gxai-20260630

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2026

☐ TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ___________ to ___________

Commission File Number: 001-41620

GAXOS.AI INC.

(Exact name of registrant as specified in its charter)

Nevada		87-3288897
(State or other jurisdiction of incorporation or organization)		(IRS Employer Identification No.)

101 Eisenhower Pkwy, Suite 300
Roseland, New Jersey		07068
(Address of principal executive offices)		(Zip Code)

(973) 275-7428
(Registrant’s telephone number, including area code)

Not applicable

(Registrant’s former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Exchange Act:

Title of each class		Trading Symbol(s)		Name of exchange on which registered
Common Stock, par value $0.0001 per share		GXAI		The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registration was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☒
		Emerging growth company	☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of August 11, 2026, there were 10,744,634 shares of common stock, par value $0.0001 per share, issued and outstanding.

GAXOS.AI INC.
FORM 10-Q
JUNE 30, 2026

TABLE OF CONTENTS

		Page
PART I - FINANCIAL INFORMATION
Item 1.	Financial Statements	1
	Consolidated Balance Sheets as of June 30, 2026 (Unaudited) and December 31, 2025	1
	Consolidated Statements of Operations and Comprehensive Loss - For the Three and Six Months Ended June 30, 2026 and 2025 (Unaudited)	2
	Consolidated Statements of Changes in Stockholders’ Equity - For the Six Months Ended June 30, 2026 and 2025 (Unaudited)	3
	Consolidated Statements of Cash Flows - For the Six Months Ended June 30, 2026 and 2025 (Unaudited)	4
	Notes to Consolidated Financial Statements (Unaudited)	5
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	18
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	26
Item 4.	Controls and Procedures	26

PART II - OTHER INFORMATION
Item 1.	Legal Proceedings	27
Item 1A.	Risk Factors	27
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	27
Item 3.	Defaults Upon Senior Securities	27
Item 4.	Mine Safety Disclosures	27
Item 5.	Other Information	27
Item 6.	Exhibits	27

SIGNATURE		28

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Any statements in this Quarterly Report on Form 10-Q about our expectations, beliefs, plans, objectives, assumptions or future events or performance are not historical facts and are forward-looking statements. These statements are often, but not always, made through the use of words or phrases such as “believe,” “will,” “expect,” “anticipate,” “estimate,” “intend,” “plan” and “would.” For example, statements concerning financial condition, possible or assumed future results of operations, growth opportunities, industry ranking, plans and objectives of management, markets for our common stock and future management and organizational structure are all forward-looking statements. Forward-looking statements are not guarantees of performance. They involve known and unknown risks, uncertainties and assumptions that may cause actual results, levels of activity, performance or achievements to differ materially from any results, levels of activity, performance or achievements expressed or implied by any forward-looking statement.

Any forward-looking statements are qualified in their entirety by reference to the risk factors discussed throughout this Quarterly Report on Form 10-Q. Some of the risks, uncertainties and assumptions that could cause actual results to differ materially from estimates or projections contained in the forward-looking statements include, but are not limited to:

	●	our ability to obtain additional funds for our operations;

	●	our financial performance, including our revenues, cost of revenues, operating expenses, and our ability to attain and sustain profitability;

	●	our ability to attract and retain users;

	●	our ability to attract and retain advertisers;

	●	our ability to compete effectively with existing competitors and new market entrants;

	●	our ability to successfully expand in our existing markets and penetrate new markets;

	●	our expectations regarding the time during which we will be an emerging growth company under the Jumpstart Our Business Startups Act, or JOBS Act;

	●	our ability to effectively manage our growth, and future expenses;

	●	our ability to maintain, protect, and enhance our intellectual property;

	●	our ability to comply with modified or new laws and regulations applying to our business, competitors and industry;

	●	our ability to attract and retain qualified key management and technical personnel;

	●	other risks and uncertainties, including those listed under the caption “Risk Factors.”

The foregoing list sets forth some, but not all, of the factors that could affect our ability to achieve results described in any forward-looking statements. You should read this Quarterly Report on Form 10-Q and the documents that we reference herein and have filed as exhibits to the Quarterly Report on Form 10-Q, completely and with the understanding that our actual future results may be materially different from what we expect. You should assume that the information appearing in this Quarterly Report on Form 10-Q is accurate as of the date hereof. Because the risk factors referred to on page 4 of our Annual Report on Form 10-K for the year ended December 31, 2025 could cause actual results or outcomes to differ materially from those expressed in any forward-looking statements made by us or on our behalf, you should not place undue reliance on any forward-looking statements. Further, any forward-looking statement speaks only as of the date on which it is made, and except as required by law, we undertake no obligation to update any forward-looking statement to reflect events or circumstances after the date on which the statement is made or to reflect the occurrence of unanticipated events. New factors emerge from time to time, and it is not possible for us to predict which factors will arise. In addition, we cannot assess the impact of each factor on our 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. We qualify all of the information presented in this Quarterly Report on Form 10-Q, and particularly our forward-looking statements, by these cautionary statements.

PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

GAXOS.AI INC. AND SUBSIDIARY

CONSOLIDATED BALANCE SHEETS

	June 30,			December 31,
	2026			2025
	(Unaudited)
ASSETS
CURRENT ASSETS:
Cash	$	1,089,449		$	840,799
Short-term investments, at fair value		10,353,040			11,345,187
Investment in non-traded equity securities, at fair value		60,000			180,000
Accounts receivable		118,064			76,247
Prepaid expenses and other current assets		274,057			157,586

Total Current Assets		11,894,610			12,599,819

LONG-TERM ASSETS:
Property and equipment, net		65,707			103,393
Intangible assets, net		628,533			718,333
Investment in cost method investees		4,875,000			-

Total Long-Term Assets		5,569,240			821,726

TOTAL ASSETS	$	17,463,850		$	13,421,545

LIABILITIES AND STOCKHOLDERS’ EQUITY

CURRENT LIABILITIES:
Accounts payable	$	326,010		$	270,105
Accrued expenses		437,020			280,430
Deferred revenue		362,532			130,054

