Annual Report for Fiscal Year Ending June 30, 2026 (Form 10-K)

Management's Discussion and Analysis of Financial Condition and Results of Operations.

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our financial statements and the related notes thereto and other financial information appearing elsewhere in this Annual Report In addition to historical financial information, the following discussion and analysis contains forward-looking statements that involve risks, uncertainties, and assumptions. Some of the numbers included herein have been rounded for the convenience of presentation. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of many factors, including those discussed under Part I. "Item 1A. Risk Factors" and elsewhere in this Annual Report.

Overview

FreeCast provides a white-label Platform-as-a-Service (PaaS) that enables companies with existing customers to offer their own branded entertainment and media hub. The platform brings together free and paid streaming, television (TV) and related services while allowing partners to maintain their brand and direct customer relationship. We currently earn revenue mainly from advertising, FAST services and subscriptions; our model is designed to add licensing, pay-per-view, connectivity and e-commerce revenue rather than depending primarily on owning expensive content and selling another consumer streaming subscription. We currently operate exclusively in the U.S., but see opportunities for expansion into international markets, by signing licensing agreements and collaborating with international Consumer Direct Platforms (CDPs). However, we can only take advantage of these opportunities if we have sufficient capital to do so, are able to recruit the necessary staff, and are able to expand our current infrastructure. We may also face additional challenges from new competitors that may be able to launch new businesses at relatively low cost, with consumers easily being able to shift spending from one provider to another. In order to combat this, we must continue to deliver a product that is more advanced than that of competitors.

For the year ended June 30, 2026, we reported total revenue of $710,882, comprising $385,602 of advertising revenue, $267,509 of FAST revenue - related parties, $56,311 of subscription revenue and $1,460 of other revenue. These activities include advertising campaigns, media planning and related media services; FAST channel buildout, production and platform distribution services; premium subscriptions; and product, licensing and referral arrangements. Our enterprise PaaS strategy seeks to expand platform deployments and monetization beyond this current revenue base. The six business-model categories describe revenue mechanisms and opportunities, not six separately reported current revenue streams or a measure of recurring enterprise platform revenue.

Primarily as a result of our shift to a free registration subscription service, we have been able to increase the number of subscribers during our most recent 12-month period. Our subscriber numbers have increased from 975,501 on June 30, 2025, to 1,194,219 on June 30, 2026. Our revenue excluding Free Ad-Supported TV (FAST) Revenue (FAST Revenue was $267,509 and $221,894 for the year ended June 30, 2026, and 2025, respectively) and Ad Revenue (Ad Revenue was $385,602 and $271,638 for the year ended June 30, 2026, and 2025, respectively) per subscriber has decreased from $0.14 for the year ended June 30, 2025 compared to $0.05 for the year end June 30, 2026.

As of June 30, 2026, we had a cash balance of $8,919,833 and a working capital surplus of $1,964,398. We plan to raise additional equity financing as well. However, we cannot provide any assurance that additional equity financing will be available on terms that are acceptable to us, or at all.

Components of our Operating Results

Revenue

Subscription (Membership) Revenue

In light of shifting consumer behaviors and constraints on big-box retail sales (especially during the pandemic), we refined our business model in 2022 to focus on B2B2C distribution. This approach leverages partnerships with multi-dwelling unit operators, hospitality providers, broadband carriers, and device manufacturers, each channel granting us immediate, large-scale user access. We believe that aligning with enterprise-level partners reduces our direct retail marketing costs, stabilizes recurring revenues, and extends the reach of our aggregator platform to tens of thousands of new users at once.

As a result, we no longer generate subscription revenue through renewal sales of Rabbit TV and Rabbit TV Plus, or through Select TV and Streaming TV Kits, which operated as the successor products to Rabbit TV and Rabbit TV Plus. In October 2022, our SelectTV.com paid subscription service and packaged SelectTV Streaming TV Kits were discontinued. We rebranded to the corporate namesake FreeCast.com and relaunched our SmartGuide as a free registration subscription service. SmartGuide is our internet distributed streaming media guide that searches and aggregates media content on the web and facilitates access to our customers through Wi-Fi-enabled devices that support streaming video.

We do, however, sell monthly subscriptions for premium content purchased through our SmartGuide for varying fees for different content. Revenue from such premium subscription fees is recognized on a gross basis over the service period as we are deemed to be the principal in the relationship with the end user. We control the content before transferring it to the end user and have latitude in establishing pricing. We both retransmit and "ingest" and distribute content for our Value Channels.

Subscription revenue is derived from online sales through search engine optimization, search engine marketing, various marketing advertising services, the utilization of resellers in the form of publishers that promote upcoming retail promotions and packages, as well as direct sales to subscribers of our Value Channels subscription service. Value Channels subscription contains 17 cable channels and sells on a monthly subscription or annual fee. Value Channels is integrated into the initial FreeCast.com free registration and then offered as an upgrade. Both FreeCast.com (free registration) and Value Channels are available in various streaming Smart TV models (Google TV's, Amazon Fire TV's, LG, Samsung, TCL, Sony, and others), plus Streaming Devices (Amazon Fire, Google ChromeCast, Apple TV), PC's/Laptops and mobile apps for Android and iOS devices.

Subscription revenue is recognized ratably on a straight-line basis over the duration of the subscription period, generally ranging from one month to five years. If the subscriber renews early, then the expiration date is extended by the renewal period, and the additional subscription fee is deferred and amortized over the additional months purchased by the subscriber. We no longer offer SelectTV lifetime subscriptions, which were initially deferred and recognized over a five-year period. All subscription fees are collected at the time of purchase.

FAST (Free Ad-Supported TV)

We provide FAST channel buildouts that include post-production editing, motion graphics, channel assembly and content acquisitions. We charge the customers based on time incurred for the services plus a reasonable margin in addition to any additional out of pocket cost incurred that is charged at cost to us. In addition, we split the advertising revenue. Revenue is recognized when services are performed. We charge a monthly platform fee for distributing the FAST channel on its platform. Revenue is recognized at the point in time when the content is available on the digital platform.

In June 2023, we entered into verbal arrangements with two related party entities, Test Drive Live Inc. and Celebrity Cigars, Inc. William A. Mobley, Jr. serves as the President of both companies and is the sole director for Celebrity Cigars. Mr. Mobley's son, Sean Mobley, is part of the management team of Celebrity Cigars. We provided FAST channel buildout services relating to the development and buildout of their respective channels. We also provide the platform on an ongoing basis for each company to stream their content. We charge each company a monthly fee based on a 15% or 30% markup of our cost of production, depending on the level of supervision required to provide our services, which include labor, rent, etc. We also charge for any out-of-pocket costs, which vary from month-to-month.

