d) thereof (without regard to any limitation on conversion or exercise thereof) (the “Promissory Note Approval”), with the recommendation of the Company’s Board of Directors that such proposals be approved. The Company shall include the SEPA Stockholder Approval and the Promissory Note Approval in the Proxy Statement and shall use its commercially reasonable efforts to solicit proxies from its stockholders in connection therewith in the same manner as all other management proposals in the Proxy Statement, and all management-appointed proxyholders shall vote their proxies in favor of such proposals.
Section 7.14 Expenses. The Company, whether or not the transactions contemplated hereunder are consummated or this Agreement is terminated, will pay all expenses incident to the performance of its obligations hereunder, including but not limited to (i) the preparation, printing and filing of the Registration Statement and each amendment and supplement thereto, of each Prospectus and of each amendment and supplement thereto; (ii) the preparation, issuance and delivery of any Shares issued pursuant to this Agreement, (iii) all fees and disbursements of the Company’s counsel, accountants and other advisors (but not, for the avoidance of doubt, the fees and disbursements of Investor’s counsel, accountants and other advisors), (iv) the qualification of the Shares under securities laws in accordance with the provisions of this Agreement, including filing fees in connection therewith, (v) the printing and delivery of copies of any Prospectus and any amendments or supplements thereto requested by the Investor, (vi) the fees and expenses incurred in connection with the listing or qualification of the Shares for trading on the Principal Market, and (vii) filing fees of the SEC and the Principal Market.
Section 7.15 Current Report. The Company shall, not later than 9:00 a.m., New York City time, on the fourth business day after the Effective Date, file with the SEC a current report on Form 8-K, or provided it is permitted and satisfies the Company’s disclosure obligations, include a subsequent event report in the June Form 10-Q, describing all the material terms of the transactions contemplated by the Transaction Documents in the form required by the Exchange Act and attaching all the material Transaction Documents (including any exhibits thereto, the “Current Report”). The Company shall provide the Investor and its legal counsel a reasonable opportunity to comment on a draft of the Current Report including any exhibits to be filed related thereto, as applicable, prior to filing the Current Report with the SEC and shall reasonably consider all such comments. Notwithstanding anything contained in this Agreement to the contrary, the Company expressly agrees that from and after the filing of the Current Report with the SEC, the Company shall have publicly disclosed all material, non-public information provided to the Investor (or the Investor’s representatives or agents) by the Company or any of its Subsidiaries, or any of their respective officers, directors, employees, agents or representatives (if any) in connection with the transactions contemplated by the Transaction Documents. The Company shall not, and the Company shall cause each of its Subsidiaries and each of its and their respective officers, directors, employees and agents not to, provide the Investor with any material, non-public information regarding the Company or any of its Subsidiaries without the express prior written consent of the Investor (which may be granted or withheld in the Investor’s sole discretion. Notwithstanding anything contained in this Agreement to the contrary, the Company expressly agrees that it shall publicly disclose in the Current Report, the June Form 10-Q or otherwise make publicly available any information communicated to the Investor by or, to the knowledge of the Company, on behalf of the Company in connection with the transactions contemplated by the Transaction Documents, which, following the Effective Date would, if not so disclosed, constitute material, non-public information regarding the Company or its Subsidiaries. The Company understands and confirms that the Investor will rely on the foregoing representations in effecting resales of Shares. In addition, effective upon the filing of the Current Report and the June Form 10-Q, if separate, the Company acknowledges and agrees that any and all confidentiality or similar obligations with respect to the transactions contemplated by the Transaction Documents under any agreement, whether written or oral, between the Company, any of its Subsidiaries or any of their respective officers, directors, Affiliates, employees or agents, on the one hand, and Investor or any of its respective officers, directors, Affiliates, employees or agents, on the other hand, including the non-disclosure agreement dated August __, 2026, shall terminate.
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Section 7.16 Advance Notice Limitation. The Company shall not deliver an Advance Notice if a shareholder meeting or corporate action, or the record date for any shareholder meeting or any corporate action, would fall during the period beginning two Trading Days prior to the date of delivery of such Advance Notice and ending two Trading Days following the Closing of such Advance.
Section 7.17 Use of Proceeds; Subsidiary Guaranty.
| (a) | Use of Proceeds. Neither the Company nor any Subsidiary will, directly or indirectly, use the proceeds of the transactions contemplated herein to repay any advances or loans to any executives, directors, or employees of the Company or any Subsidiary or to make any payments in respect of any related party obligations, including without limitation any payables or notes payable to related parties of the Company or any Subsidiary whether or not such amounts are described on the balance sheets of the Company in any SEC Documents and any Subsidiary or described in any “Related Party Transactions” section of any SEC Documents. Neither the Company nor any of its Subsidiaries will, directly or indirectly, use the proceeds from the transactions contemplated herein, or lend, contribute, facilitate, or otherwise make available such proceeds to any subsidiary, joint venture partner or other Person (a) for the purpose of funding or facilitating, directly or indirectly, any activities or business of or with any Person or in any country or territory that, at the time of such funding or facilitation, is or whose government is, the subject of Sanctions or is a Sanctioned Country, or (b) in any other manner that will result in a violation of Sanctions or Applicable Laws by any Person (including any Person participating in the transactions contemplated by this Agreement, whether as underwriter, advisor, investor or otherwise). The Company shall not without the prior written consent of the Investor loan, invest, transfer or “downstream” any cash proceeds, or assets or property acquired with cash proceeds from the issuance and sale of the Promissory Notes to any Subsidiary. |
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| (b) | Prior to the First Pre-Advance Closing, each Subsidiary (other than HITChain, Inc.) shall enter into a subsidiary guaranty with the Investor in the form of the Global Guaranty Agreement. |
Section 7.18 Compliance with Laws. The Company shall comply in all material respects with all Applicable Laws.
Section 7.19 Market Activities. Neither the Company, nor any Subsidiary, nor any of their respective officers, directors or controlling persons will, directly or indirectly, (i) take any action designed to cause or result in, or that constitutes or might reasonably be expected to constitute or result, in the stabilization or manipulation of the price of any security of the Company to facilitate the sale or resale of Common Shares or (ii) sell, bid for, or purchase Common Shares in violation of Regulation M, or pay anyone any compensation for soliciting purchases of the Shares.
Section 7.20 Trading Information. Upon the Company’s request, the Investor agrees to provide the Company with trading reports setting forth the number and average sales prices of Common Shares sold by the Investor during the prior trading week.
Section 7.21 Assignment. This Agreement shall be binding upon and shall inure to the benefit of the Parties and their respective successors and permitted assigns. No Party shall have any power or any right to assign or transfer, in whole or in part, this Agreement, or any of its rights or any of its obligations hereunder, including, without limitation, any right to pursue any claim for damages pursuant to this Agreement or the transactions contemplated herein, or to pursue any claim for any breach or default of this Agreement, or any right arising from the purported assignor’s due performance of its obligations hereunder, without the prior written consent of the other Party and any such purported assignment in contravention of the provisions herein shall be null and void and of no force or effect. Without the consent of the Investor, the Company shall not have the right to assign or transfer any of its rights or provide any third party the right to bind or obligate the Company, to deliver Advance Notices or effect Advances hereunder.
Section 7.22 Non-Public Information. The Company covenants and agrees that, other than as expressly required by Section 7.10 hereof, it shall refrain from disclosing, and shall cause its officers, directors, employees and agents to refrain from disclosing, any material non-public information (as determined under the Securities Act, the Exchange Act, or the rules and regulations of the SEC) to the Investor without also disseminating such information to the public, unless prior to disclosure of such information the Company identifies such information as being material non-public information and the Investor agrees in writing to accept such material non-public information for review. Unless specifically agreed to in writing, in no event shall the Investor have a duty of confidentiality or be deemed to have agreed to maintain information in confidence, with respect to the delivery of any Advance Notices.
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Section 7.23 No Frustration; No Variable Rate Transactions, Etc.
| (a) | No Frustration. The Company shall not enter into, announce or recommend to its stockholders any agreement, plan, arrangement or transaction in or of which the terms thereof would restrict, materially delay, conflict with or impair the ability or right of the Company to perform its obligations under the Transaction Documents to which it is a party, including, without limitation, the obligation of the Company to deliver the Shares to the Investor in respect of an Advance Notice. |
| (b) | No Variable Rate Transactions or Related Party Payments. From the date hereof until the date upon which the Promissory Notes to be issued hereunder has been repaid in full, the Company shall not (A) repay any loans to any executives or employees of the Company or to make any payments in respect of any related party debt, and (B) effect or enter into an agreement to effect any issuance by the Company or any of its Subsidiaries of Common Shares or any security which entitles the holder to acquire Common Shares (or a combination of units thereof) involving a Variable Rate Transaction. Notwithstanding the foregoing, the Company may enter into a Variable Rate Transaction with the Investor, and the Company may enter into an At-the-Market Agreement (provided that the Company is then eligible), provided that (i) Yorkville Ives & Co., LLC, an affiliate of the Investor (or such other affiliate as may be designated by the Investor) (the “Investor Designee”) is granted a participation right of at least 33% of any such facility, which participation right (but not any participation previously granted) shall terminate on the date that is 12 months after the First Pre-Advance Closing, and (ii) for so long as any Promissory Notes remain outstanding, only the Investor Designee may be the executing broker on such facility. The Investor shall be entitled to seek injunctive relief against the Company and its Subsidiaries to preclude any such issuance, which remedy shall be in addition to any right to collect damages, without the necessity of showing economic loss and without any bond or other security being required. |
| (c) | From the date hereof until the Promissory Notes to be issued hereunder have been repaid in full, without the prior written consent of the Investor, neither the Company, nor any Subsidiary shall, directly or indirectly (i) other than Permitted Indebtedness, enter into, create, incur, assume, guarantee or suffer to exist any Indebtedness, or (ii) other than Permitted Liens, enter into, create, incur, assume or suffer to exist any Lien on or with respect to any of its property or assets now owned or hereafter acquired or any interest therein or any income or profits therefrom. |
Section 7.24 Short Selling Restrictions. Except as expressly set forth below, the Investor covenants that from and after the date hereof through and including the Trading Day next following the expiration or termination of this Agreement as provided in Section 10.01 (the “Restricted Period”), none of the Investor, any of its officers, affiliates or any entity managed or controlled by the Investor (collectively, the “Restricted Persons” and each of the foregoing is referred to herein as a “Restricted Person”) shall engage in any Short Sales of the Common Shares, either for its own principal account or for the principal account of any other Restricted Person, solely to the extent such Short Sale establishes a net short position in the Common Shares. Notwithstanding the foregoing, it is expressly understood and agreed that nothing contained herein shall (without implication that the contrary would otherwise be true) prohibit any Restricted Person during the Restricted Period from: (1) selling “long” (as defined under Rule 200 promulgated under Regulation SHO) any Common Shares; (2) selling a number of Common Shares equal to the number of Advance Shares that such Restricted Person is unconditionally obligated to purchase under a pending Advance Notice but has not yet received from the Company or the transfer agent pursuant to this Agreement; or (3) selling a number of shares of Common Shares equal to the number of Common Shares that the Investor is entitled to receive, but has not yet received from the Company or the transfer agent, upon the completion of a pending conversion of the Promissory Note for which a valid Conversion Notice (as defined in the Promissory Note) has been submitted to the Company.
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Article VIII.
Non-Exclusive Agreement
Subject to Section 7.23 hereof, this Agreement and the rights awarded to the Investor hereunder are non-exclusive, and the Company may, at any time throughout the term of this Agreement and thereafter, issue and allot, or undertake to issue and allot, any shares and/or securities and/or convertible notes, bonds, debentures, options to acquire shares or other securities and/or other facilities which may be converted into or replaced by Common Shares or other securities of the Company, and to extend, renew and/or recycle any bonds and/or debentures, and/or grant any rights with respect to its existing and/or future share capital.
Article IX.
Choice of Law/Jurisdiction; Waiver of Jury Trial
Section 9.01 This Agreement, and any and all claims, proceedings or causes of action relating to this Agreement or arising from this Agreement or the transactions contemplated herein, including, without limitation, tort claims, statutory claims and contract claims, shall be interpreted, construed, governed and enforced under and solely in accordance with the substantive and procedural laws of the State of New York, in each case as in effect from time to time and as the same may be amended from time to time, and as applied to agreements performed wholly within the State of New York. The Parties further agree that any action between them shall be heard in New York County, New York, and expressly consent to the jurisdiction and venue of the Supreme Court of New York, sitting in New York County, New York and the United States District Court of the Southern District of New York, sitting in New York, New York, for the adjudication of any civil action asserted pursuant to this Agreement.