Total Current Liabilities		1,125,562			680,589

Total Liabilities		1,125,562			680,589

Commitments and Contingencies (See Note 7)

STOCKHOLDERS’ EQUITY:
Preferred stock; par value $0.0001; 5,000,000 shares authorized; No shares issued and outstanding on June 30, 2026 and December 31, 2025		-			-
Common stock; par value $0.0001: 50,000,000 shares authorized; 10,744,634 and 7,123,453 shares issued and outstanding on June 30, 2026 and December 31, 2025, respectively		1,074			712
Additional paid-in capital		32,219,500			25,801,322
Accumulated other comprehensive (loss) income		(297,753	)		26,976
Accumulated deficit		(14,631,773	)		(12,700,304	)

Total Gaxos.AI Stockholders’ Equity		17,291,048			13,128,706
Noncontrolling interest		(952,760	)		(387,750	)

Total Stockholders’ Equity		16,338,288			12,740,956

Total Liabilities and Stockholders’ Equity	$	17,463,850		$	13,421,545

See accompanying notes to unaudited consolidated financial statements.

GAXOS.AI INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(Unaudited)

	For the Three Months Ended						For the Six Months Ended
	June 30,						June 30,
	2026			2025			2026			2025

REVENUES	$	2,457,357		$	170,971		$	4,266,724		$	194,703

OPERATING EXPENSES:
Research and development		506,971			243,020			953,393			464,009
Selling, general and administrative		3,815,141			910,645			7,725,208			2,105,083

Total Operating Expenses		4,322,112			1,153,665			8,678,601			2,569,092

LOSS FROM OPERATIONS		(1,864,755	)		(982,694	)		(4,411,877	)		(2,374,389	)

OTHER INCOME (EXPENSES):
Interest income		113,753			146,902			271,863			295,090
Unrealized gain (loss) on short-term investments		-			8,615			(21,945	)		8,615
Unrealized loss on non-traded equity securities		(46,000	)		-			(120,000	)		-
Realized gain on short-term investments		24,879			2,605			35,590			14,050
Gain on sale of gaming assets		1,749,890			-			1,749,890			-

Total other income, net		1,842,522			158,122			1,915,398			317,755

NET LOSS		(22,233	)		(824,572	)		(2,496,479	)		(2,056,634	)

Net loss of subsidiary attributable to noncontrolling interest		263,289			75,184			565,010			115,446

NET INCOME (LOSS) ATTRIBUTABLE TO COMMON SHAREHOLDERS	$	241,056		$	(749,388	)	$	(1,931,469	)	$	(1,941,188	)

COMPREHENSIVE LOSS:
Net loss	$	(22,233	)	$	(824,572	)	$	(2,496,479	)	$	(2,056,634	)

Other comprehensive income (loss):
Unrealized gain (loss) on short-term debt investments		60,355			85,732			(324,729	)		16,692

Comprehensive income (loss)	$	38,122		$	(738,840	)	$	(2,821,208	)	$	(2,039,942	)

NET INCOME (LOSS) PER COMMON SHARE ATTRIBUTABLE TO COMMON SHAREHOLDERS:
Basic	$	0.02		$	(0.11	)	$	(0.20	)	$	(0.27	)
Diluted	$	0.02		$	(0.11	)	$	(0.20	)	$	(0.27	)

WEIGHTED AVERAGE COMMON SHARE OUTSTANDING:
Basic		10,377,344			7,123,453			9,596,222			7,062,680
Diluted		10,377,344			7,123,453			9,596,222			7,062,680

See accompanying notes to unaudited consolidated financial statements.

GAXOS.AI INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2026 AND 2025

(Unaudited)

									Additional		Accumulated Other									Total
	Preferred Stock				Common Stock				Paid-in		Comprehensive			Accumulated			Noncontrolling			Stockholders’
	# of Shares		Amount		# of Shares		Amount		Capital		Income (Loss)			Deficit			Interest			Equity

Balance, December 31, 2025		—	$	—		7,123,453	$	712	$	25,801,322	$	26,976		$	(12,700,304	)	$	(387,750	)	$	12,740,956

Common shares issued for cash, net		—		—		3,096,481		310		5,315,599		—			—			—			5,315,909

Accretion of stock option expense		—		—		—		—		53,866		—			—			—			53,866

Accumulated other comprehensive loss - short-term investments		—		—		—		—		—		(385,084	)		—			—			(385,084	)

Net loss		—		—		—		—		—		—			(2,172,525	)		(301,721	)		(2,474,246	)

Balance, March 31, 2026		—		—		10,219,934		1,022		31,170,787		(358,108	)		(14,872,829	)		(689,471	)		15,251,401

Common shares issued for cash, net		—		—		524,700		52		1,003,512		—			—			—			1,003,564

Accretion of stock option expense		—		—		—		—		45,201		—			—			—			45,201

Accumulated other comprehensive gain - short-term investments		—		—		—		—		—		60,355			—			—			60,355

Net loss		—		—		—		—		—		—			241,056			(263,289	)		(22,233	)

Balance, June 30, 2026		—	$	—		10,744,634	$	1,074	$	32,219,500	$	(297,753	)	$	(14,631,773	)	$	(952,760	)	$	16,338,288

									Additional		Accumulated Other									Total
	Preferred Stock				Common Stock				Paid-in		Comprehensive			Accumulated			Noncontrolling			Stockholders’
	# of Shares		Amount		# of Shares		Amount		Capital		Income (Loss)			Deficit			Interest			Equity

Balance, December 31, 2024		-		-		6,923,453		692		25,416,451		11,693			(8,799,721	)		(6,086	)		16,623,029

Common shares issued for intangible asset		-		-		200,000		20		247,980		-			-			-			248,000

