FiEE, Inc. 10-Q

ITEM 1. FINANCIAL STATEMENTS FIEE, INC. AND SUBSIDIARIES Condensed Consolidated Balance Sheets (Unaudited) June 30, 2025 December 31, 2024 ASSETS Current assets Cash and cash equivalents $ 4,504,079 $ 30,162 Other receivable 519,822 - Prepaid expenses and other current assets 179,742 134,757 Total current assets 5,203,643 164,919 Property, equipment and software, net 268,416 119,871 Operating lease right-of-use assets, net 59,236 - Intangible assets 1,269,658 - Deferred offering costs 150,000 - Other assets 99,664 22,245 Total assets $ 7,050,617 $ 307,035 LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT) Current liabilities Accounts payable $ - $ 143,414 Contract liabilities 1,468,346 - Other payables 1,527,933 - Accrued expenses and other current liabilities 756,732 293,613 Convertible note payable to related party 305,425 - Current maturities of operating lease liabilities 58,801 - Total current liabilities 4,117,237 437,027 Total liabilities 4,117,237 437,027 Commitments and Contingencies (Note 6) Stockholders’ equity (deficit) Preferred Stock, authorized: 10,000,000 shares at $ 0.001 par value, including 3,000,000 shares designated as Series A Convertible Preferred Stock at $ 0.001 par value; 2,305,357 Series A shares issued and outstanding at June 30, 2025 and December 31, 2024, respectively. 1,639,779 1,639,779 Common Stock, authorized: 60,000,000 shares at $ 0.01 par value; issued and outstanding: 6,224,389 shares at June 30, 2025 and 3,713,792 shares at December 31, 2024 respectively 62,244 37,138 Additional paid-in capital 98,936,041 94,886,147 Accumulated deficit ( 97,707,603 ) ( 96,694,013 ) Accumulated other comprehensive income 2,919 957 Total stockholders’ equity (deficit) 2,933,380 ( 129,992 ) Total liabilities and stockholders’ equity (deficit) $ 7,050,617 $ 307,035 See accompanying notes to the unaudited condensed consolidated financial statements. 1 FIEE, INC. AND SUBSIDIARIES Condensed Consolidated Statements of Operations (Unaudited) Three Months Ended Six Months Ended June 30, June 30, 2025 2024 2025 2024 Net sales $ 44,993 $ - $ 45,118 $ 639,893 Cost of sales 43,930 - 44,680 432,634 Gross profit 1,063 - 438 207,259 Operating expenses: Selling and marketing 16,811 45,134 16,811 66,171 General and administrative 603,744 566,514 944,240 1,585,030 Research and development 17,419 40,864 47,419 113,294 Vendor liability forgiveness, net of asset transfers (Note 6) - ( 164,026 ) - 2,200,929 Total operating expenses 637,974 488,486 1,008,470 3,965,424 Operating loss ( 636,911 ) ( 488,486 ) ( 1,008,032 ) ( 3,758,165 ) Other income (expense): Interest income (expense), net ( 2,638 ) 20 ( 5,427 ) 82 Foreign currency exchange loss ( 131 ) - ( 131 ) - Total other income (expense) ( 2,769 ) 20 ( 5,558 ) 82 Loss before income taxes ( 639,680 ) ( 488,466 ) ( 1,013,590 ) ( 3,758,083 ) Income tax benefit - ( 554 ) - ( 11,216 ) Net loss $ ( 639,680 ) $ ( 487,912 ) $ ( 1,013,590 ) $ ( 3,746,867 ) Net loss per share: Basic and diluted $ ( 0.13 ) $ ( 0.16 ) $ ( 0.20 ) $ ( 1.27 ) Basic and diluted weighted average common and common equivalent shares 5,090,949 2,965,900 5,090,949 2,946,355 See accompanying notes to unaudited condensed consolidated financial statements. 2 FIEE, INC. AND SUBSIDIARIES Condensed Consolidated Statements of Stockholders’ Equity (deficit) (Unaudited) For the six months ended June 30, 2025 Preferred Stock Common Stock Additional Paid In Accumulated Accumulated Other Comprehensive Shares Amount Shares Amount Capital Deficit Income Total Balance at December 31, 2024 2,305,357 $ 1,639,779 3,713,792 $ 37,138 $ 94,886,147 $ ( 96,694,013 ) $ 957 $ ( 129,992 ) Net loss - - - - - ( 373,910 ) - ( 373,910 ) Balance at March 31, 2025 2,305,357 $ 1,639,779 3,713,792 $ 37,138 $ 94,886,147 $ ( 97,067,923 ) $ 957 $ ( 503,902 ) Net loss - - - - - ( 639,680 ) - ( 639,680 ) Foreign currency translation - - - - - - 1,962 1,962 Common Stock Issuance - - 2,510,597 25,106 4,049,894 - - 4,075,000 Balance at June 30, 2025 2,305,357 $ 1,639,779 6,224,389 $ 62,244 $ 98,936,041 $ ( 97,707,603 ) $ 2,919 $ 2,933,380 For the six months ended June 30, 2024 Preferred Stock Common Stock Additional Paid In Accumulated Accumulated Other Comprehensive Shares Amount Shares Amount Capital Deficit Income Total Balance at December 31, 2023 - $ - 2,789,020 $ 27,890 $ 92,556,805 $ ( 92,469,735 ) $ 957 $ 115,917 Net loss - - - - - ( 3,258,955 ) - ( 3,258,955 ) Preferred stock issuance 2,000,000 1,358,573 - - - - - 1,358,573 Issuance of warrants - - - - 1,441,427 - - 1,441,427 Stock-based compensation - - 176,880 1,769 424,512 - - 426,281 Balance at March 31, 2024 2,000,000 $ 1,358,573 2,965,900 $ 29,659 $ 94,422,744 $ ( 95,728,690 ) $ 957 $ 83,243 Net loss - - - - - ( 487,912 ) - ( 487,912 ) Balance at June 30, 2024 2,000,000 $ 1,358,573 2,965,900 $ 29,659 $ 94,422,744 $ ( 96,216,602 ) $ 957 $ ( 404,669 ) See accompanying notes to unaudited condensed consolidated financial statements. 