NOTE 2. GOING CONCERN 

The Company has incurred recurring losses and negative cash flows from operations since inception. As of June 30, 2026, the Company had an accumulated deficit of approximately $112,685,000 and negative cash flows from operating activities of approximately $4,360,000 for the six months then ended. As of June 30, 2026, the Company had cash of approximately $429,000 and a working capital deficit of approximately $411,000. Revenue from the Company's historical operations has been insufficient to support its cost structure, and based on its current operating plan, management does not expect existing cash resources to be sufficient to fund operations for the twelve months following the issuance date of these financial statements.

On March 19, 2026, the Company received a deficiency letter from the Nasdaq Listing Qualifications Department indicating that it no longer satisfied the $1.00 minimum bid price requirement under Nasdaq Listing Rule 5550(a)(2). Because the Company's prior reverse stock splits exceeded the cumulative threshold under Listing Rule 5810(c)(3)(A), it was not eligible for the standard 180-day compliance period. The Company timely appealed Nasdaq's determination, which stayed any suspension or delisting action pending a hearing. Following a hearing held April 28, 2026, the Nasdaq Hearings Panel granted the Company's request for continued listing until September 15, 2026, conditioned on the Company completing its proposed merger with Clean World Ventures, Inc. ("CWV") and demonstrating compliance with Nasdaq's initial listing requirements by that date. There can be no assurance that the Company will satisfy these conditions or otherwise regain or maintain compliance. Management also expects that stockholders' equity may fall below Nasdaq's minimum continued-listing requirement absent additional capital or improved results. A delisting would materially impair the Company's access to the public capital markets and to future financing.

During the six months ended June 30, 2026, the Company initiated a restructuring program reducing its workforce by 11 employees, or approximately 70%, expected to reduce annual operating costs by approximately $1.6 million, with aggregate restructuring charges of approximately $105,000 recorded primarily in the second quarter of 2026. The Company further reduced its workforce by three employees in June 2026. On July 10, 2026, the Board approved the discontinuation of the Company's legacy alcohol monitoring operations, effective July 31, 2026, including the cessation of SOBRcheck and SOBRsure device manufacturing, termination of related software support, further workforce reductions, and exit from the Company's corporate office lease. These actions are expected to reduce annual operating expenses by an additional approximately $1.2 million against approximately $50,000 in one-time exit costs. Upon completion, substantially all of the Company's historical revenue-generating operations will have ceased; the Company intends to continue operating pending completion of the transaction described below.

On April 24, 2026, the Company entered into a merger agreement with CWV, pursuant to which CWV will become a wholly owned subsidiary of the Company. Upon closing, former CWV shareholders are expected to hold approximately 98% of the combined company and existing Company shareholders approximately 2%. Completion of the merger remains subject to a number of conditions outside the Company's control, including effectiveness of a Form S-4 registration statement, approval by the stockholders of both companies, Nasdaq approval, and other regulatory and contractual requirements, and accordingly management cannot conclude that completion is probable. On July 16, 2026, the Company completed a warrant inducement transaction generating approximately $3.1 million in gross proceeds, which extends the Company's near-term cash runway but is not, by itself, sufficient to fund operations through the required evaluation period absent the merger closing or additional financing. The Company is evaluating further financing alternatives, including equity and debt financings, but no committed arrangements are currently in place.

These conditions and events, when considered in the aggregate, raise substantial doubt about the Company's ability to continue as a going concern within one year after the issuance date of these financial statements. This includes recurring losses, negative operating cash flows, the accumulated deficit, limited liquidity, the Nasdaq listing uncertainty, the planned discontinuation of the Company's legacy operations, and the uncertainty surrounding completion of the pending merger. While management has taken steps intended to improve liquidity, including the workforce reductions and cost-reduction measures described above, the July 2026 financing, and pursuit of the merger, these plans are not considered probable of being effectively implemented and of mitigating the underlying conditions within the required timeframe. Accordingly, substantial doubt about the Company's ability to continue as a going concern has not been alleviated as of the date these financial statements are issued.