Aether Holdings, Inc. 10-K

ITEM 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations The following discussion should be read in conjunction with our consolidated financial statements and the related notes contained elsewhere in this Annual Report on Form 10-K and in our other Securities and Exchange Commission filings. The following discussion may contain predictions, estimates, and other forward-looking statements that involve a number of risks and uncertainties, including those discussed under “Risk Factors” and elsewhere in this Annual Report on Form 10-K. These risks could cause our actual results to differ materially from any future performance suggested below. Overview of Our Company We are an emerging financial technology platform company that offers proprietary research analytics, data and tools for both institutional and retail equity traders through our flagship, cloud-based software platform, SentimenTrader.com. By integrating advanced technologies, including AI tools, with the critical thinking and analytical abilities of our team of evidenced-based trading veterans, we aim to provide our Users with a powerful combination of technology and expertise, enabling them to make informed decisions to level-up their trading in the markets. Our platform is powered by an advanced data collection system that operates utilizing API calls and web scraping, fetching raw data 24/7 from a wide array of authoritative sources, including industry leaders like Bloomberg, Chicago Board Options Exchange , Consensus, Commodity Futures Trading Commission , End of Day Historical Data and Intercontinental Exchange . This automated process allows us to remain abreast of the latest market trends, trading volumes, and essential financial indicators. Our platform currently provides coverage of U.S. equity and option securities, evaluating the equities and options markets and conducting assessments through our analysts and technology daily. SentimenTrader utilizes technical indicators of market sentiment (meaning our proprietary gauge of the overall attitude of investors towards a particular market or security) as the cornerstone for our analyses and integrates technological advancements and the potential of deep learning techniques to create trade ideas, strategies, models, and other market analysis. We intend to target a wider audience than our current User base by broadening the scope and variety of our products, expanding the types of securities our platform covers, and broadening our coverage to include more markets and exchanges. We currently generate revenue from subscriptions to SentimenTrader, IPO Stream and Altcoin . Cloud-based services allow our users to access tailor-made stock research reports without taking possession of the software. Revenue is generally recognized ratably over the subscription term beginning on the commencement date of each subscription, which is the date our cloud-based software is first made available to a user. Subscription agreements generally have terms ranging from one month and one year. For the years ended September 30, 2025 and 2024, our total revenues were $1,380,850 and $1,440,096, respectively. The registration statement for our initial public offering (“IPO”) was declared effective on April 9, 2025. We consummated our IPO on April 11, 2025, with the issuance of 1,800,000 shares of our common stock at a public offering price of $4.30 per share, generating gross proceeds of $7,740,000. In connection with the IPO, we granted the underwriters an over-allotment option to purchase up to 270,000 additional shares at the same public offering price. On April 16, 2025, the IPO Over-Allotment Option was fully exercised, resulting in additional gross proceeds of $1,161,000. With the full exercise of the IPO Over-Allotment Option, the total gross proceeds from the IPO amounted to $8,901,000, before deducting underwriting discounts, commissions, and offering expenses. On April 30, 2025, we incorporated a new subsidiary, Alpha Edge Media, Inc., to support our expanding newsletter business. The newsletters published by AEM will target both institutional and retail investors, focusing on topics such as macroeconomic trends, market insights, and market psychology, while broadening our overall coverage of securities, markets and exchanges. We believe the expansion of our newsletter business will complement the newsletters currently published through our SentimenTrader platform and enable us to continue to build brand authority, expand recurring engagement with our Users, generate new User engagement with SentimenTrader, and open up new revenue streams through potential advertisements, sponsorships, and premium content. 