Ad Platform Revenue

We are an agent in transactions on our Ad Exchange platforms. We act as an intermediary between DSPs and non-owned and operated publishers by providing access to a platform that allows both parties to transact in the buying and selling of ad inventory. The transaction price is determined by a real-time auction, and the Company has no pricing discretion or obligation related to the fulfillment of the advertising delivery.

We generally invoice buyers at the end of each month for the full purchase price of ad impressions monetized in that month. Accounts receivables are recorded at the amount of gross billings for the amounts we are responsible for collecting, and accounts payable are recorded at the net amount payable to suppliers. Accordingly, both accounts receivable and accounts payable appear large in relation to revenue reported on a net basis.

Ad Agency Revenue

We earn revenue from direct client service contracts for marketing and campaign execution, such as the Launch That agreement. These contracts typically involve two distinct phases:

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Phase 1: Discovery and Development Services (data research, audience analysis, creative development). Revenue is recognized over time using an input method based on the proportion of costs incurred relative to total estimated costs for Phase 1.

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Phase 2: Test Media Distribution Services (media placement, outreach, KPI reporting). Revenue is recognized upon delivery of the performance evaluation report specified in the contract.

Revenue from such contracts is presented separately from "Other Revenue" due to its materiality and distinct nature.

Deferred Revenue - Ad Agency Revenue

For the Ad Agency revenue stream, we provide demand partners with access to the FreeCast Ad Platform, enabling real-time bidding on advertising inventory. Revenue is recognized at a point in time when a transaction is completed-specifically, when a bid is won and the client's purchase occurs through the platform. Amounts invoiced in advance of the completion of these transactions are recorded as deferred revenue and recognized as revenue when our performance obligation is satisfied.

Advertising & Media Revenue

The Company generates Advertising & Media Revenue from: (i) direct advertising campaign arrangements in which customers purchase advertising inventory and promotional services through the Company's owned and operated streaming television, connected television ("CTV"), mobile, web and related digital media properties; and (ii) content distribution, channel promotion, audience development, carriage fee and advertising monetization arrangements involving third-party channel partners. Representative arrangements include LaunchThat, Del Air, NHK World-Japan and CCTV News Content Co., Ltd.

Revenue is generally recognized over time as advertising campaign delivery services, content distribution services, channel promotion services and audience development services are provided. Fixed campaign fees and carriage fees are recognized over the applicable service period, while revenue-sharing arrangements are recognized as the underlying advertising activities occur and become measurable.

Other Revenue

Other revenue consists primarily of licensing, referral fee, and other miscellaneous revenue streams. Revenue is recognized when the related performance obligations are satisfied in accordance with ASC 606. Other revenue was not material for the years ended June 30, 2026, and 2025.

Deferred Revenue

Deferred revenue consists principally of both prepaid but unrecognized subscription revenue and advertising fees received or billed in advance of the delivery or completion of the delivery of services. We may pay sales incentives, in cash or by issuing equity instruments, to distributors of our subscriptions. Such sales incentives are not recognized as deferred revenue. Rather, sales incentives are recognized in current operations when issued, regardless of amounts in deferred revenue, which may have resulted from the distributor's efforts. Deferred revenue consists primarily of subscriptions for multiple months purchased upfront and recognized ratably over the term of the subscription.

Cost of Revenue

Cost of revenue consists primarily of subscription costs and FAST streaming costs, such as third-party hosting costs, infrastructure costs and salaries and benefits related to employees for our customer support. We make payments to third-party ad servers in the period in which the advertising impressions are delivered, or click-through actions occur, and accordingly record this as a cost of revenue in the related period. Hosting costs consist of content streaming, maintaining our internet service and creating and serving advertisements through third-party ad servers. Cost of revenue also consists of FAST channel buildout costs such as the salaries and benefits related to employees, facility related expenses and information technology associated with supporting these buildouts.

Operating Expenses

Compensation and Benefits

Compensation and benefits consist primarily of employee-related costs, including salaries and benefits related to employees in finance, accounting, internal information technology and other administrative personnel and stock-based compensation.

Sales and Marketing

Sales and marketing consist primarily of employee-related costs, including salaries, commissions and benefits related to employees in sales, sales support and marketing departments. In addition, sales and marketing expenses include external sales and marketing expenses such as third-party marketing, TV Infomercials, branding, advertising, public relations expenses, commissions, facilities-related expenses, and infrastructure costs.

General and Administrative

General and administrative expenses include professional services costs for outside legal and accounting services, facilities-related expenses, travel costs, third party customer support, and credit card fees.

Year Ended June 30, 2026, Compared to Year Ended June 30, 2025

Revenue

Our primary sources of revenue are advertising revenue and FAST revenue. Additionally, we have several other revenue streams: subscription revenue and other revenue, which encompasses earnings from licensing and referral fees.

Subscription revenue decreased by 57.6%, or $76,639, to $56,311, in the year ended June 30, 2026, as compared to $132,950 for the year ended June 30, 2025. The decrease in subscription revenue is primarily attributable to our shift to a free registration subscription service that is supported with advertising revenue.

FAST revenue increased by 20.6%, or $45,615, to $267,509, in the year ended June 30, 2026, as compared to $221,894 for the year ended June 30, 2025. The increase was primarily due to higher production activity and induced related-party channel buildout services compared to the prior year. While we continued to provide platform distribution services, higher new channel buildouts were completed in fiscal year ended June 30, 2026, compared to fiscal year ended June 30, 2025, resulting in higher FAST revenue.

Ad revenue increased by 41.7% or $113,382 to $385,602, in the year ended June 30, 2026, as compared to $271,638 for the year ended June 30, 2025. The increase was primarily attributable to revenue generated from contracts secured during the fourth quarter of fiscal 2026, including revenue recognized under the Del Air agreement and new LaunchThat agreement.

We are strategically reinvesting in our proprietary Platform-as-a-Service (PaaS) infrastructure and broader ecosystem to enhance long-term enterprise value and deepen monetization opportunities for both us and our partners.

Our recent increase in advertising revenue is largely due to the platform integration stabilizing and revenue performance starting to better reflect the underlying economics of a vertically integrated advertising model, as we have secured new commercial relationships with major media spenders such as Launch That, NHK and Del-Air.

The connected TV (CTV) advertising ecosystem led by demand-side platforms like The Trade Desk is under scrutiny for its lack of transparency and complex fee structures. Advertisers struggle to trace how much of their spending actually reaches publishers, with multiple intermediaries taking cuts along the programmatic supply chain. This opacity, combined with concerns about data quality and measurement consistency, has put pressure on traditional ad tech platforms to justify their value. As brands demand clearer attribution and more efficient media buying, the perceived inefficiencies of third-party platforms are becoming a growing point of friction.