Section 9.02 EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREIN, THE PERFORMANCE THEREOF OR THE FINANCINGS CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTY HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS PARAGRAPH.
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Article X.
Termination
Section 10.01 Termination.
| (a) | Unless earlier terminated as provided hereunder, this Agreement shall terminate automatically on the earlier of (i) the 36-month anniversary of the Effective Date, provided that if any Promissory Notes are then outstanding, such termination shall be delayed until such date that all Promissory Notes that were outstanding have been repaid, or (ii) the date on which the Investor shall have made payment of Advances pursuant to this Agreement for Common Shares equal to the Commitment Amount. |
| (b) | The Company may terminate this Agreement effective upon five Trading Days’ prior written notice to the Investor; provided that (i) there are no outstanding Advance Notices under which Common Shares have yet to be issued, (ii) there is not an outstanding Promissory Note, and (iii) the Company has paid all amounts owed to the Investor pursuant to this Agreement. This Agreement may be terminated at any time by the mutual written consent of the parties, effective as of the date of such mutual written consent unless otherwise provided in such written consent. |
| (c) | Nothing in this Section 10.01 shall be deemed to release the Company or the Investor from any liability for any breach under this Agreement prior to the valid termination hereof, or to impair the rights of the Company and the Investor to compel specific performance by the other party of its obligations under this Agreement prior to the valid termination hereof. The indemnification provisions contained in Article VI shall survive the termination of this Agreement. |
Article XI.
Notices
Other than with respect to Advance Notices, which must be in writing delivered in accordance with Section 3.01 and will be deemed delivered on the day set forth in Section 3.01(c), any notices, consents, waivers, or other communications required or permitted to be given under the terms of this Agreement must be in writing and will be deemed to have been delivered (i) upon receipt, when delivered personally; (ii) upon receipt, when sent by e-mail if sent on a Trading Day, or, if not sent on a Trading Day, on the immediately following Trading Day; (iii) 5 days after being sent by U.S. certified mail, return receipt requested, or (iv) 1 day after deposit with a nationally recognized overnight delivery service, in each case properly addressed to the party to receive the same. The addresses for such communications (except for Advance Notices which shall be delivered in accordance with Exhibit C hereof) shall be:
| If to the Company, to: | Health In Tech, Inc. 701 S. Colorado Ave, Suite 1 Stuart, FL 34994 Attn: Tim Johnson E-mail: [***********] |
| With copies (which shall not constitute notice or delivery of process) to: |
Loeb & Loeb LLP 345 Park Ave New York, NY 10154 Attn: Alexandria E. Kane, Esq. E-mail: [***********] |
| If to the Investor: | YA II PN, Ltd. 1012 Springfield Avenue Mountainside, NJ 07092 Attn: Mark Angelo E-mail: [***********] |
| With a copy (which shall not constitute notice or delivery of process) to: |
David Fine, Esq. 1012 Springfield Avenue Mountainside, NJ 07092 E-mail: [***********] |
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or at such other address and/or e-mail and/or to the attention of such other person as the recipient party has specified by written notice given to each other party three Business Days prior to the effectiveness of such change. Written confirmation of receipt (i) given by the recipient of such notice, consent, waiver or other communication, (ii) electronically generated by the sender’s email service provider containing the time, date, and recipient email address or (iii) provided by a nationally recognized overnight delivery service shall be rebuttable evidence of delivery in accordance with clause (i), (ii) or (iii) above, respectively.
Article XII.
Miscellaneous
Section 12.01 Counterparts. This Agreement may be executed in identical counterparts, both which shall be considered one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to the other party. Facsimile or other electronically scanned and delivered signatures (including any electronic signature covered by the U.S. federal ESIGN Act of 2000, Uniform Electronic Transactions Act, the Electronic Signatures and Records Act or other applicable law, e.g., www.docusign.com), including by e-mail attachment, shall be deemed to have been duly and validly delivered and be valid as originals and effective for all purposes of this Agreement.
Section 12.02 Entire Agreement; Amendments. This Agreement supersedes all other prior oral or written agreements between the Investor, the Company, their respective Affiliates and persons acting on their behalf with respect to the matters discussed herein, and this Agreement contains the entire understanding of the parties with respect to the matters covered herein and, except as specifically set forth herein, neither the Company nor the Investor makes any representation, warranty, covenant or undertaking with respect to such matters. No provision of this Agreement may be waived or amended other than by an instrument in writing signed by the parties to this Agreement. The failure of any party hereto to exercise any right, power or remedy provided under this Agreement or otherwise available in respect hereof at law or in equity, or to insist upon strict compliance by any other party hereto with its obligations hereunder, shall not constitute a waiver by such party of its right to exercise any such right, power or remedy or any other right, power or remedy or to demand strict compliance with such obligations hereunder. No custom or practice of the parties at variance with the terms hereof shall constitute a waiver by any party of its right to exercise any right, power or remedy available to it hereunder or any other right, power or remedy or to demand strict compliance with the terms of this Agreement.
Section 12.03 Reporting Entity for Common Shares. The reporting entity relied upon for the determination of the trading price or trading volume of the Common Shares on any given Trading Day for the purposes of this Agreement shall be Bloomberg L.P. or any successor thereto. The written mutual consent of the Investor and the Company shall be required to employ any other reporting entity.
Section 12.04 Commitment and Structuring Fee. Each of the parties shall pay its own fees and expenses (including the fees of any attorneys, accountants, appraisers or others engaged by such party) in connection with this Agreement and the transactions contemplated hereby, except that the Company has paid the Investor or its designee a structuring fee in the amount of $25,000, and the Company shall pay a commitment fee in an amount equal to 1.00% of the Commitment Amount (the “Commitment Fee”) which shall be earned as of the date hereof and which shall be payable as follows: (i) one half of the Commitment Fee shall be paid within three days of the Effective Date and shall be paid, at the option of the Company, in cash, or by the issuance to the Investor of such number of Common Shares that is equal to one half of the Commitment Fee divided by the average of the daily VWAPs of the Common Shares during the 3 Trading Days immediately prior to the Effective Date (collectively, the “Commitment Shares”), and (ii) the remaining one half of the Commitment Fee shall be paid by the six month anniversary of the Effective Date. The Commitment Shares issuable hereunder shall be included on the initial Registration Statement.
Section 12.05 Brokerage. Each of the parties hereto represents that it has had no dealings in connection with this transaction with any finder or broker who will demand payment of any fee or commission from the other party. The Company on the one hand, and the Investor, on the other hand, agree to indemnify the other against and hold the other harmless from any and all liabilities to any person claiming brokerage commissions or finder’s fees on account of services purported to have been rendered on behalf of the indemnifying party in connection with this Agreement or the transactions contemplated hereby.
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IN WITNESS WHEREOF, the parties hereto have caused this Standby Equity Purchase Agreement to be executed by the undersigned, thereunto duly authorized, as of the date first set forth above.
| COMPANY: | ||
| HEALTH IN TECH, INC. | ||
| By: | ||
| Name: | /s/ Tim Johnson | |
| Title: | Chief Executive Officer | |
| INVESTOR: | |||
| YA II PN, Ltd. | |||
| By: | Yorkville Advisors Global, LP | ||
| Its: | Investment Manager | ||
| By: | Yorkville Advisors Global II, LLC | ||
| Its: | General Partner | ||
| By: | |||
| Name: | /s/ Matthew Beckman | ||
| Title: | Manager | ||
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ANNEX I TO THE
STANDBY EQUITY PURCHASE AGREEMENT
DEFINITIONS
“Additional Shares” shall have the meaning set forth in Section 3.03.
“Adjusted Advance Amount” shall have the meaning set forth in Section 3.03.
“Advance” shall mean any issuance and sale of Advance Shares by the Company to the Investor pursuant to this Agreement.
“Advance Date” shall mean the first Trading Day after expiration of the applicable Pricing Period for each Advance.
“Advance Notice” shall mean a written notice in the form of Exhibit C attached hereto to the Investor executed by an officer of the Company and setting forth the number of Advance Shares that the Company desires to issue and sell to the Investor.
“Advance Notice Date” shall mean each date the Company is deemed to have delivered (in accordance with Section 3.01(c) of this Agreement) an Advance Notice to the Investor, subject to the terms of this Agreement.
“Advance Shares” shall mean the Common Shares that the Company shall issue and sell to the Investor pursuant to the terms of this Agreement.
“Affiliate” shall have the meaning set forth in Section 4.07.
“Agreement” shall have the meaning set forth in the preamble of this Agreement.
“Amortization Event” shall have the meaning set forth in the Promissory Note.
“Applicable Laws” shall mean all applicable laws, statutes, rules, regulations, orders, executive orders, directives, policies, guidelines and codes having the force of law, whether local, national, or international, as amended from time to time, including without limitation (i) all applicable laws that relate to money laundering, terrorist financing, financial record keeping and reporting, (ii) all applicable laws that relate to anti-bribery, anti-corruption, books and records and internal controls, including the United States Foreign Corrupt Practices Act of 1977, and (iii) any Sanctions laws.
“Black Out Period” shall have the meaning set forth in Section 7.04.
“Closing” shall have the meaning set forth in Section 3.05.
“Commitment Amount” shall mean $20,000,000 of Common Shares.
“Commitment Fee” shall have the meaning set forth in Section 12.04.
“Commitment Shares” shall have the meaning set forth in Section 12.04.
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“Commitment Period” shall mean the period commencing on the Effective Date and expiring upon the date of termination of this Agreement in accordance with Section 10.01.
“Common Share Equivalents” shall mean any securities of the Company or its Subsidiaries which entitle the holder thereof to acquire at any time Common Shares, including, without limitation, any debt, preferred stock, rights, options, warrants or other instrument that is at any time convertible into or exercisable or exchangeable for, or otherwise entitles the holder thereof to receive, Common Shares.
“Common Shares” shall have the meaning set forth in the recitals of this Agreement.
“Company” shall have the meaning set forth in the preamble of this Agreement.
“Company Indemnitees” shall have the meaning set forth in Section 6.02.
“Condition Satisfaction Date” shall have the meaning set forth in Annex III.
“Conversion Price” shall have the meaning set forth in the Promissory Note.
“Daily Traded Amount” shall mean the daily trading volume of the Company’s Common Shares on the Principal Market during regular trading hours as reported by Bloomberg L.P.
“Effective Date” shall mean the date hereof.
“Environmental Laws” shall have the meaning set forth in Section 5.14.
“Event of Default” shall have the meaning set forth in the Promissory Note.
“Exchange Act” shall mean the U.S. Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.
“Exchange Cap” shall have the meaning set forth in Section 3.02(c).
“Excluded Day” shall have the meaning set forth in Section 3.03.
“Fixed Price” shall have the meaning set forth in the Promissory Note.
“Floor Price” shall have the meaning set forth in each Promissory Note.
“Global Guaranty Agreement” shall mean the global guaranty agreement in the form attached hereto as Exhibit F.
“Hazardous Materials” shall have the meaning set forth in Section 5.14.
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“Indebtedness” of any Person means, without duplication (i) all indebtedness for borrowed money, (ii) all obligations issued, undertaken or assumed as the deferred purchase price of property or services (including, without limitation, “capital leases” in accordance with GAAP) (other than trade payables entered into in the ordinary course of business consistent with past practice), (iii) all reimbursement or payment obligations with respect to letters of credit, surety bonds and other similar instruments, (iv) all obligations evidenced by notes, bonds, debentures or similar instruments, including obligations so evidenced incurred in connection with the acquisition of property, assets or businesses, (v) all indebtedness created or arising under any conditional sale or other title retention agreement, or incurred as financing, in either case with respect to any property or assets acquired with the proceeds of such indebtedness (even though the rights and remedies of the seller or bank under such agreement in the event of default are limited to repossession or sale of such property), (vi) all monetary obligations under any leasing or similar arrangement which, in connection with GAAP, consistently applied for the periods covered thereby, is classified as a capital lease, (vii) all indebtedness referred to in clauses (i) through (f) above secured by (or for which the holder of such Indebtedness has an existing right, contingent or otherwise, to be secured by) any Lien upon or in any property or assets (including accounts and contract rights) owned by any Person, even though the Person which owns such assets or property has not assumed or become liable for the payment of such indebtedness, and (viii) all Contingent Obligations in respect of indebtedness or obligations of others of the kinds referred to in clauses (i) through (vii) above.
“Indemnified Liabilities” shall have the meaning set forth in Section 6.01.
