ABVC BIOPHARMA, INC. 10-K

Item 8. Financial Statements and Supplementary Data Our Consolidated Financial Statements and Notes thereto and the report of Simon & Edward, LLP, our independent registered public accounting firm, are set forth on pages F-1 through F-40 of this Report. PAGE F-2 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM (PCAOB ID 2485) PAGE F-4 CONSOLIDATED BALANCE SHEETS AS OF DECEMBER 31, 2025 AND DECEMBER 31, 2024. PAGE F-5 CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS FOR THE YEARS ENDED DECEMBER 31, 2025 AND DECEMBER 31, 2024. PAGE F-6 CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2025 AND DECEMBER 31, 2024. PAGES F-7 CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY FOR THE YEARS ENDED DECEMBER 31, 2025 AND DECEMBER 31, 2024. PAGES F-8 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS. F- 1 17506 Colima Road, Ste 101, Rowland Heights, CA 91748 Tel: +1 (626) 581-0818 Fax: +1 (626) 581-0809 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM Shareholders and Board of Directors ABVC BioPharma, Inc. Fremont, CA Opinion on the Consolidated Financial Statements We have audited the accompanying consolidated balance sheets of ABVC BioPharma, Inc. and subsidiaries (the “Company”) as of December 31, 2025 and 2024, the related consolidated statements of operations and comprehensive loss, stockholders’ equity, and cash flows for each of the years then ended, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2025 and 2024, and the results of its operations and its cash flows for the years then ended , in conformity with accounting principles generally accepted in the United States of America. Substantial Doubt About the Company’s Ability to Continue as a Going Concern The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As described in Note 2 to the consolidated financial statements, the Company incurred substantial losses during the year ended December 31, 2025. As of December 31, 2025, the Company had a working capital deficit and net cash outflows from operating activities. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 2. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. Our opinion is not modified with respect to this matter. Basis for Opinion These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion. F- 2 Critical Audit Matters The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of the critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate. Asset acquired from related party As described in Note 5 to the consolidated financial statements, the Company acquired land in Taoyuan City, Taiwan from a related party for total consideration consisting of the Company’s common shares and warrants. Due to local regulatory restrictions in Taiwan preventing foreign entities from directly holding certain land titles, the property is held under a nominee holding arrangement where the legal title remains with the related party seller for the beneficial interest of the Company. We identified the accounting for this related party asset acquisition as a critical audit matter due to the high degree of auditor judgment and specialized skills required to evaluate the transaction’s measurement and economic substance. Specifically, the significant estimations used in the warrant valuation presented substantial challenges. Finally, the nominee holding arrangement required extensive legal and structural analysis to validate the Company’s “substance over form” claim of beneficial ownership and to ensure the proper recognition of the asset in accordance with U.S. GAAP. The primary procedures we performed to address this critical audit matter included: Ø Inspected the Definitive Land Purchase Agreement and related shareholder’s meeting minutes to understand the terms, conditions, and business purpose of the transaction. Ø Inspected the executed Nominee Holding Agreement between the Company and the related party seller. We evaluated the legal terms to ensure the Company retains all economic benefits, risks, and ultimate control over the land, despite the legal title being held by a related party due to local regulatory restrictions in Taiwan. Ø Performed a physical inspection of the acquired land in Taiwan to verify its existence, location, and current condition, and to observe any indicators of potential impairment or third-party usage that might conflict with the Company’s beneficial ownership. Ø Evaluated the reasonableness of the methodology and significant assumptions used by management to determine the cost of the acquired asset. Ø Independently tested the key inputs used in the warrant valuation model by comparing the underlying stock price and risk-free interest rates to observable market data and historical information. Ø Tested the mathematical accuracy of management’s valuation model to ensure the calculated fair value was consistent with the selected option-pricing methodology. Ø Inspected the independent appraisal report of the real estate and evaluated the competence and objectivity of the appraiser. Ø Verified the issuance of common stock through transfer agent confirmation procedure. Ø Evaluated the completeness and accuracy of the related party disclosures in the financial statements to ensure compliance with ASC 850, Related Party Disclosures. /s/ Simon & Edward, LLP We have served as the Company’s auditor since 2024. PCAOB ID: 2485 Rowland Heights, California March 3, 2026 F- 3 ABVC BIOPHARMA, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS December 31, 2025 2024 ASSETS Current Assets Cash and cash equivalents $ 681,480 $ 248,382 Restricted cash 645,505 615,433 Due from related parties – current 763,388 1,155,051 Short-term investments 64,354 64,736 Prepaid expense and other current assets 346,616 96,213 Total Current Assets 2,501,343 2,179,815 Property and equipment, net 12,835,409 511,088 Operating lease right-of-use assets 1,913,278 640,387 Long-term investments 1,878,465 2,258,754 Prepayment for long-term investments 1,124,842 1,124,842 Prepayment for asset acquisition 691,900 691,900 Other non-current assets 116,966 133,121 Total Assets $ 21,062,203 $ 7,539,907 LIABILITIES AND EQUITY Current Liabilities Short-term bank and other loans $ 755,512 $ 840,252 Accrued expenses and other current liabilities 4,161,629 3,509,422 Contract liabilities 12,600 81,115 Operating lease liabilities – current 317,557 403,581 Due to related parties 105,704 773,045 Tax payable 11,964 - Convertible notes payable – third parties, net 559,010 950,046 Convertible notes payable – related parties, net 240,000 - Total Current Liabilities 6,163,976 6,557,461 Tenant security deposit - 21,680 Operating lease liability – non-current 1,600,747 236,807 Total Liabilities 7,764,723 6,815,948 COMMITMENTS AND CONTINGENCIES Equity Preferred stock, $ 0.001 par value, 20,000,000 authorized, nil shares issued and outstanding - - Common stock, $ 0.001 par value, 100,000,000 authorized, 25,053,193 and 13,868,484 shares issued and outstanding as of December 31, 2025 and 2024, respectively 25,053 13,868 Stock to be issued 359,000 31,040 Additional paid-in capital 96,008,258 78,595,065 Accumulated deficit ( 76,858,361 ) ( 68,949,807 ) Accumulated other comprehensive income 487,602 445,665 Treasury stock ( 8,909,691 ) ( 8,909,691 ) Total Stockholders’ equity 11,111,861 1,226,140 Noncontrolling interest 2,185,619 ( 502,181 ) Total Equity 13,297,480 723,959 Total Liabilities and Equity $ 21,062,203 $ 7,539,907 The accompanying notes are an integral part of these consolidated financial statements. F- 4 ABVC BIOPHARMA, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS YEARS ENDED DECEMBER 31, 2025 AND 2024 2025 2024 Revenue $ - $ 509,589 Cost of revenue - 763 Gross profit - 508,826 Operating expenses Selling, general and administrative expenses 2,887,358 2,261,336 Research and development expenses 121,085 179,272 Stock-based compensation 4,142,816 2,773,460 Total operating expenses 7,151,259 5,214,068 Loss from operations ( 7,151,259 ) ( 4,705,242 ) Other income (expense) Interest income 167,103 87,358 Interest expense ( 415,890 ) ( 825,899 ) Operating sublease income 134,196 48,478 Loss on foreign exchange changes ( 77,546 ) ( 25,135 ) Loss on investment in equity securities ( 192,759 ) ( 339,171 ) Loss on impairment of equity investment ( 803,008 ) - Write off unclaimed accrued liabilities - 255,592 Other (loss) income, net ( 13,642 ) 134,443 Total other expenses ( 1,201,546 ) ( 664,334 ) Loss before provision for income tax ( 8,352,805 ) ( 5,369,576 ) Provision for income tax expense (benefit) 24,154 ( 110,539 ) Net loss ( 8,376,959 ) ( 5,259,037 ) Net loss attributable to noncontrolling interests ( 468,405 ) ( 356,159 ) Net loss attributed to ABVC and subsidiaries ( 7,908,554 ) ( 4,902,878 ) Foreign currency translation adjustment 41,937 ( 70,722 ) Comprehensive loss $ ( 7,866,617 ) $ ( 4,973,600 ) Net loss per share: Basic and diluted $ ( 0.39 ) $ ( 0.42 ) Weighted average number of common shares outstanding: Basic and diluted 20,108,944 11,673,980 The accompanying notes are an integral part of these consolidated financial statements. F- 5 ABVC BIOPHARMA, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS YEARS ENDED DECEMBER 31, 2025 AND 2024 2025 2024 Cash flows from operating activities Net loss $ ( 8,376,959 ) $ ( 5,259,037 ) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation 25,330 32,025 Stock-based compensation 4,142,816 2,773,460 Inventory write-down 11,460 - Provision for doubtful accounts - 11,993 Other non-cash expenses, net 351,085 532,769 Loss on investment in equity securities 192,759 339,171 Loss on impairment of equity investment 803,008 - Amortization of right-of-use asset 479,504 168,896 Changes in operating assets and liabilities: Inventory ( 11,460 ) - Prepaid expenses and other current assets ( 71,653 ) 12,948 Due from related parties ( 136,501 ) ( 293,962 ) Accrued expenses and other current liabilities 152,207 152,819 Contract liabilities ( 68,515 ) 1,615 Tenant security deposit ( 16,865 ) - Taxes payables 11,964 ( 112,946 ) Operating lease liabilities ( 474,479 ) ( 168,896 ) Net cash used in operating activities ( 2,986,299 ) ( 1,809,145 ) Cash flows from investing activities Loan to related parties ( 1,406,022 ) - Repayment from related parties 203,026 - Transaction costs for acquiring land ( 5,794 ) - Net cash used in investing activities ( 1,208,790 ) - Cash flows from financing activities Proceeds from private placement 3,305,303 - Proceeds from exercise of warrants 991,366 947,500 Proceeds from convertible notes payable – third parties 499,010 342,095 Repayment of convertible notes payable – third parties ( 277,284 ) ( 327,017 ) Proceeds from convertible notes payable – related parties 390,000 - Repayment of convertible notes payable – related parties ( 150,000 ) - Repayment of short-term bank loans ( 120,400 ) ( 29,152 ) Proceeds from related party payables - 599,552 Proceeds from issuance of warrants - 394,071 Repurchase of treasury stocks - ( 7,320 ) Proceeds from issuance of a promissory note - 30,000 Proceeds from common stock subscription - 31,040 Net cash provided by financing activities 4,637,995 1,980,769 Effect of exchange rate changes on cash and cash equivalents and restricted cash 20,264 ( 24,589 ) Net increase in cash and cash equivalents and restricted cash 463,170 147,035 Cash and cash equivalents and restricted cash Beginning 863,815 716,780 Ending $ 1,326,985 $ 863,815 Supplemental disclosure of cash flows Cash paid during the year for: Interest expense paid $ 31,518 $ 22,539 Income taxes paid $ 12,077 $ 25,863 Non-cash financing and investing activities Issuance of subsidiary’s commons stock to acquire the control of the land $ 7,670,000 $ - Issuance of common stock and stock warrants in the land acquisition $ 4,156,461 $ - Increase in ROU asset and lease liabilities due to lease amendment $ 1,752,395 $ - Conversion of convertible note due from related parties to equity investment $ 563,819 $ - Assuming loan in the land acquisition $ 500,000 $ - Issuance of common stock for conversion of debt $ 463,847 $ 593,714 Issuance of subsidiary’s common stock for consulting services $ - $ 383,500 The accompanying notes are an integral part of these consolidated financial statements. F- 6 ABVC BIOPHARMA, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY YEARS ENDED DECEMBER 31, 2025 AND 2024 Common Stock Additional Treasury Stock Non Number of shares Amounts Subscribed stock Paid-in Capital Accumulated Deficit Comprehensive Income Number of Shares Amount controlling Interest Stockholders’ Equity Balance at December 31, 2023 7,940,298 7,940 - 73,978,380 ( 64,046,929 ) 516,387 ( 26,553 ) ( 8,901,668 ) ( 300,637 ) 1,253,473 Issuance of common shares for Lind CN 1,705,303 1,706 - 592,008 - - - - - 593,714 Issuance of pre-funded warrant - - - 394,071 - - - - - 394,071 Issuance of common shares for acquisition of property 703,496 703 - - - - ( 703,496 ) ( 703 ) - - Stock-based compensation 2,019,387 2,019 - 2,451,854 - - - - - 2,453,873 Issuance of common shares for exercise of warrants 1,500,000 1,500 - 946,000 - - - - - 947,500 Repurchase of common stock from a prior employee - - - - - - ( 592 ) ( 7,320 ) - ( 7,320 ) Stock subscription received - - 31,040 - - - - - - 31,040 Issuance of subsidiary’s common shares for consulting service - - - 225,690 - - - - 157,810 383,500 Debt discount recognized from Issuance of subsidiary’s convertible note - - - 2,276 - - - - 1,591 3,867 Decrease in ownership of subsidiary due to share issuance - - - 4,786 - - - - ( 4,786 ) - Net loss - - - - ( 4,902,878 ) - - - ( 356,159 ) ( 5,259,037 ) Cumulative transaction adjustments - - - - - ( 70,722 ) - - - ( 70,722 ) Balance at December 31, 2024 13,868,484 $ 13,868 $ 31,040 $ 78,595,065 $ ( 68,949,807 ) $ 445,665 ( 730,641 ) $ ( 8,909,691 ) $ ( 502,181 ) $ 723,959 Issuance of common shares for Lind Notes repayment 1,336,239 1,336 - 462,511 - - - - - 463,847 Issuance of common shares for exercise of warrants 1,745,418 1,746 - 989,620 - - - - - 991,366 Issuance of common shares in private offerings 3,354,475 3,355 ( 31,040 ) 3,332,988 - - - - - 3,305,303 Stock-based compensation 2,713,441 2,713 359,000 3,959,853 - - - - - 4,321,566 Acquisition of control of acquired land - - - 4,513,795 - - - - 3,156,205 7,670,000 Acquisition of land 2,035,136 2,035 - 4,154,426 - - - - - 4,156,461 Net loss - - - - ( 7,908,554 ) - - - ( 468,405 ) ( 8,376,959 ) Cumulative transaction adjustments - - - - - 41,937 - - - 41,937 Balance at December 31, 2025 25,053,193 $ 25,053 $ 359,000 $ 96,008,258 $ ( 76,858,361 ) $ 487,602 ( 730,641 ) $ ( 8,909,691 ) $ 2,185,619 $ 13,297,480 The accompanying notes are an integral part of these consolidated financial statements. F- 7 ABVC BIOPHARMA, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. ORGANIZATION AND DESCRIPTION OF BUSINESS ABVC BioPharma, Inc. (the “Company”), formerly known as American BriVision (Holding) Corporation, a Nevada corporation, through the Company’s operating entity, American BriVision Corporation (“BriVision”), which was incorporated in July 2015 in the State of Delaware, engages in biotechnology to fulfill unmet medical needs and focuses on the development of new drugs and medical devices derived from plants. BriVision develops its pipeline by carefully tracking new medical discoveries or medical device technologies in research institutions in the Asia-Pacific region. Pre-clinical, disease animal model and Phase I safety studies are examined closely by the Company to identify drugs that BriVision believes demonstrate efficacy and safety. Once a drug appears to be a good candidate for development and ultimately commercialization, BriVision licenses the drug or medical device from the original researchers and begins to introduce the drugs clinical plan to highly respected principal investigators in the United States, Australia and Taiwan to conduct a Phase II clinical trial. At present, clinical trials for the Company’s drugs and medical devices are being conducted at such world-famous institutions including Stanford University, University of California San Fransisco (UCSF) and Cedar Sinai Medical Centre (CSMC). The Company has three wholly-owned subsidiaries, BriVision, BioLite Holding Inc. (“BioLite Holding”), BioKey (Cayman), Inc (“BioKey Cayman”), and a majority-owned subsidiary, AiBtl BioPharma Inc. (“AiBtl”). BioLite Holding was incorporated in the State of Nevada with wholly owned subsidiary BioLite BVI, Inc. (“BioLite BVI”) that was incorporated in the British Virgin Islands . BioLite BVI holds 73 % ownership of BioLite Inc. (“BioLite Taiwan”), a Taiwanese corporation that was founded in February 2006. BioLite Taiwan has been in the business of developing new drugs since it was incorporated. Yun Zhi Yi Co. Ltd. (“Yun Zhi Yi”), a Taiwanese entity in which BioLite holds a 90 % stake and Shuling Jiang, a director and beneficial owner of more than 10 % of the ABVC’s outstanding common stock (“Shuling”, or “Ms. Jiang”), holds the remaining 10 % stake. This entity is set up for holding the land that AiBtl is working to acquire in Puli, Taiwan for developing health related business in Taiwan. BioKey Cayman was incorporated in Cayman Islands in July 2023, which is 100 % owned by ABVC. This subsidiary has no activities since inception. On May 10, 2025, ABVC transferred its 100 % ownership in BioKey Inc. (“BioKey”) to BioKey Cayman. This reorganization did not have any other impact on the consolidated financial statements. Incorporated in California on November 20, 2000, BioKey has chosen to initially focus on developing generic drugs to ride the opportunity of the booming industry. AiBtl was acquired by the Company with the transaction of the collaborative licensing agreements. On November 12, 2023, the Company and BioLite Taiwan each entered into a multi-year, global licensing agreement