64 On May 22, 2025, we incorporated a new subsidiary, Aether Grid Inc., to house and support the growth of our suite of financial tools designed to empower our Users. On June 6, 2025, we incorporated a new subsidiary, Aether Labs, Inc., to act as the arm of the Company that focuses on innovation and research and development of our fintech ecosystem, with a focus on proprietary analytics and AI-driven models. We continue to focus on achieving our mission of establishing ourselves as a preeminent fintech information company dedicated to the development of smart platforms tailored to empower the investing community with actionable strategic insights. To this end, in addition to further developing our newsletter business through AEM and expanding the securities, markets, and exchanges we currently cover, we are also actively exploring research and development initiatives to focus on advancing proprietary analytics and AI-driven models, as well as the possibility of growth through acquisition of complementary tools and technologies that would enhance our platform’s capabilities and value to Users Recent Acquisitions Altcoin On June 11, 2025, we acquired substantially all digital assets associated with the Altcoin Investing newsletter business for total consideration of $9,000. The acquisition expands our digital media footprint within the cryptocurrency research and education segment and aligns with the growth strategy of AEM, our digital media subsidiary. The acquired assets include the Altcoin domain name, trade name, subscriber lists, historical research content, social media presence, and associated platform rights, which we believe will enhance AEM’s audience reach and engagement. We have integrated the Altcoin content ecosystem into AEM’s suite of newsletters, which we expect will improve cross-promotion, channel diversification, and monetization opportunities through advertising, affiliate relationships, and premium content. We believe the Altcoin acquisition will strengthen our competitive position in the digital media and alternative investment content markets by expanding audience reach and enhancing AEM’s portfolio of specialized financial newsletters. WhaleTales On September 16, 2025, we completed the acquisition of substantially all assets associated with the WhaleTales digital newsletter business, including a digital content library, domain name, trade name, subscriber lists, and associated vendor and writer relationships, for total consideration of $12,500. The acquisition enhances the content portfolio of AEM and expands our digital reach within targeted investor-focused media channels. We expect the addition of WhaleTales to strengthen long-term user engagement, improve cross-property distribution efficiency, and support incremental monetization opportunities through sponsorships, premium content offerings, and advertising. We believe that the WhaleTales acquisition will contribute positively to AEM’s growth strategy by increasing audience scale, enhancing engagement metrics, and providing additional opportunities for commercial partnerships across our media network. Recent Developments Formation of 537 Greenwich LLC On October 14, 2025, we formed a new wholly owned subsidiary, 537 Greenwich LLC, under the laws of the State of Delaware. The subsidiary was established for the purpose of acquiring and holding office space in New York City, which will be purchased and owned by 537 Greenwich LLC, which will serve as our corporate headquarters. 65 Acquisition of 21bitcoin.xyz On October 15, 2025, we announced the acquisition of 21Bitcoin, a digital platform that autonomously generates and distributes real-time market intelligence through an advanced AI-powered publishing engine. 21Bitcoin provides expansive coverage of the digital asset landscape, including market trends, blockchain innovation, industry developments, regulatory policy, decentralized finance (DeFi), non-fungible tokens (NFTs), the metaverse, Web3 infrastructure, cybersecurity, privacy, and global adoption trends. The integration of 21Bitcoin into AEM is expected to deepen our coverage for both institutional and retail readers by combining algorithmic precision with editorial context. We believe this acquisition strengthens AEM’s position as a data-centric media network, enhances its AI and automation capabilities, and supports our broader strategy to expand our AI-driven media and fintech ecosystem. The transaction aligns with our long-term vision to merge advanced analytics with trusted financial media, creating a connected ecosystem of insights, automation, and intelligence . Removal of Director On November 21, 2025, we received a written consent in lieu of stockholder meeting dated November 21, 2025, executed in accordance with Section 228 of the DGCL and Article III Section 8 of our Amended and Restated Bylaws, whereby Elixir Technology Inc., an entity controlled by Jaclyn Mang Hei Wu, a former member of our board of directors, and Up and Up Ventures Limited, an entity controlled by Nicolas Kuan Liang Lin, our Chairman and Chief Executive Officer, which together are the beneficial owners of a majority of our outstanding common stock, removed Mr. David Mandel from our board of directors with immediate effect pursuant to Section 141(k) of the DGCL. Dispute with Former Director As previously reported in our