“Investor” shall have the meaning set forth in the preamble of this Agreement.
“Investor Indemnitees” shall have the meaning set forth in Section 6.01.
“Lien” shall mean any (i) mortgage, (ii) right of way, (iii) easement, (iv) encroachment, (v) restriction on use, (vi) servitude, (vii) pledge, (viii) lien, (ix) charge, (x) hypothecation, (xi) security interest, (xii) encumbrance, (xiii) adverse right, interest or claim, (xiv) community or other marital property interest, (xv) condition, (xvi) equitable interest, (xvii) encumbrance, (xviii) license, (xix) covenant, (xx) title defect, (xxi) option, (xxii) right of first refusal or offer or similar restriction, (xxiii) voting right, (xxiv) transfer restriction, or (xxv) receipt of income or exercise of any other attribute of ownership.
“Market Price” shall mean the lowest daily VWAP of the Common Shares during the Pricing Period, other than the daily VWAP on an Excluded Day.
“Material Adverse Effect” shall mean any event, occurrence or condition that has had or would reasonably be expected to have (i) a material adverse effect on the legality, validity or enforceability of this Agreement or the transactions contemplated herein, (ii) a material adverse effect on the results of operations, assets, business or condition (financial or otherwise) of the Company and its Subsidiaries, taken as a whole, or (iii) a material adverse effect on the Company’s ability to perform in any material respect on a timely basis its obligations under this Agreement.
“Material Outside Event” shall have the meaning set forth in Section 7.10.
“Maximum Advance Amount” means an amount equal to one hundred percent (100%) of the average of the Daily Traded Amount during the five consecutive Trading Day immediately preceding an Advance Notice.
“Minimum Acceptable Price” shall mean the minimum price notified by the Company to the Investor in each Advance Notice, if applicable.
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“OFAC” shall have the meaning set forth in Section 5.32.
“Ownership Limitation” shall have the meaning set forth in Section 3.02(a).
“Permitted Indebtedness” shall mean: (i) indebtedness in respect of the Promissory Notes; (ii) indebtedness (A) the repayment of which has been subordinated to the payment of the Promissory Notes on terms and conditions acceptable to the Investor, including with regard to interest payments and repayment of principal, (B) which does not mature or otherwise require or permit redemption or repayment prior to or on the 91st day after the maturity date of the Promissory Note; and (C) which is not secured by any assets; (iii) indebtedness incurred in connection with commercial bank loans, provided that the Company provides the Investor with an offer to redeem an amount outstanding under the Promissory Notes equivalent to the lower of the outstanding balance remaining and the net proceeds of such commercial loan, at a price of 105% of the principal of such Promissory Notes with all or a portion of the net proceeds of any such commercial bank loan, and the Company redeems the Promissory Notes so tendered for redemption by the Investor; and (iv) any indebtedness (other than the indebtedness set out in (i) – (iii) above), including, incurred after the date hereof, provided that such indebtedness does not exceed $1,000,000 at any given time.
“Permitted Liens” shall mean (i) any security interest granted to the Investor, (ii) inchoate Liens for taxes, assessments or governmental charges or levies (A) not yet due, as to which the grace period, if any, related thereto has not yet expired, or (B) being contested in good faith and by appropriate proceedings for which adequate reserves have been established in accordance with GAAP; (iii) Liens of carriers, materialmen, warehousemen, mechanics and landlords and other similar Liens which secure amounts which are not yet overdue by more than 60 days or which are being contested in good faith by appropriate proceedings for which adequate reserves have been established in accordance with GAAP; (iv) licenses, sublicenses, leases or subleases granted to other persons not materially interfering with the conduct of the business of the Company or any Subsidiary; (v) Liens incurred in the ordinary course of business in connection with workers compensation claims, unemployment insurance, pension liabilities and social security benefits and Liens securing the performance of bids, tenders, leases and contracts in the ordinary course of business, statutory obligations, surety bonds, performance bonds and other obligations of a like nature (other than appeal bonds) incurred in the ordinary course of business (exclusive of obligations in respect of the payment for borrowed money); and (vi) Liens in favor of a banking institution arising by operation of law encumbering deposits (including the right of set-off) and contractual set-off rights held by such banking institution and which are within the general parameters customary in the banking industry and only burdening deposit accounts or other funds maintained with a creditor depository institution.
“Person” shall mean an individual, a corporation, a partnership, a limited liability company, a trust or other entity or organization, including a government or political subdivision or an agency or instrumentality thereof.
“Plan of Distribution” shall mean the section of a Registration Statement disclosing the plan of distribution of the Shares.
“Pre-Advance Closing” shall have the meaning set forth in Section 2.01.
“Pre-Paid Advance” shall have the meaning set forth in Section 2.01.
“Pricing Period” shall mean the three consecutive Trading Days commencing on the Advance Notice Date.
“Principal Market” shall mean the Nasdaq Stock Market; provided, however, that in the event the Common Shares are ever listed or traded on the New York Stock Exchange or the NYSE American, the “Principal Market” shall mean such other market or exchange on which the Common Shares are then listed or traded to the extent such other market or exchange is the principal trading market or exchange for the Common Shares.
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“Promissory Note” shall have the meaning set forth in Section 2.01.
“Prospectus” shall mean any prospectus (including, without limitation, all amendments and supplements thereto) used by the Company in connection with a Registration Statement, including documents incorporated by reference therein.
“Prospectus Supplement” shall mean any prospectus supplement to a Prospectus filed with the SEC pursuant to Rule 424(b) under the Securities Act, including documents incorporated by reference therein.
“Purchase Price” shall mean the price per Advance Share obtained by multiplying the Market Price by 97% in respect of an Advance Notice delivered by the Company.
“Registration Limitation” shall have the meaning set forth in Section 3.02(b).
“Registration Statement” shall have the meaning set forth in the Registration Rights Agreement.
“Registrable Securities” shall have the meaning set forth in the Registration Rights Agreement.
“Regulation D” shall mean the provisions of Regulation D promulgated under the Securities Act.
“Sanctions” shall have the meaning set forth in Section 5.32.
“Sanctioned Countries” shall have the meaning set forth in Section 5.32.
“SEC” shall mean the U.S. Securities and Exchange Commission.
“SEC Documents” shall have the meaning set forth in Section 5.06.
“Securities Act” shall have the meaning set forth in the recitals of this Agreement.
“Settlement Document” in respect of an Advance Notice delivered by the Company, shall mean a settlement document in the form set out on Exhibit D.
“Shares” shall mean the Commitment Shares and the Common Shares to be issued from time to time hereunder pursuant to an Advance.
“Short Sales” shall have the meaning set forth under Rule 200 of Regulation SHO under the Securities Exchange Act of 1934, as amended.
“Solvent” shall mean, as to any Person as of any date of determination, that on such date (a) the fair value of the property of such Person is greater than the total amount of liabilities, including contingent liabilities, of such Person, (b) the present fair saleable value of such Person is not less than the amount that will be required to pay the probable liability of such Person on its debts as they become absolute and matured, (c) such Person does not intend to, and does not believe that it will, incur debts or liabilities beyond such Person’s ability to pay such debts and liabilities as they mature and (d) such Person is not engaged in a business or a transaction, and is not about to engage in a business or a transaction, for which such Person’s property would constitute an unreasonably small capital. The amount of any contingent liability at any time shall be computed as the amount that, in light of all of the facts and circumstances existing at such time, represents the amount that can reasonably be expected to become an actual or matured liability.
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“Subsidiary” shall mean any Person in which the Company, directly or indirectly, (x) owns a majority of the outstanding capital stock or holds a majority of the equity or similar interest of such Person or (y) controls or operates all or substantially all of the business, operations or administration of such Person, and the foregoing are collectively referred to herein as “Subsidiaries.”
“Trading Day” shall mean any day during which the Principal Market shall be open for business.
“Transaction Documents” means, collectively, this Agreement, the Registration Rights Agreement, any Promissory Notes issued by the Company hereunder, and each of the other agreements and instruments entered into or delivered by any of the parties hereto in connection with the transactions contemplated hereby and thereby, as may be amended from time to time.
“Variable Rate Transaction” shall mean a transaction in which the Company (i) issues or sells any Common Shares or Common Share Equivalents that are convertible into, exchangeable or exercisable for, or include the right to receive additional Common Shares either (A) at a conversion price, exercise price, exchange rate or other price that is based upon and/or varies with the trading prices of or quotations for the Common Shares at any time after the initial issuance of Common Shares or Common Share Equivalents, or (B) with a conversion, exercise or exchange price that is subject to being reset at some future date after the initial issuance of such equity or debt security or upon the occurrence of specified or contingent events directly or indirectly related to the business of the Company or the market for the Common Shares (including, without limitation, any “full ratchet,” “share ratchet,” “price ratchet,” or “weighted average” anti-dilution provisions, but not including any standard anti-dilution protection for any reorganization, recapitalization, non-cash dividend, stock split or other similar transaction), (ii) enters into, or effects a transaction under, any agreement, including but not limited to an “equity line of credit,” At-the-Market Offering, or other continuous offering or similar offering of Common Shares or Common Share Equivalents, (iii) issues or sells any Common Shares or Common Share Equivalents (or any combination thereof) at an implied discount (taking into account all the securities issuable in such offering) to the market price of the Common Shares at the time of the offering in excess of 30% or (iv) enters into or effects any forward purchase agreement, equity pre-paid forward transaction or other similar offering of securities where the purchaser of securities of the Company receives an upfront or periodic payment of all, or a portion of, the value of the securities so purchased, and the Company receives proceeds from such purchaser based on a price or value that varies with the trading prices of the Common Shares.
“VWAP” shall mean for any Trading Day or specified period, the daily volume weighted average price of the Common Shares for such Trading Day on the Principal Market during regular trading hours, or such specified period, as reported by Bloomberg L.P through its “AQR” function. All such determinations shall be appropriately adjusted for any stock dividend, stock split, stock combination, recapitalization or other similar transaction during such period.