3 FIEE, INC. AND SUBSIDIARIES Condensed Consolidated Statements of Cash Flows (Unaudited) Six Months Ended June 30, 2025 2024 Cash flows used in operating activities: Net loss $ ( 1,013,590 ) $ ( 3,746,867 ) Adjustments to reconcile net loss to net cash (used in) operating activities: Depreciation and amortization 71,797 215,203 Amortization of right-of-use assets 19,746 22,512 Non-cash interest expense 5,425 - Stock based compensation - 426,281 Provision for accounts receivable allowances - ( 29,741 ) Vendor liability forgiveness, net of asset transfers - 2,200,929 Changes in operating assets and liabilities: Accounts receivable - 731,118 Other receivable ( 519,822 ) - Inventories - 404,299 Prepaid expenses and other current assets ( 44,985 ) 11,660 Other assets ( 77,419 ) 21,251 Accounts payable ( 143,414 ) ( 3,129,003 ) Contract liabilities 1,468,346 - Other payables 37,933 - Accrued expenses and other current liabilities 388,119 16,364 Operating lease liabilities ( 20,181 ) ( 22,512 ) Net cash provided by (used in) operating activities 171,955 ( 2,878,506 ) Cash flows from investing activities: Net cash used in investing activities - - Cash flows from financing activities: Proceeds from preferred stock issuance - 2,800,000 Proceeds from the issuance of common stock 4,000,000 - Proceeds from the issuance of convertible note 300,000 - Net cash provided by financing activities 4,300,000 2,800,000 Effect of foreign exchange rate changes on cash 1,962 - Net increase (decrease) in cash and cash equivalents 4,473,917 ( 78,506 ) Cash and cash equivalents - Beginning 30,162 709,322 Cash and cash equivalents - Ending $ 4,504,079 $ 630,816 Supplemental disclosures of cash flow information: Cash paid during the period for: Interest $ - $ - Income taxes $ - $ - Supplemental disclosures of non-cash investing and financing activities: Non-cash common stocks issued and to be issued that were recognized in deferred offering costs $ 150,000 $ - Obtaining right-of-use assets in exchange for operating lease liability $ 79,580 $ - Purchase of property and equipment, and intangible assets through increase in other payables $ 1,490,000 $ - See accompanying notes to the unaudited condensed consolidated financial statements. 4 FIEE, INC. AND SUBSIDIARIES Notes to Condensed Consolidated Financial Statements (Unaudited) (1) NATURE OF OPERATIONS AND BASIS OF PRESENTATION FiEE, Inc. (formerly, Minim, Inc.) was founded in 1977 as a networking company and pivoted into delivering intelligent software to protect and improve the WiFi connections we depend on to work, learn, and live. FiEE held the exclusive global license to design, manufacture, and sell consumer networking products under the Motorola brand until 2023. Our cable and WiFi products, with an intelligent operating system and bundled mobile app, were sold in leading retailers and e-commerce channels in the United States (“U.S.”). Our AI-driven cloud software platform and applications make network management and security simple for home and business users, as well as the service providers that assist them— leading to higher customer satisfaction and decreased support burden. FiEE, Inc. and its wholly owned subsidiaries, FiEE (HK) Limited, which was incorporated in March 2025, MTRLC LLC, and Minim Asia Private Limited, are herein collectively referred to as “FiEE” or the “Company”. The Company delivered intelligent networking products that reliably and securely connected homes and offices around the world. We were the exclusive global license holder to the Motorola brand for home networking hardware until 2023. The Company designed and manufactured products including cable modems, cable modem/routers, mobile broadband modems, wireless routers, Multimedia over Coax (“MoCA”) adapters and mesh home networking devices. Our AI-driven cloud software platform and applications made network management and security simple for home and business users, as well as the service providers that assisted them. We continue to grow and expand our operations as a digital service provider focused on integrating artificial intelligence and data analytics into content creation and brand management. We offer a range of SaaS solutions designed to support our clients in developing, managing, and optimizing their digital presence across global platforms, including customized graphic and posts, short videos, and editorial calendars aligned with brand goals. We provide digital content management solutions and brand growth strategies primarily through three service verticals: (1) digital account management, (2) content operations and growth analytics, and (3) community engagement and creator partnerships. These services are structured to support clients at varying stages of digital development, from initial account setup to multi-platform brand promotion. On February 27, 2025, the Company filed with the Secretary of State of the State of Delaware a Certificate of Amendment to its Amended and Restated Certificate of Incorporation (the “Certificate of Amendment”) to change the name of the Company from Minim, Inc. to FiEE, Inc., effective as of February 27, 2025. Basis of Presentation The accompanying unaudited condensed consolidated financial statements of the Company have been prepared in accordance with the requirements of the U.S. Securities and Exchange Commission (“SEC”) for interim reporting. As permitted under those rules, certain footnotes or other financial information that are normally required by U.S. generally accepted accounting principles (“GAAP”) can be condensed or omitted. In the opinion of management, the financial statements include all normal and recurring adjustments that are considered necessary for the fair presentation of the Company’s financial position and operating results. All intercompany balances and transactions have been eliminated in consolidation. The information included in this Quarterly Report on Form 10-Q should be read in conjunction with the audited financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024. The results of the Company’s operations can vary during each quarter of the year. Therefore, the results and trends in these interim financial statements may not be the same as those for the full year or any future periods. 