Accretion of stock option expense		-		-		-		-		32,880		-			-			-			32,880

Accumulated other comprehensive loss - short-term investments		-		-		-		-		-		(69,040	)		-			-			(69,040	)

Net loss		-		-		-		-		-		-			(1,191,800	)		(40,262	)		(1,232,062	)

Balance, March 31, 2025		-		-		7,123,453		712		25,697,311		(57,347	)		(9,991,521	)		(46,348	)		15,602,807

Accretion of stock option expense		-		-		-		-		30,473		-			-			-			30,473

Accumulated other comprehensive gain - short-term investments		-		-		-		-		-		85,732			-			-			85,732

Net loss		-		-		-		-		-		-			(749,388	)		(75,184	)		(824,572	)

Balance, June 30, 2025		-	$	-		7,123,453	$	712	$	25,727,784	$	28,385		$	(10,740,909	)	$	(121,532	)	$	14,894,440

See accompanying notes to unaudited consolidated financial statements.

GAXOS.AI INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

	For the Six Months Ended
	June 30,
	2026			2025

CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(2,496,479	)	$	(2,056,634	)
Adjustments to reconcile net loss to net cash used in operating activities:
Amortization expense		120,026			86,311
Stock-based compensation		99,067			63,353
Realized gain on short-term investments		(35,590	)		(14,050	)
Unrealized loss on short-term investments		21,945			(8,615	)
Unrealized loss on non-traded equity securities		120,000			-
Accretion of bond discounts		52,904			-
Gain on sale of gaming assets		(1,749,890	)		-
Change in operating assets and liabilities:
Accounts receivable		(41,817	)		(9,368	)
Prepaid expenses and other current assets		(116,471	)		(179,285	)
Accounts payable		55,905			(88,074	)
Accrued expenses		156,590			192,577
Deferred revenue		232,478			(560	)

NET CASH USED IN OPERATING ACTIVITIES		(3,581,332	)		(2,014,345	)

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of short-term investments		(8,073,312	)		(13,313,986	)
Proceeds from sale of short-term investments		8,701,471			3,194,096
Cash paid for investment in cost method investees		(3,115,000	)		-
Increase in capitalized internal-use software development costs		(2,650	)		(44,900	)
Purchase of intangible asset		-			(500,000	)

NET CASH USED IN INVESTING ACTIVITIES		(2,489,491	)		(10,664,790	)

CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from the sale of common stock, net		6,319,473			-

NET CASH PROVIDED BY FINANCING ACTIVITIES		6,319,473			-

NET INCREASE (DECREASE) IN CASH		248,650			(12,679,135	)

CASH, beginning of period		840,799			14,398,099

CASH, end of period	$	1,089,449		$	1,718,964

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid for:
Interest	$	-		$	-
Income taxes	$	-		$	-

SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:
Unrealized loss on short-term investments	$	324,729		$	69,040
Common stock issued for intangible asset	$	-		$	248,000

See accompanying notes to unaudited consolidated financial statements.

GAXOS.AI INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2026
(Unaudited)

NOTE 1 – NATURE OF OPERATIONS

Gaxos.ai Inc. (the “Company”) was incorporated in the state of Wyoming on October 27, 2021. On March 30, 2022, the Company reincorporated to the State of Delaware pursuant to a Plan of Conversion approved by the Board of Directors and a majority of the shareholders. At the Company’s annual meeting on December 27, 2024, the stockholders approved an amendment to the Company’s Amended and Restated Certificate of Incorporation for the reincorporation of the Company from The State of Delaware to the State of Nevada, which occurred on March 3, 2025. On January 5, 2024, the Company changed its name from The NFT Gaming Company, Inc. to Gaxos.ai Inc. The Company is a technology company developing artificial intelligence (“AI”) applications designed to address opportunities across consumer and enterprise markets in high-growth sectors.. The Company’s flagship product is Gaxos Labs, which develops and launches AI applications across fast-moving sectors. Gaxos Labs’ team works in rapid development cycles to prototype, refine with real-world users, and scale into impactful products. Through June 2026 (see asset sale below), the Company also operated a gaming platform called “Gaxos Gaming” (the “Platform” or “Gaxos Gaming”), created with a vision to develop, design, acquire, and manage conventional games and to combine these games with unconventional game mechanisms, such as the ability for gamers and developers to utilize artificial intelligence to create and design in-game features, as well as to mint unique in-game features, such as skins, characters, weapons, gear, levels, and virtual lands, in the form of non-fungible tokens, or “NFTs,” that will allow users to have unique experiences and more control over in-game assets, and the Company launched Gaxos Gaming Labs, a transformative generative AI service that empowers game developers and publishers. Key features of the product include the reduction of creative asset development time from hours to minutes, transforming artistic visions into reality with ease. The Company also launched Gaxos Health, which is dedicated to revolutionizing personal health and wellness by developing an AI-powered health optimization solutions.

On September 23, 2024, the Company formed a subsidiary, RNK Health, LLC (“RNK Health”), a company incorporated under the laws of the State of Delaware as a limited liability company. RNK Health was formed in order to form a partnership and potential relationship with Nekwellness, LLC (“Nekwellness”) to engage in the proposed business of marketing certain products. On October 10, 2024, the Company, RNK Health, and Nekwellness entered into an operating agreement (the “Operating Agreement”) for the regulation and management of the affairs of RNK Health and, as of such date, the Company owns a 70% membership interest in RNK Health and Nekwellness owns a 30% membership interest in RNK Health. RNK Health provides access to certain medications, supplements and other wellness products and services.

On June 18, 2026, the Company entered into and simultaneously consummated the closing of an Asset Purchase Agreement (the “APA”), by and among the Company and Game Foundry AI (the “Buyer”) for the sale and divestiture of substantially all of the Company’s gaming assets, including its portfolio of mobile games and Gaxos Gaming in exchange for the issuance of 2,200,000 shares of the Buyer’s common stock, for an aggregate estimated consideration of $1,760,000 (See Note 3).