with AiBtl for the Company and BioLite Taiwan’s CNS drugs with the indications of MDD (Major Depressive Disorder) and ADHD (Attention Deficit Hyperactivity Disorder) (collectively, the “Licensed Products”). The potential license will cover the Licensed Products’ clinical trial, registration, manufacturing, supply, and distribution rights. The parties are determined to collaborate on the global development of the Licensed Products. The parties are also working to strengthen new drug development and business collaboration, including technology, interoperability, and standards development. As per each of the respective agreements, each of ABVC and BioLite Taiwan received 23 million shares of AiBtl stock and as a result, the Company has a controlling interest over AiBtl. If certain milestones are met, the Company and BioLite Taiwan are each eligible to receive $ 3,500,000 and royalties equaling 5 % of net sales, up to $ 100 million. The financial statements of AiBtl are included in the Company’s consolidated financial statements. As a result of these transactions, the Company became a controlling parent of AiBtl, with 58.85 % of group ownership over AiBtl. F- 8 2. LIQUIDITY, GOING CONCERN, AND RESTATEMENT Liquidity and Going Concern The accompanying financial statements have been prepared in conformity with the generally accepted accounting principles in the United States of America (the “U.S. GAAP”) which contemplates continuation of the Company on a going concern basis. The going concern basis assumes that assets are realized, and liabilities are settled in the ordinary course of business at amounts disclosed in the financial statements. The Company’s ability to continue as a going concern depends upon its ability to market and sell its products to generate positive operating cash flows. For the year ended December 31, 2025, the Company reported net loss of $ 8,376,959 . As of December 31, 2025, the Company’s working capital deficit was $ 3,662,633 . In addition, the Company had net cash outflows of $ 2,986,299 from operating activities for the year ended December 31, 2025. These conditions give rise to substantial doubt as to whether the Company will be able to continue as a going concern. To sustain its ability to support the Company’s operating activities, the Company may have to consider supplementing its available sources of funds through the following sources: ● cash generated from operations; ● other available sources of financing from banks and other financial institutions in the U.S. and in Taiwan; and ● financial support from the Company’s related parties and shareholders. Management’s plan is to continue to improve operations to generate positive cash flows and raise additional capital through private or public offerings, or financial support from related parties or shareholders. If the Company is not able to generate positive operating cash flows, and raise additional capital, there is the risk that the Company may not be able to meet its short-term obligations. All of these factors raise substantial doubt about the ability of the Company to continue as a going concern. The consolidated financial statements for the years ended December 31, 2025 and 2024 have been prepared on a going concern basis and do not include any adjustments to reflect the possible future effects on the recoverability and classifications of assets or the amounts and classifications of liabilities that may result from the inability of the Company to continue as a going concern. 3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation The accompanying consolidated financial statements have been prepared in accordance with the U.S. GAAP and pursuant to the regulations of the Securities and Exchange Commission (the “SEC”). All significant intercompany transactions and account balances have been eliminated. The Company’s fiscal year is the calendar year. Reclassifications of Prior Year Presentation Certain amounts on prior year’s consolidated financial statements have been reclassified for consistency with the current year presentation. These reclassifications had no effect on the reported results of operations. F- 9 Use of Estimates The preparation of financial statements in conformity with the U.S. GAAP that requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the amount of revenues and expenses during the reporting periods. Actual results could differ materially from those results. Fair Value Measurements ASC 820 “Fair Value Measurements” defines fair value for certain financial and nonfinancial assets and liabilities that are recorded at fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. It requires that an entity measures its financial instruments to base fair value on exit price, maximize the use of observable units and minimize the use of unobservable inputs to determine the exit price. It establishes a hierarchy which prioritizes the inputs to valuation techniques used to measure fair value. This hierarchy increases the consistency and comparability of fair value measurements and related disclosures by maximizing the use of observable inputs and minimizing the use of unobservable inputs by requiring that observable inputs be used when available. Observable inputs are inputs that reflect the assumptions market participants would use in pricing the assets or liabilities based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that reflect the Company’s own assumptions about the assumptions market participants would use in pricing the asset or liability developed based on the best information available in circumstances. The hierarchy prioritizes the inputs into three broad levels based on the reliability of the inputs as follows: ● Level 1– Inputs are quoted prices in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date. Valuation of these instruments does not require a high degree of judgment as the valuations are based on quoted prices in active markets that are readily and regularly available. ● Level 2– Inputs other than quoted prices in active markets that are either directly or indirectly observable as of the measurement date, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. ● Level 3– Valuations based on inputs that are unobservable and not corroborated by market data. The fair value for such assets and liabilities is generally determined using pricing models, discounted cash flow methodologies, or similar techniques that incorporate the assumptions a market participant would use in pricing the asset or liability. The carrying values of certain assets and liabilities of the Company, such as cash and cash equivalents, restricted cash, accounts receivable, short-term investments, due from related parties, prepaid expenses and other current assets, accrued expenses and other current liabilities, and due to related parties, approximate fair value due to their relatively short maturities. The carrying value of the Company’s short-term bank loans and convertible notes payable approximates their fair value as the terms of the borrowing are consistent with current market rates and the duration to maturity is short. Concentration of Credit Risk The Company’s financial instruments that are exposed to concentrations of credit risk consist primarily of cash and cash equivalents. The Company places its cash and temporary cash investments in high quality credit institutions, but these investments may be in excess of the limit of $ 95,400 (NTD 3.0 million) covered by Taiwan Central Deposit Insurance Corporation, and the limit of $ 250,000 covered by the U.S. Federal Deposit Insurance Corporation’s (“FDIC”) insurance limits. As of December 31, 2025, and December 31, 2024, the Company had approximately $ 265,521 and $ 0 , respectively, in cash and cash equivalent balances that were in excess of the FDIC limits. However, the Company does not anticipate any losses on excess deposits. The Company does not enter into financial instruments for hedging, trading or speculative purposes. The Company performs ongoing credit evaluation of its customers and requires no collateral. Credit losses and allowance for unbilled receivables are provided based on a review of the collectability of accounts receivable. The Company determines the amount of allowance for doubtful accounts by examining its historical collection experience and current trends in the credit quality of its customers as well as its internal credit policies. Actual credit losses may differ from our estimates. F- 10 Concentration of Clients As of December 31, 2025 and 2024, management estimated all accounts receivable balances are uncollectible and recognized $0 and $ 11,993 of credit loss, respectively. For the year ended December 31, 2025, the Company did not receive any payments for the license agreements. For the year ended December 31, 2024, the out-licensing income from our two major licensees, accounts for 58 % and 39 % of the Company’s total revenue. Cash and Cash Equivalents The Company considers highly liquid investments with maturities of three months or less to be cash equivalents when purchased. As of December 31, 2025 and 2024, the Company’s cash and cash equivalents amounted to $ 681,480 and $ 248,382 , respectively. Some of the Company’s cash deposits are held in financial institutions located in Taiwan where there is currently regulation mandated on obligatory insurance of bank accounts. The Company believes this financial institution is of high credit quality. Restricted Cash Restricted cash primarily consists of cash held in a reserve bank account in Taiwan. As of December 31, 2025 and 2024, the Company’s restricted cash amounted $ 645,505 (NTD 20.3 million) and $ 615,433 (NTD 20.2 million), respectively. Accounts receivable and allowance for expected credit losses accounts Accounts receivable is recorded and carried at the original invoiced amount less an allowance for any potential uncollectible amounts. The Company make estimates of expected credit and collectability trends for the allowance for credit losses and allowance for unbilled receivables based upon our assessment of various factors, including historical experience, the age of the accounts receivable balances, credit quality of customers, current economic conditions reasonable and supportable forecasts of future economic conditions, and other factors that may affect our ability to collect from customers. The provision is recorded against accounts receivable balances, with a corresponding charge recorded in the consolidated statements of income. Actual amounts received may differ from management’s estimate of credit worthiness and the economic environment. Delinquent account balances are written-off against the allowance for doubtful accounts after management has determined that the likelihood of collection is not probable. Allowance for expected credit losses accounts was $ 614,470 and $ 616,414 as of December 31, 2025 and 2024, respectively. Inventory Write-Down Inventory is carried at the lower of cost or net realizable value. The Company evaluates inventory for excess, obsolescence, and declines in selling price. When the cost of inventory exceeds its estimated net realizable value, a write-down is recorded within cost of goods sold. Write-downs are not reversed for subsequent increases in value. F- 11 Revenue Recognition The Company recognizes revenue in accordance with ASC 606, Revenue from Contracts with Customers. Pursuant to ASC 606, the Company recognizes revenue when its customer obtains control of promised goods or services, in an amount that reflects the consideration that the Company expects to receive in exchange for those goods or services. To determine revenue recognition for arrangements that the Company determines is within the scope of ASC 606, the Company performs the following five steps: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the Company satisfies a performance obligation. The Company only applies the five-step model to contracts when it is probable that the Company will collect the consideration the Company is entitled to in exchange for the goods or services the Company transfers to the customers. At inception of the contract, once the contract is determined to be within the scope of ASC 606, the Company assesses the goods or services promised within each contract, determines those that are performance obligations, and assesses whether each promised good or service is distinct. The Company then recognizes as revenue the amount of the transaction price that is allocated to the respective performance obligation when (or as) the performance obligation is satisfied. The following are examples of when the Company recognizes revenue based on the types of payments the Company receives. Collaborative Revenues — The Company recognizes collaborative revenues generated through collaborative research, development and/or commercialization agreements. The terms of these agreements typically include payment to the Company related to one or more of the following: non-refundable upfront license fees, development and commercial milestones, partial or complete reimbursement of research and development costs, and royalties on net sales of licensed products. Each type of payments results in collaborative revenues except for revenues from royalties on net sales of licensed products, which are classified as royalty revenues. To date, the Company has not received any royalty revenues. Revenue is recognized upon satisfaction of a performance obligation by transferring control of a good or service to the collaboration partners. As part of the accounting for these arrangements, the Company applies judgment to determine whether the performance obligations are distinct, and develop assumptions in determining the stand-alone selling price for each distinct performance obligation identified in the collaboration agreements. To determine the stand-alone selling price, the Company relies on assumptions which may include forecasted revenues, development timelines, reimbursement rates for R&D personnel costs, discount rates and probabilities of technical and regulatory success. The Company had multiple deliverables under the collaborative agreements, including deliverables relating to grants of technology licenses, regulatory and clinical development, and marketing activities. Estimation of the performance periods of the Company’s deliverables requires the use of management’s judgment. Significant factors considered in management’s evaluation of the estimated performance periods include, but are not limited to, the Company’s experience in conducting clinical development, regulatory and manufacturing activities. The Company reviews the estimated duration of its performance periods under its collaborative agreements on an annually basis, and makes any appropriate adjustments on a prospective basis. Future changes in estimates of the performance period under its collaborative agreements could impact the timing of future revenue recognition. (i) Non-refundable upfront payments If a license to the Company’s intellectual property is determined to be distinct from the other performance obligations identified in an arrangement, the Company recognizes revenue from the related non-refundable upfront payments based on the relative standalone selling price prescribed to the license compared to the total selling price of the arrangement. The revenue is recognized when the license is transferred to the collaboration partners and the collaboration partners are able to use and benefit from the license. To date, the receipt of non-refundable upfront fees was solely for the compensation of past research efforts and contributions made by the Company before the collaborative agreements entered into and it does not relate to any future obligations and commitments made between the Company and the collaboration partners in the collaborative agreements. F- 12 (ii) Milestone payments The Company is eligible to receive milestone payments under the collaborative agreement with collaboration partners based on achievement of specified development, regulatory and commercial events. Management evaluated the nature of the events triggering these contingent payments, and concluded that these events fall into two categories: (a) events which involve the performance of the Company’s obligations under the collaborative agreement with collaboration partners, and (b) events which do not involve the performance of the Company’s obligations under the collaborative agreement with collaboration partners. The former category of milestone payments consists of those triggered by development and regulatory activities in the territories specified in the collaborative agreements. Management concluded that each of these payments constitute substantive milestone payments. This conclusion was based primarily on the facts that (i) each triggering event represents a specific outcome that can be achieved only through successful performance by the Company of one or more of its deliverables, (ii) achievement of each triggering event was subject to inherent risk and uncertainty and would result in additional payments becoming due to the Company, (iii) each of the milestone payments is non-refundable, (iv) substantial effort is required to complete each milestone, (v) the amount of each milestone payment is reasonable in relation to the value created in achieving the milestone, (vi) a substantial amount of time is expected to pass between the upfront payment and the potential milestone payments, and (vii) the milestone payments relate solely to past performance. Based on the foregoing, the Company recognizes any revenue from these milestone payments in the period in which the underlying triggering event occurs. (iii) Multiple Element Arrangements The Company evaluates multiple element arrangements to determine (1) the