At the same time, major streaming platforms such as Roku, Netflix and Amazon are building and expanding their own first-party advertising ecosystems. By owning both the content distribution and ad inventory, these companies can offer advertisers more direct access to audiences, better data integration and improved transparency. This vertical integration reduces reliance on external intermediaries and allows streaming providers to capture a greater share of ad revenue while delivering more measurable outcomes for brands.

In this shifting landscape, our Zer0Gap Ads strategy positions us to benefit long term by aligning with this broader industry trend. By creating and recently launching our own internal ad platform, we able to directly serve advertising across our network of content partners while also enabling co-branded telecom and MDU partners to monetize their customer bases within the same ecosystem. This dual-sided approach enhances revenue potential, strengthens partner relationships and provides greater control over data and pricing. As transparency and efficiency become critical differentiators in CTV advertising, our integrated model could offer a more streamlined and scalable alternative to traditional programmatic platforms.

Other revenue decreased by 12.4% or $207, to $1,460 in the year ended June 30, 2026, as compared to $1,667 for the year ended June 30, 2025.

Cost of Revenue

Cost of revenue decreased by 63.2%, or $219,025, to $127,556 in the year ended June 30, 2026, as compared to $346,581 for the year ended June 30, 2025. The decrease in cost of revenue is primarily attributed to lower platform delivery costs and lower content-related costs.

Operating Expenses

Operating expenses decreased by 5.52%, or $775,230 to $13,261,776 in the year ended June 30, 2026, as compared to $14,037,006 for the year ended June 30, 2025. The change in operating expenses is attributed to a $1,238,050 decrease in general and administrative expenses, a $195,168 decrease in sales and marketing expenses, partially offset by an increase in compensation and benefits expense of $657,988. The increase in compensation and benefits was primarily the result of Maxim partners stock-based compensation. The decrease in general and administrative expenses was primarily the result of decreased website development and professional fees.

Other (Expense) Income

Other expense was $366,349, for the year ended June 30, 2026, as compared to other expense of $310,510 for the year ended June 30, 2025. The change was principally caused by an increase in interest expense of $56,028.

Liquidity and Capital Resources

Since inception, we have financed our operations from a combination of:

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issuance and sales of our Class A common stock;

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issuance of notes payable with related and non-related parties;

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issuance of convertible notes payable with related and non-related parties;

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borrowing under our revolving convertible notes payable with related party;

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cash advances from related parties; and

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cash generated from operations.

We have experienced operating losses since our inception and had a total accumulated deficit of $219,691,498 as of June 30, 2026. We expect to incur additional costs and require additional capital as we continue to implement our expansion plan. During the year ended June 30, 2026, and 2025, our cash used in operations was $10.1 million and $12.3 million, respectively.

Our primary short-term cash requirements are to fund working capital, lease obligations and short-term debt, including current maturities of long-term debt. Working capital requirements can vary significantly from period to period, particularly as a result of additional development expenses.

Our ability to fund our cash needs will depend, in part, on our ability to generate cash in the future, which depends on future financial results. Our future results are subject to general economic, financial, competitive, legislative and regulatory factors that may be outside of our control. Our future access to, and the availability of credit on acceptable terms and conditions, is impacted by many factors, including capital market liquidity and overall economic conditions.

On July 2, 2026, we completed a private placement financing that generated aggregate gross proceeds of approximately $23.7 million and net proceeds of approximately $22.3 million after placement agent commissions and offering costs

Based on our current operating plan and available cash resources, including the proceeds received from the private placement financing, management believes that we have sufficient liquidity to fund our operations, planned capital expenditures and working capital requirements for at least the next twelve months.

Our future liquidity requirements will depend on numerous factors, including revenue growth, operating expenses, capital expenditures, strategic investments and general economic conditions. While we may seek additional financing opportunities in the future to support growth initiatives, we believe our current cash resources are sufficient to meet our anticipated operating needs for the foreseeable future.

Equity Line of Credit

On December 8, 2025, we entered into an Equity Purchase Agreement, which was subsequently amended on March 30, 2026, (together, the "EPA") with Amiens Technology Investments LLC, a Delaware limited liability company (the "Selling Shareholder"), pursuant to which the Selling Shareholder committed to purchase up to $50 million of shares of our Class A common stock (the "ELOC Shares" and such financing, the "ELOC Financing"), subject to certain limitations and conditions set forth in the EPA. During the Commitment Period (as defined in the EPA), we may from time to time, by written notice delivered by us to the Selling Shareholder (each, an "Advance Notice"), direct the Selling Shareholder to purchase a number of shares of our Class A common stock up to the Maximum Advance Amount (as defined in the EPA) as set forth in the Advance Notice, subject to limitations and adjustments as set forth in the EPA. Advances under the agreement are conditioned on the Company's compliance with certain customary conditions, such as timely filing of required reports and maintaining its listing on a national securities exchange. Shares issued pursuant to an advance under the agreement are priced at 95% of the VWAP (volume-weighted average price) for the ten-trading day period immediately following the advance request.

We have filed a registration statement, which has been declared effective as of May 6, 2026, that registers the resale of up to 5,750,000 shares of our Class A common stock, based on the assumption that we may deliver Advance Notices to the Selling Shareholder for an aggregate of $21,735,000 under the EPA at an assumed purchase price of $3.78 per share. The actual number of shares of our Class A common stock issuable by us in connection with the ELOC Financing will vary depending on the then-current market price of the shares of our Class A common stock sold to the Selling Shareholder pursuant to the EPA and we expect that the number of shares currently registered will not be sufficient to register the full $50 million facility in the ELOC Financing and the ELOC Commitment Shares (as defined herein). We may be required to file one or more additional registration statements in order to deliver future Advance Notices to the Selling Shareholder to access the full $50 million commitment under the EPA.

As consideration for the Selling Shareholder's commitment to purchase the ELOC Shares in accordance with the EPA, we agreed to pay a commitment fee in an amount equal to $750,000, by the issuance to the Selling Shareholder of a number of shares of Class A common stock (the "ELOC Commitment Shares") as follows: (1) one-third of the ELOC Commitment Shares are to be issued to the Selling Shareholder on the occurrence of the first closing under the EPA; (2) one-third of the ELOC Commitment Shares are to be issued to the Selling Shareholder on the date the Selling Shareholder has purchased an aggregate of $15 million of ELOC Shares; and (3) the remaining one-third of the ELOC Commitment Shares are to be issued to the Selling Shareholder on the date the Selling Shareholder has purchased an aggregate of $30 million of ELOC Shares. The number of ELOC Commitment Shares issued to the Selling Shareholder on each required date will be equal to $250,000 divided by the lower of: (i) $10.00; and (ii) the lowest daily VWAP (as defined in the EPA) of our Class A common stock during the five trading days immediately preceding the applicable issuance due date.

