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

Critical Accounting Policies

The Condensed Consolidated Financial Statements of Elite Health Systems Inc. and subsidiaries (the "Company") have been prepared in accordance with accounting principles generally accepted in the United States of America. As such, some accounting policies have a significant impact on amounts reported in the Condensed Consolidated Financial Statements. A summary of those significant accounting policies can be found in Note B to the Consolidated Financial Statements, in our 2025 Annual Report on Form 10-K. In particular, judgment is used in areas such as determining and assessing possible asset impairments, including investments in, and advances, to unconsolidated entities.

The following discussion and analysis provides information which the Company's management believes is relevant to an assessment and understanding of the Company's results of operations and financial condition. This discussion should be read in conjunction with the Condensed Consolidated Financial Statements and notes thereto appearing elsewhere herein.

Recent events

None

Results of Operations

Three Months Ended March 31, 2026, Compared to Three Months Ended March 31, 2025

Selling, general, and administrative expenses of $1,165,000 for the first quarter of 2025 were 148% higher than the $427,000 incurred during the comparable period in 2025, due mostly to the acquisition of PSS and an increase in cost at EHP now that the health plan is operating.

During the three months ended March 31, 2026 and 2025 the Company recorded no income tax benefit or provision.

For the three months ended March 31, 2026, the Company reported a net loss of $1,355,000 as compared to $424,000 for the same period a year earlier. The net loss was primarily due to the acquisition of PSS.

Liquidity and Capital Resources

The Company's primary sources of liquidity are from equity transactions discussed below.

Net cash used in operating activities for the three months ended March 31, 2026, was $1,256,000 as compared to $461,000 for the same period a year earlier. This change is primarily due to the Company's acquisition of PSS and higher expenses of EHP now that the plan has begun operations.

The Company raised total proceeds of an aggregate of $100,000 and $474,000 during the quarters ended March 31, 2026 and 2025, respectively. As a result of these issuances, as of March 31, 2026, there were outstanding 28,521,620 shares of the Company's Common Stock.

For this sale of securities in connection with private placement, no general solicitation was used, no commissions were paid, all participants in the private placement were accredited investors, and the Company relied on the exemption from registration available under Section 4(a)(2) and/or Rule 506(b) of Regulation D promulgated under the Securities Act with respect to transactions by an issuer not involving any public offering.

The Company presently intends to use the net proceeds from the private placement principally to execute the plan of Elite Health to establish a managed care organization that will operate as a Medicare Advantage plan for seniors.

The Company presently intends to use the net proceeds from the private placement principally to execute the plan of Elite Health to establish a managed care organization that will operate as a Medicare Advantage plan for seniors.

The Company incurred a net loss of $7,804,000 compared to $2,055,000 in fiscal year 2024 with a further loss of $1,294,000 during the quarter ended March 31, 2026 as a result of the launch on January 1, 2026 of its EHP's Medicare Advantage plans. As a result, it has limited revenue and significant expenses. The Company has funded operations through the sale of common stock. The Company had an accumulated deficit in stockholders' equity of $13,543,000 and $12,249,000 at March 31, 2026 and December 31, 2025, respectively; cash and cash equivalents of $2,602,000 and $3,758,000 at March 31, 2026 and December 31, 2025, respectively; and working capital of $1,849,000 and $3,144,000 at March 31, 2026 and December 31,2025, respectively. In addition, the Company currently does not have access to capital through a line of credit nor other readily available sources of capital. Together, these factors raised substantial doubt regarding the Company's ability to continue as a going concern at March 31, 2026. The Company raised an additional $3.7 million through the private sale of shares of Common stock in fiscal 2025 to support its plan, bringing the total outstanding to 28,521,620 shares as of March 31, 2026 and December 31, 2025.

