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

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 together with our unaudited condensed financial statements and related notes appearing elsewhere in this Quarterly Report on Form 10-Q and our audited financial statements and related notes for the year ended June 30, 2025 included in our Annual Report on Form 10-K filed with the SEC on September 29, 2025 and amended on October 28, 2025. In addition to historical information, this discussion and analysis contains forward-looking statements that involve risks, uncertainties, and assumptions. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of certain factors. We discuss factors that we believe could cause or contribute to these differences below and elsewhere in this Quarterly Report on Form 10-Q, including those factors set forth in the section entitled "Cautionary Statement Regarding Forward-Looking Statements" and in the section entitled "Risk Factors" in Part II, Item 1A.

Overview

The following discussion highlights our results of operations and the principal factors that have affected our financial condition as well as our liquidity and capital resources for the three months and nine months ended March 31, 2026 and provides information that management believes is relevant for an assessment and understanding of the statements of financial condition and results of operations presented herein. The following discussion and analysis are based on our unaudited condensed financial statements contained in this Quarterly Report on Form 10-Q, which we have prepared in accordance with United States generally accepted accounting principles, or GAAP, and the requirements of the SEC. You should read the discussion and analysis together with such financial statements and the related notes thereto.

We are not currently profitable, and we cannot provide any assurance that we will ever be profitable. We incurred a net loss of $2,052,875 for the nine months ended March 31, 2026, and we incurred a net loss of $43.5 million for the period from November 14, 2017 (date of incorporation) to March 31, 2026.

The assessment of the Company's ability to meet its future obligations is inherently judgmental, subjective and susceptible to change. Based on their current forecast, management believes that it will have sufficient cash and cash equivalents to maintain the Company's planned operations for the next twelve months following the issuance of these condensed financial statements; however, there is uncertainty in the forecast and therefore the Company cannot assert that it is probable. The Company has considered both quantitative and qualitative factors that are known or reasonably known as of the date of these condensed financial statements are issued and concluded that there are conditions present in the aggregate that raise substantial doubt about the Company's ability to continue as a going concern.

In response to the conditions, management plans include generating cash by completing financing transactions, which may include offerings of common stock. However, these plans are subject to market conditions, and are not within the Company's control, and therefore, cannot be deemed probable. There is no assurance that the Company will be successful in implementing their plans. As a result, the Company has concluded that management's plans do not alleviate substantial doubt about the Company's ability to continue as a going concern.

Financial Position, Liquidity, and Capital Resources

We are not currently profitable, and we cannot provide any assurance that we will ever be profitable. We incurred a net loss of $678,000 and $2,052,875 for the three months and nine months ended March 31, 2026, respectively.

On January 8, 2025, we closed on a public offering of common stock and received approximately $3.08 million of cash proceeds, net of underwriting discounts, commissions, and other offering costs.

On April 28, 2026, we closed a registered direct offering, a concurrent private placement, and an insider-led private placement, pursuant to which the Company agreed to issue and sell to such investors common stock and warrants for net cash proceeds of approximately $2.2 million.

As of March 31, 2026, our cash, cash equivalent, and restricted cash balance totaled $740,711.

Going Concern

The accompanying condensed financial statements have been prepared in accordance with generally accepted accounting principles applicable to a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business.

The Company is developing its customer base and has not completed its efforts to establish a stabilized source of revenue sufficient to cover its expenses. The Company has had a history of net losses and negative cash flows from operating activities since inception and expects to continue to incur net losses and use cash in its operations in the foreseeable future.

The assessment of the Company's ability to meet its future obligations is inherently judgmental, subjective and susceptible to change. Based on their current forecast, management believes that it may not have sufficient cash and cash equivalents to maintain the Company's planned operations for the next twelve months following the issuance of these condensed financial statements.

The Company has considered both quantitative and qualitative factors that are known or reasonably known as of the date of these condensed financial statements are issued and concluded that there are conditions present in the aggregate that raise substantial doubt about the Company's ability to continue as a going concern. In response to the conditions, management plans include generating cash by completing financing transactions, which may include offerings of common stock. However, these plans are subject to market conditions, and are not within the Company's control, and therefore, cannot be deemed probable. There is no assurance that the Company will be successful in implementing their plans. As a result, the Company has concluded that management's plans do not alleviate substantial doubt about the Company's ability to continue as a going concern. The condensed financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might result from the outcome of this uncertainty.

Critical Accounting Policies and Significant Judgments and Estimates

This management's discussion and analysis of financial condition and results of operations is based on our condensed financial statements, which have been prepared in accordance with U.S. GAAP. The preparation of these condensed financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the condensed financial statements, and the reported amounts of revenue and expenses during the reported period. In accordance with U.S. GAAP, we base our estimates on historical experience and on various other assumptions we believe to be reasonable under the circumstances. Actual results may differ from these estimates if conditions differ from our assumptions. While our significant accounting policies are more fully described in Note 2 of the "Notes to Condensed Financial Statements," we believe the following accounting policies are critical to the process of making significant judgments and estimates in preparation of our condensed financial statements.