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ANNEX II TO THE
STANDBY EQUITY PURCHASE AGREEMENT
CONDITIONS PRECEDENT TO THE INVESTOR’S OBLIGATION TO FUND A PRE-PAID ADVANCE
The obligation of the Investor to advance to the Company a particular tranche of the Pre-Paid Advance hereunder at each Pre-Advance Closing is subject to the satisfaction, as of the date of such Pre-Advance Closing, of each of the following conditions, provided that these conditions are for the Investor’s sole benefit and may be waived by the Investor at any time in its sole discretion by providing the Company with prior written notice signed by the Investor thereof:
| (a) | The Company shall have duly executed and delivered to the Investor each of the Transaction Documents to which it is a party, and the Company shall have duly executed and delivered to the Investor a Promissory Note with a principal amount corresponding to the amount of the applicable tranche of the Pre-Paid Advance (before any deductions made thereto). |
| (b) | Each Subsidiary shall have duly executed and delivered to the Investor the Global Guaranty Agreement. |
| (c) | The Company shall have delivered to the Investor a compliance certificate executed by the chief executive officer of the Company certifying that Company has complied with all of the conditions precedent to the Pre-Advance Closing set forth herein and which may be relied upon by the Investor as evidence of satisfaction of such conditions without any obligation to independently verify. |
| (d) | The Investor shall have received an opinion of counsel to the Company, dated on or before the Pre-Advance Closing Date, in form and substance reasonably acceptable to the Investor. |
| (e) | The Investor shall have received a closing statement in a form to be agreed by the parties, duly executed by an officer of the Company, setting forth wire transfer instructions of the Company for the payment of the amount of the applicable tranche of the Pre-Paid Advance, the amount to be paid by the Investor, which shall be the full principal amount of such tranche of the Pre-Paid Advance less the Purchase Price Discount applicable to such tranche and any other deductions that may be agreed by the parties. |
| (f) | The Company shall have delivered to the Investor certified copies of its and each of its Subsidiaries’ charter or certificate of formation, bylaws or operating agreement and any other material organizational documents. |
| (g) | The Company shall have delivered to the Investor a certificate evidencing the incorporation and good standing of the Company as of a date within ten (10) days of the applicable Pre-Advance Closing. |
| (h) | (I) The board of directors of the Company shall have approved the transactions contemplated by the Transaction Documents, (II) said approval shall not have been amended, rescinded or modified and shall remain in full force and effect as of the applicable Pre-Advance Closing Date, and (III) a true, correct and complete copy of such resolutions duly adopted by the board of directors of the Company shall have been provided to the Investor. |
| (i) | Each and every representation and warranty of the Company in this Agreement shall be true and correct in all material respects (other than representations and warranties qualified by materiality, which shall be true and correct in all respects) as of the date when made and as of the applicable Pre-Advance Closing Date as though originally made at that time (except for representations and warranties that speak as of a specific date, which shall be true and correct as of such specific date), and the Company shall have performed, satisfied and complied in all material respects with the covenants, agreements and conditions set forth in each Transaction Document required to be performed, satisfied or complied with by the Company at or prior to the applicable Pre-Advance Closing. |
| (j) | No Suspension of Trading in or Delisting of Common Shares. (I) Trading in the Common Shares shall not have been suspended by the SEC, the Principal Market or FINRA, (II) the Company shall not have received any notice that the listing or quotation of the Common Shares on the Principal Market shall be terminated, nor shall there have been imposed any suspension of, or restriction on, accepting additional deposits of the Common Shares, electronic trading or book-entry services by DTC with respect to the Common Shares that is continuing, and (III) the Company shall not have received any notice from DTC to the effect that a suspension of, or restriction on, accepting additional deposits of the Common Shares, electronic trading or book-entry services by DTC with respect to the Common Shares is being imposed or is contemplated. |
| (k) | The Company shall have obtained all governmental, regulatory or third-party consents and approvals, if any, necessary for the sale of the Common Shares. |
| (l) | No statute, rule, regulation, executive order, decree, ruling or injunction shall have been enacted, entered, promulgated or endorsed by any court or governmental entity of competent jurisdiction that prohibits the consummation of any of the transactions contemplated by the Transaction Documents. |
| (m) | Since the date of execution of this Agreement, no event or series of events shall have occurred that has resulted in or would reasonably be expected to result in a Material Adverse Effect, or an Event of Default. |
| (n) | (I) No material breach of this Agreement or any Transaction Document shall have occurred, (II) no Event of Default shall have occurred (assuming that the applicable Promissory Note had been outstanding as of such Pre-Advance Closing), and (III) no event has occurred and no condition exists that with the passage of time or the giving of notice, or both, would constitute a material breach of this Agreement or any Transaction Document or an Event of Default (assuming that the applicable Promissory Note had been outstanding as of each Pre-Advance Closing). |
| (o) | The Company shall have notified the Principal Market of the potential issuance of all of the Shares issuable hereunder, the Principal Market shall have completed its review of the related Listing of Additional Share form, and the Company shall have obtained approval of the Principal Market to list or designate for quotation (as the case may be) the maximum number of Common Shares issuable pursuant to the Promissory Notes to be issued at the Pre-Advance Closing. |
| (p) | The Company’s June Form 10-Q shall have been timely filed with the SEC. |
| (q) | The Company and its Subsidiaries shall have delivered to the Investor such other documents, instruments or certificates relating to the transactions contemplated by this Agreement as the Investor or its counsel may reasonably request. |
| (r) | Solely with respect to the Second Pre-Advance Closing, the initial Registration Statement shall have been filed and shall have been declared effective in accordance with the provisions set forth in the Registration Rights Agreement (including the filing and effectiveness deadlines set forth therein). |
ANNEX III TO THE
STANDBY EQUITY PURCHASE AGREEMENT
CONDITIONS PRECEDENT TO THE RIGHT OF THE COMPANY TO DELIVER AN ADVANCE NOTICE
The right of the Company to deliver an Advance Notice and the obligations of the Investor hereunder with respect to an Advance are subject to the satisfaction or waiver (by the Investor pursuant to prior written notice signed by the Investor to the Company thereof), on each Advance Notice Date (a “Condition Satisfaction Date”), of each of the following conditions:
| (a) | Accuracy of the Company’s Representations and Warranties. The representations and warranties of the Company in this Agreement shall be true and correct in all material respects as of the Advance Notice Date, except to the extent such representations and warranties are as of another date, such representations and warranties shall be true and correct as of such other date. |
| (b) | Issuance of Commitment Shares. The Company shall have paid the portion of the Commitment Fee or issued the portion of the Commitment Shares due within three days of the Effective Date to an account designated by the Investor on or prior to the Effective Date, in accordance with Section 12.04, all of which Commitment Fee shall be deemed fully earned and non-refundable on the Effective Date, regardless of whether any Advance Notices are made or settled hereunder or any subsequent termination of this Agreement. |
| (c) | Registration of the Common Shares with the SEC. There is an effective Registration Statement pursuant to which the Investor is permitted to utilize the prospectus thereunder to resell all of the Common Shares issuable pursuant to such Advance Notice. The Current Report and the June Form10-Q shall have been filed with the SEC, and the Company shall have filed with the SEC in a timely manner all reports, notices and other documents required under the Exchange Act and applicable SEC regulations during the twelve-month period immediately preceding the applicable Condition Satisfaction Date. |
| (d) | Authority. The Company shall have obtained all permits and qualifications required by any applicable state for the offer and sale of all the Common Shares issuable pursuant to such Advance Notice or shall have the availability of exemptions therefrom. The sale and issuance of such Common Shares shall be legally permitted by all laws and regulations to which the Company is subject. |
| (e) | Board. (I) The board of directors of the Company shall have approved the transactions contemplated by the Transaction Documents, (II) said approval shall not have been amended, rescinded or modified and shall remain in full force and effect as of the applicable Advance Notice Date, and (III) a true, correct and complete copy of such resolutions duly adopted by the board of directors of the Company shall have been provided to the Investor. |
| (f) | No Material Outside Event. No Material Outside Event shall have occurred and be continuing. |
| (g) | Performance by the Company. The Company shall have performed, satisfied and complied in all respects with all covenants, agreements and conditions required by this Agreement to be performed, satisfied or complied with by the Company at or prior the applicable Condition Satisfaction Date. |
| (h) | No Injunction. No statute, rule, regulation, executive order, decree, ruling or injunction shall have been enacted, entered, promulgated or endorsed by any court or governmental authority of competent jurisdiction that prohibits or materially and adversely affects any of the transactions contemplated by the Transaction Documents. |
| (i) | No Suspension of Trading in or Delisting of Common Shares. (I) Trading in the Common Shares shall not have been suspended by the SEC, the Principal Market or FINRA, (II) the Company shall not have received any notice that the listing or quotation of the Common Shares on the Principal Market shall be terminated, nor shall there have been imposed any suspension of, or restriction on, accepting additional deposits of the Common Shares, electronic trading or book-entry services by DTC with respect to the Common Shares that is continuing, and (III) the Company shall not have received any notice from DTC to the effect that a suspension of, or restriction on, accepting additional deposits of the Common Shares, electronic trading or book-entry services by DTC with respect to the Common Shares is being imposed or is contemplated. |
| (j) | Authorized. All of the Common Shares issuable pursuant to the applicable Advance Notice shall have been duly authorized by all necessary corporate action of the Company. All Common Shares relating to all prior Advance Notices required to have been received by the Investor under this Agreement shall have been delivered to the Investor in accordance with this Agreement. |
| (k) | Other Agreements. The Company shall not have breached or failed to observe any term of any debenture, note, or other instrument held by the Investor in the Company or any other agreement between or among the Company and the Investor. |
| (l) | Material Non-Public Information. Neither the Company nor the Investor shall be in possession of any material non-public information regarding the Company. |
| (m) | Executed Advance Notice. The representations contained in the applicable Advance Notice shall be true and correct in all material respects as of the applicable Condition Satisfaction Date. |
EXHIBIT A
REGISTRATION RIGHTS AGREEMENT
See attached.
EXHIBIT B
CONVERTIBLE PROMISSORY NOTE
See attached.
EXHIBIT C
ADVANCE NOTICE
| Dated: ______________ | Advance Notice Number: ____ |
The undersigned, _______________________, hereby certifies, with respect to the sale of Common Shares of HEALTH IN TECH, INC. (the “Company”) issuable in connection with this Advance Notice, delivered pursuant to that certain Standby Equity Purchase Agreement, dated as of August 12, 2026 (the “Agreement”), as follows (with capitalized terms used herein without definition having the same meanings as given to them in the Agreement):
1. The undersigned is the duly elected ______________ of the Company.
2. There are no fundamental changes to the information set forth in the Registration Statement which would require the Company to file a post-effective amendment to the Registration Statement.
3. The Company has performed in all material respects all covenants and agreements to be performed by the Company contained in the Agreement on or prior to the Advance Notice Date. All conditions to the delivery of this Advance Notice are satisfied as of the date hereof.
4. The number of Advance Shares the Company is requesting is _____________________.
5. The Minimum Acceptable Price with respect to this Advance Notice is ____________ (if left blank then no Minimum Acceptable Price will be applicable to this Advance).
6. The number of Common Shares of the Company outstanding as of the date hereof is ___________.
The undersigned has executed this Advance Notice as of the date first set forth above.
| HEALTH IN TECH, INC. | ||
| By: | ||
| Name: | ||
| Title: | ||
Please deliver this Advance Notice by email to:
Email: Trading@yorkvilleadvisors.com
Attention: Trading Department and Compliance Officer
Confirmation Telephone Number: (201) 985-8300.
EXHIBIT D
SETTLEMENT DOCUMENT
VIA EMAIL
HEALTH IN TECH, INC.
Attn:
Email:
| Below please find the settlement information with respect to the Advance Notice Date of: | ||
| 1. | Number of Common Shares requested in the Advance Notice | |
| 2. | Minimum Acceptable Price for this Advance (if any) | |
| 3. | Number of Excluded Days (if any) | |
| 4. | Adjusted Advance Amount (if applicable) | |
| 5. | Market Price | |
| 6. | Purchase Price (Market Price x 97%) per share | |
| 7. | Number of Advance Shares due to the Investor | |
| 8. | Total Purchase Price due to Company (row 6 x row 7) |
If there were any Excluded Days then add the following
|
9. |
Number of Additional Shares to be issued to the Investor | |
| 10. | Additional amount to be paid to the Company by the Investor (Additional Shares in row 9 x Minimum Acceptable Price x 97%) | |
| 11. | Total Amount to be paid to the Company (Purchase Price in row 8 + additional amount in row 10) | |
| 12. | Total Advance Shares to be issued to the Investor (Advance Shares due to the Investor in row 7 + Additional Shares in row 9) |
Please issue the number of Advance Shares due to the Investor to the account of the Investor as follows:
Investor’s DTC participant #:
ACCOUNT NAME:
ACCOUNT NUMBER:
ADDRESS:
CITY:
COUNTRY:
Contact person:
Number and/or email:
| Sincerely, | |
| YA II PN, LTD. |
| Agreed and approved by: | ||
| HEALTH IN TECH, INC. | ||
| By: | ||
| Name: | ||
| Title: | ||
EXHIBIT E
FORM OF GLOBAL GUARANTY AGREEMENT
See attached.
SCHEDULE 5.13 TO THE
STANDBY EQUITY PURCHASE AGREEMENT
The Company is the plaintiff in a civil action against certain of its former employees in the United States District Court for the Southern District of Iowa, alleging the former employees’ violations of contractual and common law obligations relating to restrictive covenants, including non-competition, non-solicitation, confidentiality, and the protection of the trade secrets and other proprietary information. The Company’s action seeks injunctive relief, monetary damages, recovery of attorneys’ fees and costs, where permitted by law, and such other relief as the court may deem appropriate.
As of the date hereof, the litigation is in its preliminary stages. The complaint has been filed, and service of process is being completed. No defendant has filed a responsive pleading, no discovery has commenced, and the court has not ruled on the merits of any claims or defenses.
Management believes the claims are well-founded and commenced the action to protect the Company’s confidential information, customer relationships and legitimate business interests. Because the Company is the plaintiff, management does not anticipate any material monetary liability arising from the proceeding other than ordinary legal fees and litigation expenses incurred in prosecuting the action. Conversely, the Company expects to seek monetary damages from and is pursuing other available remedies against the defendants, although the amount and timing of any potential recovery, if awarded, cannot presently be estimated.
Management does not believe that the litigation will materially impair the Company’s financial condition, operations, liquidity, ability to perform its contractual obligations, or its ability to satisfy its obligations in connection with the transactions contemplated under this Agreement. No injunction, counterclaim, judgment or other order currently exists that restricts the Company’s business operations or otherwise affects the transactions contemplated under this Agreement.
SCHEDULE 5.27 TO THE
STANDBY EQUITY PURCHASE AGREEMENT
In connection with the transactions contemplated by this Agreement, a fee shall be payable by the Company to Sanjay Shrestha, a member of the Company’s board of directors.