However, management has considered its plans to continue the Company as a going concern, concentrating on the establishment and operation of managed health care plans. The Company raised gross proceeds of approximately $14 million in support of this business opportunity through the sale of its Common Stock in private placements and will need additional capital in 2026. The Company is evaluating different approaches to raise the capital that it will require, as well as other strategic options to support operations. Management believes its plan alleviates the substantial doubt and that it will be successful in its planned business initiatives and will be able to continue as a going concern through at least the next twelve months. However, there can be no assurance that sources of capital will be available to the Company at that time or, if available, can be obtained on terms favorable to the Company.

Risk Factors

We desire to take advantage of the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995. The factors listed under the caption "Risk Factors" in Annual Report on our Form 10-K for the fiscal year ended December 31, 2025, have affected or could affect our actual results and could cause such results to differ materially from those expressed in any forward-looking statements made by us. Investors should carefully consider these risks and speculative factors inherent in and affecting our business and an investment in our common stock.

Disclosure Regarding Forward Looking Statements

The Securities and Exchange Commission encourages companies to disclose forward looking information so that investors can better understand a company's future prospects and make informed investment decisions. This document contains such "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, particularly statements anticipating future growth in revenues and cash flow. Words such as "anticipates," "estimates," "expects," "projects," "targets," "intends," "plans," "believes," "will be," "will continue," "will likely result," and words and terms of similar substance used in connection with any discussion of future operating or financial performance identify such forward-looking statements. Those forward-looking statements are based on management's present expectations about future events. As with any projection or forecast, they are inherently susceptible to uncertainty and changes in circumstances, and the Company is under no obligation to (and expressly disclaims any such obligation to) update or alter its forward-looking statements whether as a result of such changes, new information, future events or otherwise.

The Company operates in a highly competitive and rapidly changing environment and in businesses that are dependent on our ability to: achieve profitability; increase revenues; sustain our current level of operations; maintain satisfactory relations with business partners; attract and retain key personnel; maintain and expand our strategic alliances; and protect our intellectual property. The Company's actual results could differ materially from management's expectations because of changes in such factors. New risk factors can arise and it is not possible for management to predict all such risk factors, nor can it assess the impact of all such risk factors on the Company's 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. Given these risks and uncertainties, investors should not place undue reliance on forward-looking statements as a prediction of actual results. Factors that could cause actual results to differ materially from those currently anticipated include the following:

●

Uncertainties relating to our ability to successfully implement our strategy of developing a Medicare Advantage plan under our Elite Health subsidiaries;

●

Uncertainty over our ability to achieve a Medicare Advantage license in California in a timely manner, acquire managed health consumers in California, expand consumer enrollment beyond this initial state, or diversify and expand our portfolio of products and services, our business and results of operations will be significantly impaired;

●

Our ability to raise capital in the future on satisfactory terms;

●

Our financial condition and liquidity;

●

Uncertainty over our ability to successfully implement management's plan to improve liquidity, including the ability to manage costs, systems and growth;

All forward looking statements should be considered in the context of the risks and other factors described above and in "Risk Factors" (Part I, Item 1A of the Company's Annual Report on Form 10-K for the Fiscal Year ended December 31, 2025), "Quantitative and Qualitative Disclosures about Market Risk" (Part II, Item 7A of the Company's Annual Report on Form 10-K for the Fiscal Year ended December 31, 2025), and "Management's Discussion and Analysis" (Part I, Item 2 of this Form 10-Q). We undertake no obligation to update or revise publicly any forward-looking statements, whether because of new information, future events, or otherwise.

Investors should also be aware that while the Company might, from time to time, communicate with securities analysts, it is against the Company's policy to disclose to them any material non-public information or other confidential commercial information. Accordingly, investors should not assume that the Company agrees with any statement or report issued by any analyst irrespective of the content of the statement or report. Furthermore, the Company has a policy against issuing or confirming financial forecasts or projections issued by others. Thus, to the extent that reports issued by securities analysts or others contain any projections, forecasts or opinions, such reports are not the responsibility of the Company.

In addition, the Company's overall financial strategy, including growth in operations, maintaining financial ratios and strengthening the balance sheet, could be adversely affected by increased interest rates, construction delays or other transactions, economic slowdowns and changes in the Company's plans, strategies and intentions.