5 Use of Estimates The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make judgments, 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 reported amounts of revenue and expense during the reporting period. These judgments, estimates and assumptions made by the Company include, but are not limited to revenue recognition, expected credit losses; contract liabilities (sales returns); valuation allowance for deferred income tax assets; write-downs of inventory for slow-moving and obsolete items and stock-based compensation. The Company evaluates its estimates and assumptions on an ongoing basis using historical experience and other factors and adjusts those estimates and assumptions when facts and circumstances dictate. Actual results may differ from those estimates under different assumptions or conditions and the differences may be material. Liquidity The Company’s operations have historically been financed through the issuance of common stock and preferred stock. Since inception, the Company has incurred significant losses and negative cash flows from operations. During the six months ended June 30, 2025, the Company incurred a net loss of $1 ( 1,013,590 ) million, and used cash from operations of $172 171,955 thousand, which was offset by $4.3 4,300,000 million in cash provided from financing activities. As of June 30, 2025, the Company had an accumulated deficit of $98 ( 97,707,603 ) million and cash and cash equivalents of $4.5 4,504,079 million. These conditions raise substantial doubt about the Company’s ability to continue as a going concern one year from the date the condensed consolidated financial statements were issued. The Company will continue to monitor its costs in relation to its sales and adjust its cost structure accordingly. The Company’s condensed consolidated financial statements as of June 30, 2025, do not include any adjustments to the carrying amounts and classification of assets, liabilities, and reported expenses that may be necessary if the Company were unable to continue as a going concern. If the Company is unable to raise additional capital and is therefore unable to continue as a going concern, it may have to liquidate its assets and may receive less than the value at which those assets are carried on its consolidated financial statements, and it is likely that investors will lose all or part of their investment. Non-Binding Letter of Intent On March 25, 2025, the Company entered into a non-binding letter of intent (“LOI”) with Hongyan Sun and Lin Lin (collectively, the “Sellers”), pursuant to the terms of which the Sellers will transfer 100% of their equity interests in Suzhou Yixuntong Network Technology Co., Ltd. (the “Target Company”) to the Company (the “Potential Transaction”) for a purchase price not to exceed $2,000,000. The Company shall make a prepayment of $300,000 to the Sellers upon the signing of the LOI and the prepayment had not been paid as of March 31, 2025. Upon the signing of this LOI, the Target Company and the Sellers (i) have granted the access of the Target Company’s service ports to the Company; (ii) have connected the Company to the Target Company’s Software as a Service platform; (iii) and are working with the Company to ensure it can carry out the Multi-Channel Network business in the second quarter of 2025. The Potential Transaction is subject to the Company’s satisfactory completion of legal, tax, financial, operation, human resources and administration, and environmental due diligence of Target Company and such other due diligence as the Company may deem necessary. The Company and the Sellers expect to complete the Potential Transaction as soon as reasonably practicable, but in no event later than six (6) months after signing of the LOI (the “Long-Stop Date”). The Sellers have agreed that that, from the date of the LOI through the Long-stop Date, or the date when the Company informs the Sellers that the exclusivity expires, whichever occurs earlier, the Sellers shall refrain, directly or indirectly from (i) soliciting offers from third parties to acquire Target Company and/or its business, and from offering Target Company or its business to any person, firm, group or corporation other than the Company; and (ii) entering into any agreement aimed at selling or otherwise transferring Target Company or the business or that may otherwise prevent the parties from consummating the Potential Transaction. 6 On June 27, 2025, the Company and the Sellers entered into an amendment to the LOI (the “Amended LOI”). The Amended LOI extended the completion date for the Potential Transaction to March 25, 2026. Additionally, the Amended LOI outlined the transfer of certain fixed assets and intellectual property, including patents and copyrights, from the Target Company to the Company. The purchase price for these assets was $ 1.4 million and the Amended LOI was executed as part of a simultaneous sign and close transaction on June 30, 2025, as discussed in the following section. The Potential Transaction is subject to the Company’s satisfactory completion of legal, tax, financial, operational, human resources, administrative, and environmental due diligence, as well as any other due diligence deemed necessary by the Company. The Company and the Sellers anticipate completing the Potential Transaction by March 25, 2026, subject to regulatory approvals, board and stockholder approvals, and other customary conditions. The Company expects to announce additional details regarding the Potential Transaction if and when a