Exhibit 10.2
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (this “Agreement”) dated as of August __, 2026, is made by and between YA II PN, LTD., a Cayman Islands exempt limited company (the “Investor”), and HEALTH IN TECH, INC., a company incorporated under the laws of the State of Nevada (the “Company”). The Investor and the Company may be referred to herein individually as a “Party” and collectively as the “Parties.”
WHEREAS, the Company and the Investor have entered into that certain Standby Equity Purchase Agreement, dated as of the date hereof (the “Purchase Agreement”), pursuant to which the Company may issue, from time to time, to the Investor up to $20 million of newly issued shares of the Company’s shares of Class A Common Stock, par value $0.001 per share (the “Common Shares”); and
WHEREAS, pursuant to the terms of, and in consideration for the Investor entering into, the Purchase Agreement, and to induce the Investor to execute and deliver the Purchase Agreement, the Company has agreed to provide the Investor with certain registration rights under the Securities Act of 1933, as amended, and the rules and regulations thereunder, or any similar successor statute (collectively, the “Securities Act”).
AGREEMENT
NOW, THEREFORE, in consideration of the premises and the mutual covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Company and the Investor hereby agree as follows:
1. DEFINITIONS.
Capitalized terms used herein and not otherwise defined herein shall have the respective meanings set forth in the Purchase Agreement. As used in this Agreement, the following terms shall have the following meanings:
(a) “Applicable Date” means the earlier to occur of (I) the first date on which the initial Registration Statement is declared effective by the SEC (and each Prospectus contained therein is available for use on such date) or (II) the first date on which all of the Registrable Securities are eligible to be resold by the Investor pursuant to Rule 144.
(b) “Business Day” shall mean any day on which the New York Stock Exchange is open for trading, other than any day on which commercial banks are authorized or required to be closed in New York City.
(c) “Effectiveness Deadline” means, with respect to the initial Registration Statement filed hereunder, the 75th calendar day following the Filing Deadline, provided, however, in the event the Company is notified by the SEC that the Registration Statement will not be reviewed or is no longer subject to further review and comments, the Effectiveness Deadline as to such Registration Statement shall be the fifth Business Day following the date on which the Company is so notified if such date precedes the date required above.
(d) “Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.
(e) “Filing Deadline” means, with respect to the initial Registration Statement required hereunder, the 21st calendar day following the date hereof.
(f) “Person” means a corporation, a limited liability company, an association, a partnership, an organization, a business, an individual, a governmental or political subdivision thereof or a governmental agency.
(g) “Prospectus” means the prospectus included in a Registration Statement (including, without limitation, a prospectus that includes any information previously omitted from a prospectus filed as part of an effective registration statement in reliance upon Rule 430A promulgated under the Securities Act), as amended or supplemented by any prospectus supplement, with respect to the terms of the offering of any portion of the Registrable Securities covered by a Registration Statement, and all other amendments and supplements to the Prospectus, including post-effective amendments, and all material incorporated by reference or deemed to be incorporated by reference in such Prospectus.
(h) “Registrable Securities” means all of (i) the Shares (as defined in the Purchase Agreement), (ii) the Common Shares that may be issuable upon conversion of all Promissory Notes, (iii) the Commitment Shares, and (iv) any capital stock issued or issuable with respect to the foregoing, including, without limitation, (1) as a result of any stock split, stock dividend or other distribution, recapitalization or similar event or otherwise, and (2) shares of capital stock of the Company into which the Common Shares are converted or exchanged and shares of capital stock of a successor entity into which the Common Shares are converted or exchanged.
(i) “Registration Statement” means any registration statement of the Company filed pursuant to this Agreement, including the Prospectus, amendments and supplements to such registration statement or Prospectus, including post-effective amendments, all exhibits thereto, and all material incorporated by reference or deemed to be incorporated by reference in such registration statement.
(j) “Required Registration Amount” means the Common Shares issued or to be issued pursuant to the Purchase Agreement and the Commitment Shares, and such number of shares of Common Stock equal to the maximum number of shares of Common Shares that may be issuable upon conversion of all Promissory Notes issuable pursuant to the Purchase Agreement (without taking into account any limitations on the conversion of the Promissory Notes set forth therein).
(k) “Rule 144” means Rule 144 under the Securities Act or any successor rule thereto.
2
(l) “Rule 415” means Rule 415 promulgated by the SEC pursuant to the Securities Act, as such Rule may be amended from time to time, or any similar rule or regulation hereafter adopted by the SEC having substantially the same purpose and effect as such Rule.
(m) “SEC” means the Securities and Exchange Commission or any other federal agency administering the Securities Act and the Exchange Act at the time.
(n) “Securities Act” shall have the meaning set forth in the Recitals above.
2. REGISTRATION.
(a) The Company’s registration obligations set forth in this Section 2 including its obligations to file Registration Statements, obtain effectiveness of Registration Statements, and maintain the continuous effectiveness of any Registration Statement that has been declared effective shall begin on the date hereof and continue until all the earlier of (i) the date on which the Investor has sold all of the Registrable Securities and (ii) the date of termination of the Purchase Agreement if as of such termination date the Investor holds no Registrable Securities (the “Registration Period”).
(b) Subject to the terms and conditions of this Agreement, the Company shall (i) as soon as practicable, but in no case later than the Filing Deadline, prepare and file with the SEC an initial Registration Statement on Form S-3 (or, if the Company is not then eligible, on Form S-1) or any successor form thereto covering the resale by the Investor of the Required Registration Amount in accordance with applicable SEC rules, regulations and interpretations so as to permit the resale of such Registrable Securities by the Investor under Rule 415 at then prevailing market prices (and not fixed prices). The Registration Statement shall contain “Selling Stockholders” and “Plan of Distribution” sections. The Company shall use its best efforts to have the Registration Statement declared effective by the SEC as soon as practicable, but in no event later than the Effectiveness Deadline. By 9:30 am on the business day following the date of effectiveness, the Company shall file with the SEC in accordance with Rule 424 under the Securities Act the final Prospectus to be used in connection with sales pursuant to such Registration Statement. Prior to the filing of the Registration Statement with the SEC, the Company shall furnish a draft of the Registration Statement to the Investor for their review and comment. Investor must furnish comments within twenty-four (24) hours of receipt and comments on amendments or supplements shall be furnished within twelve (12) hours of receipt.
(c) Sufficient Number of Shares Registered. If at any time all Registrable Securities are not covered by a Registration Statement filed pursuant to Section 2(b) as a result of Section 2(e) or otherwise, the Company shall use its commercially reasonable efforts to file with the SEC one (1) or more additional Registration Statements so as to cover all of the Registrable Securities not covered by such initial Registration Statement, in each case as soon as practicable (taking into account any position of the staff of the SEC with respect to the date on which the Staff will permit such additional Registration Statement(s) to be filed with the SEC and the rules and regulations of the SEC). The Company shall use its commercially reasonable efforts to cause each such new Registration Statement to become effective as soon as reasonably practicable following the filing thereof with the SEC.
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(d) During the Registration Period, the Company shall (i) promptly prepare and file with the SEC such amendments (including post-effective amendments) and supplements to a Registration Statement and the Prospectus used in connection with a Registration Statement, which Prospectus is to be filed pursuant to Rule 424 promulgated under the Securities Act, as may be necessary to keep such Registration Statement effective at all times during the Registration Period, (ii) prepare and file with the SEC additional Registration Statements in order to register for resale under the Securities Act all of the Registrable Securities; (iii) cause the related Prospectus to be amended or supplemented by any required Prospectus supplement (subject to the terms of this Agreement), and as so supplemented or amended to be filed pursuant to Rule 424; (iv) respond as promptly as reasonably possible to any comments received from the SEC with respect to a Registration Statement or any amendment thereto and as promptly as reasonably possible provide the Investor true and complete copies of all correspondence from and to the SEC relating to a Registration Statement (provided that the Company may excise any information contained therein which would constitute material non-public information as to any Investor which has not executed a confidentiality agreement with the Company); and (v) comply with the provisions of the Securities Act with respect to the disposition of all Registrable Securities of the Company covered by such Registration Statement until such time as all of such Registrable Securities shall have been disposed of in accordance with the intended methods of disposition by the seller or sellers thereof as set forth in such Registration Statement. In the case of amendments and supplements to a Registration Statement which are required to be filed pursuant to this Agreement (including pursuant to this Section 2(c)) by reason of the Company’s filing a report on Form 10-K, Form 10-Q, or Form 8-K or any analogous report under the Exchange Act, the Company shall incorporate such report by reference into the Registration Statement, if applicable, or shall file such amendments or supplements with the SEC on the same day on which the Exchange Act report is filed which created the requirement for the Company to amend or supplement the Registration Statement.
(e) Reduction of Registrable Securities Included in a Registration Statement. Notwithstanding anything contained herein, in the event that the SEC requires the Company to reduce the number of Registrable Securities to be included in a Registration Statement in order to allow the Company to rely on Rule 415 with respect to a Registration Statement, then the Company shall reduce the number of Registrable Securities to be included in such Registration Statement (after consultation with the Investor as to the specific Registrable Securities to be removed therefrom) to the maximum number of securities as is permitted to be registered by the SEC. In the event of any reduction in Registrable Securities pursuant to this paragraph, the Company shall use its commercially reasonable efforts to file one (1) or more new Registration Statements with the Commission in accordance with Section 2(c) until such time as all Registrable Securities have been included in Registration Statements that have been declared effective and the Prospectuses contained therein are available for use by the Investor.
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(f) Failure to File or Obtain Effectiveness of the Registration Statement or Remain Current. If: (i) a Registration Statement is not filed on or prior to its Filing Date, or (ii) a Registration Statement is not declared effective on or prior to the Effectiveness Deadline, or the Company fails to file with the SEC a request for acceleration in accordance with Rule 461 promulgated under the Securities Act, within five (5) Business Days of the date that the Company is notified (orally or in writing, whichever is earlier) by the SEC that a Registration Statement will not be “reviewed,” or not subject to further review, or (iii) after the effectiveness, a Registration Statement ceases for any reason to remain continuously effective as to all Registrable Securities for which it is required to be effective, or (iv) the Investor is not permitted to utilize the Prospectus therein to resell such Registrable Securities for more than 30 consecutive calendar days or more than an aggregate of 40 calendar days during any 12-month period (which need not be consecutive calendar days), or (v) if after the date that is six (6) months from the date hereof, the Company does not have available adequate current public information as set forth in Rule 144(c) (any such failure or breach being referred to as an “Event”), then in addition to any other rights the Investor may have hereunder or under applicable law, such Event shall constitute a Registration Event (as defined in each respective Promissory Notes), and the Company shall be in breach of the term and conditions of this Agreement and such Event shall be deemed an Event of Default (as defined in each respective Promissory Notes) for so long as such Event remains uncured. During the period of the existence of an uncured Event, the Investor shall have no obligation to accept an Advance Notice or accept or purchase any Advance Shares (other than any Advance Shares purchased by the Investor prior to the occurrence of the Event).
(g) Piggy-Back Registrations. If at any time after the Effectiveness Deadline, there is not an effective Registration Statement covering all of the Registrable Securities and the Company proposes to register the offer and sale of any Common Shares under the Securities Act (other than a registration (i) pursuant to a Registration Statement on Form S-8 (or other registration solely relating to an offering or sale to employees or directors of the Company pursuant to any employee stock plan or other employee benefit arrangement), (ii) pursuant to a Registration Statement on Form S-4 (or similar form that relates to a transaction subject to Rule 145 under the Securities Act or any successor rule thereto), or (iii) in connection with any dividend or distribution reinvestment or similar plan), whether for its own account or for the account of one (1) or more stockholders of the Company and the form of Registration Statement to be used may be used for any registration of Registrable Securities, the Company shall give prompt written notice (in any event no later than five (5) days prior to the filing of such Registration Statement) to the holders of Registrable Securities of its intention to effect such a registration and, shall include in such registration all Registrable Securities with respect to which the Company has received written requests for inclusion from the holders of Registrable Securities; provided, however, that, the Company shall not be required to register any Registrable Securities pursuant to this Section 2(g) that have been sold or may permanently be sold without any restrictions pursuant to Rule 144, as determined by the counsel to the Company pursuant to a written opinion letter to such effect, addressed and acceptable to the Company’s transfer agent.
(h) No Inclusion of Other Securities; Other Registration Statements. In no event shall the Company (i) include any securities other than Registrable Securities on any Registration Statement pursuant to Section 2(b) or Section 2(c) without the Investor’s prior written consent or (ii) prior to the Applicable Date, the Company shall not file a registration statement or an offering statement under the Securities Act relating to securities that are not the Registrable Securities (other than a registration statement on Form S-8 or such supplements or amendments to registration statements that are outstanding and have been declared effective by the SEC as of the date hereof) (solely to the extent necessary to keep such registration statements effective and available and not for any other reason).