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

This summary of significant account policies of the Company is presented to assist in understanding the Company’s consolidated financial statements. The consolidated financial statements and the notes are the representation of the Company’s management, who are responsible for their integrity and objectivity.

The accompanying unaudited consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America (the “U.S. GAAP”) for interim financial information and with the instructions Article 8-03 of Regulation S-X. Operating results for interim periods are not necessarily indicative of results that may be expected for the fiscal year as a whole. Certain information and note disclosure normally included in financial statements prepared in accordance with U.S. GAAP has been condensed or omitted from these consolidated statements pursuant to such accounting principles and, accordingly, they do not include all the information and notes necessary for comprehensive financial statements. Management acknowledges its responsibility for the preparation of the accompanying unaudited consolidated financial statements which reflect all adjustments, consisting of normal recurring and non-recurring adjustments, considered necessary in its opinion for a fair statement of its financial position and the results of its operations for the periods presented. These unaudited consolidated financial statements should be read in conjunction with the summary of significant accounting policies and notes to the consolidated financial statements for the year ended December 31, 2025 included in the Company’s Annual Report on Form 10-K as filed with the Securities and Exchange Commission on March 17, 2026.

The accompanying unaudited consolidated financial statements have been prepared on the basis of continuity of operations, realization of assets and the satisfaction of liabilities and commitments in the ordinary course of business.

The Company’s unaudited consolidated financial statements include the accounts of the parent entity, Gaxos.AI, Inc. and RNK Health, which is a majority-owned subsidiary. All intercompany accounts and transactions have been eliminated in consolidation.

The Company accounts for its noncontrolling interest in RNK Health in accordance with ASC Topic 810-10-45, which requires the Company to present noncontrolling interests as a separate component of total shareholders’ equity on the consolidated balance sheets and the consolidated net loss attributable to its noncontrolling interest be clearly identified and presented on the face of the consolidated statements of operations and comprehensive loss.

GAXOS.AI INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2026
(Unaudited)

Liquidity

Liquidity is the ability of a company to generate funds to support its current and future operations, satisfy its obligations, and otherwise operate on an ongoing basis. On June 30, 2026, the Company had a cash balance of $1,089,449, had short-term investments of $10,353,040, and had working capital of $10,769,048. During the six months ended June 30, 2026, the Company used net cash in operations of $3,581,332. Until such time that the Company achieves its growth strategy, it expects to continue to generate operating losses in the foreseeable future, mostly due to corporate overhead, research and development, and costs of being a public company. The Company believes that its existing working capital and cash on hand will provide sufficient cash to enable the Company to meet its operating needs and debt requirements for the next twelve months from the issuance date of this report.

Use of Estimates

The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant estimates in the accompanying unaudited consolidated financial statements include the valuation of investments, valuation of intangible assets and other long-lived assets, the estimate of the sales returns reserve liability, the valuation of common shares issued to purchase intangible assets, estimates of deferred tax valuation allowances and the fair value of stock options issued for services.

Fair Value Measurements and Fair Value of Financial Instruments

The Company analyzes all financial instruments with features of both liabilities and equity under the Financial Accounting Standard Board’s (the “FASB”) accounting standard for such instruments. Under this standard, financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. The Company identified the following assets or liabilities that are required to be presented on the balance sheet at fair value in accordance with Accounting Standards Codification (“ASC”) Topic 820.

The three levels of the fair value hierarchy are as follows:

	●	Level 1 - Inputs are unadjusted quoted prices in active markets for identical assets or liabilities available at the measurement date.

	●	Level 2 - Inputs are unadjusted quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, inputs other than quoted prices that are observable, and inputs derived from or corroborated by observable market data.

	●	Level 3 - Inputs are unobservable inputs which reflect the reporting entity’s own assumptions on what assumptions the market participants would use in pricing the asset or liability based on the best available information.

The carrying amounts reported in the balance sheets for cash, accounts receivable, prepaid expenses and other current assets, accounts payable, and accrued expenses approximate their fair market value based on the short-term maturity of these instruments.

The following table represents the Company’s fair value hierarchy of its financial assets and liabilities measured at fair value on a recurring basis as of June 30, 2026 and December 31, 2025.

	June 30, 2026						December 31, 2025
Description	Level 1		Level 2		Level 3		Level 1		Level 2		Level 3
Short-term investments	$	10,353,040	$	-	$	-	$	11,345,187	$	-	$	-
Non-traded equity securities	$	-	$	-	$	60,000	$	-	$	-	$	180,000

The Company’s short-term investments are level 1 measurements and are based on the quoted fair value on each date.

GAXOS.AI INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2026
(Unaudited)

Investment in Non-Traded Equity Securities, at Fair Value

The following table summarizes activity in the Company’s investment in non-traded equity securities, at fair value for the periods presented:

	Six Months Ended June 30,			Six Months Ended June 30,
	2026			2025
Balance, beginning of period	$	180,000		$	199,998
Unrealized loss on non-traded equity securities		(120,000	)		-
Balance, end of period	$	60,000		$	199,998

On June 30, 2025, non-traded equity securities, at fair value, consisted of 666,660 shares of common equity securities of one entity, RPM Interactive, Inc., a security without a readily determinable fair value. On May 16, 2024, the Company purchased 666,660 common shares of RPM Interactive, Inc. for $199,998. On December 10, 2025, the Company exchanged a $10,000 note receivable into an additional 100,000 shares of RPM Interactive valued at $10,000. On December 12, 2025 (the “Exchange Date”), the Company exchanged its 766,660 shares of RPM Interactive for 402.45 shares of Avalon Globocare Corp’s (“Avalon”) Series E preferred shares valued at $60,000 and $180,000, as of June 30, 2026 and December 31, 2025, respectively, using a dribble out model using assumptions such as Avalon’s trading volume, sale restrictions, marketability discount and capitalization rate.