Quarterly Report on Form 10-Q for the period ended June 30, 2025, our management is currently engaged in a dispute with Mr. David Mandel, a former member of our board of directors. On July 18, 2025, our board of directors received an email notification from Mr. Mandel wherein he alleged that he was promised the position of Chief Executive Officer of the Company with associated compensation of an annual salary of $220,000 and seven percent (7%) of the outstanding common stock of the Company, subject to a vesting schedule over a three-year period. Our management firmly denies these allegations, rejects the premise that any agreement related to the subject matter of the allegations was ever entered into, and does not believe that any related legal claim, if brought, would hold merit or be valid. See the section above entitled “ Risk Factors - Our management is currently in a dispute with one of our former directors. If he were to bring legal action against us, and we were to receive an adverse ruling, it could materially and adversely affect our reputation, dilute our shareholders’ equity interests in the Company, and adversely affect our stock price ” for a discussion of the risks associated with the dispute. Special Committee Investigation As previously disclosed in our Quarterly Report on Form 10-Q for the period ended June 30, 2025, on July 23, 2025, our board of directors was made aware of certain assertions through the online publication of third party “short report” that Nicolas Lin, our Chief Executive Officer and Chairman, did not disclose an affiliation with one of our shareholders, 28 Ventures Aether. In response, our board of directors, through the Company’s counsel, initiated an investigation into, among other things, whether Mr. Lin has beneficial ownership of, or voting or dispositive control over, the shares of our common stock held by 28 Ventures Aether. On August 18, 2025, our board of directors formed the Special Committee comprised of two non-management directors, Justin Molander and Timothy Murphy, to, among other things, oversee the Investigation and report to the board of directors its conclusions and recommendations as to what actions, if any, the Company should take with respect to the Assertions. With the assistance of counsel, the Special Committee reviewed documentation, interviewed witnesses, and made inquiries of third parties. The Special Committee presented preliminary conclusions and recommendations to our board of directors on September 18, 2025, and final conclusions and recommendations October 31, 2025, which our board of directors adopted. Following the Investigation, the Special Committee found no conclusive evidence that Mr. Lin, from December 30, 2024, the date of the initial filing of our registration statement on Form S-1 with the SEC, to the present, held an ownership interest in 28 Ventures Aether, 28 Ventures Master, or any of their affiliated entities, was an affiliate of any 28 Ventures Entities, or that Mr. Lin otherwise held or exercised voting power, dispositive control, or managerial authority, directly or indirectly, over the shares of our common stock owned by 28 Ventures Aether. Resignation of Director On December 14, 2025, Jaclyn Mang Hei Wu resigned as a member of our board of directors for personal reasons related to a regulatory proceeding (announced on November 27, 2025) initiated by the British Columbia Securities Commission towards her and Elixir Technology Inc. (a significant stockholder of the Company which is also an affiliate of Ms. Wu). 66 Bitcoin Treasury Strategy On July 18, 2025, our board of directors approved the adoption of a new treasury strategy for the Company, which primarily consists of holding the majority our liquid assets in bitcoin. We do not currently hold any bitcoin and we intend to fund our initial acquisition of bitcoin with the proceeds of a public or private offering of our securities; however, there can be no assurances that we will complete such an offering on favorable terms, on unfavorable terms, or at all. If we do not complete an offering of our securities, we intend to pursue other capital raising opportunities to finance our initial acquisition of bitcoin. See the sections above entitled “ Business – Bitcoin Treasury Strategy ” and “ Risk Factors – Risks Related to our Bitcoin Treasury Strategy and Holdings .” Financial Highlights The following tables present the revenue, cost of sales, gross margin and the net cash provided by or used in operating activities for the years ended September 30, 2025 and 2024. For the Year ended September 30, 2025 2024 % Change Revenue $ 1,380,850 $ 1,440,096 (4.11 )% Cost of sales $ 403,381 $ 445,466 (9.45 )% Gross profit margin 70.79 % 69.07 % 2.49 % Net cash used in operating activities $ (3,570,318 ) $ (688,661 ) 418.44 % Factors and Trends Affecting Our Business and Results of Operations We believe the most significant factors that affect our business and results of operations including the following: Increasing Usage by Our Existing