We will not receive any of the proceeds from the resale or other disposition of the shares of our Class A common stock by the Selling Shareholder; however, we may receive gross proceeds of up to $50 million from the sale of the ELOC Shares from time to time, in our discretion, over a 36-month period. The 36-month period began on March 11, 2026, and ends on April 1, 2029.

We have the right to control the timing and amount of any sales of shares of our Class A common stock to the Selling Shareholder under the EPA, subject to certain limitations described in the EPA. We will bear all fees and expenses incident to our obligation to register the offer and sale of the shares of Class A common stock. The Selling Shareholder has no right to require us to sell any shares of our Class A common stock under the EPA and has no obligation to purchase shares unless and until we deliver a valid Advance Notice in accordance with the EPA, at which time, subject to the terms and conditions of the EPA, the Selling Shareholder is contractually obligated to purchase the applicable shares.

Consistent with the applicable Nasdaq listing rules, the aggregate number of shares of our Class A common stock that we may issue to the Selling Shareholder under the EPA may not exceed 19.99% of the shares of Class A common stock issued and outstanding as of the execution date of the EPA (the "Exchange Cap"), unless we first obtain shareholder approval to issue shares of our Class A common stock in excess of the Exchange Cap in accordance with applicable Nasdaq listing rules.

Additionally, we may not direct the Selling Shareholder to purchase any shares of our Class A common stock under the EPA if such purchase, when aggregated with all other shares of our Class A common stock then owned by the Selling Shareholder and its affiliates beneficially, would result in the Selling Shareholder and its affiliates beneficially owning (on an aggregated basis) more than 4.99% of the then outstanding voting power or number of shares of our Class A common stock; provided that, Selling Shareholder may increase or decrease this ownership limitation, upon notice to us, which notice for any increase will not be effective until the 61st day following the date such notice is delivered, not to exceed 9.99% of the number of shares of our Class A common stock outstanding immediately after giving effect to the issuance of shares of our Class A common stock held by the Selling Shareholder.

The EPA contains customary representations, warranties, conditions and indemnification obligations of the parties. We have the right to terminate the EPA at any time effective five trading days after providing written notice to the Selling Shareholder, at no cost or penalty, provided that there are no outstanding Advance Notices, the shares of Class A common stock under which have yet to be issued, and we have paid all amounts owed to the Selling Shareholder pursuant to the EPA. We are required to use commercially reasonable efforts to continuously maintain the effectiveness of the registration statement until all of the Commitment Shares and the shares of our Class A common stock to be issued from time to time under the EPA pursuant to an Advance Notice have been sold or may be sold without restriction pursuant to Rule 144.

For additional information regarding the EPA, see "Description of ELOC Financing."

Convertible Note Payable - Related Party

In June 2016, William A. Mobley, Jr., our founder, Chief Executive Officer and Chairman, loaned us $111,000, at an interest rate of 12% per annum, and due and payable at June 30, 2025. The note was convertible into shares of our Class B common stock at a conversion price of $0.50 per share. The note was converted on March 29, 2024. As of March 29, 2024, and June 30, 2023, accrued interest charges related to this loan were $25,020 and $19,003, respectively. On March 29, 2024, the outstanding principal and accrued interest balance of $92,068 was converted into 184,136 shares of our Class B common stock.

On May 3, 2024, we signed a convertible promissory note with Nextelligence in the principal amount of $1,000,000. Outstanding principal accrued interest at 12% per annum and was due and payable no later than May 3, 2025. In lieu of repayment, at Nextelligence's option, all or part of the outstanding principal and accrued interest was convertible into shares of our Class A common stock at a conversion price of $8.00 per share. Between May 30, 2024, and June 26, 2024, we borrowed an additional $1,075,000 from Nextelligence. On July 1, 2024, we repaid $1,075,000 on the convertible promissory note with related party Nextelligence. Between October 31, 2024, and December 11, 2024, we borrowed an additional $1,395,000 from Nextelligence. On December 13, 2024, we renewed and modified the May 3, 2024, note to include the additional loans. Between December 31, 2024, and June 3, 2025, we borrowed an additional $1,557,000 and made payments of $150,000 to Nextelligence. On July 26, 2025, Nextelligence converted the outstanding principal and accrued interest balance of $4,076,051 into 509,507 shares of our Class A common stock.

Between October 9, 2025, and November 21, 2025, Nextelligence, a related party, majority owned by our CEO, provided aggregate funding to us totaling $1,500,000. Of this amount, $191,023 was remitted by Nextelligence on behalf of Celebrity Cigars, Inc. and Test Drive Live Inc. to fully satisfy their outstanding accounts receivable balances with the Company. As these entities are under common control, Nextelligence agreed to assume the obligations of both Celebrity Cigars, Inc. and Test Drive Live Inc. The remaining $1,308,977 was recorded as a revolving convertible note payable to Nextelligence, for a total of $1,308,977. The Company and Nextelligence entered into an agreement on November 21, 2025, to place terms on this revolving convertible note payable. The new outstanding revolving convertible note payable has an interest rate of 12%, a maturity date of June 30, 2026, and is convertible at Nextelligence's discretion for $8 per share of Class A common stock. Additionally, the agreement capitalized all unpaid accrued interest as of November 21, 2025, for $6,575, which resulted in an "original principal balance" of $1,315,552.

On April 20, 2026, the Company renewed and modified its revolving convertible promissory note with Nextelligence, Inc, a related party majority owned by the Company's Chief Executive Officer. The renewed note bears interest at 12% per annum, matures on June 30, 2027, and is convertible at the holder's option into shares of the Company's Class A common stock at a conversion price equal to the closing price of the Company's Class A common stock on the Nasdaq Global Market on the most recent trading day before conversion. The Company accounted for the renewal as a debt modification. The Company determined that the embedded conversion feature does not require bifurcation as a derivative liability because the feature settles a fixed monetary amount of debt in shares at contemporaneous market value.

Between the date of the executed agreement on November 21, 2025 and June 30, 2026, the Company has received an additional $6,127,951. Additionally, Nextelligence elected to convert a total of $3,764,052 into common stock throughout the period. As of June 30, 2026, the total outstanding principal is $3,679,451 and the accrued interest balance is $256,111, which is recorded within Accounts payable and accrued expenses - related party in the financial statements, for a total outstanding balance of $3,945,562.