definitive agreement is executed. No assurances can be made that the Company will successfully negotiate and enter into a definitive agreement with respect to the Potential Transaction, or that the Potential Transaction will be consummated on the terms or timeframe currently contemplated, or at all. Any transaction is subject to board and stockholder approval of the Company, regulatory approvals and other customary conditions. Asset Purchase Agreement On June 30, 2025, FiEE (HK) Limited, a wholly owned subsidiary of the Company entered into an Asset Purchase Agreement (the “Asset Purchase Agreement”) with Hongyan Sun, Lin Lin and the Target Company, to purchase certain fixed assets and intellectual property, including patents and copyrights, of the Target Company for a total purchase price of $ 1.4 million (the “Asset Acquisition”). The Asset Acquisition was structured as a simultaneous sign and close transaction which closed on June 30, 2025. The purchase price was partly paid in the subsequent period. The transaction was accounted for as an asset acquisition under ASC 805-50 and SEC Regulation S-X Rule 11-01(d). As part of the assessment, the Company applied the initial screen test, which considers whether substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or group of similar identifiable assets. In this case, substantially all of the fair value was concentrated in the software codes and related patents, by using market approach method and Excess earning approach method prepared by a third party valuation specialist. Accordingly, the transaction did not meet the definition of a business and was accounted for as an acquisition of assets, with the total purchase consideration allocated on a relative fair value basis. (2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The Company’s significant accounting policies are disclosed in its Annual Report on Form 10-K for the year ended December 31, 2024. The Company’s significant accounting policies have no material changes during the six months ended June 30, 2025, except for the following updates resulting from transactions that occurred and the establishment of a new operating subsidiary during the current period. Functional Currency The functional currency of FiEE HK is the Hong Kong dollar (HKD). Foreign currency transactions are translated into HKD using exchange rates at the transaction dates, while monetary assets and liabilities denominated in foreign currencies are remeasured at period-end rates. The functional currency of all other entities of the Company is US Dollar (USD), the same as the reporting currency. Assets and liabilities of the Company denominated in functional currency other than USD are translated into USD at fiscal year-end exchange rates. Equity accounts other than earnings generated in the current period are translated into USD at the appropriate historical rates. The results of operations and the statements of cash flows denominated in functional currency other than USD are translated into USD at the average exchange rates during the reporting period. Translation adjustments arising from these are reported as cumulative translation adjustments and are shown as a separate component of accumulated other comprehensive loss in the consolidated statements of changes in shareholders’ equity. 7 Deferred Offering Costs Offering costs directly attributable to a potential private offering of equity securities are accounted for in accordance with ASC 340 10 S99 1 and SEC Staff Accounting Bulletin (“SAB”) Topic 5.A – Expenses of Offering. The Company’s offering costs primarily consist of commitment fees incurred through the balance sheet date, which have been deferred and recorded as a non-current asset, as the offering had not been completed as of the reporting date. Upon successful completion of the private offering, such costs will be charged against the proceeds and recorded as a reduction to stockholders’ equity. If the offering is ultimately unsuccessful or abandoned, the deferred offering costs will be expensed in the period in which the offering is terminated. Property, Equipment and Software Property, equipment and software primarily consisted of equipment, vehicles, and internal-use software customized by a third-party vendor, which are stated at cost, and are depreciated or amortized on a straight-line basis over their estimated useful lives, which is generally three to five years. Maintenance and repairs are charged to expense as incurred. Significant improvements that substantially enhance the useful life of an asset are capitalized and depreciated. When assets are retired or disposed of, the cost together with related accumulated depreciation is removed from the balance sheet and any resulting gain or loss is reflected in the Company’s statements of operations in the period realized. Costs incurred to develop internal-use software are capitalized only during the application development stage. Schedule of property, equipment and software useful life Category Estimated useful life Internal use software 3 years Equipment 3 - 5 years Vehicles 5 years Intangible Assets Intangible assets primarily consisted of acquired group of proprietary software, which are stated at cost and are amortized on a straight-line basis over their estimated useful lives. The estimated useful life of the Company’s intangible assets is 3 years. The amortization started in July 2025. Fair Market Value The Company complies with FASB ASC 820, “Fair Value Measurements and Disclosures,” for its financial assets and liabilities that are re-measured and