Customers Our existing Userbase presents a significant opportunity for further sales expansion through increased usage of our platform and adoption of additional product offerings. We are highly focused on gaining a better understanding of the needs and growth plans of our existing Users. This deeper relationship with our Users will help us identify opportunities to educate our customer base on ways to utilize the platform more effectively for their individual use cases, as well as provide a feedback loop to inform our product roadmap. We are focusing our sales and support teams to prevent User churn by ensuring that our products and services can provide a high level of value. Our goal is to continue to increase our revenue from existing Users through the introduction of new products and features tailored to our customer base in addition to expanded User outreach, focused on larger Users and specific use cases. Growing Our Base of Higher Spend Customers We believe there is a substantial opportunity to further expand our User base to attract more businesses that can scale on our platform. We are investing in strategies that we believe will attract enterprise Users, including new marketing and partnership initiatives that further optimize our self-service revenue funnel and help Users expand their usage. 67 Investing in Our Platform and Product Offerings We have a history of, and will continue to invest significantly in, delivering innovative products, features and functionality targeted at our core Userbase. The market opportunity for our core services of providing proprietary research analytics, data, and tools for equity traders through a flagship platform continues to expand and we are making targeted investments to expand this revenue. Beyond the SentimentTrader platform, we continue to see large growth opportunities in U.S. markets and, accordingly, we have expanded our portfolio of products and offerings over the last few years. In addition, we may pursue both strategic partnerships and acquisitions that we believe will be complementary to our business, accelerate User acquisition, increase usage of our platform and/or expand our product offerings in our core markets. Our results of operations may fluctuate as we make these investments to drive usage and take advantage of our market opportunity. Increasing Importance of AI Our future success depends in large part on the continuing adoption of AI, proliferation of retail investors and the increasing importance of research, all of which we believe can drive the adoption of our equity research platform. We believe our market opportunity is large and that these factors will continue to drive our growth. Research and Development During the year, our research and development activities were primarily focused on building and testing the core components of the XYZ Terminal platform. Key efforts included: ● Platform Architecture and Data Integration : Development of the system framework and integration of real-time market data feeds, automated aggregation of regulatory and corporate disclosures, and the implementation of third-party financial data services. ● AI and Quantitative Modeling : Design and prototyping of large language model (LLM)–based tools for conversational financial queries, as well as predictive analytics modules to assist Users in identifying market opportunities. ● User Interface Development : Enhancement of the web-based dashboard for speed, navigation, and customization, with parallel design work for mobile platforms. ● Administrative and Monetization Systems : Integration of subscription billing capabilities, role-based access controls, and administrative analytics dashboards. Research and development expenditures for the year primarily consisted of fees charged by third-party service providers. Management expects research and development work on XYZ Terminal to continue in subsequent periods, with commercialization targeted following the completion of the initial feature set. Macroeconomic Conditions Unfavorable conditions in the economy both in the United States and abroad, including conditions resulting from changes in gross domestic product growth, supply chain disruptions, inflationary pressures, interest rates, financial and credit market fluctuations, volatility in the capital markets, liquidity concerns at, and failures of, banks and other financial institutions, international trade relations, political turmoil, political instability, natural catastrophes, outbreaks of contagious diseases, warfare and terrorist attacks on the United States, Europe or elsewhere, including military actions affecting Russia, Ukraine, the Middle East or elsewhere, could cause a decrease in business investments in information technology and negatively affect the growth of our business and our results of operations. While our business model provides some resilience against these factors, we will continue to monitor the impacts of these or similar circumstances on our business, and will take appropriate measures to minimize potential risk exposure. 