NOTE 15. SUBSEQUENT EVENTS

Discontinuation of Legacy Operations

On July 10, 2026, the Board of Directors approved and committed to a plan to discontinue the Company's revenue-generating alcohol monitoring and detection hardware and software operations, effective July 31, 2026. The plan includes the cessation of manufacturing and sales of the Company's SOBRcheck and SOBRsure devices, termination of related SOBRsafe software support agreements, further workforce reductions (following a reduction of three employees in June 2026), and termination of the Company's corporate office lease. The Company estimates these actions will reduce annual operating expenses by approximately $1.2 million, against estimated aggregate exit costs of approximately $50,000, consisting primarily of severance and other employee-related costs, agreement termination costs, and corporate office decommissioning costs. The charges and costs associated with this plan are subject to a number of assumptions, and actual results may differ materially. This action is intended to preserve cash to support completion of the Company's proposed business combination with CWV.

Warrant Inducement Transaction

On July 15, 2026, the Company entered into a warrant inducement agreement with certain holders of existing warrants to purchase an aggregate of 2,360,648 shares of common stock (originally issued under the Securities Purchase Agreement dated December 24, 2025, consisting of Series C and Series D Warrants, each with an exercise price of $1.30 per share). The holders agreed to exercise these warrants for cash in exchange for the Company's issuance of new Series E Warrants (to purchase up to 2,580,648 shares) and Series F Warrants (to purchase up to 2,140,648 shares), each with an exercise price of $1.30 per share. The transaction closed on July 16, 2026, generating gross proceeds of approximately $3.1 million before deducting placement agent fees and offering expenses payable to the exclusive placement agent. The Company intends to use the net proceeds for working capital and general corporate purposes. The Company also agreed to issue placement agent warrants to purchase up to 177,049 shares of common stock and to file a registration statement covering resale of the shares underlying the new warrants within 30 days of the agreement date.

The Company has evaluated subsequent events through the date these financial statements were issued and has determined that no other material subsequent events require disclosure or adjustment to the financial statements as presented.