Cash and Cash Equivalents

For purposes of the consolidated statements of cash flows, the Company considers all highly liquid instruments with a maturity of three months or less at the purchase date and money market accounts to be cash equivalents. The Company has no cash equivalents as of June 30, 2026 and December 31, 2025.

The Company’s cash is held at major commercial banks, which may at times exceed the Federal Deposit Insurance Corporation (“FDIC”) limit. To date, the Company has not experienced any losses on its invested cash. Any loss incurred or a lack of access to such funds could have a significant adverse impact on the Company’s financial condition, results of operations, and cash flows.

On June 30, 2026, the Company had approximately $634,000 of cash in excess of FDIC limits of $250,000.

Accounts Receivable

The Company follows ASC 326, “Financial Instruments - Credit Losses” and recognizes an allowance for losses on accounts and notes receivable in an amount equal to the estimated probable losses net of recoveries under the current expected credit loss method. The allowance is based on an analysis of historical credit loss experience, current receivables aging, and expected future write-offs, as well as an assessment of specific identifiable customer accounts considered at risk or uncollectible. The credit loss expense associated with the allowance for doubtful accounts related to accounts receivable is recognized in general and administrative expenses. As of June 30, 2026 and December 31, 2025, accounts receivable amounted to $118,064 and $76,247, respectively. For the six months ended June 30, 2026 and 2025, the Company did not recognize any credit losses.

Short-Term Investments

The Company’s portfolio of short-term investments consists of marketable debt securities which are comprised of corporate bonds with maturities of more than three months, but less than one year. The Company classifies these as available-for-sale at purchase date and will reevaluate such designation at each period end date. The Company may sell these marketable debt securities prior to their stated maturities depending upon changing liquidity requirements. The debt securities are classified as current assets in the consolidated balance sheets and recorded at fair value, with unrealized gains or losses included in accumulated other comprehensive income (loss) on the consolidated balance sheets and as a component of the consolidated statements of comprehensive loss. The Company also invests in exchange-traded and closed end equity securities. The equity securities are classified as current assets in the consolidated balance sheets and recorded at fair value, with unrealized gains or losses included in other income (expense) on the consolidated statement of operation and comprehensive loss. Gains and losses are recognized when realized. Gains and losses are determined using the specific identification method and are reported in other income (expense), net in the consolidated statements of operations and comprehensive loss.

GAXOS.AI INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2026
(Unaudited)

An impairment loss may be recognized when the decline in fair value of the debt securities is determined to be other-than-temporary. The Company evaluates its investments for other-than-temporary declines in fair value below the cost-basis each quarter, or whenever events or changes in circumstances indicate that the cost basis of the short-term investments may not be recoverable. The evaluation is based on a number of factors, including the length of time and the extent to which the fair value has been below the cost basis, as well as adverse conditions related specifically to the security, such as any changes to the credit rating of the security and the intent to sell or whether the Company will more likely than not be required to sell the security before recovery of its amortized cost basis.

The Company recorded $60,355 and $85,732 of unrealized gain on short-term debt investments as a component of other comprehensive loss for the three months ended June 30, 2026 and 2025, respectively. The Company recorded $(324,729) and $16,692 of unrealized (loss) gain on short-term debt investments as a component of other comprehensive loss for the six months ended June 30, 2026 and 2025, respectively.

During the three months ended June 30, 2026 and 2025, the Company recognized a realized gain on sale of short-term equity investments of $24,879 and $2,605, respectively. During the six months ended June 30, 2026 and 2025, the Company recognized a realized gain on sale of short-term equity investments of $35,590 and $14,050, respectively.

During the three months ended June 30, 2026 and 2025, the Company recognized an unrealized gain on short-term equity investments of $0 and $8,615, respectively. During the six months ended June 30, 2026 and 2025, the Company recognized an unrealized (loss) gain on short-term equity investments of $(21,945) and $8,615, respectively.

Investment in Non-Traded Equity Securities, at Fair Value

Equity investments are carried at fair value with unrealized gains or losses which are recorded as net unrealized gain (loss) on equity investments in the accompanying consolidated statement of operations and comprehensive loss. Realized gains and losses are determined on a specific identification basis which is recorded in earnings or loss as a net realized gain (loss) on equity investments in the unaudited consolidated statement of operations and comprehensive loss. The Company reviews investments in non-traded equity securities, at fair value, for impairment whenever circumstances and situations change such that there is an indication that the carrying amounts may not be recovered. During the three and six months ended June 30, 2026, the Company recognized an unrealized loss on investments in non-traded equity securities of $46,000 and $120,000, respectively.

Investment in Cost Method Investees

The Company accounts for its interest in an entity where the Company has virtually no influence over operating and financial policies under the cost method of accounting. In such cases, the Company’s original investment is recorded at the cost to acquire the interest and any distributions received are recorded as income. This investment is subject to the Company’s impairment review policy. The Company reviews investment in cost method investee for impairment whenever circumstances and situations change such that there is an indication that the carrying amounts may not be recovered.

Property and Equipment

Property and equipment are stated at cost and are depreciated using the straight-line method over their estimated useful lives. Maintenance and repairs are charged to expense as incurred. When assets are retired or disposed of, the cost and accumulated depreciation are removed from the accounts, and any resulting gains or losses are included in income in the year of disposition. The Company examines the possibility of decreases in the value of these assets when events or changes in circumstances reflect the fact that their recorded value may not be recoverable.

Property and equipment includes capitalized internal-use software development costs. Costs incurred to develop internal-use software, including game development, are expensed as incurred during the preliminary project stage. Internal-use software development costs are capitalized during the application development stage, which is after: (i) the preliminary project stage is completed; and (ii) management authorizes and commits to funding the project and it is probable the project will be completed and used to perform the intended function. Capitalization ceases at the point where the software project is substantially complete and ready for its intended use, and after all substantial testing is completed. Upgrades and enhancements are capitalized if it is probable that those expenditures will result in additional functionality. Amortization is provided for on a straight-line basis over the expected useful life of the internal-use software development costs and related upgrades and enhancements, which currently is three years. When existing software is replaced with new software, the unamortized costs of the old software are expensed when the new software is ready for its intended use.