68 Key Business Metrics We review the following key business metrics to measure our performance, identify trends, formulate financial projections, and make strategic decisions. We are not aware of any uniform standards for calculating these key metrics, which may hinder comparability with other companies who may calculate similarly titled metrics in a different way. SentimenTrader For the Year Ended September 30, 2025 2024 % change Free Subscribers 1,558 5,576 (72.1 ) Average conversion rate from free to Paid Subscribers 19.10 % 23.90 % (20.1 ) Paid Subscribers 2,319 2,831 (18.1 ) Average Revenue Per User (“ARPU”) $ 595 $ 509 16.9 Free Subscribers “Free subscribers” are defined as Users who subscribe to our free investment publications using a valid email address and remain directly opted-in, excluding paid subscribers who also receive free subscriptions. These free subscriptions often feature daily publications with commentary on the stock market, investment ideas, and other specialized topics. Our free publications include advertisements and editorial support for our current marketing campaigns. Through these publications, free subscribers become acquainted with our editors and analysts, explore our products and services, and discover how we could help them become better investors. The number of free subscribers for SentimenTrader decreased by 4,018, or 72.06%, from 5,576 for the year ended September 30, 2024 to 1,558 for the year ended September 30, 2025. This decline was primarily due to the limited number of marketing campaigns for free subscriptions during the year ended September 30, 2025, compared to the large-scale marketing campaigns conducted throughout the year ended September 30, 2024. We acknowledge that free subscribers play a critical role in our business ecosystem, serving as the foundation of the customer acquisition funnel. They represent a low-barrier entry point for potential Users, allowing them to explore and engage with the platform without financial commitment. This group often acts as a pipeline for converting Users into paid subscribers, which directly drives revenue growth. To address the decline in free subscribers in fiscal 2025, we plan to implement more diversified and targeted marketing campaigns, enhance our User interface to simplify the free User sign-up process, and foster a sense of community through exclusive events, forums, and social media groups, which encourage retention and advocacy. Paid Subscribers “Paid subscribers” are defined as the number of monthly average users with paid subscriptions during the period or year. We view the number of paid subscribers at the end of a given year as a key indicator of the attractiveness of our products and services, as well as the efficacy of our marketing in converting free subscribers to paid subscribers and generating direct-to-paid paid subscribers. We grow our paid subscriber base through performance marketing directly to prospective and existing users across a variety of media, channels, and platforms. Management anticipates the conversion rate will increase when the business becomes more mature in the future. Paid subscribers for SentimenTrader decreased by 512, or 18.09%, from 2,831 for the year ended September 30, 2024 to 2,319 for the year ended September 30, 2025. 69 The average conversion rate for SentimenTrader was approximately 19.10% and 23.90% for the years ended September 30, 2025 and 2024, respectively. The lower conversion rates for the year ended September 30, 2025 was attributable to the absence of a large-scale promotional campaign. To reverse this downward trend and drive future growth, management is focused on several strategic initiatives. We are actively incorporating new features and improvements into SentimenTrader to enhance user experience and increase conversion rates. This includes introducing advanced analytical tools, expanding data sources, and refining our platform’s design to improve accessibility and ease of use. Additionally, we are exploring targeted marketing strategies to attract new paid subscribers while retaining existing ones. Through these efforts, we are confident in our ability to enhance user engagement and improve both subscriber growth and conversion rates in the coming periods. Because Altcoin Investing began operations in August 2025, no subscriber data is currently available for its Users. Average Revenue Per User (“ARPU”) The ARPU is calculated based on the revenue divided by the number of monthly average paid subscribers over that period or year. We believe ARPU is a key indicator of how successful we are in attracting users to higher-value content. We believe that our high ARPU is indicative of the trust we build with our users and of the value they see in our products and services. ARPU for SentimenTrader increased by $86, or 16.90%, to $595 for the year ended September 30, 2025, as compared to $509 for the year ended September 30, 2024. Revenue Revenue is generated from providing online subscription services. Revenue is generally recognized ratably over the contract term, starting from the commencement date of each contract, which is the date our cloud-based software is made available to customers and collection is reasonably assured. Total revenue decreased marginally by $59,246, or 4.11%, from $1,440,096 for the year ended September 30, 2024, to $1,380,850 for the year ended September 30, 2025. 