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(i) Suspension of Prospectus. For not more than fifteen (15) consecutive days or for a total of not more than thirty (30) days in any twelve (12) month period, the Company may suspend the use of any Prospectus included in any Registration Statement contemplated by this Section in the event that the Company determines in good faith that such suspension is necessary to (A) delay the disclosure of material nonpublic information concerning the Company, the disclosure of which at the time is not, in the good faith opinion of the Company, in the best interests of the Company or (B) amend or supplement the affected Registration Statement or the related Prospectus so that such Registration Statement or Prospectus shall not include an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in the case of the Prospectus in light of the circumstances under which they were made, not misleading (an "Allowed Delay"); provided, that the Company shall promptly (a) notify the Investor in writing of the commencement (and the termination) of an Allowed Delay, but shall not (without the prior written consent of an Investor) disclose to such Investor any material nonpublic information giving rise to an Allowed Delay, (b) advise the Investors in writing to cease all sales under such Registration Statement until the termination of the Allowed Delay, and (c) use commercially reasonable efforts to terminate an Allowed Delay as promptly as practicable.
3. RELATED OBLIGATIONS.
(a) The Company shall, not less than three (3) Business Days prior to the filing of each Registration Statement and not less than one (1) business day prior to the filing of any related amendments and supplements to all Registration Statements (except for annual reports on Form 10-K, supplements and amendments to update the Registration Statement solely for information reflected in the Company’s annual reports on Form 10-K, quarterly reports on Form 10-Q or current reports on Form 8-K), furnish to each Investor copies of all such documents proposed to be filed, which documents (other than those incorporated or deemed to be incorporated by reference) will be subject to the reasonable and prompt review of such Investor. The Company shall not file a Registration Statement or any such Prospectus or any amendments or supplements thereto to which the Investor shall reasonably object in good faith; provided that, the Company is notified of such objection in writing no later than two (2) Trading Days after the Investor has been so furnished copies of a Registration Statement.
(b) The Company shall furnish to each Investor whose Registrable Securities are included in any Registration Statement, without charge (i) at least one (1) copy (which may be in electronic form) of such Registration Statement as declared effective by the SEC and any amendment(s) thereto, including financial statements and schedules, all documents incorporated therein by reference, all exhibits and each preliminary prospectus, (ii) at least one (1) copy (which may be in electronic form) of the final prospectus included in such Registration Statement and all amendments and supplements thereto, and (iii) any documents, which are not publicly available through EDGAR, as such Investor may reasonably request from time to time in order to facilitate the disposition of the Registrable Securities owned by such Investor.
(c) The Company shall use its commercially reasonable efforts to (i) register and qualify the Registrable Securities covered by a Registration Statement under such other securities or “blue sky” laws of such jurisdictions in the United States as any Investor reasonably requests, (ii) prepare and file in those jurisdictions, such amendments (including post-effective amendments) and supplements to such registrations and qualifications as may be necessary to maintain the effectiveness thereof during the Registration Period, (iii) take such other actions as may be necessary to maintain such registrations and qualifications in effect at all times during the Registration Period, and (iv) take all other actions reasonably necessary or advisable to qualify the Registrable Securities for sale in such jurisdictions; provided, however, that the Company shall not be required in connection therewith or as a condition thereto to (w) make any change to its articles of incorporation or by-laws, (x) qualify to do business in any jurisdiction where it would not otherwise be required to qualify but for this Section 3(c), (y) subject itself to general taxation in any such jurisdiction, or (z) file a general consent to service of process in any such jurisdiction. The Company shall promptly notify each Investor who holds Registrable Securities of the receipt by the Company of any notification with respect to the suspension of the registration or qualification of any of the Registrable Securities for sale under the securities or “blue sky” laws of any jurisdiction in the United States or its receipt of actual notice of the initiation or threat of any proceeding for such purpose.
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(d) As promptly as practicable after becoming aware of such event or development, the Company shall notify each Investor in writing of the happening of any event as a result of which the Prospectus included in a Registration Statement, as then in effect, includes an untrue statement of a material fact or omission to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading (provided that in no event shall such notice contain any material, nonpublic information), and promptly prepare a supplement or amendment to such Registration Statement to correct such untrue statement or omission and deliver one (1) electronic copy of such supplement or amendment to the Investor. The Company shall also promptly notify each Investor in writing (i) when a Prospectus or any Prospectus supplement or post-effective amendment has been filed, and when a Registration Statement or any post-effective amendment has become effective (notification of such effectiveness shall be delivered to each Investor by email on the same day of such effectiveness), (ii) of any request by the SEC for amendments or supplements to a Registration Statement or related prospectus or related information, and (iii) of the Company’s reasonable determination that a post-effective amendment to a Registration Statement would be appropriate. The Company shall respond as promptly as reasonably practicable to any comments received from the SEC with respect to a Registration Statement or any amendment thereto.
(e) The Company shall use its commercially reasonable efforts to prevent the issuance of any stop order or other suspension of effectiveness of a Registration Statement, or the suspension of the qualification of any of the Registrable Securities for sale in any jurisdiction within the United States of America and, if such an order or suspension is issued, to obtain the withdrawal of such order or suspension at the earliest possible moment and to notify each Investor who holds Registrable Securities being sold of the issuance of such order and the resolution thereof or its receipt of actual notice of the initiation or threat of any proceeding for such purpose.
(f) Without limiting any obligation of the Company under the Purchase Agreement, the Company shall use its best efforts to cause all of the Registrable Securities covered by each Registration Statement to be listed on the Principal Market. The Company shall pay all fees and expenses in connection with satisfying its obligation under this Section 3(f).
(g) The Company shall hold in confidence and not make any disclosure of information concerning the Investor provided to the Company unless (i) disclosure of such information is necessary to comply with federal or state securities laws, (ii) the disclosure of such information is necessary to avoid or correct a material misstatement or omission in any Registration Statement, (iii) the release of such information is ordered pursuant to a subpoena or other final, non-appealable order from a court or governmental body of competent jurisdiction, or (iv) such information has been made generally available to the public other than by disclosure in violation of this Agreement or any other agreement. The Company agrees that it shall, upon learning that disclosure of such information concerning the Investor is sought in or by a court or governmental body of competent jurisdiction or through other means, give prompt written notice to the Investor and allow the Investor, at the Investor’s expense, to undertake appropriate action to prevent disclosure of, or to obtain a protective order for, such information.
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(h) The Company shall cooperate with the holders of the Registrable Securities to facilitate the timely preparation and delivery of certificates representing the Registrable Securities to be sold pursuant to such Registration Statement or Rule 144 free of any restrictive legends and representing such number of Common Shares and registered in such names as the holders of the Registrable Securities may reasonably request prior to sales of Registrable Securities pursuant to such Registration Statement or Rule 144; provided, that the Company may satisfy its obligations hereunder without issuing physical stock certificates through the use of The Depository Trust Company's Direct Registration System.
(i) The Company shall use its commercially reasonable efforts to cause the Registrable Securities to be registered with or approved by such other governmental agencies or authorities as may be necessary to consummate the disposition of such Registrable Securities.
(j) The Company shall otherwise use its commercially reasonable efforts to comply with all applicable rules and regulations of the SEC in connection with any registration hereunder.
(k) Promptly after a Registration Statement which covers Registrable Securities is declared effective by the SEC, the Company shall deliver, and shall cause legal counsel for the Company to deliver, to the transfer agent for such Registrable Securities (with copies to the Investor whose Registrable Securities are included in such Registration Statement) confirmation that such Registration Statement has been declared effective by the SEC.
(l) The Company shall take all other reasonable actions necessary to expedite and facilitate disposition by each Investor of Registrable Securities pursuant to a Registration Statement.
4. OBLIGATIONS OF THE INVESTOR.
(a) The Investor agrees that upon receipt of any notice from the Company of the happening of any event of the kind described in Section 3(d) the Investor shall as soon as reasonably practicable discontinue disposition of Registrable Securities pursuant to any Registration Statement covering such Registrable Securities until the Investor’s receipt of the copies of the supplemented or amended prospectus contemplated by Section 3(d) or receipt of notice that no supplement or amendment is required. Notwithstanding anything to the contrary contained herein, subject to compliance with the securities laws, the Company shall cause its transfer agent to deliver unlegended certificates for Common Shares to a transferee of the Investor in accordance with the terms of the Purchase Agreement in connection with any sale of Registrable Securities with respect to which the Investor has entered into a contract for sale prior to the Investor’s receipt of a notice from the Company of the happening of any event of the kind described in Section 3(d) and for which the Investor has not yet settled.
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(b) The Investor covenants and agrees that it will comply with the prospectus delivery requirements of the Securities Act as applicable to it or an exemption therefrom in connection with sales of Registrable Securities pursuant to the Registration Statement.
(c) The Investor, by its acceptance of the Registrable Securities, agrees to cooperate with the Company as reasonably requested by the Company in connection with the preparation and filing of each Registration Statement hereunder, unless the Investor has notified the Company in writing of the Investor’s election to exclude all of the Investor’s Registrable Securities from such Registration Statement.
5. EXPENSES OF REGISTRATION.
All expenses incurred by the Company in complying with its obligations pursuant to this Agreement and in connection with the registration and disposition of Registrable Securities shall be paid by the Company, including, without limitation, all registration, listing and qualifications fees, printers, fees and expenses of the Company's counsel and accountants (except legal fees of Investor’s counsel associated with the review of the Registration Statement).
6. INDEMNIFICATION.
With respect to Registrable Securities which are included in a Registration Statement under this Agreement:
(a) To the fullest extent permitted by law, the Company will, and hereby does, indemnify, hold harmless and defend the Investor and its directors, officers, partners, employees, agents, and representatives, and each Person, if any, who controls the Investor within the meaning of the Securities Act or the Exchange Act (each, an “Investor Indemnified Person”), against any losses, claims, damages, liabilities, judgments, fines, penalties, charges, costs, reasonable attorneys’ fees, amounts paid in settlement or expenses, joint or several (collectively, “Indemnified Damages”), incurred in investigating, preparing or defending any action, claim, suit, inquiry, proceeding, investigation or appeal taken from the foregoing by or before any court or governmental, administrative or other regulatory agency, body or the SEC, whether pending or threatened, whether or not an indemnified party is or may be a party thereto (“Claims”), to which any of them may become subject insofar as such Claims (or actions or proceedings, whether commenced or threatened, in respect thereof) arise out of or are based upon: (i) any untrue statement or alleged untrue statement of a material fact in a Registration Statement or any post-effective amendment thereto or in any filing made in connection with the qualification of the offering under the securities or other “blue sky” laws of any jurisdiction in which Registrable Securities are offered (“Blue Sky Filing”), or the omission or alleged omission to state a material fact required to be stated therein or necessary to make the statements therein not misleading; (ii) any untrue statement or alleged untrue statement of a material fact contained in any final prospectus (as amended or supplemented, if the Company files any amendment or supplement thereto with the SEC) or the omission or alleged omission to state therein any material fact necessary to make the statements made therein, in light of the circumstances under which the statements therein were made, not misleading; or (iii) any violation or alleged violation by the Company of the Securities Act, the Exchange Act, any other law, including, without limitation, any state securities law, or any rule or regulation thereunder relating to the offer or sale of the Registrable Securities pursuant to a Registration Statement (the matters in the foregoing clauses (i) through (iii) being, collectively, “Violations”). The Company shall reimburse the Investor and each such Investor Indemnified Person promptly as Indemnified Damages are incurred and are due and payable, including reasonable legal fees, disbursements and other expenses incurred by an Investor Indemnified Person in connection with investigating or defending any such Claim. Notwithstanding anything to the contrary contained herein, the indemnification agreement contained in this Section 6(a): (x) shall not apply to a Claim arising out of or based upon a Violation which occurs in reliance upon and in conformity with information furnished in writing to the Company by such Investor Indemnified Person expressly for use in connection with the preparation of the Registration Statement or any such amendment thereof or supplement thereto; (y) shall not be available to the extent such Claim is based on a failure of the Investor to deliver or to cause to be delivered the prospectus made available by the Company, if such prospectus was timely made available by the Company pursuant to Section 3(c); and (z) shall not apply to amounts paid in settlement of any Claim if such settlement is effected without the prior written consent of the Company, which consent shall not be unreasonably withheld, conditioned or delayed. Such indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of an Investor Indemnified Person.