deliverables included in the arrangement and (2) whether the individual deliverables represent separate units of accounting or whether they must be accounted for as a combined unit of accounting. This evaluation involves subjective determinations and requires management to make judgments about the individual deliverables and whether such deliverables are separate from other aspects of the contractual relationship. Deliverables are considered separate units of accounting provided that: (i) the delivered item(s) has value to the customer on a standalone basis and (ii) if the arrangement includes a general right of return relative to the delivered item(s), delivery or performance of the undelivered item(s) is considered probable and substantially within its control. In assessing whether an item under a collaboration has standalone value, the Company considers factors such as the research, manufacturing, and commercialization capabilities of the collaboration partner and the availability of the associated expertise in the general marketplace. The Company also considers whether its collaboration partners can use the other deliverable(s) for their intended purpose without the receipt of the remaining element(s), whether the value of the deliverable is dependent on the undelivered item(s), and whether there are other vendors that can provide the undelivered element(s). The Company recognizes arrangement consideration allocated to each unit of accounting when all of the revenue recognition criteria in ASC 606 are satisfied for that particular unit of accounting. In the event that a deliverable does not represent a separate unit of accounting, the Company recognizes revenue from the combined unit of accounting over the Company’s contractual or estimated performance period for the undelivered elements, which is typically the term of the Company’s research and development obligations. If there is no discernible pattern of performance or objectively measurable performance measures do not exist, then the Company recognizes revenue under the arrangement on a straight-line basis over the period the Company is expected to complete its performance obligations. Conversely, if the pattern of performance in which the service is provided to the customer can be determined and objectively measurable performance measures exist, then the Company recognizes revenue under the arrangement using the proportional performance method. Revenue recognized is limited to the lesser of the cumulative amount of payments received or the cumulative amount of revenue earned, as determined using the straight-line method or proportional performance method, as applicable, as of the period ending date. At the inception of an arrangement that includes milestone payments, the Company evaluates whether each milestone is substantive and at risk to both parties on the basis of the contingent nature of the milestone. This evaluation includes an assessment of whether: (1) the consideration is commensurate with either the Company’s performance to achieve the milestone or the enhancement of the value of the delivered item(s) as a result of a specific outcome resulting from its performance to achieve the milestone, (2) the consideration relates solely to past performance and (3) the consideration is reasonable relative to all of the deliverables and payment terms within the arrangement. The Company evaluates factors such as the scientific, clinical, regulatory, commercial, and other risks that must be overcome to achieve the particular milestone and the level of effort and investment required to achieve the particular milestone in making this assessment. There is considerable judgment involved in determining whether a milestone satisfies all of the criteria required to conclude that a milestone is substantive. Milestones that are not considered substantive are recognized as earned if there are no remaining performance obligations or over the remaining period of performance, assuming all other revenue recognition criteria are met. F- 13 (iv) Royalties and Profit Sharing Payments Under the collaborative agreement with the collaboration partners, the Company is entitled to receive royalties on sales of products, which is at certain percentage of the net sales. The Company recognizes revenue from these events based on the revenue recognition criteria set forth in ASC 606. Based on those criteria, the Company considers these payments to be contingent revenues, and recognizes them as revenue in the period in which the applicable contingency is resolved. Revenues Derived from Research and Development Activities Services (Also known as the Contract Development & Manufacturing Organization Services (“CDMO”)) — Revenues related to research and development and regulatory activities are recognized when the related services or activities are performed, in accordance with the contract terms. The Company typically has only one performance obligation at the inception of a contract, which is to perform research and development services. The Company may also provide its customers with an option to request that the Company provides additional goods or services in the future, such as active pharmaceutical ingredient, API, or IND/NDA/ANDA/510K submissions. The Company evaluates whether these options are material rights at the inception of the contract. If the Company determines an option is a material right, the Company will consider the option a separate performance obligation. If the Company is entitled to reimbursement from its customers for specified research and development expenses, the Company accounts for the related services that it provides as separate performance obligations if it determines that these services represent a material right. The Company also determines whether the reimbursement of research and development expenses should be accounted for as revenues or an offset to research and development expenses in accordance with provisions of gross or net revenue presentation. The Company recognizes the corresponding revenues or records the corresponding offset to research and development expenses as it satisfies the related performance obligations. The Company then determines the transaction price by reviewing the amount of consideration the Company is eligible to earn under the contracts, including any variable consideration. Under the outstanding contracts, consideration typically includes fixed consideration and variable consideration in the form of potential milestone payments. At the start of an agreement, the Company’s transaction price usually consists of the payments made to or by the Company based on the number of full-time equivalent researchers assigned to the project and the related research and development expenses incurred. The Company does not typically include any payments that the Company may receive in the future in its initial transaction price because the payments are not probable. The Company would reassess the total transaction price at each reporting period to determine if the Company should include additional payments in the transaction price. The Company receives payments from its customers based on billing schedules established in each contract. Upfront payments and fees may be recorded as advance from customers upon receipt or when due, and may require deferral of revenue recognition to a future period until the Company performs its obligations under these arrangements. Amounts are recorded as accounts receivable when the right of the Company to consideration is unconditional. The Company does not assess whether a contract has a significant financing component if the expectation at contract inception is such that the period between payment by the customers and the transfer of the promised goods or services to the customers will be one year or less. Property and Equipment, net Property and equipment, net is carried at cost net of accumulated depreciation. Repairs and maintenance are expensed as incurred. Expenditures that improve the functionality of the related asset or extend the useful life are capitalized. When property and equipment is retired or otherwise disposed of, the related gain or loss is included in operating income. Leasehold improvements are depreciated on the straight-line method over the shorter of the remaining lease term or estimated useful life of the asset. Depreciation is calculated on the straight-line method generally based on the following useful lives: Estimated Life in Years Buildings and leasehold improvements 5 ~ 50 Machinery and equipment 5 ~ 10 Office equipment 3 ~ 6 F- 14 Impairment of Long-Lived Assets The Company has adopted ASC subtopic 360-10, Property, Plant and Equipment (“ASC 360-10”). ASC 360-10 requires that long-lived assets and certain identifiable intangibles held and used by the Company be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The Company evaluates its long-lived assets for impairment annually or more often if events and circumstances warrant. Events relating to recoverability may include significant unfavorable changes in business conditions, recurring losses, or a forecasted inability to achieve break-even operating results over an extended period. Should impairment in value be indicated, the carrying value of intangible assets will be adjusted, based on estimates of future discounted cash flows resulting from the use and ultimate disposition of the asset. ASC 360-10 also requires assets to be disposed of be reported at the lower of the carrying amount or the fair value less costs to sell. Long-Term Equity Investment The Company acquires long-term investments to promote business and strategic objectives. The accounting treatments are as follows: ● Marketable equity investments: The Company measures marketable equity securities at fair value at each reporting date, with unrealized gains and losses recognized in net income in accordance with ASC 321. Fair value is determined based on quoted market prices or other observable inputs. ● Non-marketable equity investments: When the equity method does not apply, non-marketable equity investments are accounted for at cost, adjusted for observable price changes in orderly transactions for identical or similar investments and for impairments, if applicable. ● Equity method investments: Investments in which the Company has the ability to exercise significant influence, but not control, over the investee, are accounted for using the equity method. The Company recognizes its proportionate share of the investee’s income or loss in gains (losses) on equity investments on a monthly basis. Investments in Convertible Notes The Company invests in convertible notes issued by related parties and manages these instruments with the objective of collecting contractual cash flows rather than trading them. At initial recognition, the Company evaluates the terms of each instrument to determine the appropriate classification and measurement in accordance with applicable accounting guidance. When the contractual cash flows represent solely payments of principal and interest and the Company’s business model is to hold the instruments to collect those cash flows, the convertible notes are measured at amortized cost using the effective interest method. Interest income is recognized over the expected term of the notes. If the contractual terms include features that are not clearly and closely related to the debt host, or if the instruments do not meet the criteria for amortized cost measurement, the notes are measured at fair value with changes recognized in earnings. Upon conversion, the carrying amount of the note is reclassified to investments in equity securities. Impairment of Equity Investments and Convertible Note Investments The Company evaluates its non-marketable equity investments, equity method investments, and convertible note investments for impairment on a periodic basis. This assessment incorporates both qualitative and quantitative factors that may indicate a decline in the fair value of an investment. Qualitative considerations include the investee’s financial performance, changes in market or industry conditions, adverse regulatory developments, operational challenges, and the investee’s ability to meet its business objectives. Quantitative analyses may include the use of market and income valuation approaches, such as comparable company metrics, recent financing transactions, and discounted cash flow models that require significant estimates regarding revenue, costs, and discount rates. For non-marketable equity investments and equity method investments, the Company recognizes an impairment in earnings when it determines that a decline in value is other than temporary. Factors considered in this determination include the severity and duration of the decline, the investee’s financial condition and near-term prospects, the investee’s ability to raise additional capital, and whether the Company expects to recover the carrying amount of the investment. Impairments deemed other than temporary are recorded in gains (losses) on equity investments. Convertible note investments measured at amortized cost are evaluated for expected credit losses in accordance with ASC 326. The Company estimates expected credit losses based on historical loss experience, the credit quality and financial condition of the issuer, expected future cash flows, and relevant macroeconomic conditions. When it is not probable that the Company will collect all amounts due according to the contractual terms of the note, an allowance for credit losses is recorded, with changes recognized in earnings. For convertible notes measured at fair value, impairment is inherently reflected in the fair value measurement, with changes recognized in earnings. F- 15 Convertible Notes Payable The Company accounts for its convertible instruments in accordance with ASC 470-20, as amended by ASU 2020-06. Under this guidance, convertible notes are generally recognized as a single liability on the Balance Sheet. The Company does not separate a conversion feature from the host debt instrument unless the feature must be separately accounted for as a derivative under ASC 815. Debt issuance costs, if any, are deferred and amortized to interest expense over the term of the note. Interest expense is recognized based on the contractual rate and includes the amortization of debt discounts and issuance costs. Warrants The Company accounts for warrants as either equity-classified or liability-classified instruments based on an assessment of the warrant’s specific terms and applicable authoritative guidance in ASC 480, Distinguishing Liabilities from Equity (“ASC 480”) and ASC 815, Derivatives and Hedging (“ASC 815”). The assessment considers whether the warrants are freestanding financial instruments pursuant to ASC 480, meet the definition of a liability pursuant to ASC 480, and whether the warrants meet all of the requirements for equity classification under ASC 815, including whether the warrants are indexed to the Company’s own common shares and whether the warrant holders could potentially require “net cash settlement” in a circumstance outside of the Company’s control, among other conditions for equity classification. This assessment, which requires the use of professional judgment, is conducted at the time of warrant issuance and as of each subsequent quarterly period end date while the warrants are outstanding. The Company determined that upon further review of the warrant agreement, the Public Warrants issued pursuant to the warrant agreement qualify for equity accounting treatment. For issued or modified warrants that meet all of the criteria for equity classification, the warrants are required to be recorded as a component of equity at the time of issuance. For issued or modified warrants that do not meet all the criteria for equity classification, the warrants are required to be recorded as liabilities at their initial fair value on the date of issuance, and each balance sheet date thereafter. Changes in the estimated fair value of the warrants are recognized as a non-cash gain or loss on the statements of operations. Research and Development Expenses The Company accounts for the cost of using licensing rights in research and development cost according to ASC 730-10-25-1. This guidance provides that absent alternative future uses the acquisition of product rights to be used in research and development activities must be charged to research and development expenses when incurred. The Company accounts for R&D costs in accordance with ASC 730, Research and Development (“ASC 730”). Research and development expenses are charged to expense as incurred unless there is an alternative future use in other research and development projects or otherwise. Research and development expenses are comprised of costs incurred in performing research and development activities, including personnel-related costs, facilities-related overhead, and outside contracted services including clinical trial costs, manufacturing and process development costs for both clinical and preclinical materials, research costs, and other consulting services. Non-refundable advance payment for goods and services that will be used in future research and development activities are expensed when the activity has been performed or when the goods have been received rather than when the payment is made. In instances where the Company enters into agreements with third parties to provide research and development services, costs are expensed as services are performed. Post-retirement and post-employment benefits The Company’s subsidiaries in Taiwan adopted the government mandated defined contribution plan pursuant to the Labor Pension Act (the “Act”) in Taiwan. Such labor regulations require that the rate of contribution made by an employer to the