Revolving Convertible Note Payable - Related Party

On July 1, 2018, we signed a revolving convertible note agreement with Nextelligence, which is a related party that is majority owned and controlled by William A. Mobley, Jr., which was amended and restated as of July 2, 2018, for an amount up to $1,000,000; with any borrowings on this loan being at our complete discretion. Outstanding principal accrued interest at 12% per annum and was due and payable on July 1, 2020. In lieu of repayment, at Nextelligence's option, all or part of the outstanding principal and accrued interest was convertible into shares of our Class A common stock at a conversion price of $0.50 per share. The loan matured on July 1, 2020, was in default and remained as an on-demand liability of ours until June 30, 2021. On June 30, 2021, we entered into a new revolving convertible promissory note with Nextelligence for an amount up to $2,500,000; with any borrowings on this loan being at our complete discretion. Outstanding principal accrued interest at 12% per annum. The borrowing limit was increased to $6,000,000 pursuant to a first amendment to the note dated June 13, 2022. Pursuant to a second amendment to the note dated July 17, 2023, the borrowing limit was increased to $10,000,000 and the maturity date extended to June 30, 2025. In lieu of repayment, at Nextelligence's option, all or part of the outstanding principal and accrued interest was convertible into shares of our Class A common stock at a conversion price of $0.50 per share. On March 29, 2024, Nextelligence converted the principal of $13,139,473 and accrued interest of $1,607,952, a total of $14,747,425, into 29,494,851 shares of our Class A common stock.

Notes Payable

On March 12, 2026, we entered into an agreement with Capital Premium Financing to provide financing in an aggregate amount of $143,949 for the insurance premium associated with a D&O policy. The policy commenced March 12, 2026, and provided coverage for the next 12 months, expiring March 12, 2027. The loan bears interest at a 13.95% rate per annum. We are required to pay monthly principal and interest of approximately $24,977 paid over 6 months, with the final payment on September 12, 2026.

Notes Payable - Due to John Francis

During 2026, our automatic payment for a monthly insurance premium in the amount of $26,232 was returned due to insufficient funds. To prevent a lapse in coverage and avoid potential late fees, John Francis, the Company's insurance agent, remitted the payment on our behalf. As a result, we recorded a payable to John Francis of $26,232 as of June 30, 2026. The amount is non-interest bearing, unsecured, and due on demand. The full principal balance was recorded as Notes payable - current on the balance sheet.

PIPE Financing

The Company entered into securities purchase agreements with accredited investors pursuant to a private placement financing subsequent to year-end. However, the financing provided approximately $8.0 million of net proceeds related to early deposits during fiscal 2026, which were recorded as common stock subscriptions as of June 30, 2026. The proceeds were used to support working capital and general corporate purposes and significantly enhanced the Company's liquidity position.

The private placement subsequently closed on July 2, 2026, resulting in aggregate gross proceeds of approximately $23.7 million before placement agent commissions and offering expenses. After deducting placement agent commissions and offering costs, the Company received approximately $22.3 million of net proceeds, of which approximately $14.0 million was received after year-end.

Warrant Modification

Effective as of June 15, 2023, we authorized and approved: (i) the reissuance of 38 expired warrants held by non-employees and 2 expired warrants held by an employee to purchase an aggregate of 7,637,962 shares of our Class A common stock, at a purchase prices from $0.50 to $8.00 per share, all of which had expired without being exercised; and (ii) the modification of 31 outstanding warrants held by non-employees and 1 warrant held by an employee to purchase an aggregate of 4,105,625 shares of our Class A common stock, at a purchase prices from $3.50 to $6.00 per share, that by their terms will expire if not exercised on or prior to dates ranging from February 10, 2024 to September 30, 2025. We reissued the Expired Warrants and modified the Reissued Warrants by extending the expiration date to December 31, 2025, and maintaining all other terms in the original warrant agreements. All outstanding warrants expired unexercised at the end of the day on December 31, 2025.

However, all warrants that expired unexercised on December 31, 2025, were reissued. Effective as of April 8, 2026, we authorized and approved the reissuance of warrants to purchase an aggregate of 6,743,587 shares of our Class A common stock held by non-employees ("Reissued Warrants"). The Reissued Warrants were issued to the same holders of previously issued warrants that had expired unexercised on December 31, 2025. The Reissued Warrants had an exercise price of $4.25 per share, were immediately exercisable upon issuance and were scheduled to expire on May 15, 2026. The Reissued Warrants required cash exercise and did not permit cashless exercise.

Effective as of May 15, 2026, we modified the Reissued Warrants by reducing the exercise price from $4.25 per share to $1.33 per share and extending the expiration date from May 15, 2026, to May 22, 2026, while maintaining all other terms of the original warrant agreements (the "Warrant Modification"). During May 2026, warrants to purchase 250,000 shares of our Class A common stock were exercised at the modified exercise price. The remaining warrants expired unexercised at the end of the day on May 22, 2026.

The value of the reissuance of the Reissued Warrants was calculated using the Black-Scholes-Merton option pricing model. The fair value of the Reissued Warrants as of April 8, 2026, was calculated at $9,550,942. The incremental fair value attributable to the Warrant Modification, which was measured at the amount equal to the change in fair value of the warrants immediately before and immediately after the Warrant Modification, was calculated at $1,860,556. The fair value of the warrants immediately before the Warrant Modification was determined to be $0 because the warrants were set to expire on the amendment day. Accordingly, the aggregate fair value attributable to the reissuance and subsequent modification was $11,411,498.

The aggregate fair value attributable to the reissuance and subsequent modification of the warrants, all of which were held by non-employees, was treated as a deemed dividend and is reflected as "Deemed dividend on warrant reissuance and modification" in the accompanying statement of operations. Accordingly, the reissuance and subsequent modification were recorded as an increase in additional paid-in capital with a corresponding decrease to retained earnings.

We utilized the closing market price of our Class A common stock to determine its fair value as of the respective measurement dates. The fair value of a share of our Class A common stock was $4.08 as of April 8, 2026, and $1.44 as of May 15, 2026. The significant inputs used to value the Reissued Warrants as of April 8, 2026, included expected volatility of 292.90%, an expected term of approximately 0.10 years, a risk-free interest rate of 3.67% and an expected dividend yield of 0%. The significant inputs used to measure the incremental fair value attributable to the Warrant Modification as of May 15, 2026, included expected volatility of 284.21%, expected terms of approximately 0 years immediately before the modification and approximately 0.019 years immediately after the modification, a risk-free interest rate of 3.71% and an expected dividend yield of 0%.