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(b) In connection with a Registration Statement, the Investor agrees to indemnify, hold harmless and defend, to the same extent and in the same manner as is set forth in Section 6(a), the Company, each of its directors, each of its officers, employees, representatives, or agents and each Person, if any, who controls the Company within the meaning of the Securities Act or the Exchange Act (each a “Company Indemnified Person”), against any Claim or Indemnified Damages to which any of them may become subject, under the Securities Act, the Exchange Act or otherwise, insofar as such Claim or Indemnified Damages arise out of or is based upon any Violation, in each case to the extent, and only to the extent, that such Violation occurs (i) in reliance upon and in conformity with written information furnished to the Company by such Investor expressly for use in connection with such Registration Statement or (ii) from the Investor’s violation of any prospectus delivery requirements under the Securities Act, the Exchange Act, any other law, including, without limitation, any state securities law, or any rule or regulation thereunder relating to the offer or sale of the Registrable Securities pursuant to a Registration Statement; and, subject to Section 6(d), such Investor will reimburse any legal or other expenses reasonably incurred by them in connection with investigating or defending any such Claim; provided, that the indemnity agreement contained in this Section 6(b) and the agreement with respect to contribution contained in Section 7 shall not apply to amounts paid in settlement of any Claim if such settlement is effected without the prior written consent of the Investor, which consent shall not be unreasonably withheld, conditioned or delayed; provided, further, that, other than in connection with fraud or gross negligence on the part of the Investor, the Investor shall be liable under this Section 6(b) for only that amount of a Claim or Indemnified Damages as does not exceed the net proceeds to such Investor as a result of the sale of Registrable Securities pursuant to such Registration Statement. Such indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of such Company Indemnified Person. Notwithstanding anything to the contrary contained herein, the indemnification agreement contained in this Section 6(b) with respect to any prospectus shall not inure to the benefit of any Company Indemnified Person if the untrue statement or omission of material fact contained in the prospectus was corrected and such new prospectus was delivered to the Investor prior to such Investor’s use of the prospectus to which the Claim relates.
(c) Promptly after receipt by an Investor Indemnified Person or Company Indemnified Person under this Section 6 of notice of the commencement of any action or proceeding (including any governmental action or proceeding) involving a Claim, such Investor Indemnified Person or Company Indemnified Person shall, if indemnification in respect of such Claim is to be sought from any indemnifying party under this Section 6, deliver to the indemnifying party a written notice of the commencement thereof, and the indemnifying party shall have the right to participate in and, to the extent the indemnifying party so desires, jointly with any other indemnifying party similarly noticed, assume control of the defense thereof with counsel reasonably and mutually satisfactory to the indemnifying party and the Investor Indemnified Person or the Company Indemnified Person, as the case may be; provided, however, that an Investor Indemnified Person or Company Indemnified Person shall have the right to retain its own counsel with the fees and expenses of not more than one (1) counsel for such Investor Indemnified Person or Company Indemnified Person to be paid by the indemnifying party, if, in the reasonable opinion of counsel retained by the indemnifying party, the representation by such counsel of the Investor Indemnified Person or Company Indemnified Person and the indemnifying party would be inappropriate due to actual or potential differing interests between such Investor Indemnified Person or Company Indemnified Person and any other party represented by such counsel in such proceeding. The Investor Indemnified Person or Company Indemnified Person shall reasonably cooperate with the indemnifying party in connection with any negotiation or defense of any Claim by the indemnifying party and shall furnish to the indemnifying party all information reasonably available to the Investor Indemnified Person or Company Indemnified Person which relates to such action or claim. The indemnifying party shall keep the Investor Indemnified Person or Company Indemnified Person fully apprised at all times as to the status of the defense or any settlement negotiations with respect thereto. No indemnifying party shall be liable for any settlement of any action, claim or proceeding effected without its prior written consent; provided, however, that the indemnifying party shall not unreasonably withhold, delay or condition its consent. No indemnifying party shall, without the prior written consent of the Investor Indemnified Person or Company Indemnified Person, as the case may be, which consent shall not be unreasonably withheld, conditioned or delayed, consent to entry of any judgment or enter into any settlement or other compromise which does not include as an unconditional term thereof the giving by the claimant or plaintiff to such Investor Indemnified Person or Company Indemnified Person of a full and unconditional release from all liability in respect to such claim or litigation. Following indemnification as provided for hereunder, the indemnifying party shall be subrogated to all rights of the Investor Indemnified Person or Company Indemnified Person with respect to all third parties, firms or corporations relating to the Claim(s) for which indemnification has been made. The failure to deliver written notice to the indemnifying party within a reasonable time of the commencement of any such Claim shall not relieve such indemnifying party of any liability to the Investor Indemnified Person or Company Indemnified Person under this Section 6, except to the extent that the indemnifying party is prejudiced in its ability to defend such Claim.
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(d) The indemnification required by this Section 6 shall be made by periodic payments of the amount thereof during the course of the investigation or defense, as and when bills are received or Indemnified Damages are incurred.
(e) The indemnity agreements contained herein shall be in addition to (i) any cause of action or similar right of the Investor Indemnified Person or Company Indemnified Person against the indemnifying party or others and (ii) any liabilities the indemnifying party may be subject to pursuant to the law.
7. CONTRIBUTION.
To the extent any indemnification by an indemnifying party is prohibited or limited by law, the indemnifying party agrees to make the maximum contribution with respect to any amounts for which it would otherwise be liable under Section 6 to the fullest extent permitted by law; provided, however, that: (i) no seller of Registrable Securities guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any seller of Registrable Securities who was not guilty of fraudulent misrepresentation and (ii) contribution by any seller of Registrable Securities shall be limited in amount to the net amount of proceeds received by such seller from the sale of such Registrable Securities.
8. REPORTS UNDER THE EXCHANGE ACT.
With a view to making available to the Investor the benefits of Rule 144 promulgated under the Securities Act or any similar rule or regulation of the SEC that may at any time permit the Investor to sell securities of the Company to the public without registration, and as a material inducement to the Investor’s purchase of the Promissory Notes, the Company represents, warrants, and covenants to the following:
(a) The Company is subject to the reporting requirements of section 13 or 15(d) of the Exchange Act and has timely filed all required reports under section 13 or 15(d) of the Exchange Act during the 12 months prior to the date hereof (or for such shorter period that the issuer was required to file such reports), other than Form 8-K reports.
(b) During the Registration Period, the Company shall file with the SEC in a timely manner all required reports under section 13 or 15(d) of the Exchange Act (it being understood that nothing herein shall limit the Company’s obligations under the Purchase Agreement) and such reports shall conform to the requirement of the Exchange Act and the SEC for filing thereunder.
(c) The Company shall furnish to the Investor so long as such Investor owns Registrable Securities, promptly upon request, (i) a written statement by the Company that it has complied with the reporting requirements of Rule 144, (ii) a copy of the most recent annual or quarterly report of the Company and such other reports and documents so filed by the Company, and (iii) such other information as may be reasonably requested to permit the Investor to sell such securities pursuant to Rule 144 without registration.
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9. AMENDMENT OF REGISTRATION RIGHTS.
Provisions of this Agreement may be amended and the observance thereof may be waived (either generally or in a particular instance and either retroactively or prospectively) only with the written consent of the Company and the Investor. Any amendment or waiver effected in accordance with this Section 9 shall be binding upon each of the Investor and the Company. No such amendment shall be effective to the extent that it applies to fewer than all of the holders of the Registrable Securities. No consideration shall be offered or paid to any Person to amend or consent to a waiver or modification of any provision of any of this Agreement unless the same consideration also is offered to all of the parties to this Agreement.
10. MISCELLANEOUS.
(a) A Person is deemed to be a holder of Registrable Securities whenever such Person owns or is deemed to own of record such Registrable Securities or owns the right to receive the Registrable Securities. If the Company receives conflicting instructions, notices or elections from two (2) or more Persons with respect to the same Registrable Securities, the Company shall act upon the basis of instructions, notice or election received from the registered owner of such Registrable Securities.
(b) Neither this Agreement nor any rights or obligations of the Investor or the Company hereunder may be assigned to any other Person, except for assignments by the Investor to any of its affiliates.
(c) Any notices, consents, waivers or other communications required or permitted to be given under the terms of this Agreement must be in writing and will be deemed to have been delivered pursuant to the notice provisions of the Purchase Agreement or to such other address and/or electronic mail address and/or to the attention of such other person as the recipient party has specified by written notice given to each other party five (5) days prior to the effectiveness of such change. Written confirmation of receipt (A) given by the recipient of such notice, consent, waiver or other communication, (B) electronically generated by the sender’s email service provider containing the time, date, and recipient email or (C) provided by a courier or overnight courier service shall be rebuttable evidence of personal service, receipt by email or receipt from a nationally recognized overnight delivery service in accordance with this section.
(d) Failure of any party to exercise any right or remedy under this Agreement or otherwise, or delay by a party in exercising such right or remedy, shall not operate as a waiver thereof.
(e) The laws of the State of New York shall govern all issues concerning the relative rights of the Company and the Investor as its stockholder. All other questions concerning the construction, validity, enforcement and interpretation of this Agreement shall be governed by the internal laws of the State of New York, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of New York or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of New York. Each party hereby irrevocably submits to the non-exclusive jurisdiction of the Supreme Court of the State of New York, sitting in New York County, New York and federal courts for the Southern District of New York sitting New York, New York, for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein, and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is brought in an inconvenient forum or that the venue of such suit, action or proceeding is improper. Each party hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof to such party at the address for such notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law. If any provision of this Agreement shall be invalid or unenforceable in any jurisdiction, such invalidity or unenforceability shall not affect the validity or enforceability of the remainder of this Agreement in that jurisdiction or the validity or enforceability of any provision of this Agreement in any other jurisdiction. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION HEREWITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.
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(f) This Agreement shall inure to the benefit of and be binding upon the permitted successors and assigns of each of the parties hereto.
(g) The headings in this Agreement are for convenience of reference only and shall not limit or otherwise affect the meaning hereof.
(h) This Agreement may be executed in identical counterparts, both of which shall be considered one (1) and the same agreement and shall become effective when counterparts have been signed by each party and delivered to the other party. Electronically scanned and delivered signatures (including any electronic signature covered by the U.S. federal ESIGN Act of 2000, Uniform Electronic Transactions Act, the Electronic Signatures and Records Act or other applicable law, e.g., www.docusign.com), including by e-mail attachment, shall be deemed to have been duly and validly delivered and be valid and effective for all purposes of this Agreement.
(i) Each party shall do and perform, or cause to be done and performed, all such further acts and things, and shall execute and deliver all such other agreements, certificates, instruments and documents, as the other party may reasonably request in order to carry out the intent and accomplish the purposes of this Agreement and the consummation of the transactions contemplated hereby.
(j) The language used in this Agreement will be deemed to be the language chosen by the parties to express their mutual intent and no rules of strict construction will be applied against any party.
(k) This Agreement is intended for the benefit of the parties hereto and their respective permitted successors and assigns, and is not for the benefit of, nor may any provision hereof be enforced by, any other Person.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the Investor and the Company have caused their signature page to this Registration Rights Agreement to be duly executed as of the date first above written.
| COMPANY: | |||
| HEALTH IN TECH, INC. | |||
| By: | |||
| Name: | |||
| Title: | |||
| INVESTOR: | |||
| YA II PN, Ltd. | |||
| By: | Yorkville Advisors Global, LP | ||
| Its: | Investment Manager | ||
| By: | Yorkville Advisors Global II, LLC | ||
| Its: | General Partner | ||
| By: | |||
| Name: | Matthew Beckman | ||
| Title: | Manager | ||
[Signature Page to Registration Rights Agreement]
Exhibit 10.3
GLOBAL GUARANTY AGREEMENT
This Guaranty (as amended, amended and restated, supplemented or otherwise modified from time to time, this “Guaranty”) is made as of August __, 2026, by the entities listed on Schedule I attached hereto and any subsequent party that may join in this Guaranty (collectively, the “Guarantors”) in favor of YA II PN, LTD. (“YA II” or the “Creditor”), with respect to all obligations of HEALTH IN TECH, INC., a Nevada corporation (the “Debtor”) owed to the Creditor.