Labor Pension Fund per month shall not be less than 6 % of the worker’s monthly salaries. Pursuant to the Act, the Company makes monthly contribution equal to 6 % of employees’ salaries to the employees’ pension fund. The Company has no legal obligation for the benefits beyond the contributions made. The total amounts for such employee benefits, which were expensed as incurred, were $ 13,367 (NTD 0.4 million) and $ 11,642 (NTD 0.4 million) for the years ended December 31, 2025 and 2024, respectively. Other than the above, the Company does not provide any other post-retirement or post-employment benefits. F- 16 Stock-based Compensation The Company measures expense associated with all employee stock-based compensation awards using a fair value method and recognizes such expense in the consolidated financial statements on a straight-line basis over the requisite service period in accordance with ASC 718 “Compensation-Stock Compensation”. Total director, officer, and employee stock-based compensation expenses were $ 1,728,148 and $$ 1,995,049 for the years ended December 31, 2025 and 2024, respectively. The Company accounted for stock-based compensation to non-employees in accordance with ASC 718 “Compensation-Stock Compensation” and ASC 505-50 “Equity-Based Payments to Non-Employees” which requires that the cost of services received from non-employees is measured at fair value at the earlier of the performance commitment date or the date service is completed and recognized over the period the service is provided. Total non-employee stock-based compensation expenses were $ 1,930,055 for consulting services and $ 484,613 for rent for the year ended December 31, 2025, respectively, and $ 506,583 for consulting services and $ 271,828 for rent for the year ended December 31, 2024, respectively. Income Taxes The Company accounts for income taxes using the asset and liability approach which allows the recognition and measurement of deferred tax assets to be based upon the likelihood of realization of tax benefits in future years. Under the asset and liability approach, deferred taxes are provided for the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. A valuation allowance is provided for deferred tax assets if it is more likely than not these items will expire before the Company is able to realize their benefits, or future deductibility is uncertain. Under ASC 740, a tax position is recognized as a benefit only if it is “more likely than not” that the tax position would be sustained in a tax examination, with a tax examination being presumed to occur. The evaluation of a tax position is a two-step process. The first step is to determine whether it is more-likely-than-not that a tax position will be sustained upon examination, including the resolution of any related appeals or litigations based on the technical merits of that position. The second step is to measure a tax position that meets the more-likely-than-not threshold to determine the amount of benefits recognized in the financial statements. A tax position is measured at the largest amount of benefit that is greater than 50 percent likely of being realized upon ultimate settlement. Tax positions that previously failed to meet the more-likely-than-not recognition threshold should be recognized in the first subsequent period in which the threshold is met. Previously recognized tax positions that no longer meet the more-likely-than-not criteria should be de-recognized in the first subsequent financial reporting period in which the threshold is no longer satisfied. Penalties and interest incurred related to underpayment of income tax are classified as income tax expense in the year incurred. No significant penalty or interest relating to income taxes has been incurred for the years ended December 31, 2025 and 2024. GAAP also provides guidance on de-recognition, classification, interest and penalties, accounting in interim periods, disclosures and transition. Valuation of Deferred Tax Assets A valuation allowance is recorded to reduce the Company’s deferred tax assets to the amount that is more likely than not to be realized. In assessing the need for the valuation allowance, management considers, among other things, projections of future taxable income and ongoing prudent and feasible tax planning strategies. If the Company determines that sufficient negative evidence exists, then it will consider recording a valuation allowance against a portion or all of the deferred tax assets in that jurisdiction. If, after recording a valuation allowance, the Company’s projections of future taxable income and other positive evidence considered in evaluating the need for a valuation allowance prove, with the benefit of hindsight, to be inaccurate, it could prove to be more difficult to support the realization of its deferred tax assets. As a result, an additional valuation allowance could be required, which would have an adverse impact on its effective income tax rate and results. Conversely, if, after recording a valuation allowance, the Company determines that sufficient positive evidence exists in the jurisdiction in which the valuation allowance was recorded, it may reverse a portion or all of the valuation allowance in that jurisdiction. In such situations, the adjustment made to the deferred tax asset would have a favorable impact on its effective income tax rate and results in the period such determination was made. F- 17 Loss Per Share of Common Stock The Company calculates net loss per share in accordance with ASC 260, “Earnings per Share”. Basic loss per share is computed by dividing the net loss by the weighted average number of common shares outstanding during the period. Diluted loss per share is computed similar to basic loss per share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common stock equivalents had been issued and if the additional common shares were dilutive. Diluted earnings per share excludes all dilutive potential shares if their effect is anti-dilutive. For the Year Ended December 31, 2025 2024 Numerator: Net loss attributable to ABVC’s common stockholders $ ( 7,908,554 ) $ ( 4,902,878 ) Denominator: Weighted-average shares outstanding – Basic & diluted 20,108,944 11,673,980 Loss per share -Basic & diluted $ ( 0.39 ) $ ( 0.42 ) Commitments and Contingencies The Company has adopted ASC 450 “Contingencies” subtopic 20, in determining its accruals and disclosures with respect to loss contingencies. Accordingly, estimated losses from loss contingencies are accrued by a charge to income when information available before financial statements are issued or are available to be issued indicates that it is probable that an asset had been impaired or a liability had been incurred at the date of the financial statements and the amount of the loss can be reasonably estimated. Legal expenses associated with the contingency are expensed as incurred. If a loss contingency is not probable or reasonably estimable, disclosure of the loss contingency is made in financial statements when it is at least reasonably possible that a material loss could be incurred. Foreign-currency Transactions For the Company’s subsidiaries in Taiwan, the foreign-currency transactions are recorded in New Taiwan Dollars (“NTD”) at the rates of exchange in effect when the transactions occur. Gains or losses resulting from the application of different foreign exchange rates when cash in foreign currency is converted into NTD, or when foreign-currency receivables or payables are settled, are credited or charged to income in the year of conversion or settlement. On the balance sheet dates, the balances of foreign-currency assets and liabilities are restated at the prevailing exchange rates and the resulting differences are charged to current income except for those foreign currencies denominated investments in shares of stock where such differences are accounted for as translation adjustments under the Statements of Changes in Stockholders’ Equity. F- 18 Segment Reporting ASC 280 “Segment Reporting” requires public companies to report financial and descriptive information about their reportable operating segments. The Company identifies the operating segments based on how the chief operating decision maker internally evaluates separate financial information, business activities and management responsibility. The Company currently has one reportable segment and assets are reviewed on a consolidated basis. As such, segment data is not provided. The following tables present revenue and gross profit information for each of our only reportable segment: Years Ended December 31, 2025 2024 Revenue $ - $ 509,589 Cost of Revenue - 763 Segment Gross Profit $ - $ 508,826 Depreciation expense $ 25,330 $ 32,025 The following table provides a reconciliation of total segment gross profit to the Company’s loss before provision for income tax: Years Ended December 31, 2025 2024 Segment Gross Profit $ - $ 508,826 Less: Selling, general and administrative expenses 2,887,358 2,261,336 Research and development expenses 121,085 179,272 Stock-based compensation 4,142,816 2,773,460 Add (Less): Interest income 167,103 87,358 Interest expense ( 415,890 ) ( 825,899 ) Operating sublease income 134,196 48,478 Loss on foreign exchange changes ( 77,546 ) ( 25,135 ) Loss on investment in equity securities ( 192,759 ) ( 339,171 ) Loss on impairment of equity investment ( 803,008 ) - Write off unclaimed accrued liabilities - 255,592 Other (loss) income, net ( 13,642 ) 134,443 Loss before provision for income tax $ ( 8,352,805 ) $ ( 5,369,576 ) F- 19 Recent Accounting Pronouncements In accordance with Staff Accounting Bulletin No. 74 (SAB 74), the Company evaluates the impact of newly issued accounting standards on its financial statements. The following standards have been issued but are not yet effective: In November 2024, the FASB issued ASU No. 2024-03, Expense Disaggregation Disclosures (Subtopic 220-40). The ASU requires disclosure of specified information about certain costs and expenses. This includes purchases of inventory, employee compensation, depreciation, and intangible asset amortization. The ASU is effective on a prospective or retrospective basis for annual reporting period beginning after December 15, 2026, and interim reporting period beginning after December 15, 2027. Early adoption is permitted. This ASU will likely result in the required additional disclosures being included in our consolidated financial statements once adopted. 4. COLLABORATIVE AGREEMENTS Collaborative agreement with ForSeeCon Eye Corporation, a related party On March 25, 2024, the Company and BioFirst each entered into a twenty-year, global definitive licensing agreement (the “FEYE Licensing Agreement”) with ForSeeCon Eye Corporation, a company registered in the British Virgin Islands (“FEYE”) for the products in the Company and BioFirst’s Ophthalmology pipeline, including Vitargus (the “Vitargus Products”). The license covers Vitargus Products’ clinical trial, registration, manufacturing, supply, and distribution rights; FEYE also has the rights to sublicense or partner with a third party to develop the Licensed Products. As per each of the respective FEYE Licensing Agreements, each of the Company and BioFirst shall receive a total licensing fee of $ 33.5 million, composed of an upfront payment of $ 30 million, which can instead be paid with 5 million shares of FEYE stock at $ 6 per share within 30 days after the execution of the FEYE Licensing Agreement, and a $ 3.5 million cash milestone payment, due 30 days upon completion of next round fundraising. Additionally, each of the Company and BioFirst are eligible to receive royalties of 5 % of net sales. At the time of transferring the license, the Company received 5 million FEYE shares but did not recognize such licensing revenue since the fair value of FEYE stock is uncertain. On June 18, 2024, the Company and BioFirst, each entered into an amendment (the “Amendment”) to the Licensing Agreement with FEYE, pursuant to which the Company and BioFirst have agreed to allow FEYE to pay the second milestone payment in the amount of $ 3.5 million per Licensing Agreement, incrementally (such as $ 100,000 ), at any given time, rather than in one lump sum. During years ended December 31, 2025 and 2024, the Company received in cash payment and recognized revenue of $ 0 and $ 296,000 , respectively, pursuant to the Amendment. Collaborative agreement with OncoX BiopPharma, Inc., a related party On April 16, 2024, the Company entered into a definitive agreement with OncoX BioPharma, Inc., a private company registered in the British Virgin Islands (“Oncox”), pursuant to which the Company will grant Oncox an exclusive right to develop and commercialize ABVC’s single-herb botanical drug extract from the dry fruit body of Maitake Mushroom (Grifola Frondosa) for treatment of Non-Small Cell Lung Cancer (the “Lung Cancer Products”), within North America for 20 years (the “April 2024 Oncox Agreement”). In consideration thereof, Oncox shall pay ABVC $ 6.25 million (or 1.25 million Oncox shares valued at $ 5 per share) 30 days after entering into the agreement and $ 625,000 , 30 days following the completion of Oncox’s next round of fundraising, of which there is no guarantee; ABVC is also entitled to 5 % royalties based on the net sales, as defined in the April 2024 Oncox Agreement, from the first commercial sale of the Lung Cancer Product in North America, of which there can be no guarantee. Oncox entered into another agreement with ABVC’s affiliate, Rgene Corporation, on the same terms. During the years ended December 31, 2025 and 2024, the Company received cash payment and recognized revenue of $ 0 and $ 200,000 , respectively, pursuant to the agreement. At the time of transferring the license, the Company received 1.25 million OncoX shares but did not recognize such licensing revenue since the fair value of Oncox stock is uncertain. F- 20 On May 8, 2024, the Company entered into a definitive agreement with OncoX, pursuant to which the Company will grant Oncox an exclusive right to develop and commercialize ABVC’s BLEX 404 single-herb botanical drug extract from the dry fruit body of Maitake Mushroom (Grifola Frondosa) for treatment of Pancreatic (the Pancreatic Product), within a certain territory, specified as 50 % of the Worldwide Markets for 20 years (the “May 8, 2024 Oncox Agreement”). In consideration thereof, Oncox shall pay ABVC a total of $ 6.25 million (or 1.25 million Oncox shares valued at $ 5 per share) within 30 days of entering into the May 8, 2024 Oncox Agreement, with an additional milestone payment of $ 625,000 in cash after OncoX’s next round of fundraising, of which there can be no guarantee. Oncox may remit cash payments of at least $ 100,000 towards the licensing fees and deductible from the second milestone payment; ABVC is also entitled to royalties of 5 % of net sales, as defined in the May 8, 2024 Oncox Agreement, from the first commercial sale of the Pancreatic Product in the noted territory, which remains uncertain. The Company will permit Oncox to pay the license fee in installments or in a lump sum and will allow Oncox to use its revenue to fund such payments. Oncox entered into another agreement with ABVC’s affiliate, Rgene Corporation, on the same terms. At the time of transferring the license, the Company received 1.25 million OncoX shares but did not recognize such licensing revenue since the fair value of Oncox stock is uncertain. There was no cash receipt from this agreement for the years ended December 31, 2025 and 2024, respectively. On May 14, 2024, the Company and its subsidiary, BioLite Inc (collectively, the “licensor”), each entered into a licensing agreement with OncoX, on the same terms, pursuant to which the licensors will grant Oncox an exclusive right to develop and commercialize ABVC’s BLEX 404 single-herb botanical drug extract from the dry fruit body of Maitake Mushroom (Grifola Frondosa) for treatment of Tripple Negative Breast Cancer (the TNBC Product), within a certain territory, specified as 50 % of the Worldwide Markets for 20 years (the “May 14, 2024 Oncox Agreements”). In each agreement for consideration thereof, Oncox shall pay each licensor a total of $ 6.25 million (or 1.25 million Oncox shares valued at $ 5 per share) within 30 days of entering into the May 14, 2024 Oncox Agreements, with an additional milestone payment of $ 625,000 in cash after OncoX’s next round of fundraising, of which there can be no guarantee. Oncox may remit cash payments of at least $ 100,000 towards the licensing fees and deductible from the second milestone payment; each licensor is also entitled to royalties of 5 % of net sales, from the first commercial sale of the TNBC Product in the noted territory, which remains uncertain. The Company will permit Oncox to pay the license fee in installments or in a lump sum and will allow Oncox to use its revenue to fund such payments. At the time of transferring the license, the Company and BioLite each received 1.25 million OncoX shares but did not recognize such licensing revenue since the fair value of Oncox stock is uncertain. There was no cash receipt from this agreement for the years ended December 31, 2025 and 2024, respectively. On May 23, 2024, the Company and its subsidiary, BioLite Inc (collectively, the “licensor”), each entered into a licensing agreement with OncoX, on the same terms, pursuant to which the licensors will grant Oncox an exclusive right to develop and commercialize ABVC’s BLEX 404 single-herb botanical drug extract from the dry fruit body of Maitake Mushroom (Grifola Frondosa) for treatment of Myelodysplastic Syndrome (the “MS Products”), within a certain territory, specified as 50 % of the Worldwide Markets for 20 years (the “May 23, 2024 Oncox Agreements”). In consideration thereof, Oncox shall pay each licensor a total of $ 6.25 million (or 1.25 million Oncox shares valued at $ 5 per share) 30 days after entering the May 23, 2024 Oncox Agreements, with an additional milestone payment of $ 625,000 in cash after OncoX’s next round of fundraising, of which there can be no guarantee. Oncox may remit cash payments of at least $ 100,000 towards the licensing fees and deductible from the second milestone payment; each licensor is also entitled to royalties of 5 % of net sales, from the first commercial sale of the MS Product in the noted territory, which remains uncertain. Oncox may use its revenue to fund the licensing fees. At the time of transferring the license, the Company and BioLite each received 1.25 million OncoX shares but did not recognize such licensing revenue since the fair value of Oncox stock is uncertain. There was no cash receipt from this agreement for the years ended December 31, 2025 and 2024, respectively. Above mentioned price of OncoX’s shares was determined through private negotiations between the parties; no third-party valuation was completed. 