70 Results of Operations For the years ended September 30, 2025 and 2024 The following table summarizes the results of consolidated statements of operations and comprehensive loss for the years ended September 30, 2025 and 2024 in U.S. dollars, and provides information regarding the dollar and percentage increase or (decrease) during such periods. The operating results in any historical period are not necessarily indicative of the results that may be expected for any future period. For the year ended September 30, 2025 2024 Amount Percentage As % of As % of Increase Increase Amount Sales Amount Sales (Decrease) (Decrease) Sales $ 1,380,850 100.00 % $ 1,440,096 100.00 % $ (59,246 ) (4.11 )% Cost of sales 403,381 29.21 % 445,466 30.93 % (42,085 ) (9.45 )% Gross profit 977,469 70.79 % 994,630 69.07 % (17,161 ) (1.72 )% Operating expenses Sales and marketing expenses 553,385 40.08 % 130,443 9.06 % 422,942 324.24 % General and administrative expenses 3,623,915 262.44 % 1,653,623 114.83 % 1,970,292 119.15 % Research and development expenses 52,500 3.80 % 150,000 10.42 % (97,500 ) (65.00 )% Total operating expenses 4,229,800 306.32 % 1,934,066 134.30 % 2,295,734 118.70 % Interest Income 91,439 6.62 % - - 91,439 - Other income, net 24,879 1.80 % - - 24,879 - Total Other Income 116,318 8.42 % - - 116,318 - Loss before income taxes (3,136,013 ) (227.11 )% (939,436 ) (65.23 )% (2,196,577 ) 233.82 % Provision for income taxes (5,298 ) (0.38 )% - - (5,298 ) - Net loss and comprehensive loss $ (3,141,311 ) (227.49 )% (939,436 ) (65.23 )% (2,201,875 ) 234.38 % Revenue Our revenues decreased by $59,246, or 4.11%, from $1,440,096 for the year ended September 30, 2024, to $1,380,850 for the year ended September 30, 2025. We are actively incorporating new features and improvements into SentimenTrader to enhance user experience and increase conversion rates. This includes introducing advanced analytical tools, expanding data sources, and refining our platform’s design to improve accessibility and ease of use. Additionally, we are exploring targeted marketing strategies to attract new paid subscribers while retaining existing ones. Through these efforts, we are confident in our ability to enhance user engagement and improve both subscriber growth and conversion rates in the coming periods. Gross Profit and Costs of Sales Cost of sales mainly include the hosting costs for the Sentiment Trader platform, Bloomberg access for the analysts to research tools, and the analyst salaries. Cost of sales decreased by $42,085, or 9.45%, from $445,466 for the year ended September 30, 2024, to $403,381 for the year ended September 30, 2025. Gross profit decreased by $17,161 or 1.72% from $994,630 for the year ended September 30, 2024, to $977,469 for the year ended September 30, 2025. The decrease in gross profit was mainly due to the decrease in subscription revenue and decrease in cost of sales, as discussed above. 71 Gross profit margin increased from 69.07% for the year ended September 30, 2024, to 70.79% for the year ended September 30, 2025. The increase in gross profit margin was primarily attributable to the combined impact of the decrease in subscription revenue and decrease in cost of sales. Our cost and gross profit are as follows: For the year ended For the year ended Variance Variance Variance September 30, 2025 September 30, 2024 in Cost in in Cost of Gross Gross Cost of Gross Gross of gross gross Category sales profit profit% sales profit profit% sales profit profit% Subscription service $ 403,381 $ 977,469 70.79 $ 445,466 $ 994,630 69.07 $ (42,085 ) $ (17,161 ) 2.49 % Total $ 403,381 $ 977,469 70.79 $ 445,466 $ 994,630 69.07 $ (42,085 ) $ (17,161 ) 2.49 % Sales and marketing expenses Our sales and marketing costs primarily consist of expenses related to advertising and marketing consultants. These costs increased by $422,942, or 324.24 %, from $130,443 for the year ended September 30, 2024, to $553,385 for the year ended September 30, 2025, representing 40.08% and 9.06% of our revenue for the respective years. The increase was mainly driven by higher advertising and marketing expenses compared to fiscal year 2024. General and administrative expenses Our general and administrative expenses primarily include salaries and benefits, professional fees, office expenses, software development expenses, travel and entertainment expenses and amortization expenses. Our general and administrative expenses represented 262.44 % and 114.83 % of our revenue for the years ended September 30, 2025 and 2024, respectively. General and administrative expenses increased by $ 1,970,292 or 