Cash, Cash Equivalents, including US Treasury Market Fund

As of March 31, 2026 and June 30, 2025 our cash, cash equivalents, and restricted cash totaled $740,711 and $2,433,418, respectively with the majority invested in a short-term US Treasury Fund totaling approximately $420,000 at March 31, 2026. The Fund is invested in US Treasuries with a 7-day liquidity. The decision to allocate funds to the short-term US Treasury Fund is based on our investment strategy, which prioritizes liquidity and stability while receiving current rate returns. The returns from the fund for the nine months ended March 31, 2026 and 2025 were 4.1% and 4.9%, respectively, and in line with our expectations and the broader market trends for similar investment vehicles. We continuously monitor our investment portfolio, considering market conditions and our liquidity needs, ensuring alignment with our broader financial strategy and risk tolerance.

Internally Developed Capitalized Software

We capitalize certain costs related to the development of software for our customers, primarily consisting of direct labor and third-party vendor costs associated with creating the software. Software development projects generally include three stages: the preliminary project stage (all costs are expensed as incurred), the application development stage (certain costs are capitalized and certain costs are expensed as incurred) and the post-implementation/operation stage (all costs are expensed as incurred). Costs capitalized in the application development stage include costs related to the design and implementation of the selected software components, software build and configuration infrastructure, and software interfaces. Capitalization of costs requires judgment in determining when a project has reached the application development stage, the proportion of time spent in the application development stage, and the period over which we expect to benefit from the use of that software. Once the software is placed in service, these costs are amortized on the straight-line method over the estimated useful life of the software, which is generally three years.

The Company capitalized software of $206,700 and $292,200 and recognized amortization expense of $180,542 and $312,709 for the nine months ended March 31, 2026 and 2025, respectively.

Revenue Recognition

Please reference the discussion under the "Results of Operations - Revenue Recognition" for more information.

Stock-Based Compensation

We issue four types of stock-based awards under our stock plans: stock options, restricted stock units, deferred stock units, and stock warrants. All stock-based awards granted to employees, directors and independent contractors are measured at fair value at each grant date. We rely on the Black-Scholes option pricing model for estimating the fair value of stock-based awards granted, and expected volatility is based on the historical volatility of the Company's stock prices. Stock options generally vest over two years from the grant date and generally have ten-year contractual terms. Restricted stock units generally have a term of 12 months from the closing date of the agreement. Stock warrants issued have a term of five years. Information about the assumptions used in the calculation of stock-based compensation expense is set forth in Note 3 in the Notes to Condensed Financial Statements.

Results of Operations

Revenue Recognition

We generate substantially all our revenue from contractual arrangements with our clients to provide a comprehensive platform of tightly integrated technology and technology-enabled services related to product offerings. Our performance obligation is satisfied as the customers receive and consume benefits and distribute them as appropriate for all of these contracts. Our services are provided ratably over contract terms; accordingly, the revenues collected are recognized ratably over the service period (generally one month).

We have recorded accounts receivable of $18,975 and $6,341 as of March 31, 2026 and June 30, 2025, respectively. We have set up deferred revenue liabilities at the end of each period to reflect performance obligations to be performed in future periods for our services delivered over time. Future obligations related to deferred revenue totaled $3,975 and $36,745 as of March 31, 2026 and June 30, 2025 respectively.

Revenue

We generated revenues totaling $285,678 for the nine months ended March 31, 2026 as compared to $54,700 for the nine months ended March 31, 2025. We generated revenues totaling $83,332 for the three months ended March 31, 2026 as compared to $30,690 for the three months ended March 31, 2025.

We have strongly pivoted to growing our customer base while reducing risk and losses, resulting in a larger client base, a short-term reduction in overall revenue and a dramatic reduction in cash burn. Larger, cash-upfront deals were struggling to produce sustainable revenue, as administrative barriers within nonprofits, high price points set by customers, and inability or unwillingness of customers to partner with schools, businesses and other entities to purchase products hampered growth.

We continue to believe that AI-powered programs, priced affordably, will supplant other academic products in the mid to long term, but have defocused on securing academic customers, and are now offering solutions for the healthcare industry. We have focused all new development work on delivering AI tools to markets hungry for increased capability that immediately impacts both their performance and their bottom line. The NurseMagic^TM app is the first of these and has already gained traction with larger entities.

General and Administrative

General and administrative expenses consist primarily of personnel and personnel-related expenses, including executive management, legal, finance, human resources and other departments that do not provide direct operational services. General and administrative expenses also include professional fees and other corporate expenses.