reported at fair value at each reporting period, and non-financial assets and liabilities that are re-measured and reported at fair value at least annually. Fair value is defined as the price that would be received for sale of an asset or paid for transfer of a liability, in an orderly transaction between market participants at the measurement date. GAAP establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). These tiers include: ● Level 1, defined as observable inputs such as quoted prices (unadjusted) for identical instruments in active markets; ● Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable such as quoted prices for similar instruments in active markets or quoted prices for identical or similar instruments in markets that are not active; and ● Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions, such as valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable. In some circumstances, the inputs used to measure fair value might be categorized within different levels of the fair value hierarchy. In those instances, the fair value measurement is categorized in its entirety in the fair value hierarchy based on the lowest level input that is significant to the fair value measurement. 8 Income Taxes Entity incorporated in Hong Kong is subject to Hong Kong Profits Tax rate at 16.5 % , and foreign-derived income is exempted from income tax. There are no withholding taxes upon payment of dividends by the entities incorporated in Hong Kong to its shareholders. For the three and six months ended June 30 2025, no provision of Hong Kong Profit Tax was made, as the Company had no assessable profit subject to Hong Kong Profits Tax. Segment reporting The Company operates as a single operating segment. The Company’s chief operating decision maker, its Chief Executive Officer, reviews financial information on an aggregate basis for the purposes of allocating resources and evaluating financial performance. The Company’s primary operations were historically in the United States, and prior to the end of 2024, it derived substantially all of its revenue from sales to customers in the U.S. Beginning in March 2025, following the expansion of its operations in Hong Kong, the Company has derived all its revenues from Hong Kong. As of December 31, 2024, the Company had no significant long-lived assets. As of June 30, 2025, the Company’s long-lived assets are mainly located in Hong Kong. In November 2023, the FASB issued ASU No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which requires that an entity disclose significant segment expenses impacting profit and loss that are regularly provided to the chief operating decision maker. The update is required to be applied retrospectively to prior periods presented, based on the significant segment expense categories identified and disclosed in the period of adoption. The amendments in ASU 2023-07 are required to be adopted for fiscal years beginning after December 15, 2023 for public entities. The Company adopted ASU 2023-07 for the year ended December 31, 2024. For the three and six months ended June 30, 2025, significant segment expenses that are regularly provided to the CODM and included in this measure consist of cost of revenues, selling, general, and administrative expenses, specifically, professional expenses for the relisting. The amounts of these expenses are presented in the condensed consolidated statements of operations. Recently Issued Accounting Standards There have been no other new accounting pronouncements that have significance, or potential significance, to the Company’s financial position, results of operations and cash flows . (3) REVENUE AND OTHER CONTRACTS WITH CUSTOMERS Revenues from SaaS service before the end of 2024 Revenue recognized for each distinct performance obligation as control is transferred to the customer. Revenue attributable to hardware products bundled with Software-as-a-Service (“SaaS”) offerings are recognized at the time control of the product transfers to the customer. The transaction price allocated to the SaaS offering was recognized ratably beginning when the customer was expected to activate their account and over a three-year period that the Company estimated based on the expected replacement of the hardware. Revenues from SaaS service- MCN Digital Service in 2025 The Company expands SaaS operations as a digital service provider, delivering full-cycle services to brand clients through legally binding agreements since March 2025. The Company offers full-service account management, content production, and targeted promotion to grow followers across key platforms. Service packages customizable via the SaaS portal. Customers may purchase value-added services with or after their purchases of basic package. Services provided under the basic services and the value-added services are considered two performance obligations, each with a standalone transaction price. The Company recognizes revenues from basic services ratably over the contract term beginning on the commencement date of each contract. The revenues from value-added services are recognized at a point in time when customers approve or accept the value-added services or system automatically approves whichever is later. The Company requires an upfront payment for the services, which is non-refundable upon execution of the contract. Customers retain the right to terminate the contract prior to its expiration date, subject to the early termination fees, including information transfer fee and fan development fee. No value-added revenues were recognized at a point in time as of June 30, 2025. 