5. PROPERTY AND EQUIPMENT, AND PREPAMENT FOR ASSET ACQUISITION Property and Equipment The Company has land, offices, and labs located in Taiwan, and a GMP manufacturing facility in Fremont, CA. Property and equipment as of December 31, 2025 and 2024 are summarized as follows: December 31, 2025 2024 Land $ 12,685,667 $ 338,966 Buildings and leasehold improvements 2,224,082 2,219,244 Machinery and equipment 1,135,602 1,131,169 Office equipment 170,155 163,448 16,215,506 3,852,827 Less: accumulated depreciation ( 3,380,097 ) ( 3,341,739 ) Property and equipment, net $ 12,835,409 $ 511,088 F- 21 Depreciation expenses were $ 25,330 and $ 28,627 for the years ended December 31, 2025 and 2024, respectively. As of December 31, 2025 and 2024, Land with book value amounted to approximately $ 4,221,388 and $ 338,966 , respectively, were pledged for obtaining bank loan (see Notes 9 Bank loans and Note 10 Related party transactions). Acquisition of land in Puli Township, Taiwan In March 2024, AiBtl issued 1,534,000 AiBtl’s common stocks to acquire farmland in Taiwan, which land will be used for developing health related businesses. However, upon the closing of the transaction, both parties are aware of such Taiwan’s legal restrictions prohibiting foreign entities directly owning farmland. In August 2024, the Company incorporated a controlling subsidiary, Yunzhiyi, to hold the title of the land upon government’s approval. On March 31, 2025, AiBtl and the landowners executed the Nominee Holding Agreement, Land Lease Agreement, and Consulting Agreement, under the witness of and confirmed by a legal counsel in Taiwan, in which the landowners unconditionally grant the full legal rights to the land to AiBtl before the completion of the title transfer. Based on the execution of the agreement, AiBtl recognized $ 7,670,000 ($ 5 per share of AiBtl’s common stock) of land on its balance sheet. To further secure the ownership of land, the board of AiBtl authorized Ms. Jiang in June 2025 to temporarily hold the land title until the administrative procedures are finalized. The title was transferred to Ms. Jiang later that month, and AiBtl recorded $ 5,794 in acquisition costs associated with the transaction. As of the reporting date, government review of the transfer of land title to Yun Zhi Yi is pending completion. Prepayment for asset acquisition Prepayment for asset acquisition consists of the properties in Chengdu, China. The Company entered into a cooperation agreement on August 14, 2023, with Zhong Hui Lian He Ji Tuan, Ltd. (the “Zhonghui”). Pursuant thereto, the Company will acquire 20 % of the ownership of certain property and a parcel of the land, with a view to jointly developing the property into a healthcare center for senior living, long-term care, and medical care in the areas of ABVC’s special interests, such as Ophthalmology, Oncology, and Central Nervous Systems. The plan is to establish a base for the China market and global development of these interests. The valuation of such property is $ 37 million; based on the Company’s 20 % ownership, the Company would acquire the value of $ 7,400,000 . In exchange, the Company issued to Zhonghui an aggregate of 370,000 shares (the “Shares”) of common stock, at a per share price of $ 20.0 . The Shares are subject to a lock-up period of one year following the closing date of the transaction. In addition, the parties agreed that, after one year following the closing of the transaction, if the market value of the Shares or the value of the property increases or decreases, the parties will negotiate in good faith to make reasonable adjustments. The Company’s ownership rights to the property and the associated land parcel, or a suitable replacement property, are safeguarded under the terms of the cooperation agreement, which is legally binding and enforceable. At the time of preparing its 2024 financial statements, the Company reviewed the entire transaction, its relevant agreements and documentation, as well as the applicable accounting guidance. The Company applied FASB Accounting Standard Codification (“ASC”) 845 Nonmonetary Transactions to determine the fair value of the asset acquired would be more evident than the fair value of the consideration in exchange, the Company’s restricted common stocks. Although the acquired real estate comes with a third-party valuation of $ 7,400,000 per the Company’s stake, guaranteed by Zhonghui, upon further review, the Company considered ASC 718 Compensation – Stock Compensation, should have been the appropriate guidance to apply given the Company’s common stocks are listed in Nasdaq with more observable fair value (Level 1). As a result, the Company adjusted the carrying value of the asset and reclassified the balance to “Prepayment for asset acquisition” account to reflect the value of 370,000 shares issued at $ 1.87 , the closing price as of the contract date. The Company also corrected the share price used to recognize stock compensation expense from $ 20 to $ 1.87 for the 29,600 shares of common stock issued on the same day to several consultants. As a result, these adjustments reduced $ 6,708,100 for asset recognized and $ 536,648 for stock-compensation expense incurred in 2023. The construction-in-progress property is planned to finish before the end of 2026. F- 22 Acquisition of land in Taoyuan City, Taiwan On July 15, 2025, the Company entered into a definitive agreement with Shuling, pursuant to which Shuling shall transfer the ownership of certain land she owns, located at Taoyuan City, Taiwan (the “Land”) to the Company (the “Agreement”). Shuling is a director of the Company, and owns over 10 % of the Company’s issued and outstanding shares of common stock. In consideration for the Land, the Company was to pay Shuling (i) 2,035,136 restricted shares of the Company’s common stock (the “Shares”) at a price of $ 1.65 per share as approved in the June 3, 2025 annual shareholder meeting and (ii) five-year warrants to purchase up to 1,000,000 shares of the Company’s common stock, with an exercise price of $ 2.50 per share. Under the Agreement, Shuling was to also transfer outstanding liability owed on the Land (approximately $ 500,000 ) to the Company. The transaction is closed on the same day, and the common stock warrants and restricted shares are issued on July 15, 2025 and July 16, 2025, respectively. The Company recognized $ 3,857,975 as the fair value of the issued common stocks and $ 798,486 for the fair value of the stock warrants based on the Black-Scholes valuation model, as the cost of the land, in total of $ 4,656,461 , and $ 500,000 liability (included in Due to Related Parties – See Note 10) on its balance sheet. In connection with the Land transaction, on July 15, 2025, the Company entered into a one-year consulting agreement with Shuling, pursuant to which Shuling shall provide advisory and development support services related to the Land. Such services include but not limited to site supervision and care, liaison with local authorities regarding land zoning and permits, acting as the Company’s agent to the Land, and other Land development related matters. The Company shall issue 1,000,000 restricted shares of the Company’s common stock, subject to a 5 -year vesting schedule of 200,000 shares per year. On July 16, 2025, the Company issued 200,000 shares at $ 1.65 per share to Shuling as prepayment for the first-year service. For the year ended December 31, 2025, the Company recognized $ 151,250 consulting expense, with $ 178,750 remaining prepaid expense balance as of December 31, 2025. Due to the administrative requirements governing title transfers in Taiwan, on February 24, 2026, to further secure the Company’s ownership interest in the Land, the Company and Shuling Jiang entered into a Nominee Holding and Transitional Arrangement Agreement. Pursuant to the agreement, the Land remains registered under the Landholder pending completion of the applicable regulatory review, and the Landholder is prohibited from selling, transferring, pledging, or otherwise disposing of the Property without the Company’s prior written consent. The final holding structure will be determined in accordance with Taiwan’s legal and regulatory requirements. 6. LONG-TERM INVESTMENTS (1) The ownership percentages of each investee are listed as follows: Ownership percentage December 31, December 31, Accounting Name of investees 2025 2024 treatments Braingenesis Biotechnology Co., Ltd.* 0.17 % 0.17 % Cost Method Genepharm Biotech Corporation 0.67 % 0.67 % Cost Method BioHopeKing Corporation 5.90 % 5.90 % Cost Method ForSeeCon Eye Corporation (see Note 10) 19.78 % 19.78 % Cost Method BioFirst Corporation 18.68 % 18.68 % Equity Method OncoX BioPharma, Inc. (see Note 10) 24.97 % 24.97 % Equity Method Rgene Corporation 37.00 % 26.65 % Equity Method BioLite Japan K.K. 49.00 % 49.00 % Equity Method * This company was acquired by Canal Biotech Corporation Inc. Our stock is in the process of replacement with the stock of the acquired company and the ownership percentage is subject to change. F- 23 (2) The extent the investee relies on the company for its business is summarized as follows: Name of investees The extent the investee relies on the Company for its business Braingenesis Biotechnology Co., Ltd. No specific business relationship Genepharm Biotech Corporation No specific business relationship BioHopeKing Corporation Collaborating with the Company to develop and commercialize drugs (referring to Note 4, Collaborative Agreements) BioLite Japan K.K. The Company’s joint venture noncontrolling subsidiary perform research and development activities and explore business opportunities in Japan ForSeeCon Eye Corporation Collaborating with the Company to develop and commercialize ophthalmic medical devices (referring to Note 4, Collaborative Agreements) BioFirst Corporation Loaned from the investee and provides research and development support service OncoX BioPharma, Inc. Collaborating with the Company to develop and commercialize single-herb botanical drug for treatment of certain diseases (referring to Note 4, Collaborative Agreements) Rgene Corporation Collaborating with the Company to develop and commercialize drugs (referring to Note 4, Collaborative Agreements) (3) Long-term investment mainly consists of the following: December 31, 2025 2024 Non-marketable Cost Method Investments, net Braingenesis Biotechnology Co., Ltd. $ 7,014 $ 6,727 Genepharm Biotech Corporation 21,727 20,540 ForSeeCon Eye Corporation (d) - - BioHopeKing Corporation (f) - 762,983 Subtotal 28,741 790,250 Equity Method Investments, net BioFirst Corporation (a) 1,298,038 1,468,504 Rgene Corporation (b) 551,686 - BioLite Japan K.K. (BioLite JP) (c) - - OncoX BioPharma, Inc. (e) - - Total $ 1,878,465 $ 2,258,754 (a) BioFirst Corporation (the “BioFirst”): The Company holds an equity interest in BioFirst Corporation, accounting for its equity interest using the equity method to accounts for its equity investment as prescribed in ASC 323, Investments—Equity Method and Joint Ventures (“ASC 323”). Equity method adjustments include the Company’s proportionate share of investee’s income or loss and other adjustments required by the equity method. As of December 31, 2025 and 2024, the Company owns 18.68 % and 18.68 % common stock shares of BioFirst, respectively. The Company made a prepayment for equity investment in BioFirst to purchase additional shares to be issued by BioFirst in the aggregate amount of $ 2,688,578 , recorded as prepayment for long-term investments as of December 31, 2022. On July 19, 2023, the Company successfully completed the registration process for this investment. The initial prepayment was $ 1,895,556 , which is a portion of the prepayment as of December 31, 2022, and was converted into 994,450 shares of BioFirst stock. As of December 31, 2025, the amount of prepayment for long-term investment in BioFirst was $ 1,124,842 . F- 24 Summarized unaudited financial information for the Company’s equity method investee, BioFirst, is as follows: Balance Sheets December 31, 2025 2024 Current Assets $ 1,534,484 $ 1,323,952 Non-current Assets 1,124,625 1,083,472 Current Liabilities 4,508,191 3,508,413 Non-current Liabilities 122,508 114,606 Stockholders’ Deficit ( 1,971,590 ) ( 1,215,595 ) Statements of operations Year Ended December 31, 2025 2024 Net sales $ 31,779 $ 357 Gross profit 31,779 216 Net loss ( 737,414 ) ( 770,877 ) Share of losses from investments accounted for using the equity method ( 180,626 ) ( 339,171 ) (b) Rgene Corporation (the “Rgene”) As described in Note 4, the Company acquired 26.65 % of Rgene’s outstanding common shares since 2018 through multiple collaborative agreements, and has been accounting this equity investment with equity method as prescribed in ASC 323, Investments—Equity Method and Joint Ventures (“ASC 323”). Equity method adjustments include the Company’s proportionate share of investee’s income or loss and other adjustments required by the equity method. Further, as disclosed in Note 10 Related Party Transactions, the Company entered a convertible loan agreement with Rgene in 2022 and has been working with Rgene to obtain approval for the Company to exercise the conversion from Department of Investment Review in Taiwan, a government agency reviews foreign investors conducting investment in Taiwan. In May 2024, the conversion request for the conversion was approved but the Company was not informed by Rgene until April 2025. The Company determined that the impact to the financial statements is immaterial and assumed the conversion was incurred on January 1, 2025. After the conversion, the Company owns 37 % of outstanding shares of Rgene. Summarized unaudited financial information for the Company’s equity method investee, Rgene, is as follows: Balance Sheets December 31, 2025 2024 Current Assets $ 45,877 $ 46,491 Non-current Assets 230,366 222,988 Current Liabilities 1,648,570 1,546,123 Non-current Liabilities 509 319 Shareholders’ Deficit ( 1,372,836 ) ( 1,276,963 ) F- 25 Statements of operations Year Ended December 31, 2025 2024 Net sales $ - $ - Gross Profit - - Net loss ( 41,835 ) ( 118,367 ) Share of loss from investments accounted for using the equity method ( 12,133 ) - (4) Disposition of long-term investment During the years ended December 31, 2025 and 2024, there is no disposition of long-term investment. (5) Loss on investment in equity securities The components of loss on investment in equity securities for each period were as follows (not recognized since the carrying value of the investment was reduced to $0): Year Ended December 31, 2025 2024 Share of equity method investee losses $ ( 192,759 ) $ ( 339,171 ) (c) BioLite Japan K.K. (BioLite JP) In October 2021, the Company, Lucidaim Co., Ltd., a Japanese corporation (“Lucidaim,” together with the Company, the “Shareholders”), and BioLite Japan K.K., a Japanese corporation (“BioLite JP”) entered into a Joint Venture Agreement. BioLite JP is a private limited company incorporated on December 18, 2018. The business of the joint venture is the research and development of drugs, medical device and digital media, investment, fund running and consulting, distribution and marketing of supplements carried on by BioLite JP and its subsidiaries in Japan, or any other territory or businesses. At the date of the Agreement, BioLite JP has 10,000 ordinary shares authorized, with 3,049 ordinary shares issued and outstanding (the “Ordinary Shares”). Pursuant to the Agreement and the related share transfer agreement, Lucidaim shall own 1,555 Ordinary Shares ( 51 %) and the Company shall own 1,494 Ordinary Shares ( 49 %). The Company paid $ 150,000 towards the setup of the joint venture; BioLite Japan’s other shareholder also paid $ 150,000 after the Letter of Intent was signed. This prepayment is booked in prepayment for investment. As of December 31, 2025, the Company evaluated the investee’s business and financial conditions and determined to fully impair such prepayment. (d) ForSeeCon Eye Corporation (FEYE) FEYE is a private company registered in the British Virgin Islands, focusing on the field of diagnosis and treatment of eye disorders, with its main product of Vitargus. The Company granted FEYE certain licensed products in exchange of FEYE ownership. See Note 4 for detail of such transactions. (e) OncoX BioPharma, Inc. (OncoX) OncoX is a private company registered in the British Virgin Islands, focusing on oncology trials and drug development across Asia-Pacific. The Company granted OncoX certain licensed products in exchange of OncoX’s ownership. See Note 4 for detail of such transactions. (f) BioHopeKing Corporation (BHK) As discussed in Note 4 with our collaborative relationship with