The Black-Scholes-Merton option pricing model included the following assumptions in determining the fair value attributable to the warrant reissuance effective April 8, 2026:

		Immediately
		Before				After
Assumptions:
Class A common stock fair value		$	4.08			$	4.08
Risk-free interest rate			3.67	%			3.67	%
Expected dividend yield			0	%			0	%
Expected volatility			292.9	%			292.9	%
Expected life (in years)			0.00				0.10

The Black-Scholes-Merton option pricing model included the following assumptions in determining the incremental fair value attributable immediately before and after the Warrant Modification effective May 15, 2026:

		Immediately
		Before				After
Assumptions:
Class A common stock fair value		$	1.44			$	1.44
Risk-free interest rate			3.71	%			3.71	%
Expected dividend yield			0	%			0	%
Expected volatility			284.21	%			284.21	%
Expected life (in years)			0.00				0.019

Cash Flows

The following tables provide detailed information about our net cash flows for the periods indicated:

		For the Year Ended June 30,
		2026				2025
Net cash used in operating activities		$	(10,029,873	)		$	(12,332,291	)
Net cash used in investing activities			(23,199	)			(26,882	)
Net cash provided by financing activities			18,423,657				7,690,009
Net increase (decrease) in cash and cash equivalents		$	8,370,584				(4,669,164	)

Operating Activities

For the year ended June 30, 2026, cash used in operating activities decreased by $2,302,418 or 18.7% due primarily to our decrease in net loss of $1,021,149, which included significant non-cash items such as $1,000,000 of stock issued for services, stock-based compensation expense of $259,354, operating lease expense of $93,643, depreciation and amortization expense of $17,650, expenses paid on behalf of the Company of $26,232, and bad debt expense of $1,632. In addition, changes in working capital increased by $1,004,685, primarily due to increases in accounts payable and accrued expenses of $1,443,938, accounts payable and accrued expenses-related party of $427,447, partially offset by decreases in deferred revenue and increases in prepaid assets.

Investing Activities

For the year ended June 30, 2026, cash used in investing activities decreased by $3,683 or 13.7%. The change was attributed to a decrease in the cash used to purchase property and equipment.

Financing Activities

For the year ended June 30, 2026, cash provided by financing activities increased by $10,733,647 or 139.6%. The change was primarily due to proceeds from Class A common stock subscriptions of $8,329,808, an increase in proceeds from convertible notes payable-related party of $4,491,503, a decrease in repayments on revolving convertible notes payable-related party of $1,161,445, and an increase in proceeds from warrant exercises of $332,500. These were partially offset by a decrease in proceeds from issuance of Class A common stock of $1,700,000, a decrease in proceeds from issuance of Class A common stock - related party of $1,500,000, an increase in transaction fees payable from Class A common stock subscriptions of $311,450, and an increase in repayments on notes payable of $70,705.

Critical Accounting Policies and Estimates

Our financial statements and accompanying notes have been prepared in accordance with GAAP applied on a consistent basis. The preparation of these financial statements requires us to make certain estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, the application of the stock split accounting as of the date these financial statements are ready to be issued and the reported amounts of revenue and expenses during the periods presented. We evaluate these estimates and assumptions on an ongoing basis. We base our estimates on the information currently available to us and on various other assumptions that we believe to be reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions. As of June 30, 2026, our previous estimates had not materially deviated from our results.

An accounting policy is deemed to be critical if it requires an accounting estimate to be made based on assumptions about matters that are highly uncertain at the time the estimate is made; if different estimates reasonably could have been used; or if changes in the estimate that are reasonably likely to occur periodically could materially impact the financial statements. While our significant accounting policies are described in more detail in the notes to our financial statements included in this Annual Report, we believe the following accounting policies to be critical to the estimates and assumptions used in the preparation of our financial statements.

Revenue Recognition

Revenue is recognized upon transfer of control of promised goods or services to customers in an amount that reflects the consideration we expect to receive in exchange for those goods or services, in accordance with ASC 606. Our contracts include various products or services or a combination of both, which are generally capable of being distinct and are accounted for as separate performance obligations. Our contracts may contain multiple distinct performance obligations.

The transaction price of a contract is estimated based on the expected value for which a significant reversal of revenue is not expected to occur. Stand-alone selling prices are generally determined based on prices charged to customers. In arrangements with multiple performance obligations, the estimated transaction price is allocated to each distinct performance obligation based on relative stand-alone selling price ("SSP").

Subscription (Membership) Revenue

In light of shifting consumer behaviors and constraints on big-box retail sales (especially during the pandemic), we refined our business model in 2022 to focus on B2B2C distribution. This approach leverages partnerships with multi-dwelling unit operators, hospitality providers, broadband carriers, and device manufacturers, each channel granting us immediate, large-scale user access. We believe that aligning with enterprise-level partners reduces our direct retail marketing costs, stabilizes recurring revenues, and extends the reach of our aggregator platform to tens of thousands of new users at once.

As a result, we no longer generate subscription revenue through renewal sales of Rabbit TV and Rabbit TV Plus, or through Select TV and Streaming TV Kits, which operated as the successor products to Rabbit TV and Rabbit TV Plus. In October 2022, our SelectTV.com paid subscription service and packaged SelectTV Streaming TV Kits were discontinued. We rebranded to the corporate namesake FreeCast.com and relaunched our SmartGuide as a free registration subscription service. SmartGuide is our internet distributed streaming media guide that searches and aggregates media content on the web and facilitates access to our customers through Wi-Fi-enabled devices that support streaming video.

We do, however, sell monthly subscriptions for premium content purchased through our SmartGuide for varying fees for different content. Revenue from such premium subscription fees is recognized on a gross basis over the service period as we are deemed to be the principal in the relationship with the end user. We control the content before transferring it to the end user and have latitude in establishing pricing.

Subscription revenue is derived from online sales through search engine optimization, search engine marketing, various marketing advertising services, the utilization of resellers in the form of publishers that promote upcoming retail promotions and packages, as well as direct sales to subscribers of our Value Channels subscription service. Value Channels subscription contains 17 cable channels and sells on a monthly subscription or annual fee. Value Channels is integrated into the initial FreeCast.com free registration and then offered as an upgrade. Both FreeCast.com (free registration) and Value Channels are available in various streaming Smart TV models (Google TV's, Amazon Fire TV's, LG, Samsung, TCL, Sony, and others), plus Streaming Devices (Amazon Fire, Google ChromeCast, Apple TV), PC's/Laptops and mobile apps for Android and iOS devices.

Subscription revenue is recognized ratably on a straight-line basis over the duration of the subscription period, generally ranging from one month to five years. If the subscriber renews early, then the expiration date is extended by the renewal period, and the additional subscription fee is deferred and amortized over the additional months purchased by the subscriber. We no longer offer SelectTV lifetime subscriptions, which was initially deferred and recognized over a five-year period. All subscription fees are collected at the time of purchase.