119.15% from $ 1,653,623 for the years ended September 30, 2024, to $ 3,623,915 for the year ended September 30, 2025. The increase was mainly due to the increase in professional fees and executive and director compensation. Our legal and professional fees increased by $ 969,005 or 90.36 %, from $ 1,072,363 for the year September 30, 2024, to $ 2,041,368 for the year ended September 30, 2025, representing 56.25% and 64.85% of our total general and administrative expenses for the years ended September 30, 2025 and 2024, respectively. The increase was mainly due to the increase in accounting and consulting fees for the IPO. Our salaries and benefits, including executive officers and directors’ compensation, increased by $528,990 or 145.02%, from $364,774 for the year ended September 30, 2024, to $893,764 for the year ended September 30, 2025, representing 24.61% and 22.06% of our total general and administrative expenses for the years ended September 30, 2025 and 2024, respectively. The increase was mainly due to the appointment of several executive officers from April to August 2024. Research and development expenses Our research and development expenses primarily consist of expenses related to the development of AI and machine learning tools for our platform. These costs decreased by $97,500, or 65.00%, from $150,000 for the year ended September 30, 2024, to $52,500 for the year ended September 30, 2025, representing 3.80% and 10.42% of our revenue for the respective years. We remain committed to further expanding our investment in AI-related features to deliver enhanced functionality and value to our Users. 72 Loss before income taxes We had a loss before income taxes of $3,136,013 and $939,436 for the years ended September 30, 2025, and 2024, respectively. The loss was primarily attributable to the increase in sales expenses, general and administrative expenses and the decrease in gross profit. Provision for income taxes We had provision for income taxes of $5,298 for the year ended September 30, 2025 related to taxes due to the state of Minnesota. Net loss and comprehensive loss We had a net loss and comprehensive loss of $3,141,311 and $939,436 for the years ended September 30, 2025 and 2024, respectively. The loss was primarily attributable to the increase in sales expenses, general and administrative expenses and the decrease in gross profit. The discussion regarding the increase in sales expenses, general and administrative expenses and the decrease in gross profit are discussed in the sections above. Cash Flows For the years ended September 30, 2025 and 2024 The following table sets forth a summary of our cash flows for the years indicated: For the years ended September 30, 2025 2024 Net cash used in operating activities $ (3,570,318 ) $ (688,661 ) Net cash used in investing activities (250,667 ) - Net cash provided by financing activities 7,681,331 1,148,378 Net increase in cash 3,860,346 459,717 Cash, beginning of the year 557,823 98,106 Cash, end of the year $ 4,418,169 $ 557,823 Operating Activities Net cash used in operating activities was $3,570,318 for the year ended September 30, 2025, as compared to net cash used in operating activities of $688,661 for the year ended September 30, 2024. The increase in net cash used in operating activities was mainly attributable to the following factors: ● Net loss of 3,141,311 for the year ended September 30, 2025, compared to net loss of 939,436 for the year ended September 30, 2024; ● Services in exchange for shares incurred $0 for the year ended September 30, 2025, compared to $222,919 for the year ended September 30, 2024; ● Prepaid expenses increased by $345,787 for the year ended September 30, 2025, compared to an increase of $6,526 for the year ended September 30, 2024; 73 ● Accounts payable and accrued liabilities increased by $91,925 for the year ended September 30, 2025, compared to a decrease of $109,068 for the year ended September 30, 2024; ● The amounts due to related party decrease by $154,759 for the year ended September 30, 2025, compared to the increase of $164,719 for the ended September 30, 2024; and ● Contract liabilities decreased by $21,449 for the year ended September 30, 2025, compared to a decrease of $23,363 for the year ended September 30, 2024. Investing Activities Net cash used in investing activities was $250,667 for the years ended September 30, 2025 and $0 for the year ended September 30, 2024. The increase in net cash used in investing activities for the year September 30, 2025 was primarily due to purchase of computers of $1,817, payment for intangible assets for $40,850, advances for purchase of property for $108,000 and advance of $100,000 to third-party vendors for the development of intangible assets for the year ended September 30, 2025. No comparable investing cash outflows were incurred during the year ended September 30, 2024. Financing Activities Net cash provided by financing activities was $7,681,331 for the year ended September 30, 2025, as compared to $1,148,378 