BHK, the Company has evaluated the progress of BHK’s development and determined that the decline in fair value is other-than temporary based on BHK’s deteriorating financial condition. As a result, the Company fully reduced the fair value of the investment on the book in the amount of NTD 25,015,830 (approximately $ 803,008 ). F- 26 7. CONVERTIBLE NOTES PAYABLE Lind Notes Payable On February 23, 2023, the Company entered into a securities purchase agreement with Lind Global Fund II, LP (“Lind”), pursuant to which the Company issued Lind a secured, convertible note in the principal amount of $ 3,704,167 , for a purchase price of $ 3,175,000 (the “Lind Note”), that is convertible into shares of the Company’s common stock at an initial conversion price of $ 10.5 per share, subject to adjustment. The Company also issued Lind a common stock purchase warrant (the “Lind Warrant”) to purchase up to 529,167 shares (post-split) of the Company’s common stock at an initial exercise price of $ 10.5 per share for a period of 5 years, subject to adjustment that immediately upon such issuance or sale, the Exercise Price in effect immediately prior to such issuance or sale shall be reduced (and in no event increased) to an Exercise Price equal to the consideration per share paid for such Additional Shares of Common Stock. The warrants were valued using the Black-Scholes model. The fair value of the warrants was determined to be $ 1,225,543 , which was recorded to debt discount. Beginning with the date that is six months from the issuance date of the Lind Note and on each one (1) month anniversary thereafter, the Company shall pay Lind an amount equal to $ 308,651 , until the outstanding principal amount of the Lind Note has been paid in full prior to or on the Maturity Date or, if earlier, upon acceleration, conversion or redemption of the Lind Note in accordance with the terms thereof (the “Monthly Payments”). At the Company’s discretion, the Monthly Payments shall be made in (i) cash, (ii) shares of the Company’s common stock, or (iii) a combination of cash and Shares; if made in shares, the number of shares shall be determined by dividing (x) the principal amount being paid in shares by (y) 90 % of the average of the 5 lowest daily VWAPs during the 20 trading days prior to the applicable payment date. The Lind Notes sets forth certain conditions that must be satisfied before the Company may make any Monthly Payments in shares of common stock. If the Company makes a Monthly Payment in cash, the Company must also pay Lind a cash premium of 5 % of such Monthly Payment. Upon the occurrence of any Event of Default (as defined in the Lind Note), the Company must pay Lind an amount equal to 120 % of the then outstanding principal amount of the Lind Note (the “Mandatory Default Amount”), in addition to any other remedies under the Note or the other Transaction Documents. The Company and Lind entered into a letter agreement on September 12, 2023, pursuant to which the Mandatory Default Amount was reduced to 115 % of the then outstanding principal amount of the Lind Note; pursuant to the letter agreement, Lind also agreed to waive any default associated with the Company’s market capitalization being below $ 12.5 million for 10 consecutive days through February 23, 2024, but retained its right to convert its Note. In addition, if the Company is unable to increase its market capitalization and is unable to obtain a further waiver or amendment to the Lind Note, then the Company could experience an event of default under the Lind Note, which could have a material adverse effect on the Company’s liquidity, financial condition, and results of operations. The Company cannot make any assurances regarding the likelihood, certainty, or exact timing of the Company’s ability to increase its market capitalization, as such metric is not within the immediate control of the Company and depends on a variety of factors outside the Company’s control. The Lind Warrant may be exercised via cashless exercise. The warrant exercise price was reset to $ 3.5 in accordance with the issuance of common stock in relation to securities purchase agreement in July 2023. On May 22, 2024, the exercise price of these warrants was reset to $ 0.75 along with the immediate exercise of existing warrants and issuance of the New Warrants. As of December 31, 2025, these Lind Warrants associated with the first Lind Note were fully exercised. On November 17, 2023, the Company entered another securities purchase agreement with Lind, pursuant to which the Company issued Lind a secured, convertible note (the “2 nd Lind Note”) in the principal amount of $ 1,200,000 , for a purchase price of $ 1,000,000 , that is convertible into shares of the Company’s common stock at a conversion price, which shall be the lesser of (i) $ 3.50 and (ii) 90 % of the average of the three lowest VWAPs during the 20 trading days prior to conversion. The 2 nd Lind Note shall be due and payable on May 19, 2025 and bears no interest. The Company may prepay all, but not less than all, outstanding principal amount prior to maturity, and Lind shall have the right to convert up to one third of the principal amount when the Company prepays. Upon the occurrence of any Event of Default (as defined in the 2 nd Lind Note), the Company must pay Lind an amount equal to 120 % of the then outstanding principal amount of the Lind Note, in addition to any other remedies under the Note or the other transaction documents. Lind also received a 5-year common stock purchase warrant to purchase up to 1,000,000 shares of the Company’s common stock at an initial exercise price of $ 2 per share for a period of 5 years. The warrants were valued using the Black-Scholes model. The fair value of the warrants was determined to be $ 480,795 , which was recorded to debt discount. An amendment was filed with the SEC on February 29, 2024 to disclose that due to Nasdaq requirements, the parties entered into an amendment to the Note, pursuant to which the conversion price shall have a floor price of $ 1.00 . Additionally, the amendment requires the Company to make a cash payment to Lind if in connection with a conversion, the conversion price is deemed to be the floor price. During the year ended December 31, 2024, Lind converted $ 800,000 of 2 nd Lind Note principal amounts into the Company’s common stocks. Refer to the common stock issuance details in Note 12, Equity. As of April 1, 2025, Lind has converted the remaining $ 400,000 principal balance into the Company’s common stocks. F- 27 On January 17, 2024, the Company entered another securities purchase agreement with Lind, pursuant to which the Company issued Lind a secured, convertible note (the “3 rd Lind Note”) in the principal amount of $ 1,000,000 , for a purchase price of $ 833,333 , that is convertible into shares of the Company’s common stock at a conversion price, which shall be the lesser of (i) $ 3.50 and (ii) 90 % of the average of the three lowest VWAPs during the 20 trading days prior to conversion. The 3 rd Lind Note shall be due and payable on July 17, 2025 and bears no interest. The Company may prepay all, but not less than all, outstanding principal amount prior to maturity, and Lind shall have the right to convert up to one third of the principal amount when the Company prepays. Upon the occurrence of any Event of Default (as defined in the 3 rd Lind Note), the Company must pay Lind an amount equal to 120 % of the then outstanding principal amount of the Lind Note, in addition to any other remedies under the Note or the other transaction documents Lind also received a 5 -year, common stock purchase warrant to purchase up to 1,000,000 shares of the Company’s common stock at an initial exercise price of $ 2 per share. The warrants were valued using the Black-Scholes model. The fair value of the warrants was determined to be $ 394,071 , which was recorded to debt discount. An amendment was filed with the SEC on February 29, 2024 to disclose that due to Nasdaq requirements, the parties entered into an amendment to the Note, pursuant to which the conversion price shall have a floor price of $ 1.00 . Additionally, the amendment requires the Company to make a cash payment to Lind if in connection with a conversion, the conversion price is deemed to be the floor price. No conversion or repayment to 3 rd Lind Note occurred during the year ended December 31, 2024. On March 3, 2025, April 1, 2025, May 14, 2025, June 5, 2025, and July 9, 2025, Lind converted $ 1,000,000 ($ 200,000 in each conversion) principal balance on 3 rd Lind Note into 1,000,000 shares of the Company’s common stocks. The 3 rd Lind Note balance was fully converted as of December 31, 2025. In connection with above three Lind Note offerings, the Company and its subsidiaries: BioKey, BioLite, Biolite BVI, and American BriVision, jointly and severally guaranteed all of the obligations of the Company in connection with the offering with certain collateral, as set forth in the related transaction documents. On May 22, 2024, November 19, 2024, January 9, 2025, and July 1, 2025, Lind exercised 1,000,000 , 500,000, 1,029,167 , and 500,000 of the existing warrants to purchase shares of Common Stock at a reduced exercise price of $ 0.75 , $ 0.42 , $ 0.40 , and $ 1.0 per share, respectively. Refer to the details in Note 12, Equity. Total interest expenses in connection with the above three Lind Notes were $ 340,240 and $ 773,139 for the years ended December 31, 2025 and 2024, respectively. Other Convertible Notes Payable On November 1, 2024 and November 5, 2024, the Company’s subsidiary, AiBtl, issued two convertible notes payable, each with a principal amount of $ 30,000 to two separate individuals, for total consideration of $ 60,000 . Each note has a 1 -year term and an implied annual discount rate of 6.89 %. These convertible notes bear 0 % interest rate and are convertible by the holders into AiBtl’s common stock at $ 5 per share at any time before maturity. AiBtl reserves the right to repurchase the note in full at any time before maturity. As of December 31, 2025, AiBtl is still negotiating the new term of these convertible notes. The convertible notes payable is accounted for in accordance with ASC 470-20, Debt with Conversion and Other Options. The Company evaluated the conversion feature and determined that it qualifies for equity classification as it meets the “fixed-for-fixed” criteria. The proceeds from the issuance were allocated to the present value of the liability component in aggregate for $ 56,132 , and to debt discount for $ 3,867 . The debt discount is recorded in additional paid-in capital in the statement of change in equity. The debt discount is being amortized over the 1 -year term using the effective interest method. During the year ended December 31, 2025 and 2024, the Company recognized $ 3,221 and $ 646 in interest expense related to the amortization of the debt discount. On April 5, 2025, AiBtl issued a convertible note payable with a principal amount of $ 9,010 to an individual investor, for total consideration of $ 9,010 . The note has a 1 -year term and an implied annual discount rate of 6.89 %. with a 0 % stated interest rate and is convertible by the holders into AiBtl’s common stock at $ 5 per share at any time before maturity. AiBtl reserves the right to repurchase the note in full at any time before maturity. On December 3, December 8, and December 26, 2025, AiBtl issued three convertible notes payable to an individual investor, with a principal amount of $ 240,000 , $ 100,000 , and $ 150,000 , respectively, for total consideration equal to the principal amounts. These notes, with identical terms, have a 1 -year term and state annual interest rate of 20 %, and are convertible by the holders into AiBtl’s common stock at $ 7.5 per share at any time before maturity. AiBtl reserves the right to repurchase the note in full at any time before maturity. F- 28 The Company recognized a total interest expense of $ 5,516 for the new convertible notes issued in December 2025 for the year ended December 31, 2025. Convertible Notes Payable – Related Party On July 8, 2025, AiBtl issued a convertible note payable with a principal amount of $ 150,000 to an employee of the Company, a related party, for total consideration of $ 150,000 . The note has a 1 -year term with a 0 % interest rate and is convertible by the holders into AiBtl’s common stock at $ 10 per share at any time before maturity. AiBtl reserves the right to repurchase the note in full at any time before maturity. This note was repaid in December 2025. On December 8 and December 30, 2025, AiBtl issued two convertible notes payable with principal amounts of $ 150,000 and $ 90,000 , respectively, to an employee of the Company, a related party, for total consideration equal to the principal amounts. The notes have a 1 -year term with a 20 % interest rate and are convertible by the holders into AiBtl’s common stock at $ 7.5 per share at any time before maturity. AiBtl reserves the right to repurchase the note in full at any time before maturity. The carrying amounts of the liability component are summarized as follows: December 31, 2025 Issuance Entity Issuance Date Maturity Date Principal Amount at Issuance Stated Interest Rate Conversion Price Common Stock to be converted Principal Amount at Balance Sheet Date Carrying Value Fair Value Other Note AiBtl November 1, 2024 November 1, 2025 * $ 30,000 0 % $ 5.00 AiBtl $ 30,000 30,000 30,000 Other Note AiBtl November 5, 2024 November 5, 2025 * 30,000 0 % $ 5.00 AiBtl 30,000 30,000 30,000 Other Note AiBtl April 6, 2025 April 6, 2026 9,010 0 % $ 5.00 AiBtl 9,010 9,010 9,010 Other Note AiBtl December 3, 2025 December 3, 2026 240,000 0 % $ 7.50 AiBtl 240,000 240,000 240,000 Other Note AiBtl December 8, 2025 December 8, 2026 100,000 0 % $ 7.50 AiBtl 100,000 100,000 100,000 Other Note AiBtl December 26, 2025 December 26, 2026 150,000 0 % $ 7.50 AiBtl 150,000 150,000 150,000 $ 559,010 $ 559,010 $ 559,010 $ 559,010 * In the process of negotiating the new terms. December 31, 2025 Issuance Entity Issuance Date Maturity Date Principal Amount at Issuance Stated Interest Rate Conversion Price Common Stock to be converted Principal Amount at Balance Sheet Date Carrying Value Fair Value Convertible note – related party AiBtl December 8, 2025 December 8, 2026 $ 150,000 20 % $ 7.50 AiBtl $ 150,000 $ 150,000 $ 150,000 Convertible note – related party AiBtl December 30, 2025 December 30, 2026 90,000 20 % $ 7.50 AiBtl 90,000 90,000 90,000 $ 240,000 $ 240,000 $ 240,000 $ 240,000 December 31, 2024 Issuance Entity Issuance Date Maturity Date Principal Amount at Issuance Stated Interest Rate Effective Interest Rate Conversion Price Common Stock to be converted Principal Amount at Balance Sheet Date Unamortized Discount Carrying Value Fair Value 2nd LIND Note ABVC November 17, 2023 May 19, 2025 $ 1,200,000 0 % 86.94 % $ 1.00 ABVC $ 400,000 $ 118,048 $ 281,952 $ 480,000 3rd LIND Note ABVC January 17, 2024 July 17, 2025 1,000,000 0 % 87.40 % $ 1.00 ABVC 1,000,000 388,685 611,315 1,200,000 Other Note AiBtl November 1, 2024 November 1, 2025 30,000 0 % 6.89 % $ 5.00 AiBtl 30,000 1,610 28,390 30,000 Other Note AiBtl November 5,2024 November 5, 2025 30,000 0 % 6.89 % $ 5.00 AiBtl 30,000 1,611 28,389 30,000 $ 2,260,000 $ 1,460,000 $ 509,954 $ 950,046 $ 1,740,000 F- 29 8. ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES Accrued expenses and other current liabilities consisted of the following as of the periods indicated: December 31, 2025 2024 Accrued research and development expense $ 1,754,083 $ 1,799,583 Accrued directors and officers (owners) compensation 1,358,293 1,025,867 Cash portion of the Lind Note repayments 492,376 127,759 Accrued compensation and employee benefits 86,744 126,106 Others 470,133 430,107 Total $ 4,161,629 $ 3,509,422 9. SHORT-TERM LOANS (1) Short-term loans consist of the following: December 31, 2025 2024 Cathay United Bank $ 89,512 $ 200,252 CTBC Bank 636,000 610,000 Other individual 30,000 30,000 Total $ 755,512 $ 840,252 Cathay United Bank On June 28, 2016, BioLite Taiwan and Cathay United Bank entered into a one-year bank loan agreement (the “Cathay United Loan Agreement”) in a credit limit amount of NTD 7.5 million, equivalent to $ 228,750 . The term started June 28, 2016 with maturity date on June 28, 2017 . The loan balance bears interest at a floating prime rate plus 1.31 %. The prime rate is based on term deposit saving interest rate of Cathay United Bank. The Company renews the agreement with the bank every year, and the next renewal date is September 6, 2026. As of December 31, 2025 and December 31, 2024, the effective interest rates per annum were 2.99 % and 2.99 %, respectively. The loan is collateralized by the building and improvement of BioLite Taiwan, and is also personal guaranteed by the Company’s chairman. During the year ended December 31, 2025, the Company made payments of the loan in total NTD 3.75 million, equivalent to $ 120,400 . Interest expenses were $ 4,743 and $ 6,891 for the years ended December 31, 2025 and 2024, respectively. CTBC Bank On June 12, 2017 and July 19, 2017, BioLite Taiwan and CTBC Bank entered into two short-term saving secured bank loan agreements (the “CTBC Loan Agreements”) in a credit limit amount of NTD 10 million, equivalent to $ 327,500 , and NTD 10 million, equivalent to $ 327,500 , respectively. Both two loans with the same maturity date at January 19, 2018 . In February 2018, BioLite Taiwan combined two loans and extended the loan contract with CTBC for one year . The Company renews the agreement with the bank every six months, and the next renewal date is July 10, 2026. The loan balances bear interest at a fixed rate of 2.5 % per annum, and is secured by the money deposited in a savings account with the CTBC Bank. This loan was also personal guaranteed by the Company’s chairman and BioFirst. During the year ended December 31, 2020, BioLite Taiwan has opened a TCD account with CTBC bank to guarantee the loan going forward. Interest expenses were $ 15,962 and $ 15,557 for the years ended December 31, 2025 and 2024, respectively. F- 30 Other individual – Third party On March 21, 2024, the Company issued an unsecured promissory note to a third party for the proceeds of $ 30,000 . The note bears interest rate of 12 % per annum and matures on March 21, 2025 , or upon the occurrence of an event of default. The promissory note was extended to another year and matures on March 21, 2026, with the same terms. Interest expenses were $ 3,600 and $ 2,811 for the year ended December 31, 2025 and 2024, respectively. 