General and administrative expenses (G&A) for the nine months ended March 31, 2026 were approximately $1,676,000 as compared to approximately $1,866,000 for the nine months ended March 31, 2025. General and administrative expenses for the three months ended March 31, 2026 were approximately $550,000 as compared to approximately $428,000 for the three months ended March 31, 2025. The increase in general and administrative expenses between the three-month periods is due to director forfeitures recognized in fiscal year 2025. The decrease in the nine-month period is largely a result of lower stock-based compensation due to having four Board members in calendar years 2025-2026 as opposed to six Board members in calendar year 2024.

Technology and Content Development

Technology and content development expenses consist primarily of personnel and personnel-related expenses and contracted services associated with the ongoing improvement and maintenance of our platform as well as hosting and licensing costs. Technology and content expenses also include the amortization of capitalized software costs.

Technology and content development expenses for the nine months ended March 31, 2026 were approximately $402,000 as compared to approximately $524,000 for the nine months ended March 31, 2025. Technology and content development expenses for the three months ended March 31, 2026 were approximately $134,000 as compared to approximately $172,000 for the three months ended March 31, 2025. The decreases between the three-month and nine-month periods in technology reflect the reductions in headcount, lower capitalized software amortization, and lower third-party software subscription costs.

Sales and Marketing

Sales and marketing expense consist primarily of activities to attract customers to our offerings. This includes personnel and personnel-related expenses, various search engine and social media costs as well as the cost of advertising.

Sales and marketing expenses for the nine months ended March 31, 2026 were approximately $299,000 as compared to approximately $411,000 for the nine months ended March 31, 2025. Sales and marketing expenses for the three months ended March 31, 2026 were approximately $83,000 as compared to approximately $118,000 for the three months ended March 31, 2025. The decrease between the three-month and nine-month periods in sales and marketing are principally related to moving certain marketing functions from outside providers to inside staff offset some by higher customer selling expenses.

Interest Income

For the nine months ended March 31, 2026, interest income approximated $39,000 as compared to interest income of approximately $53,000 for the nine months ended March 31, 2025. For the three months ended March 31, 2026, interest income approximated $6,000 as compared to interest income of approximately $24,000 for the three months ended March 31, 2025.

Net Loss

Our net loss for the nine months ended March 31, 2026 was approximately $2,053,000 as compared to a net loss for the nine months ended March 31, 2025 of approximately $2,693,000. Our net loss for the three months ended March 31, 2026 was approximately $678,000 as compared to a net loss for the three months ended March 31, 2025 of approximately $663,000.

Capital Expenditures

During the nine months ended March 31, 2026 and 2025, we had capital asset additions of $206,700 and $292,200, respectively, in capitalized technology and content development. We will continue to capitalize significant software development costs, comprised primarily of internal payroll, payroll related and contractor costs, as we build out and complete our technology platform.

Nasdaq Compliance

On October 28, 2025 we received a deficiency letter (the "Nasdaq Letter") from the staff of the Listing Qualifications Department (the "Staff") of The Nasdaq Stock Market LLC ("Nasdaq") notifying us that we were not in compliance with Nasdaq Listing Rule 5550(b)(1), which requires us to maintain a minimum of $2,500,000 in stockholders' equity for continued listing on the Nasdaq Capital Market (the "Stockholders' Equity Requirement"), nor were we in compliance with either of the alternative listing standards, either a market value of listed securities of at least $35 million or net income of $500,000 from continuing operations in the most recently completed fiscal year, or in two of the three most recently completed fiscal years. Pursuant to the Nasdaq Letter, we had 45 calendar days from the date of the Nasdaq Letter to submit a plan to regain compliance. We submitted our plan of compliance on December 10, 2025 and on January 8, 2026, Nasdaq granted an extension until April 27, 2026 to evidence compliance.

On April 28, 2026, the Company closed a registered direct offering, a concurrent private placement, and an insider-led private placement, issuing in the aggregate 1,114,984 shares of common stock, pre-funded warrants to purchase 696,866 shares (exercise price $0.001), and Series A-1 and Series A-2 common warrants to purchase up to 1,811,850 shares each at an exercise price of $1.435 per share. Aggregate gross proceeds were approximately $2.6 million, of which approximately $0.6 million was invested by certain officers and directors of the Company, including the Chairman and Chief Executive Officer and another member of the Board of Directors, at a per-share price equal to that of the registered direct offering, with one-for-one Series A-1 and Series A-2 warrant coverage. As disclosed in the Company's Current Report on Form 8-K filed on April 28, 2026, upon completion of the registered direct offering, concurrent private placement, and insider-led private placement, the Company believes that its stockholders' equity is in excess of $2.5 million necessary to regain compliance with Nasdaq's minimum stockholder' equity requirement. On May 4, 2026, the Company received written notice from Nasdaq that based upon the Form 8-K dated April 28, 2026, the Staff has determined that the Company complies with Nasdaq listing Rule 5550(b)(1). However, if the Company fails to evidence compliance within its next periodic report that it may be subject to delisting. At that time, the Staff will provide written notification to the Company, which the Company may then appeal to a Nasdaq Hearings Panel.