FAST (Free Ad-Supported TV)

We provide FAST channel buildouts that include post-production editing, motion graphics, channel assembly and content acquisitions. We charge the customers based on time incurred for the services plus a reasonable margin in addition to any additional out-of-pocket cost incurred that is charged at cost to us. Revenue is recognized when services are performed. We charge a monthly platform fee for distributing the FAST channel on our platform. Revenue is recognized at the point in time when the content is available on the digital platform.

Ad Platform Revenue

We are an agent in transactions on our Ad Exchange platforms. We act as an intermediary between DSPs and non-owned and operated publishers by providing access to a platform that allows both parties to transact in the buying and selling of ad inventory. The transaction price is determined through a real-time auction, and the Company has no pricing discretion or obligation related to the fulfillment of the advertising delivery.

We generally invoice buyers at the end of each month for the full purchase price of ad impressions monetized in that month. Accounts receivables are recorded at the amount of gross billings for the amounts we are responsible for collecting, and accounts payable are recorded at the net amount payable to suppliers. Accordingly, both accounts receivable and accounts payable appear large in relation to revenue reported on a net basis.

Ad Agency Revenue

The Company earns revenue from direct client service contracts for marketing and campaign execution, such as the Launch That agreement. These contracts typically involve two distinct phases:

●

Phase 1: Discovery and Development Services (data research, audience analysis, creative development). Revenue is recognized over time using an input method based on the proportion of costs incurred relative to total estimated costs for Phase 1.

●

Phase 2: Test Media Distribution Services (media placement, outreach, KPI reporting). Revenue is recognized upon delivery of the performance evaluation report specified in the contract.

Revenue from such contracts is presented separately from "Other Revenue" due to its materiality and distinct nature.

Deferred Revenue - Ad Agency Revenue

For the Ad Agency revenue stream, we provide demand partners with access to the FreeCast Ad Platform, enabling real-time bidding on advertising inventory. Revenue is recognized at a point in time when a transaction is completed-specifically, when a bid is won and the client's purchase occurs through the platform. Amounts invoiced in advance of the completion of these transactions are recorded as deferred revenue and recognized as revenue when our performance obligation is satisfied.

Advertising & Media Revenue

The Company generates Advertising & Media Revenue from: (i) direct advertising campaign arrangements in which customers purchase advertising inventory and promotional services through the Company's owned and operated streaming television, connected television ("CTV"), mobile, web and related digital media properties; and (ii) content distribution, channel promotion, audience development, carriage fee and advertising monetization arrangements involving third-party channel partners. Representative arrangements include LaunchThat, Del Air, NHK World-Japan and CCTV News Content Co., Ltd.

Revenue is generally recognized over time as advertising campaign delivery services, content distribution services, channel promotion services and audience development services are provided. Fixed campaign fees and carriage fees are recognized over the applicable service period, while revenue-sharing arrangements are recognized as the underlying advertising activities occur and become measurable.

Other Revenue

Other revenue consists primarily of licensing, referral fee, and other miscellaneous revenue streams. Revenue is recognized when the related performance obligations are satisfied in accordance with ASC 606. Other revenue was not material for the years ended June 30, 2026, and 2025.

Deferred Revenue

Deferred revenue consists principally of both prepaid but unrecognized subscription revenue and advertising fees received or billed in advance of the delivery or completion of the delivery of services. We may pay sales incentives, in cash or by issuing equity instruments, to distributors of our subscriptions. Such sales incentives are not recognized as deferred revenue. Rather, sales incentives are recognized in current operations when issued, regardless of amounts in deferred revenue, which may have resulted from the distributor's efforts. Deferred revenue consists primarily of subscriptions for multiple months purchased upfront and recognized ratably over the term of the subscription.

The following table presents our revenue on a disaggregated basis:

		For the year ended
		June 30,
		2026				2025
Membership (1)		$	56,311				132,950
FAST Revenue - related parties (2)			267,509				221,894
Ad Revenue (3)			385,602				271,638
Other Revenue			1,460				1,667
Total		$	710,882				628,149

(1)	Membership sales refer to customers purchasing premium content through our SmartGuide for varying fees and recognized on a gross basis over the service period determined.

(2)

We provide end-to-end software solutions for development of FAST (Free Ad-Supported TV) channels to customers such as content creation, production, video studio rental, etc. to aid in the creation of content for their channels and a platform fee for distributing the channel. Revenue is recognized at the point in time the services are performed for the development of FAST channels. We charge a monthly platform fee for distributing the FAST channel on our platform.

(3)	During the year ended June 30, 2026, the Company recognized $385,602 of advertising revenue from the sale of advertising inventory, connected television ("CTV") advertising campaigns, media planning, content distribution, channel promotion, and related digital media services. Revenue is recognized as performance obligations are satisfied and the related advertising, promotional, and media services are delivered.
	Included in advertising revenue was approximately $138,000 recognized under the Del Air Media Plan Agreement for media planning, audience targeting, creative development, lead-generation services, campaign optimization, and media distribution activities. The Company also recognized approximately $125,000 under the prior LaunchThat advertising and media services agreement for discovery, development, testing, creative production, and media distribution services. In addition, the Company recognized approximately $100,000 under the new LaunchThat Programmatic Advertising Insertion Order for programmatic advertising, streaming television, connected television ("CTV") advertising inventory, creative development, production services, and channel launch activities; approximately $10,000 under the NHK World-Japan Insertion Order for brand awareness and advertising delivery services; and approximately $12,500 under the CCTV News Content Co., Ltd. Internet Distribution Agreement related to content distribution, channel promotion, audience development, and advertising monetization services recognized over the applicable contractual service period. Revenue associated with these arrangements was recognized as the related performance obligations were satisfied.

Concentration of Credit Risk

Financial instruments that potentially subject us to concentrations of credit risk consist principally of cash and cash equivalents and trade accounts receivable. Our cash and cash equivalents are exposed to credit risk, subject to federal deposit insurance, in the event of default by the financial institutions holding its cash and cash equivalents to the extent of amounts recorded on the balance sheet. The Company maintains cash balances with multiple financial institutions, and such balances may exceed federally insured limits from time to time. The cash accounts are insured by the Federal Deposit Insurance Corporation ("FDIC") up to $250,000. As of June 30, 2026, the Company maintained cash balances in excess of FDIC insurance limits by approximately $8.7 million.

As of June 30, 2026, we had two customers, SportX, LLC and related party customer Celebrity Cigars, Inc., representing 63.6% and 35.5%, respectively, of our receivables. As of June 30, 2025, we had two customers, SportX, LLC and related party customer Celebrity Cigars, Inc., representing 51.1% and 44.5%, respectively, of our receivables.