10. RELATED PARTIES TRANSACTIONS The related parties of the company with whom transactions are reported in these financial statements are as follows: Name of entity or Individual Relationship with the Company and its subsidiaries BioFirst Corporation (the “BioFirst”) Entity controlled by controlling beneficiary shareholder of YuanGene BioFirst (Australia) Pty Ltd. (the “BioFirst (Australia)”) 100% owned by BioFirst; Entity controlled by controlling beneficiary shareholder of YuanGene Rgene Corporation (the “Rgene”) Shareholder of the Company; Entity controlled by controlling beneficiary shareholder of YuanGene; the Chairman of Rgene is Mr. Tsung-Shann Jiang GenePharm Inc. (the “GenePharm”) Dr. George Lee, Board Director of Biokey, is the Chairman of GenePharm. The Jiangs Mr. Tsung-Shann Jiang, the controlling beneficiary shareholder of the Company and Rgene, the Chairman and CEO of the BioLite Holding Inc. and BioLite Inc. and the President and a member of board of directors of BioFirst Ms. Shuling Jiang, is the Chairman of Keypoint; and a member of board of directors of the Company and BioLite Inc, and a member of board of directors of BioFirst; a director and beneficial owner of more than 10% of the ABVC’s outstanding common stock Mr. Eugene Jiang is Mr. and Ms. Jiang’s son. Mr. Eugene Jiang is the chairman, and majority shareholder of the Company and a member of board of directors of BioLite Inc. Mr. Eugene Jiang is a member of board of directors of BioFirst. Mr. Chang-Jen Jiang is Mr. Tsung-Shann Jiang’s sibling and the director of the Company, and a member of board of directors of BioFirst. Ms. Mei-Ling Jiang is Ms. Shuling Jiang’s sibling. BioLite Japan Entity controlled by controlling beneficiary shareholder of ABVC BioHopeKing Corporation (“BHK”) Entity controlled by controlling beneficiary shareholder of ABVC AiBtl (Holding) BioPharma, Inc. (“AiBtl Holding”) Founding shareholder of AiBtl BioPharma Inc. Jaimes Vargas Russman CEO of AiBtl BioPharma Inc. Lion Arts Promotion, Inc. (“Lion Arts”) Entity controlled by the Jiangs. Revenues – related parties During the year ended December 31, 2024, the Company received $ 296,000 in cash, pursuant to the licensing agreement and related amendment with FEYE, and recognized $ 296,000 revenue correspondingly. In addition, the Company received $ 200,000 in 2024, pursuant to the licensing agreement with OncoX, and recognized revenue correspondingly. Please refer to Note 4, Collaborative Agreements for details. Year Ended December 31, 2025 2024 OncoX $ - $ 200,000 FEYE - 296,000 Total $ - $ 496,000 F- 31 Consulting fees – related parties In March 2024, the BioLite engaged Lion Arts to provide operation, business development, human resources, and capital finance consulting services in Taiwan. The agreement is for 12 months expiring in February 2025, and was renewed for another 12 months expiring February 2026. The service fee is NTD 5,520,000 (approximately $ 173,328 ) for each of the contracts expiring 2025 and 2026. In May 2025, BioLite entered another consulting agreement with Lion Arts for international business development for service fee of NTD 2,000,000 (approximately $ 62,800 ). This agreement is for 12 months expiring April 2026, and is optional for renewal upon mutual agreement. The Company incurred consulting fees for both agreements of $ 219,992 and $ 104,083 for the years ended December 31, 2025 and 2024, respectively. Due from related parties Amount due from related parties consisted of the following as of the periods indicated: Due from related party- Current December 31, 2025 2024 BioFirst (1) $ 761,017 $ 589,340 Rgene (2) 2,347 - Director (3) 24 565,711 Total $ 763,388 $ 1,155,051 Due from related parties- Non-current, net December 31, 2025 2024 BioFirst (Australia) (4) $ 839,983 $ 839,983 BioHopeKing Corporation (5) 120,210 120,210 Total 1,014,193 1,014,193 Less: allowance for expected credit losses accounts ( 1,014,193 ) ( 1,014,193 ) Net $ - $ - (1) On December 31, 2023, BioLite Taiwan entered into a loan agreement with BioFirst, with a principal amount of $ 337,707 , which bears interest at 12 % per annum for the use of working capital. During the year ended December 31, 2024, the Company entered into another loan agreement with BioFirst, with a principal amount of $ 347,883 , which bears interest at 12 % per annum for the use of working capital. In 2025, the Company entered several loan agreements with BioFirst, in the aggregate of $ 1,406,022 . These loans bear 12 % per annum, with the term of 12 months. During 2025, the Company also received around $ 203,026 repayment. The funds were used to support BioFirst’ daily operations. As of December 31, 2025 and 2024, the outstanding loan balance were $ 761,016 and $ 535,918 , respectively; accrued interest was $ 212,839 and $ 53,422 , respectively. All the outstanding principal and interests were collected on February 26, 2026. (2) On June 16, 2022, the Company entered into a one-year convertible loan agreement with Rgene, with a principal amount of $ 1,000,000 to Rgene which bears interest at 5 % per annum for the use of working capital that, if fully converted, would result in ABVC owning an additional 6.4 % of Rgene. The Company may convert the Note at any time into shares of Rgene’s common stock at either (i) a fixed conversion price equal to $ 1.00 per share or (ii) 20 % discount of the stock price of the then most recent offering, whichever is lower; the conversion price is subject to adjustment as set forth in the Note. The Note includes standard events of default, as well as a cross-default provision pursuant to which a breach of the Service Agreement will trigger an event of default under the convertible note if not cured after 5 business days of written notice regarding the breach is provided. As of December 31, 2025 and 2024, the outstanding loan balance were $ 0 and $ 500,000 , respectively; and accrued interest was $ 0 and $ 63,819 , respectively. Both principal and accrued interest were converted to Rgene’s common stocks. As of December 31, 2025 and 2024, the Company has other receivables amounted $ 2,347 and $ 1,892 , respectively, from Rgene due to daily operations. F- 32 (3) The director paid certain operating expenses on behalf of the Company. (4) On July 1, 2020, the Company entered into a loan agreement with BioFirst (Australia) for $ 361,487 to properly record R&D cost and tax refund allocation based on co-development contract executed on July 24, 2017. The loan was originally set to be mature on September 30, 2021 with an interest rate of 6.5 % per annum, but on September 7, 2021, the Company entered into a loan agreement with BioFirst (Australia) for $ 67,873 to meet its new project needs. On July 27, 2021, the Company repaid a loan 249,975 to BioFirst (Australia). On December 1, 2021, the Company entered into a loan agreement with BioFirst (Australia) for $ 250,000 to increase the cost for upcoming projects. The loan will be matured on November 30, 2022 with an interest rate of 6.5 % per annum. In 2022, the Company entered into several loan agreements with BioFirst (Australia) for a total amount of $ 507,000 to increase the cost for upcoming projects. During the first quarter of 2023, the Company entered into several loan agreements with BioFirst (Australia) for a total amount of $ 88,091 to increase the cost for upcoming projects. During the second quarter of 2023, the Company entered into several loan agreements with BioFirst (Australia) for a total amount of $ 25,500 to increase the cost for upcoming projects. All the loans period was twelve months with an interest rate of 6.5 % per annum. For accounting purpose, the due from and due to related party balances was being net off. As of December 31, 2025 and 2024, the outstanding loan balances and allocated research fee were both amounted to $ 681,185 , and accrued interest balances were both amounted $ 158,798 . The business conditions of BioFirst (Australia) deteriorated and, as a result, the Company recognized expected credit losses of $ 839,983 for the year ended December 31, 2023. The Company stopped accruing interest income recognizing such losses. (5) On February 24, 2015, BioLite Taiwan and BioHopeKing Corporation (the “BHK”) entered into a co-development agreement, (the “BHK Co-Development Agreement”, see Note 4). The development costs shall be shared 50/50 between BHK and the Company. Under the term of the agreement, BioLite issued relevant development cost to BHK. As of December 31, 2025 and 2024, due from BHK was both NTD 3,941,299 (approximately $ 120,210 and $ 120,210 , respectively). The business conditions of BHK deteriorated and as a result, the Company recognized expected credit losses of NTD 3,941,299 as of December 31, 2024. No recovery was made during the year ended December 31, 2025. The Company’s due from related parties are subject to certain risks that our collaborative parties, would face. Such risks exist in future market conditions, macro economy, legal and regulatory, results of clinical trials and product developments, and among others. As of December 31, 2025, the Company’s comprehensive review of the balances of due from related parties indicates that there are no expected losses except those being recognized above. This conclusion is based on business relationships with our related parties and the absence of any significant indicators of potential default. Due to related parties Amount due to related parties consisted of the following as of the periods indicated: December 31, 2025 2024 The Jiangs (1) $ 300 $ 274,170 AiBtl Holding (2) - 348,219 Shareholders (3) - 142,130 Directors (4) - 8,526 ForSeeCon (5) 70,000 - OncoX (5) 35,404 - Total $ 105,704 $ 773,045 (1) Since 2019, the Jiangs advanced funds to the Company for working capital purposes. As of December 31, 2025 and 2024, the outstanding balance due to the Jiangs amounted to $ 300 and $ 274,170 , respectively. These loans bear no interest and are due on demand. In addition, during year ended 2025, the Company purchased a piece of land in Taiwan from Shuling Jiang, as discussed in Note 5. (2) On April 11, 2024, May 10, 2024, August 15, 2024, and December 24, 2024, AiBtl received short-term loans from its founding shareholder, AiBtl Holding, for the principal amounts of $ 40,000 , $ 60,000 , $ 33,732 , and $ 214,487 , respectively, for the purpose of daily operations. These loans do not bear interest and are payable on demand. (3) Since 2018, the Company’s shareholders have advanced funds to the Company for working capital purposes. The advances bear interest rates around 12 % per annum. As of December 31, 2024, the outstanding principal and accrued interest was $ 142,130 . Interest expenses in connection with these loans were $ 21,101 for the years ended December 31, 2024. (4) As of December 31, 2024, due to Directors amounting to $ 8,526 was related to the daily operating expenses in 2024 paid by the Directors of AiBtl on behalf of the entity. All balance was repaid in 2025. (5) As of December 31, 2025, the funds received from ForSeeCon and OncoX were initially designated for their payments of licensing fees. Upon further review, management determined that these funds did not meet the fund-raising covenant requirements under licensing agreement. Accordingly, the Company will subsequently return these funds to ForSeeCon and OncoX. F- 33 11. INCOME TAXES Income tax (benefit) expense for the years ended December 31, 2025 and 2024 consisted of the following: Year Ended December 31, 2025 2024 Current: Federal $ - $ - State - - Foreign 24,154 ( 110,539 ) Total Current $ 24,154 $ ( 110,539 ) Deferred: Federal $ - $ - State - - Foreign - - Total Deferred $ - $ - Total provision for income tax expense (benefit) $ 24,154 $ ( 110,539 ) Deferred tax assets (liability) as of December 31, 2025 and 2024 consist approximately of: December 31, 2025 2024 Loss on impairment of Assets $ 881,855 $ 713,223 Net operating loss carryforwards 6,473,705 5,677,413 Operating lease liabilities 446,376 178,014 Operating lease assets ( 445,321 ) ( 178,014 ) Deferred tax assets, Gross 7,356,615 6,390,636 Valuation allowance ( 7,356,615 ) ( 6,390,636 ) Deferred tax assets, net $ - $ - F- 34 13. EQUITY Lind Offerings and Repayments 1 st Lind Note During the year ended December 31, 2024, the Company accepted the conversion of Lind Note with the Company’s common stock for 905,303 shares, for the carrying amount of $ 811,175 . The 1 st Lind Note was fully repaid in April 2024. Please refer to Note 7 for detail of the Lind Note. 2 nd Lind Note During the year ended December 31, 2024, the Company issued Lind in total of 800,000 shares of the Company’s common stock as the repayment of $ 800,000 principal of 2 nd Lind Note. According to the amended agreement pursuant to Nasdaq requirements, the conversion price is subject to $ 1.00 floor price if the conversion price was below such floor, resulting in effective conversion price between $ 0.7907 to $ 0.4932 . During 2024, the Company made additional $ 327,017 cash repayments, with $ 127,759 unpaid cash booked in Accrued Expenses and Other Current Liabilities. On March 3, 2025 and April 1, 2025, Lind has converted the remaining $ 400,000 principal balance on 2 nd Lind Note into 400,000 shares of the Company’s common stocks. All principal balance of 2 nd Lind Note was fully converted as of April 1, 2025. 3 rd Lind Note On March 3, 2025, April 1, 2025, May 14, 2025, June 5, 2025, and July 9, 2025, Lind converted $ 1,000,000 ($ 200,000 in each conversion) principal balance on 3 rd Lind Note into 936,239 shares of the Company’s common stocks. As of July 9, 2025, all outstanding balance of 3 rd Lind Note was fully converted. Stock-Based Compensation and Payments 2024 On January 27, 2024, the Company granted 1,302,726 restricted shares to its employees and directors under the 2016 Equity Incentive Plan as compensation for their previous services, amounted to $ 1,935,755 , with an issuance date of February 2, 2024. These shares are subject to a three-year restriction period. On May 24, 2024, the Company issued 200,000 shares of common stock amounted to $ 187,000 to a consultant for providing business and funding opportunities. In December 2024, the Company issued 117,277 shares of its common stock to employees as compensation. The Company has entered several agreements with its landlord in California, which both parties agreed that the Company issues its common stocks in lieu of cash for certain months of rent. As of December 31, 2024, the Company has issued 399,384 shares with average issuance price of $ 0.68 per share, for the monthly rent from April 2024 and half month of December 2024, in total of $ 271,827 . 