9 Transaction Price Allocated to the Remaining Performance Obligations The remaining performance obligations represent the transaction price allocated to performance obligations that are unsatisfied or partially unsatisfied as of the end of the reporting period. Unsatisfied and partially unsatisfied performance obligations consist of contract liabilities, in-transit orders with destination terms, and non-cancellable backlog. Non-cancellable backlog includes goods for which customer purchase orders have been accepted, that are scheduled or in the process of being scheduled for shipment, and that are not yet invoiced. Prior years’ performance obligations were all satisfied and recognized as revenue in the periods before the end of 2024. As of June 30, 2025, the remaining performance obligation relates to MCN digital services purchased and paid for in advance by customers for basic and value-added packages, which was amounted to $1,468,346, equals the balance of contract liabilities. Contract Costs The Company recognizes the incremental costs of obtaining a contract with a customer if the Company expects the benefit of those costs to be longer than one year. The Company has determined that certain sales commissions meet the requirements to be capitalized, and the Company amortizes these costs on a consistent basis with the pattern of transfer of the goods and services in the contract. Total capitalized costs to obtain a contract were immaterial during the periods presented and are included in other current and long-term assets on our condensed consolidated balance sheets if any. The Company applies a practical expedient to expense costs as incurred for costs to obtain a contract when the amortization period is one year or less. These costs include sales commissions on SaaS contracts with a contract period of one year or less as sales commissions on contract renewals are commensurate with those paid on the initial contract. Contract Balances The Company records accounts receivable when it has an unconditional right to the consideration. Contract liabilities are recorded when customers remit payment prior to revenue recognition, representing the Company’s obligation to transfer services in the future. Liabilities arise upon customer order placement. The Company did not have contract liabilities at December 31, 2024, while the ending balance at June 30, 2025 was $ 1,468,346 . Disaggregation of Revenue The following table sets forth our revenues by distribution channel: Schedule of disaggregation of revenue Three Months Ended June 30, Six Months Ended June 30, 2025 2024 2025 2024 Retailers $ - $ - $ - $ 638,904 Other online and offline channels 44,993 - 45,118 989 $ 44,993 $ - $ 45,118 $ 639,893 The following table sets forth our revenues by product: Schedule of reveneus Three Months Ended June 30, Six Months Ended June 30, 2025 2024 2025 2024 Cable modems & gateways $ - $ - $ - $ 638,804 Other networking products - - - 1,089 SaaS – MCN digital services 44,993 - 45,118 - $ 44,993 $ - $ 45,118 $ 639,893 10 (4) BALANCE SHEET COMPONENTS Property, equipment and software, net Property, equipment and software, net consists of the following: Schedule of equipment As of June 30, 2025  As of December 31, 2024 Internal use software $ 90,000 $ - Equipment 2,622,829 2,621,706 Vehicles 129,220 - Total property, equity and software 2,842,049 2,621,706 Accumulated depreciation and amortization ( 2,573,633 ) ( 2,501,835 ) Total property, equipment and software, net $ 268,416 $ 119,871 For the three months ended June 30, 2025 and 2024, depreciation and amortization was $ 22 thousand and $ 83 thousand, respectively. Depreciation and amortization expense was $ 72 thousand and $ 169 thousand for the years ended June 30, 2025 and 2024, respectively. Intangible assets As part of the asset acquisition completed on June 30, 2025, a substantial portion of the total purchase consideration was allocated to intangible assets, primarily consisting of acquired proprietary software, which represent a group of software code and associated patents that are expected to provide future economic benefits to the Company. The allocation of the purchase price was performed on a relative fair value basis in accordance with ASC 805-50. The acquired group of proprietary software is being amortized over 3 years, its estimated useful life. Intangible assets consisted of the following at June 30, 2025 and December 31, 2024: Schedule of intangible assets As of June 30, 2025 As of December 31, 2024 Gross Carrying Amount Accumulated Amortization Net Gross Carrying Amount Accumulated Amortization Net Acquired group of proprietary software $ 1,269,658 $ - $ 1,269,658 $ - $ - $ - $ 1,269,658 $ - $ 1,269,658 $ - $ - $ - Amortization expense was $ 0 thousand and $ 29 thousand in the three months ended June 30, 2025 and 2024, respectively. Amortization expense was $ 0 thousand and $ 33 thousand in the six months ended June 30, 2025 and 2024, respectively. Estimated amortization expenses for the future years are as follows: Schedule of Amortization Years ending December 31, Amortization 2025 $ 211,610 2026 423,219 2027 423,219 2028 211,610 Total $ 1,269,658 11 Prepaid and other current assets Prepaid and other current assets consist of the following: Schedule of inventories June 30, 2025 December 31, 2024 Insurance fees $ 65,930 $ 119,757 Cloud hosting fee 93,461 - Other 20,351 15,000 Total prepaid and other current assets $ 179,742 $ 134,757 Accrued expenses and other current liabilities Accrued expenses and other current liabilities