GAXOS.AI INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2026
(Unaudited)

Intangible Assets

Intangible assets, consisting of acquired software licenses, technology licenses and acquired software, are carried at cost less accumulated amortization, computed using the straight-line method over the estimated useful life of 5 years, less any impairment charges.

Stock-based Compensation

Stock-based compensation is accounted for based on the requirements of ASC 718 – “Compensation–Stock Compensation”, which requires recognition in the financial statements of the cost of employee, non-employee and director services received in exchange for an award of equity instruments over the period the employee or director is required to perform the services in exchange for the award (presumptively, the vesting period). The ASC also requires measurement of the cost of employee and director services received in exchange for an award based on the grant-date fair value of the award. The Company has elected to account for forfeitures as they occur.

Income Taxes

Deferred income taxes are provided using the liability method whereby deferred tax assets are recognized for deductible temporary differences and operating loss and tax credit carryforwards, and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of the changes in tax laws and rates of the date of enactment.

When tax returns are filed, it is highly certain that some positions taken would be sustained upon examination by the taxing authorities, while others are subject to uncertainty about the merits of the position taken or the amount of the position that would be ultimately sustained. The benefit of a tax position is recognized in the financial statements in the period during which, based on all available evidence, management believes it is more likely than not that the position will be sustained upon examination, including the resolution of appeals or litigation processes, if any. Tax positions taken are not offset or aggregated with other positions. Tax positions that meet the more-likely-than-not recognition threshold are measured as the largest amount of tax benefit that is more than 50 percent likely of being realized upon settlement with the applicable taxing authority. The portion of the benefits associated with tax positions taken that exceed the amount measured as described above is reflected as a liability for unrecognized tax benefits in the accompanying balance sheets along with any associated interest and penalties that would be payable to the taxing authorities upon examination. Applicable interest and penalties associated with unrecognized tax benefits are classified as additional income taxes in the consolidated statements of operations.

Revenue Recognition

The Company follows Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers (“ASC 606”). This standard establishes a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers. ASC 606 requires an entity to recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services and requires certain additional disclosures.

In accordance with ASU Topic 606 - Revenue from Contracts with Customers, the Company recognizes revenue in accordance with that core principle by applying the following steps:

Step 1: Identify the contract(s) with a customer.

Step 2: Identify the performance obligations in the contract.

Step 3: Determine the transaction price.

Step 4: Allocate the transaction price to the performance obligations in the contract.

Step 5: Recognize revenue when (or as) the entity satisfies a performance obligation.

GAXOS.AI INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2026
(Unaudited)

The Company generates revenue from the following sources:

●

Through June 2026, the Company generated revenue from the sale of our in-game items to our customers. Revenue generated from such sales, primarily through the app stores, such as Google Play Store or Apple App Store, was recognized at a point in time, which was upon delivery of the in-game items to the customer, which was when the Company completed its sole performance obligation. Fees incurred by the Company, such as commissions to the app stores, were recognized in operating expenses.

●

The Company generates revenue from the sale of health coaching packages to its customers. Health coaching packages consist of a series of lab tests and personal health coaching sessions. Revenues generated from such sales are recognized at a point in time, which is upon the completion of lab testing and the utilization of health coaching sessions, which is when the Company completes its performance obligation. Any fees paid in advance by the customer are reflected as contract liabilities until such time as the performance obligation is completed. Fees incurred by the Company, such as the lab testing charges, are recognized in operating expenses.

●

Gaxos Labs sells subscriptions to its customers for the use of its software under a software as a service subscription model (“SaaS”), which allows game developers and publishers to create content using AI which reduces creative asset development time. The Company’s SaaS offerings are sold under a prepaid or postpaid, usage-based pricing system pursuant to a tiers model, allowing customers to choose the subscription level to be charged based upon their intended usage. The subscription tiers utilize declining prices as the volume grows. Under prepaid pay-as-you-go plans, revenues related to contracts that do not include a specified contract period are recognized over a period of time, which is upon usage by the customer and satisfaction of the Company’s performance obligation. If professional services are deemed to be distinct, revenue is recognized over a period of time as services are performed. The Company does not view the signing of the contract or the provision of initial setup services as discrete earnings events that are distinct. Fees incurred by the Company, such as the merchant fees, are recognized in operating expenses.

●

In connection with RNK Health, the Company is generating revenues from providing non-clinical administrative services to support patient health. RNK Health has partnered with a third-party medical management company (the “Medical Partner”) that provides medication management and patient support care services via telehealth to patients located in all 50 states. The Medical Partner provides and makes available health care professionals to perform telehealth services within their respective scope of practice, provides and maintains applicable professional licensure, provides medication management services and provides RNK Health and patients access to the Medical Partner’s telehealth optimized technology platform. RNK Health provides services to patients to support the delivery of various medical services, including virtual rooming of patients, patient pathway advisory services, patient scheduling and interface connected to the Medical Partners central calendar, patient pathway monitoring and service, nonclinical patient customer service, care navigation service, software-based care optimization services, patient education services, patient intake system and data collection (the “Administrative Services”). The Company evaluates the presentation of revenue on a gross vs. net basis based on whether it acts as a principal by controlling the product or service sales to customers. The Company records these revenues on a net basis as an agent since Medical Partner is primarily responsible for fulfilling the contract with the customer, the Company does not have inventory risk before or after the goods have been ordered by a customer, during shipping, or on return, the Company’s consideration is in the form of a commission for its Administrative Services, and the Company is not exposed to credit risk for the amount receivable from a customer in exchange for the Medical Partner’s goods or services. The Medical Partner performs all medical management and patient support care services and the Medical Partner pays the Company its share of revenue. The Medical Partner has the right to refuse services to the Patient. The Company is obligated to fulfill the non-clinical administrative services and is reliant on the Medical Partner to accept the Patient, deliver all medication management and patient support services, and the collect and remit the Company’s commission to the Company. Revenues from non-clinical administrative services are recognized at a point in time, upon satisfaction of the performance obligation, which occurs when the non-clinical administrative services have been completed and collection of the fee is probable. RNK Health pays a monthly fee to the Medical Partner for access to the Medical Partners telehealth optimized technology platform, which is included in operating expenses on the accompanying consolidated statements of operations and comprehensive loss.