2025 During the year ended December 31, 2025, the Company compensated an employee with 550,000 shares of the Company’s common stocks amounting to $ 1,062,500 for her additional services. As of December 31, 2025, there are 100,000 shares totaling $ 254,000 that have not been issued. During the year ended December 31, 2025, the Company compensated various business consultants with 1,815,193 shares of common stock amounting to $ 2,501,691 , for their financial and business advisory services. As of December 31, 2025, 100,000 shares totaling $ 105,000 remain unissued. F- 35 In December 2025, the Company issued 14,792 shares of common stock as a payment for a former employee’s compensation, amounted to $ 43,849 . For the year ended September 31, 2025, the Company issued 333,456 shares of common stock, for the rent payments amounted to $ 383,526 . In connection with the Shuling Land transaction (see below Shuling Land Acquisition section), on July 15, 2025, the Company entered into a one-year consulting agreement with Shuling, pursuant to which Shuling shall provide advisory and development support services related to the Land. Such services include but not limited to site supervision and care, liaison with local authorities regarding land zoning and permits, acting as the Company’s agent to the Land, and other Land development related matters. The Company shall issue 1,000,000 restricted shares of the Company’s common stock, subject to a 5 -year vesting schedule of 200,000 shares per year. On July 16, 2025, the Company issued 200,000 shares, amounted to $ 330,000 , of restricted stock as a prepayment for Shuling’s first year service. Private Offerings In 2024, the Company received $ 31,040 from an investor to subscribe 41,387 shares of the Company’s common stock. These stocks were issued to the investor in September 2025 due to delay of certain administrative process. During the year ended December 31, 2025, the Company conducted several private offerings of its common stock to several individual investors and issued 3,354,475 shares of common stocks at $ 0.60 to $ 1.95 per share, raising a total of $ 3,305,303 . Shuling Land Acquisition On February 6, 2024, the Company entered into a definitive agreement with Shuling Jiang (“Shuling”), pursuant to which Shuling shall transfer the ownership of certain land she owns located at Taoyuan City, Taiwan (the “Land”) to the Company (the “Agreement”). Shuling is a director of the Company and currently owns approximately 14.7 % of the Company’s issued and outstanding shares of common stock. In consideration for the Land, the Company was to pay Shuling (i) 703,496 restricted shares of the Company’s common stock (the “Shares”) at a price of $ 3.50 per share and (ii) five-year warrants to purchase up to 1,000,000 shares of the Company’s common stock, with an exercise price of $ 2.00 per share. Under the Agreement, Shuling was to also transfer outstanding liability owed on the Land (approximately $ 500,000 ) to the Company. On May 16, 2024, the Company’s board of directors determined that it was in the best interest of the Company and its shareholders to terminate the Agreement and not proceed with the transfer of land ownership; the Company may reconsider the transaction at a later date. The shares were returned and booked as treasury stock, and the warrants were not issued. On June 3, 2025, the Company’s annual general shareholder meeting approved the proposal that the issuance of 2,035,136 restricted shares of the Company’s common stock at a price of $ 1.65 per share and five-year warrants to purchase up to 1,000,000 shares of the Company’s common stock, with an exercise price of $ 2.50 per share, to purchase the above Land from Shuling. On July 15, 2025, the Company closed the purchase of Land from Shuling and issued 2,035,136 shares of restricted common stocks and 1,000,000 shares of warrants and to Shuling on July 16, 2025 and July 15, 2025, respectively. Please refer to Note 5 for more details. Noncontrolling Interests On March 14, 2024, AiBtl issued 1,610,700 AiBtl’s common stocks to a land acquisition transaction in Taiwan, including the 1-year business consulting fee of $ 383,500 incurred beginning in November 2023, and the cost of land $ 7,670,000 . Due to certain administrative processes and restrictions, AiBtl has not acquired ownership of the land. Yun Zhi Yi, a Taiwan corporation, was incorporated in August 2024, with 90 % owned by BioLite Taiwan and 10 % owned by Shuling Jiang, the Company’s director. This entity is set up for holding the land that AiBtl acquired in Taiwan for developing health related business in Taiwan. Due to certain administrative processes and restrictions, the title transfer has not completed. However, AiBtl entered a series of agreements with the sellers in March 2025, to obtain the complete rights and obligations of the land while in the process of transferring the title. These agreements are effective until the title transfer is completed. AiBtl recognized such asset on its balance sheet on March 31, 2025. Refer to Note 5 for details. F- 36 13. STOCK OPTIONS AND WARRANTS The Company’s 2025 annual meeting of shareholders approved an increase in the Company’s Amended and Restated 2016 Equity Incentive Plan (the “Plan”) up to a maximum of 15 % of the number of issued and outstanding shares on the date of the meeting and permit the automatic increase of such shares available under the Plan, on January 1 of each year, by that number of shares equal to 5 % of the number of shares of common stock issued and outstanding on the immediately preceding December 31, commencing on January 1, 2026 and ending with the year that the additional number of shares equals 15 % of the number of shares of common stock issued and outstanding as of December 31 of the previous year. As of the date of the 2025 annual meeting of shareholders, the outstanding share was 16,153,055 shares, which results in the maximum shares issuable of 2,422,958 shares under the Plan. Stock Options The Company has not granted any options during years ended December 31, 2025 and 2024. The Company’s most recent option grant was in 2022 that 76,190 shares (post-split) of common stock were granted to employees and certain consultants. The weighted average grant date fair value of options granted in 2022 was $ 27.9 (post-split). There are 386,021 options available for grant under the 2016 Equity Incentive Plan as of December 31, 2025. Compensation costs associated with the Company’s stock options are recognized, based on the grant-date fair values of these options over vesting period. As of December 31, 2025 and 2024, there were no unvested options. The intrinsic value in this section as of December 31, 2025 is based on the Company’s closing stock price of $ 2.130 as quoted on the Nasdaq market. Options issued and outstanding as of December 31, 2025, and their activities during the year then ended are as follows: Weighted- Weighted- Average Average Number of Exercise Contractual Underlying Shares (post-split) Price Per Share (post-split) Life Remaining in Years Aggregate Intrinsic Value Outstanding as of January 1, 2025 258,710 $ 27.9 6.74 - Granted - - - - Forfeited - - - - Outstanding as of December 31, 2025 258,710 27.9 5.74 $ - Exercisable as of December 31, 2025 258,710 27.9 5.74 $ - Vested and expected to vest 258,710 $ 27.9 5.74 $ - Stock Warrants - Shuling Warrants issued and outstanding in connection with Shuling land transaction (See Note 5) as of December 31, 2025, and their activities during the year ended are as follows: Number of Underlying Shares Weighted- Average Exercise Price Per Share Weighted- Average Contractual Life Remaining in Years Aggregate Intrinsic Value Outstanding as of January 1, 2025 - $ - - $ - Issued 1,000,000 2.50 4.54 - Exercised - $ - - - Outstanding as of December 31, 2025 1,000,000 $ 2.50 4.54 $ - F- 37 Stock Warrants – Lind Notes On February 23, 2023, in connection with the issuance of the 1 st Lind Note (referring to Note 7), the Company issued Lind a 5 -year term of common stock purchase warrant to purchase up to 529,167 shares (post-split) of the Company’s common stock at an initial exercise price of $ 10.5 per share (post-split), subject to adjustment. The warrant exercise price was reset to $ 3.5 in accordance with the issuance of common stock in relation to securities purchase agreement in July 2023. On November 17, 2023, in connection with the issuance of the 2 nd Lind Note (referring to Note 7), Lind also received a 5 -year term of common stock purchase warrants to purchase up to 1,000,000 shares of the Company’s common stock at an initial exercise price of $ 2 per share. The warrants were valued using the Black-Scholes model and the fair value was determined to be $ 480,795 , which was recorded as a debt discount. On January 17, 2024, in connection with the issuance of the 3 rd Lind Note (referring to Note 7), Lind also received 5 -year term of common stock purchase warrants to purchase up to 1,000,000 shares of the Company’s common stock at an initial exercise price of $ 2 per share. On May 22, 2024, the Company and Lind entered into a letter agreement, pursuant to which Lind will exercise, for cash, 1,000,000 of its Pre-Existing Warrants (all of the warrants issued to Lind on February 23, 2023, November 17, 2023 and January 17, 2024 are hereinafter referred to as the “Pre-Existing Warrants”), to purchase shares of Common Stock at a reduced exercise price of $ 0.75 per share. Such 1,000,000 Pre-Existing Warrants exercised include 529,167 warrants issued in February 2023 and 470,833 warrants issued in November 2023. Concurrently, the exercise price of all Pre-Existing Warrants was reduced to $ 0.75 per share according to this agreement. Lind also received new warrants to purchase 1,000,000 shares of common stock, exercisable at any time on or after the date of its issuance and until the five-year anniversary thereof, for $ 1.00 per share (the “New Warrants”). The fair value of the New Warrants was determined to be $ 925,210 using the Black-Scholes model. The New Warrants may be exercised via cashless exercise or resale pursuant to the registration statement that was declared effective. As of December 31, 2024, Lind has exercised 1,000,000 shares of Pre-Existing Warrants and received 1,000,000 shares of New Warrants according to this agreement. All warrants issued to Lind may be exercised via cashless exercise. On January 5, 2025, the Company and Lind entered into a third letter agreement, pursuant to which Lind agreed to exercise for cash, 1,029,167 of the Existing Warrants to purchase shares of Common Stock, with a current exercise price of $ 0.75 per share, at a reduced exercise price of $ 0.40 per share. On July 1, 2025, Lind exercised 500,000 warrants at an exercise price of $ 1.00 per share and left 500,000 warrants as of December 31, 2025. In July 2025, the Company received $ 83,567 in cash for 216,251 common stock warrant exercise from the placement agents of LIND notes. These warrants were issued in 2023 and 2024 along with the Lind Note financing. Warrants issued and outstanding in connection with Lind convertible notes (See Note 12) as of December 31, 2025, and their activities during the year ended are as follows: Number of Underlying Shares Weighted- Average Exercise Price Per Share Weighted- Average Contractual Life Remaining in Years Aggregate Intrinsic Value Outstanding as of January 1, 2025 2,029,167 $ 0.40 4.20 $ 195,542 Issued - - - - Exercised ( 1,529,167 ) $ 0.60 - - Outstanding as of December 31, 2025 500,000 $ 1.00 3.39 $ 565,000 F- 38 14. LEASE The Company adopted ASC 842 on January 1, 2019 using the modified retrospective approach and elected the transition practical expedient not to restate comparative periods. In applying the standard, the Company elected several practical expedients, including not reassessing whether existing or expired contracts contained leases, not reassessing prior lease classifications or initial direct costs, using hindsight when evaluating lease terms and potential impairments, and not reevaluating pre-existing land easements accounted for under ASC 840. The Company also elected the short-term lease exemption and generally accounts for lease and non-lease components separately. Under ASC 842, the Company recognizes right-of-use (“ROU”) assets and corresponding lease liabilities on the consolidated balance sheets. ROU assets represent the right to use the underlying leased assets over the lease term, and lease liabilities represent the present value of future minimum lease payments. Because most leases do not provide an implicit rate, the Company uses its incremental borrowing rate at lease commencement to measure lease liabilities. Future minimum lease payments primarily include fixed base rent obligations. The Company recognized lease liabilities, with corresponding ROU assets, based on the present value of unpaid lease payments for existing operating leases longer than twelve months. The ROU assets were adjusted per ASC 842 transition guidance for existing lease-related balances of accrued and prepaid rent, unamortized lease incentives provided by lessors, and restructuring liabilities. Operating lease cost is recognized as a single lease cost on a straight-line basis over the lease term and is recorded in Selling, general and administrative expenses. Variable lease payments for common area maintenance, property taxes and other operating expenses are recognized as expense in the period when the changes in facts and circumstances on which the variable lease payments are based occur. The Company has no finance leases. The Company’s leases primarily include various office and laboratory spaces, copy machine, and vehicles under various operating lease arrangements. The Company’s operating leases have remaining lease terms of up to approximately five years. December 31, 2025 December 31, 2024 ASSETS Operating lease right-of-use assets $ 1,913,278 $ 640,387 LIABILITIES Operating lease liabilities (current) 317,557 403,581 Operating lease liabilities (non-current) 1,600,747 236,807 Supplemental Information The following provides details of the Company’s lease expenses: Year Ended December 31, 2025 2024 Operating lease expenses $ 486,281 $ 514,420 F- 39 Other information related to leases is presented below: Year Ended December 31, 2025 2024 Cash paid for amounts included in the measurement of operating lease liabilities $ 102,761 $ 228,393 Stock paid for amounts included in the measurement of operating lease liabilities $ 383,250 $ 255,788 December 31, 2025 December 31, 2024 Weighted Average Remaining Lease Term: Operating leases 5.01 years 2.48 years Weighted Average Discount Rate: Operating leases 7.11 % 1.19 % The minimum future annual payments under non-cancellable leases during the next five years and thereafter, at rates now in force, are as follows: Operating leases 2026 $ 441,029 2027 442,890 2028 447,886 2029 459,843 2030 422,821 Thereafter 70,814 Total future minimum lease payments, undiscounted 2,285,283 Less: Imputed interest ( 366,979 ) Present value of future minimum lease payments $ 1,918,304 15. COMMITMENTS AND CONTINGENCIES In the ordinary course of business, the Company may be subject to legal proceedings regarding contractual and employment relationships and a variety of other matters. The Company records contingent liabilities resulting from such claims, when a loss is assessed to be probable, and the amount of the loss is reasonably estimable. In the opinion of management, there were no pending or threatened claims and litigation as of December 31, 2025 and up through the date of the consolidated financial statements was available to the issued. 16. SUBSEQUENT EVENTS On January 12, 2026, the Company sold an aggregate amount of $ 256,000 on the same terms and conditions as the Reg S Offering; Pursuant to the share subscriptions, the Company has issued an aggregate of 131,280 shares of the Company’s common stock. The price at which the Shares were sold at $ 1.95 per share. On January 20, 2026, Lind Global Fund II LP (“Lind”) exercised a total of 102,000 warrants to purchase shares of the Company’s common stock. Each warrant was exercised at a price of $ 1.00 per share, in accordance with the terms outlined in the original warrant agreement dated May 22, 2024. Following this transaction, Lind retains a remaining balance of 398,000 warrants. These warrants are set to expire on May 22, 2029. F- 40 ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE Previous Independent Registered Public Accounting Firm Effective as of October 18, 2022, the Company engaged WWC P.C. CPA (“WWC”) as its independent registered public accounting firm for the Company’s fiscal year ended December 31, 2022. The decision to engage the New Auditor as the Company’s independent registered public accounting firm was approved by the Audit Committee of the Board of Directors and the Board of Directors of the Company. During the two fiscal years ended December 31, 2021 and the subsequent interim period through October 17, 2022, neither the Company nor anyone acting on its behalf has consulted with WWC with respect to (i) the application of accounting principles to a specified transaction, either completed or proposed, or the type of audit opinion that might be rendered on the Company’s financial statements, and neither a written report nor oral advice was provided to us by WWC that was an important factor considered by us in reaching a decision as to any accounting, auditing or financial reporting issue, or (ii) any other matter that was the subject of a disagreement as defined in Item 304(a)(1)(iv) of Regulation S-K and the related instructions to Item 304 of Regulation S-K or a reportable event as described in Item 304(a)(1)(v) of Regulation S-K. On October 10, 2024, WWC agreed not to renew its engagement with the Company. WWC’s voluntary decision not to renew the engagement was approved and acknowledged by the Company’s board of directors on October 17, 2024. During the fiscal years ended December 31, 2022 and 2023 and the subsequent interim period through June 30, 2024, there were no disagreements with WWC on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreement(s), if not resolved to the satisfaction of WWC, would have caused it to make reference to the subject matter of the disagreement(s) in connection with its report. During the fiscal years ended December 31, 2022 and 2023 and the subsequent interim period through June 30, 2024, there were no reportable events of the type described in Item 304(a)(1)(v) of Regulation S-K. New Independent Registered Public Accounting Firm On October 17, 2024, the Board approved the engagement of Simon & Edward, LLP (“S&E”) as the Company’s new independent registered public accounting firm. During the Company’s two most recent fiscal years and the subsequent interim period through June 30, 2024, neither the Company nor anyone on its behalf consulted with S&E regarding (i) the application of accounting principles to a specified transaction, either completed or proposed; the type of audit opinion that might be rendered on the Company’s financial statements, and neither a written report nor oral advice was provided that S&E concluded was an important factor considered by the Company in reaching a decision as to the accounting, auditing or financial reporting issue; or (ii) any matter that was either the subject of a disagreement (as defined in Item 304(a)(1)(iv) of Regulation S-K and its related instructions) or a reportable event (as described in Item 304(a)(1)(v) of Regulation S-K). Subsequent to the change of auditors, S&E identified certain matters that led to a restatement of previously issued financial statements. On March 31, 2025, we filed a Form 12b-25 stating that we required additional time to complete this annual report on Form 10-K. The Company and the audit committee of our board of directors, in consultation with S&E, concluded that our audited financial statements for the year ended December 31, 2023 required restatement and were not reliable. We reported this determination in a Form 8-K and filed the restated 2023 consolidated financial statements in our 2024 Form 10-K. 77