RECITALS
WHEREAS, the Creditor and the Debtor have entered into a Standby Equity Purchase Agreement (as amended, amended and restated, supplemented or otherwise modified from time to time, the “Agreement”) dated as of August 12, 2026, pursuant to which the Creditor shall provide advances to the Debtor (the “Pre-Paid Advances”) to be evidenced by promissory notes issued to the Creditor (the “Promissory Notes”), pursuant to and upon the terms and conditions of the Agreement, in the aggregate amount of up to $15,000,000;
WHEREAS, it is a condition precedent to the Creditor’s obligation to provide the Pre-Paid Advances to the Debtor that each Guarantor guarantees all of the Debtor’s obligations under the Agreement, the Pre-Paid Advances issued thereunder, each Promissory Note evidencing the Pre-Paid Advances, and all other instruments, agreements or other items executed or delivered (collectively, the “Transaction Documents”) by the Debtor to the Creditor in connection with or related to the Agreement. The Creditor is only willing to enter into the Agreement and provide the Pre-Paid Advances to the Debtor if each Guarantor agrees to execute and deliver to the Creditor this Guaranty; and
WHEREAS, the Guarantors are, or will be at the time of making the Pre-Paid Advances, wholly-owned, or majority-owned subsidiaries of the Debtor and will benefit, directly or indirectly, from the Debtor entering into the Agreement, the making of the Pre-Paid Advances, and other Transaction Documents and extensions of credit the Creditor will make to Debtor;
NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, each Guarantor covenants and agrees as follows:
1. Guaranty of Payment and Performance. Each Guarantor, jointly and severally, hereby guarantees to the Creditor the full, prompt and unconditional payment when due (whether at maturity, by acceleration or otherwise), and the performance, of all liabilities, agreements and other obligations of the Debtor to the Creditor contained in the Transaction Documents (all the foregoing, collectively, the “Obligations”). This Guaranty is an absolute, unconditional and continuing guaranty of the full and punctual payment and performance of the Obligations and not of their collectability only and is in no way conditioned upon any requirement that the Creditor first attempt to collect or require the performance of any of the Obligations from the Debtor or resort to any security or other means of obtaining their payment. Should the Debtor default in the payment or performance of any of the Obligations, the obligations of the Guarantors hereunder shall become immediately due and payable to the Creditor, without demand or notice of any nature, all of which are expressly waived by the Guarantors.
2. Limited Guaranty. The liability of the Guarantors hereunder shall be limited to the amount of the Obligations due to the Creditor.
3. Waivers by Guarantors; Creditor’s Freedom to Act. Each Guarantor hereby agrees that the Obligations will be paid and performed strictly in accordance with their terms regardless of any law, regulation or order now or hereafter in effect in any jurisdiction affecting any of such terms or the rights of the Creditor with respect thereto. Each Guarantor waives presentment, demand, protest, notice of acceptance, notice of Obligations incurred and all other notices of any kind, all defenses that may be available by virtue of any valuation, stay, moratorium law or other similar law now or hereafter in effect (other than payment in full of the Obligations), any right to require the marshalling of assets of the Debtor, and all suretyship defenses generally. Without limiting the generality of the foregoing, each Guarantor agrees to the provisions of any instrument evidencing, securing or otherwise executed in connection with any Obligation and agrees that the obligations of such Guarantor hereunder shall not be released or discharged, in whole or in part, or otherwise affected by (i) the failure of the Creditor to assert any claim or demand or to enforce any right or remedy against the Debtor; (ii) any extensions or renewals of, or alteration of the terms of, any Obligation or any portion thereof unless entered into by the Creditor; (iii) any rescissions, waivers, amendments or modifications of any of the terms or provisions of any agreement evidencing, securing or otherwise executed in connection with any Obligation unless entered into by the Creditor; (iv) the substitution or release of any entity primarily or secondarily liable for any Obligation; (v) the adequacy of any rights the Creditor may have against any collateral or other means of obtaining payment or performance of the Obligations; (vi) the impairment of any collateral securing the Obligations, including without limitation the failure to perfect or preserve any rights the Creditor might have in such collateral or the substitution, exchange, surrender, release, loss or destruction of any such collateral; (vii) failure to obtain or maintain a right of contribution for the benefit of such Guarantor; (viii) errors or omissions in connection with the Creditor’s administration of the Obligations (except behavior constituting bad faith); or (ix) any other act or omission that might in any manner or to any extent vary the risk of any Guarantor or otherwise operate as a release or discharge of any Guarantor, all of which may be done without notice to any Guarantor.
4. Unenforceability of Obligations Against Debtor. If for any reason the Debtor is under no legal obligation to discharge or perform any of the Obligations, or if any of the Obligations have become irrecoverable from the Debtor by operation of law or for any other reason, this Guaranty shall nevertheless be binding on the Guarantors to the same extent as if the Guarantors at all times had been the principal obligors on all such Obligations. In the event that acceleration of the time for payment of the Obligations is stayed upon the insolvency, bankruptcy or reorganization of the Debtor, or for any other reason, all such amounts otherwise subject to acceleration under the terms of any agreement evidencing, securing or otherwise executed in connection with any Obligation shall be immediately due and payable by the Guarantors.
5. Subrogation; Subordination. Until the payment and performance in full of all Obligations, the Guarantors shall not exercise any rights against the Debtor arising as a result of payment by the Guarantors hereunder, by way of subrogation or otherwise, and will not prove any claim in competition with the Creditor in respect of any payment hereunder in bankruptcy or insolvency proceedings of any nature; the Guarantors will not claim any set-off or counterclaim against the Debtor in respect of any liability of the Guarantors to the Debtor; and the Guarantors waive any benefit of and any right to participate in any collateral that may be held by the Creditor. The payment of any amounts due with respect to any indebtedness of the Debtor now or hereafter held by the Guarantors is hereby subordinated to the prior payment in full of the Obligations. Each Guarantor agrees that after the occurrence of any default in the payment or performance of the Obligations, the Guarantors will not demand, sue for or otherwise attempt to collect any such indebtedness of the Debtor to the Guarantors until the Obligations shall have been paid or performed in full. If, notwithstanding the foregoing sentence, the Guarantors shall collect, enforce or receive any amounts in respect of such indebtedness, such amounts shall be collected, enforced and received by the Guarantors as trustee for the Creditor and be paid over to the Creditor on account of the Obligations without affecting in any manner the liability of the Guarantors under the other provisions of this Guaranty.
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7. Termination; Reinstatement. This Guaranty is irrevocable and shall continue until such time as the Obligations have been indefeasibly paid or performed in full. This Guaranty shall be reinstated if at any time any payment made or value received with respect to an Obligation is rescinded or must otherwise be returned by the Creditor upon the insolvency, bankruptcy or reorganization of the Debtor, or otherwise, all as though such payment had not been made or value received.
8. Successors and Assigns. This Guaranty shall be binding upon each Guarantor, its successors and assigns, and shall inure to the benefit of and be enforceable by the Creditor and the Creditor’s shareholders, officers, directors, agents, successors and assigns.
9. Amendments and Waivers. No amendment or waiver of any provision of this Guaranty nor consent to any departure by any Guarantor therefrom shall be effective unless the same shall be in writing and signed by the Creditor. No failure on the part of the Creditor to exercise, and no delay in exercising, any right hereunder shall operate as a waiver thereof; nor shall any single or partial exercise of any right hereunder preclude any other or further exercise thereof or the exercise of any other right.
10. Notices. All notices and other communications called for hereunder to the Creditor or the Debtor shall be made in writing as provided in the Agreement. All notices and other communications called for hereunder to the Guarantors shall be made in writing as provided on Schedule I attached hereto or as the Guarantors may otherwise notify the Creditor.
11. Governing Law; Consent to Jurisdiction; Waiver of Jury Trial. This Guaranty is intended to take effect as a sealed instrument and shall be governed by, and construed in accordance with, the laws of the State of New York (excluding the laws applicable to conflicts or choice of law). Each Guarantor agrees that any suit for the enforcement of this Guaranty may be brought in the courts of the State of New York, New York County and consents to the non-exclusive jurisdiction of such court and to service of process in any such suit’s being made upon any Guarantor by mail at the address set forth on Schedule I hereto. Each Guarantor hereby waives any objection that it may now or hereafter have to the venue of any such suit or any such court or that such suit was brought in an inconvenient court. EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS GUARANTY OR THE TRANSACTIONS CONTEMPLATED HEREIN, THE PERFORMANCE THEREOF OR THE FINANCINGS CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTY HERETO HAVE BEEN INDUCED TO ENTER INTO THIS GUARANTY BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS PARAGRAPH.
12. Counterparts; Effectiveness. This Guaranty may be executed in identical counterparts, each of which shall be considered one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to the other party. Facsimile or other electronically scanned and delivered signatures (including any electronic signature covered by the U.S. federal ESIGN Act of 2000, Uniform Electronic Transactions Act, the Electronic Signatures and Records Act or other applicable law, e.g., www.docusign.com), including by e-mail attachment, shall be deemed to have been duly and validly delivered and be valid and effective for all purposes of this Guaranty.
[Rest of page intentionally left blank. Signature page follows.]
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IN WITNESS WHEREOF, each Guarantor has caused this Guaranty to be executed and delivered as a sealed instrument as of the date appearing on page one.
| Stone Mountain Risk, LLC | ||
| By: | ||
| Name: | ||
| Title: | ||
| International Captive Exchange, LLC | ||
| By: | ||
| Name: | ||
| Title: | ||
| Health Intelligence Card, LLC | ||
| By: | ||
| Name: | ||
| Title: | ||
| Title: | ||
[Signature Page to Global Guaranty Agreement]
Schedule I
The Guarantors
| Name | Jurisdiction of Formation | |
| Stone Mountain Risk, LLC | Delaware | |
| International Captive Exchange, LLC | Iowa | |
| Health Intelligence Card, LLC | Iowa |
To any Guarantor:
______
______
______
Creditor:
YA PN II, Ltd.
1012 Springfield Ave.
Mountainside, NJ 07092
Attn: Legal Department
E-mail: Legal@YorkvilleAdvisors.com
Exhibit 31.1
CERTIFICATION OF CHIEF EXECUTIVE OFFICER
PURSUANT TO RULE 13A-14(A) UNDER THE SECURITIES EXCHANGE ACT OF 1934,
AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Tim Johnson, certify that:
| 1. | I have reviewed this quarterly report on Form 10-Q of Health In Tech, Inc.; |
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
| 4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
| a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under my supervision, to ensure that material information relating to the registrant, is made known to us by others within those entities, particularly during the period in which this report is being prepared; and |
| b) | [Paragraph omitted pursuant to SEC Release Nos. 33-8238/34-47986 and 33-8392/334-49313]; and |
| c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report my conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
| d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
| 5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
| a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
| b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: August 13, 2026
| /s/ Tim Johnson | |
| Tim Johnson | |
| Chief Executive Officer and Director | |
| (Principal Executive Officer) |
Exhibit 31.2
CERTIFICATION OF CHIEF FINANCIAL OFFICER
PURSUANT TO RULE 13A-14(A) UNDER THE SECURITIES EXCHANGE ACT OF 1934
AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Julia (LinLin) Qian, certify that:
| 1. | I have reviewed this quarterly report on Form 10-Q of Health In Tech, Inc., |
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
| 4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
| a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under my supervision, to ensure that material information relating to the registrant, is made known to us by others within those entities, particularly during the period in which this report is being prepared; and |
| b) | [Paragraph omitted pursuant to SEC Release Nos. 33-8238/34-47986 and 33-8392/334-49313]; and |
| c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report my conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
| d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
| 5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
| a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
| b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: August 13, 2026
| /s/ Julia (LinLin) Qian | |
| Julia (LinLin) Qian | |
| Chief Financial Officer and Director | |
| (Principal Financial and Accounting Officer) |
Exhibit 32.1
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report on Form 10-Q of Health In Tech, Inc. (the “Company”) for the quarter ended June 30, 2026, as filed with the Securities and Exchange Commission (the “Report”), the undersigned, in the capacities and on the date indicated below, hereby certifies pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
| 1. | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
| 2. | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operation of the Company. |
Date: August 13, 2026
| /s/ Tim Johnson | |
| Tim Johnson | |
| Chief Executive Officer and Director | |
| (Principal Executive Officer) |
Exhibit 32.2
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report on Form 10-Q of Health In Tech, Inc. (the “Company”) for the quarter ended June 30, 2026, as filed with the Securities and Exchange Commission (the “Report”), the undersigned, in the capacities and on the date indicated below, hereby certifies pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
| 1. | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
| 2. | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operation of the Company. |
Date: August 13, 2026
| /s/ Julia (LinLin) Qian | |
| Julia (LinLin) Qian | |
| Chief Financial Officer and Director | |
| (Principal Financial and Accounting Officer) |