GAXOS.AI INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2026
(Unaudited)

During the three and six months ended June 30, 2026 and 2025, revenues consisted of the following:

	For the Three Months Ended June 30,				For the Six Months Ended June 30,
	2026		2025		2026		2025
Revenue from administrative services	$	1,737,052	$	170,398	$	2,982,961	$	192,950
Revenue from the sale of health coaching packages		-		-		-		1,124
Revenue from the sale of subscriptions		720,305		556		1,283,763		607
Revenue from sale of in-game items		-		17		-		22
Total revenues	$	2,457,357	$	170,971	$	4,266,724	$	194,703

For RNK Health, revenue refunds and credits are recorded as a reduction to revenues, and a return reserve liability is included in accrued expenses on the accompanying unaudited consolidated statement of operations and comprehensive loss. As of June 30, 2026 and December 31, 2025, the return reserve liability amounted to $29,693 and $15,667, respectively, which is included in accrued expenses on the accompanying consolidated balance sheets.

For the six months ended June 30, 2026 and 2025, deferred revenue activity consisted of the following:

	For the Six Months Ended June 30, 2026			For the Six Months Ended June 30, 2025
Balance – beginning of period	$	130,054		$	1,126
Additions		362,532			566
Recognized as revenue		(130,054	)		(1,126	)
Balance – end of period	$	362,532		$	566

During the six months ended June 30, 2026, $130,054 of the deferred revenue as of December 31, 2025 was recognized into revenues. Deferred revenue as of June 30, 2026 of $362,532 is expected to be realized during 2026.

Research and Development

Research and development costs incurred in the development of the Company’s products are expensed as incurred and include costs such as labor and outside development costs, software license fees, materials, and other allocated costs incurred.

Net Loss per Share

The Company computes net loss per share in accordance with ASC 260-10, “Earnings Per Share.” The basic net loss per common share is computed by dividing the net loss by the weighted average number of common shares outstanding. Diluted net loss per share gives effect to all dilutive potential common shares outstanding during the period using the “as if converted” basis.

Pursuant to ASC 260-10-45, basic loss per common share is computed by dividing net loss attributable to common stockholders by the weighted average number of shares of common stock outstanding for the period presented. Diluted loss per share is computed by dividing net loss attributable to common stockholders by the weighted average number of shares of common stock, common stock equivalents and potentially dilutive securities outstanding during the period.

During the three and six months ended June 30, 2026 and 2025, the following common stock equivalents were excluded from the computation of diluted shares outstanding as they would have had an anti-dilutive impact on the Company’s net loss.

	June 30,
	2026		2025
Common stock equivalents:
Warrants		4,509,259		4,509,259
Stock options		284,084		139,084
Total		4,793,343		4,648,343

GAXOS.AI INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2026
(Unaudited)

Noncontrolling Interests

The Company follows ASC Topic 810, “Consolidation,” governing the accounting for and reporting of noncontrolling interests (“NCI”) in its partially owned consolidated subsidiary. Certain provisions of this standard indicate, among other things, that NCI be treated as a separate component of equity, not as a liability, that increases and decreases in the parent’s ownership interest that leave control intact be treated as equity transactions rather than as step acquisitions or dilution gains or losses, and that losses of a partially-owned consolidated subsidiary be allocated to noncontrolling interests even when such allocation might result in a deficit balance. The net loss attributed to NCI was separately designated in the accompanying unaudited consolidated statements of operations and comprehensive loss. Losses attributable to NCI in a subsidiary may exceed a NCI’s interests in the subsidiary’s equity. The excess attributable to NCI is attributed to those interests. NCI shall continue to be attributed to their share of losses even if that attribution results in a deficit NCI balance.

Segment Reporting

The Company operates as a single operating segment technology-based company that is developing applications aimed at redefining the way we utilize artificial intelligence (“AI”) to optimize the user experience. In accordance with ASC 280 – “Segment Reporting”, the Company’s chief operating decision maker has been identified as the Chief Executive Officer, who reviews operating results to make decisions about allocating resources and assessing performance for the entire Company. Existing guidance, which is based on a management approach to segment reporting, establishes requirements to report selected segment information quarterly and to report annually entity-wide disclosures about products and services, major customers, and the countries in which the entity holds material assets and reports revenue. All material operating units qualify for aggregation under “Segment Reporting” due to their similarities in economic characteristics such as nature of services; and procurement processes. Since the Company operates in one segment, all financial information required by “Segment Reporting” can be found in the accompanying unaudited consolidated balance sheets and consolidated statements of operations and notes to unaudited consolidated financial statements.

Recent Accounting Pronouncements

In November 2024, the FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40), which requires entities to provide more detailed disaggregation of expenses in the income statement, focusing on the nature of the expenses rather than their function. The new disclosures will require entities to separately present expenses for significant line items, including but not limited to, depreciation, amortization, and employee compensation. Entities will also be required to provide a qualitative description of the amounts remaining in relevant expense captions that are not separately disaggregated quantitatively, disclose the total amount of selling expenses and, in annual reporting periods, provide a definition of what constitutes selling expenses. This pronouncement is effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027, with early adoption permitted. The Company does not expect the adoption of this new guidance to have a material impact on the consolidated financial statements.