As of June 30, 2026, we had three customers, Launch That, related party customer Celebrity Cigars, Inc., and Del Air, representing 31.7%, 30.2% and 19.4%, respectively, of our revenues. As of June 30, 2025, we had two related party customers, Test Drive Live Inc. and Celebrity Cigars, Inc., representing 13.7% and 20.3%, respectively, of our revenues.

Fair Value of Financial Instruments

We account for financial instruments under Financial Accounting Standards Board ("FASB") ASC 820, Fair Value Measurements. This statement defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles, and expands disclosures about fair value measurements. To increase consistency and comparability in fair value measurements, ASC 820 establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three levels as follows:

Level 1 - quoted prices (unadjusted) in active markets for identical assets or liabilities;

Level 2 - observable inputs other than Level 1, quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, and model-derived prices whose inputs are observable or whose significant value drivers are observable; and

Level 3 - assets and liabilities whose significant value drivers are unobservable.

The Company applies fair value accounting for all assets and liabilities that are recognized or disclosed at fair value in the financial statements. The carrying amounts reported in the financial statements for cash, accounts receivable, accounts payable and accrued liabilities approximate their fair value due to their short-term nature.

Earnings (Loss) Per Share

Basic earnings (loss) per share is computed by dividing net income (loss) attributable to all classes of our common stock by the weighted average number of shares of all classes of our common stock outstanding during the applicable period. Diluted earnings (loss) per share is determined in the same manner as basic earnings (loss) per share, except that the number of shares is increased to include restricted stock still subject to risk of forfeiture and to assume exercise of potentially dilutive stock options using the treasury stock method, unless the effect of such increase would be anti-dilutive.

The following table provides the number of Class A common stock equivalents not included in diluted income per share, because the effects are anti-dilutive, for the year ended June 30, 2026, and 2025, respectively.

		For the Year Ended June 30,
		2026				2025
Convertible debt and liabilities			702,779				503,549
Options			849,448				953,892
Warrants			3,451,060				8,056,087
Total			5,003,287				9,513,528

Stock Based Compensation

Stock-based compensation issued is measured at the date of grant based on the estimated fair value of the award, net of estimated forfeitures. The grant date fair value of a stock-based award is recognized as an expense over the requisite service period of the award on a straight-line basis. The Company will recognize compensation expense measured as the fair value of the stock-based compensation on grant date, when a performance condition is considered probable to occur. For purposes of determining the variables used in the calculation of stock-based compensation issued to employees, the Company performs an analysis of current market data and historical data to calculate an estimate of implied volatility, the expected term of the option and the expected forfeiture rate. With the exception of the expected forfeiture rate, which is not an input, the Company uses these estimates as variables in the Black-Scholes option pricing model. Depending upon the number of warrants granted, any fluctuations in these calculations could have a material effect on the results presented in the Company's Statements of Operations. In addition, any differences between estimated forfeitures and actual forfeitures could also have a material impact on the Company's financial statements.

In accounting for modifications of equity-classified warrants held by employees, it is the Company's policy to determine the impact by analogy to the share-based compensation guidance of ASC 718, Compensation - Stock Compensation ("ASC 718"). The model for a modified share-based payment award that is classified as equity and remains classified in equity after the modification is addressed in ASC 718-20-35-3. Pursuant to that guidance, the incremental fair value from the modification is recognized as stock-based compensation expense in the statements of operations to the extent the modified instrument has a higher fair value. The Company modified certain equity-classified warrants held by employees in the year 2023.

Loss Contingencies

Certain conditions may exist as of the date the financial statements are issued, which may result in a loss to us, but which will only be resolved when one or more future events occur or fail to occur. Our management and legal counsel assess such contingent liabilities, and such assessment inherently involves an exercise of judgment. In assessing loss contingencies related to legal proceedings that are pending against us or unasserted claims that may result in such proceedings, our legal counsel evaluates the perceived merits of any legal proceedings or unasserted claims as well as the perceived merits of the amount of relief sought or expected to be sought therein.

If the assessment of a contingency indicates that it is probable that a material loss has been incurred and the amount of the liability can be estimated, then the estimated liability would be accrued in our financial statements. If the assessment indicates that a potentially material loss contingency is not probable, but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent liability, together with an estimate of the range of possible loss if determinable and material, would be disclosed.

Loss contingencies considered remote are generally not disclosed unless they involve guarantees, in which case the nature of the guarantee would be disclosed.

Modifications to Equity-classified Instruments

A change in the terms or conditions of a warrant is accounted for as a modification. For a warrant modification accounted for under ASC 815, the effect of a modification shall be measured as the difference between the fair value of the modified warrant and the fair value of the original warrant immediately before its terms are modified, with each measured on the modification date. The accounting for incremental fair value of the modified warrants over the original warrants is based on the specific facts and circumstances related to the modification. When a modification is directly attributable to an equity offering, the incremental change in fair value of the warrants is accounted for as an equity issuance cost. When a modification is directly attributable to a debt offering, the incremental change in fair value of the warrants is accounted for as a debt discount or debt issuance cost. For all other modifications accounted for under ASC 815, the incremental change in fair value is recognized as a deemed dividend.

Redeemable Series A Preferred Stock

We apply the guidance enumerated in ASC 480, when determining the classification and measurement of preferred stock. Preferred stock subject to mandatory redemption, if any, is classified as a liability and is measured at fair value. We classify conditionally redeemable preferred stock, which includes preferred stock that features redemption rights that are either within the control of the holder or subject to redemption upon the occurrence of uncertain events not solely within our control, as mezzanine equity. At all other times, we classify its preferred stock in stockholders' equity. We subsequently measure mezzanine equity to redemption value when the instrument is redeemable or when it is probable the instrument will become redeemable. Initially, the redemption rights were not solely within our control because our Chief Executive Officer (CEO), William Mobley, was able to force us to redeem the shares for cash. Therefore, we classified the Series A Preferred Stock as mezzanine equity pursuant to ASC 480-10-S99 until the redemption feature was removed on September 26, 2024.

On December 26, 2024, we amended the terms and conditions of the Series A Preferred Stock to replace the deemed liquidation triggered by a change in control with an ordinary liquidation. In conjunction with this amendment, we reclassified the Series A Preferred Stock from mezzanine equity to permanent equity because the features giving rise to mezzanine equity classification, the redemption right and the deemed liquidation, have been removed as part of the amendment.

Recently Issued Accounting Pronouncements

From time to time, new accounting pronouncements are issued by the FASB or other standard-setting bodies that we adopt as of the specified effective date. See Note 2 to the financial statements for a discussion of recently issued accounting pronouncements and their impact on the Company's financial statements.