consist of the following: Schedule of accrued expenses June 30, 2025 December 31, 2024 Payroll & related benefits $ 94,516 $ - Professional fees 442,429 185,000 Value of shares to be issued 75,000 - Sales allowances 26,905 26,905 Sales and use tax 81,708 81,708 Other (1) 36,174 - Total accrued expenses and other current liabilities $ 756,732 $ 293,613 (1) There was a balance of $7,232 due to a stockholder of the Company, Cao Yu, which represents the amount paid by Cao Yu to support the company’s normal operating activities. Other payables As of June 30, 2025, other payables included $ 1.4 million for the assets acquisition, $ 90 thousand for a software development, $ 20 thousand for advanced hosting fee, and $ 18 thousand for software maintenance, all payable to a single third-party vendor. (5) LEASES The Company ​​previously had entered into agreements to lease certain office space as well as its former warehouses and distribution centers under operating leases, which have expired. Following the expiration, the Company’s newly established Hong Kong subsidiary executed new office lease agreements in March 2025. ​​The Company recognizes lease expense for these leases on a straight-line basis over the lease term. Right-of-use (“ROU”) assets and lease liabilities are recorded on the balance sheet for all leases, except leases with an initial term of 12 months or less. The components of lease expenses were as follows: Schedule of components of lease costs Three Months Ended June 30, Six Months Ended June 30, 2025 2024 2025 2024 Operating lease costs $ 15,705 $ 9,061 $ 20,981 $ 22,512 Short-term lease costs - - 14,050 Total lease costs $ 15,705 $ 9,061 $ 20,981 $ 36,562 Cash paid for amounts included in the measurement of lease liabilities $ 11,322 $ 8,836 $ 11,322 $ 22,512 12 The weighted-average remaining lease term and discount rate were as follows: Schedule of weighted average remaining lease term and discount rate Period Ended June 30, 2025 2024 Operating leases: Weighted average remaining lease term (years) 1.02 0.0 Weighted average discount rate 4.65 % 0.0 % The Company leased office space from an affiliate entity owned by the Company’s former Chairman of the Board. The lease expired and was not renewed in the first quarter of 2024. (6 ) COMMITMENTS AND CONTINGENCIES (a) Commitments The Company was a party to a license agreement with Motorola Mobility LLC pursuant to which the Company has an exclusive license to use certain trademarks owned by Motorola Trademark Holdings, LLC for the manufacture, sale and marketing of consumer cable modem products, consumer routers, WiFi range extenders, MoCa adapters, cellular sensors, home powerline network adapters, and access points worldwide through a wide range of authorized sales channels. The license agreement had a term ending December 31, 2025 prior to its cancellation in 2023. In connection with the license agreement, the Company had committed to reserve a certain percentage of wholesale prices for use in advertising, merchandising and promotion of the related products. Additionally, the Company was required to make quarterly royalty payments equal to a certain percentage of the preceding quarter’s net sales with minimum annual royalty payments. Following the Company’s agreement with Motorola Mobility LLC on January 22, 2024, as mentioned below. The Company’s quarterly royalty payments, in addition to current and future obligations, were satisfied in exchange for certain assets of the Company. The Company did not incur royalty expenses under the License Agreement for the three and six months ended June 30, 2025 and 2024. On January 22, 2024, the Company, entered into a Letter Agreement re Product Purchase (the “Letter Agreement”) and a Debt Settlement Agreement (the “Settlement Agreement,” and the Letter Agreement, the “Agreements”) with Motorola Mobility, LLC (“Motorola”). Pursuant to the Letter Agreement, the Company (A) initially transferred a portion of its inventory to Motorola and (B) agreed to transfer the reminder of such inventory upon receipt of certain funding in order to satisfy liabilities owed to Motorola, while agreeing to continue to provide certain customer and technical support. Pursuant to the Settlement Agreement, the Company agreed (i) to pay Motorola a settlement amount of $1,167,071 and (ii) to transfer additional funds as collected from the Company’s customers in an amount up to $263,752. The Company believes that the Agreements, together with arrangements it has finalized with other major vendors, will allow the Company to streamline its operations while reducing its current liabilities. On March 2025, the Company entered into a software development service contract with a third-party vendor to customize and develop an internal-use software. The total contract price is $300 thousand, of which $90 thousand was due and included in the balance of other payables. The remaining $180 thousand is expected to be due before the end of 2025, and $30 thousand will be due in 2026. (b) Vendor Obligation Releases In its efforts to manage its liquidity and cash-flow position, the Company negotiated and executed liability release agreements with certain vendors in Q4 2023 who comprised $ 5.0 million of outstanding accounts payable as of December 31, 2023. In aggregate, the executed release agreements resulted in a reduction of outstanding accounts payable obligations by $3.6 million from $5.0 million to $1.4 million. The executed release agreements became effective and are contingent upon payment of the $ 1.4 million negotiated amounts received during the period of Q1 2024. In addition, the Company agreed to pay certain vendors an additional $0.4 million contingent upon successful collection of customer receivables. After the collection of customer receivables, the contingent amount was amended to $ 0.3 million during the period ended June 30, 2024. As of June 30, 2024, the contingent amount has not been paid and is accounted in accrued expenses on the accompanying condensed consolidated balance sheets. In July 2024, the Company paid the contingent amount of $ 0.3 million to its vendors. 