for the year ended September 30, 2024. The increase in net cash provided by financing activities for the year ended September 30, 2025, was primarily due to net proceeds of $7,725,350 from the share issuance in our IPO, and offset by deferred offering costs decreased of $44,019 compared to net proceeds of $1,505,662 from the share issuance through non-brokered private placements, and offset by deferred offering costs increased of $139,017 ,and the payment of $218,267 to acquire non-controlling interest in Sundial during the year ended September 30, 2024. Liquidity and Capital Resources Overview Our primary capital management strategy is to preserve sufficient capital to continue providing benefits to our stakeholders and adequate investment returns to our shareholders by selling our products at prices commensurate with our operating risks. We determine the total amount of capital required to be consistent with risk levels. This capital structure is adjusted on a timely basis depending on changes in the economic environment and risks of the underlying assets. We are not subject to any externally imposed capital requirements. Working Capital As of September 30, 2025, our current assets were $4,783,242 which includes cash of $4,418,169 and prepaid expenses of $365,073. Our current liabilities were $519,078 which includes trade payables and accrued liabilities of $150,727, amounts due to related parties of $9,723, and contract liabilities of $358,628. The resulting positive working capital was $4,264,164. No dividends were declared and paid to the shareholders for the year ended September 30, 2025. As of September 30, 2024, our current assets totaled $716,126, which included cash of $557,823, prepaid expenses of $19,286, and deferred offering costs of $139,017. Our current liabilities amounted to $603,361, which consisted of trade payables and accrued liabilities of $31,332, amounts due to related parties of $191,952, and contract liabilities of $380,077. This resulted in positive working capital of $112,765. No dividends were declared or paid to shareholders for the year ended September 30, 2024. 74 Our available cash resources currently consist of the net proceeds from our April 2025 IPO and cash generated from our business. We estimate that we will be able to conduct our planned operations using currently available capital resources for at least the next 12 months. However, in order to meet our growth expectations, we will need to raise funds beyond our current working capital balance in order to finance future development of services and meet any debt obligations until such time as future profitable revenues are achieved. We completed our IPO on April 11, 2025 and closed the IPO Over-Allotment Option on April 16, 2025, which generated aggregate gross proceeds of $8,901,000. We believe that the successful completion of the IPO significantly improved our liquidity and financial position. We will seek to fund our operations for the next 12 months with the proceeds raised in our IPO, and if needed, through additional public and private offerings of securities. Capital Expenditures During the year, we advanced $108,000 towards purchase of property, $100,000 advance towards the development of Project Alpha, $40,850 towards the purchase of intangible assets and $1,817 towards the purchase of office equipment. Contractual Obligations As of September 30, 2025 and 2024, we don’t have any contractual obligations. Off-Balance Sheet Arrangements We have no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources for the years ended September 30, 2025 and 2024. Critical Accounting Policies and Estimates The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, contingent assets and liabilities, each as of the date of the financial statements, and revenues and expenses during the periods presented. On an ongoing basis, management evaluates their estimates and assumptions, and the effects of any such revisions are reflected in the financial statements in the period in which they are determined to be necessary. Management bases their estimates on historical experience and on various other factors that they believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual outcomes could differ materially from those estimates in a manner that could have a material effect on our consolidated financial statements. While our significant accounting policies are more fully described in Note 2 – Summary of Significant Accounting Policies to our consolidated financial statements, we believe that there were no critical accounting policies and estimates that affect the preparation of financial statements. ITEM 7A. Quantitative and Qualitative Disclosure About Market Risk As a “smaller reporting company” we are not required to provide information required by this Item. ITEM 8. Financial Statements and Supplementary Data The financial statements begin on page F-1 and are incorporated in their entirety into this Item 8. 75 ITEM 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure None.