In December 2025, the FASB issued ASU 2025-11, Interim Reporting (Topic 270), Narrow-Scope Improvements, to provide clarity about the current requirements, rather than evaluate whether to expand or reduce interim disclosure requirements. The amendments in ASU 2025-11 result in a comprehensive list of interim disclosures that are required by GAAP. The amendments in ASU 2025-11 also include a disclosure principle that requires entities to disclose events since the end of the last annual reporting period that have a material impact on the entity. The amendments in ASU 2025-11 are effective for interim reporting periods within annual reporting periods beginning after December 15, 2027 and early adoption is permitted. The amendments in ASU 2025-11 can be applied either prospectively or retrospectively to any or all prior periods presented in the financial statements. The Company is currently evaluating the disclosure impact that ASU 2025-11 may have on its financial statement presentation and disclosures.

Management does not believe that any other recently issued, but not yet effective accounting pronouncements, if adopted, would have a material effect on its consolidated financial statements.

GAXOS.AI INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2026
(Unaudited)

NOTE 3 – SHORT-TERM INVESTMENTS, INVESTMENT IN NON-TRADED EQUITY SECURITIES AND COST-METHOD INVESTMENTS

Short-Term Investments

On June 30, 2026, the Company’s short-term investments consisted of the following:

	Cost		Unrealized Loss			Fair Value
Corporate bonds	$	10,650,793	$	(297,753	)	$	10,353,040
Total short-term investments	$	10,650,793	$	(297,753	)	$	10,353,040

On December 31, 2025, the Company’s short-term investments consisted of the following:

	Cost		Unrealized Gain		Fair Value
Corporate bonds	$	10,903,573	$	26,976	$	10,930,549
Exchange-traded and closed end equity funds		392,693		21,945		414,638
Total short-term investments	$	11,296,266	$	48,921	$	11,345,187

During the six months ended June 30, 2026 and 2025, the realized gain or loss on short-term investments consisted of the following:

	For the Six Months Ended June 30, 2026			For the Six Months Ended June 30, 2025
Proceeds from the sale of short-term investments	$	8,701,471		$	3,194,096
Cost of short-term investments		(8,665,881	)		(3,180,046	)
Realized gain on short-term investments	$	35,590		$	14,050

Investment in Non-Traded Equity Securities, at Fair Value

The following table summarizes activity in the Company’s investment in non-traded equity securities, at fair value for the periods presented:

	For the Six Months Ended June 30, 2026			For the Six Months Ended June 30, 2025
Balance, beginning of period	$	180,000		$	199,998
Unrealized loss on non-traded equity securities		(120,000	)		-
Balance, end of period	$	60,000		$	199,998

On June 30, 2025, non-traded equity securities, at fair value, consisted of 666,660 shares of common equity securities of one entity, RPM Interactive, Inc., a security without a readily determinable fair value. On May 16, 2024, the Company purchased 666,660 common shares of RPM Interactive, Inc. for $199,998. On December 10, 2025, the Company exchanged a $10,000 note receivable into an additional 100,000 shares of RPM Interactive valued at $10,000. On December 12, 2025 (the “Exchange Date”), the Company exchanged its 766,660 shares of RPM Interactive for 402.45 shares of Avalon’s Series E preferred shares valued at $60,000 and $180,000 as of June 30, 2026 and December 31, 2025, respectively, using a dribble out model using assumptions such as Avalon’s trading volume, sale restrictions, marketability discount and capitalization rate.

GAXOS.AI INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2026
(Unaudited)

Investment in Cost Method Investees

On March 2, 2026, the Company entered into a Membership Interest Purchase Agreement (the “Purchase Agreement”) with America First Defense.AI LLC, a New Mexico limited liability company (“AFD”), pursuant to which the Company agreed to purchase, and AFD agreed to sell, 19.99% of AFD’s outstanding membership interests (the “Membership Interests”) for an aggregate purchase price of $2,900,000. The closing of the purchase (the “Closing”) occurred on March 4, 2026 and the Company paid the purchase price. Additionally, in April 2026, the Company paid expenses of $15,000 related to the Purchase Agreement, which was included in the purchase price for an aggregate purchase price of $2,915,000. The Purchase Agreement contains customary representations, warranties and covenants of the parties, including provisions regarding the private offering nature of the transaction. The Membership Interests have not been registered under the Securities Act of 1933, as amended (the “Securities Act”), or under applicable state securities laws, and are being issued and sold in reliance on an exemption from registration under Section 4(a)(2) of the Securities Act. The Purchase Agreement also includes restrictions on transfer of the Membership Interests, including that any transfer must be made in accordance with applicable law and AFD’s operating agreement.

On June 18, 2026, the Company entered into and simultaneously consummated the closing of an Asset Purchase Agreement, by and among the Company and Game Foundry AI (the “Buyer”) for the sale of substantially all of the Company’s gaming assets, including its portfolio of mobile games and Gaxos Gaming in exchange for the issuance of 2,200,000 shares of the Buyer’s common stock, for an aggregate estimated consideration of $1,760,000, or $0.80 per share, based on recent sales of Buyer’s common shares in a private placement. Additionally, the Company purchased 250,000 shares of the Buyer for cash of $200,000. As of June 30, 2026, the Company owns 2,450,000 common shares of Game Foundry with a cost basis of $1,960,000.

In connection with the sale of the Company’s gaming assets, for the three and six months ended June 30, 2026, the Company recorded a gain on sale of assets of $1,749,890, which includes the value of the Buyers common shares received of $1,760,000 less the write off on unamortized capitalized internal-use software development costs of $10,110.

NOTE 4 – PROPERTY AND EQUIPMENT

On June 30, 2026 and December 31, 2025, property and equipment consisted of the following:

	Useful life	June 30, 2026			December 31, 2025
Capitalized internal-use software development costs	3 years	$	109,600		$	185,231
Less: accumulated amortization			(43,893	)		(81,838	)
		$	65,707		$	103,393

For the six months ended June 30, 2026 and 2025, amortization of capitalized internal-use software development costs amounted to $