13 (c) Contingencies The Company is party to various lawsuits and administrative proceedings arising in the ordinary course of business. The Company evaluates such lawsuits and proceedings on a case-by-case basis, and its policy is to vigorously contest any such claims which it believes are without merit. The Company reviews the status of its legal proceedings and records a provision for a liability when it is considered probable that both a liability has been incurred and the amount of the loss can be reasonably estimated. This review is updated periodically as additional information becomes available. If both criteria are not met, the Company reassesses whether there is at least a reasonable possibility that a loss, or additional losses, may be incurred. If there is a reasonable possibility that a loss may be incurred, the Company discloses the estimate of the amount of the loss or range of losses - that the amount is not material, or that an estimate of the loss cannot be made. At June 30, 2025, the Company is not currently a party to any legal proceedings that, if determined adversely to the Company, in management’s opinion, are currently expected to individually or in the aggregate have a material adverse effect on the Company’s business, operating results or financial condition taken as a whole. The Company expenses its legal fees as incurred. In the ordinary course of its business, the Company is subject to lawsuits, arbitrations, claims, and other legal proceedings in connection with their business. Some of the legal actions include claims for substantial or unspecified compensatory and/or punitive damages. A substantial adverse judgment or other unfavorable resolution of these matters could have a material adverse effect on the Company’s financial condition, results of operations, and cash flows. Management believes that the Company has adequate legal defenses with respect to the legal proceedings to which it is a defendant or respondent, and that the outcome of these pending proceedings is not likely to have a material adverse effect on the financial condition, results of operations, or cash flows of the Company. However, the Company is unable to predict the outcome of these matters. (7) SIGNIFICANT CUSTOMER AND DEPENDENCY ON KEY SUPPLIERS During the three months ended March 31, 2025, the Company had one new customer upon launching its SAAS services on March 28, 2025. As of June 30, 2025, the number of our customers increased to 245 . As of June 30, 2025, prepaid subscription fees received from customers for our SaaS service amounted to approximately $ 1.5 million. During the three and six months ended June 30, 2024, the Company did not have sales or outstanding accounts receivable balance that accounted for 10% of greater individually of the Company’s total net sales and accounts receivable, respectively. (8) CONVERTIBLE NOTE PAYABLE TO RELATED PARTY The Company entered into an unsecured promissory note (the “Convertible Note”) effective February, 18, 2025,with David Lazar, a stockholder holding more than 10% of the Company’s outstanding shares and a former officer and director. Under the terms of the Convertible Note, the Company agreed to pay Mr. Lazar a principal amount of $ 300,000 , bearing interest at an annual rate of approximately 4.34 % , with the full principal and interest balance due on or before December 31, 2025. Upon stockholders’ approval, the Convertible Note will automatically convert into shares of the Company’s common stock at a conversion price of $ 0.25 per share. The Convertible Note to related party is accounted for as a single liability in accordance with Accounting Standards Update (ASU) 2020-06, Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity. As of June 30, 2025, the Convertible Note was recorded at an aggregate amount of $ 305,425 , which includes $ 5,425 of accrued interest. 14 (9) RELATED PARTY TRANSACTION The Company had the following related party transactions during the three and six months ended June 30, 2025 and 2024: ● Lease from the Company’s former officer, see Note 5 for details. ● Amount paid by a shareholder for operating activities and the balance due as of June 30, 2025. See Note 4 for details. ● Convertible note issued to a related party. See Note 8 for details. ● Equity transactions with shareholders. See Note 11 for details. (10) LOSS PER SHARE Net loss per share for the three and six months ended June 30, 2025 and 2024, respectively, were as follows: Schedule of net income (loss) per share Three Months Ended Six Months Ended June 30, 2025 June 30, 2024 June 30, 2025 June 30, 2024 Numerator: Net loss $ ( 639,680 ) $ ( 487,912 ) $ ( 1,013,590 ) $ ( 3,746,867 ) Denominator: Weighted average common shares - basic 5,090,949 2,965,900 5,090,949 2,946,355 Effect of dilutive common share equivalents - - Weighted average common shares - dilutive 5,090,949 2,965,900 5,090,949 2,946,355 Basic and diluted $ ( 0.13 ) $ ( 0.16 ) $ ( 0.20 ) $ ( 1.27 ) Diluted loss per common share for the three and six months ended June 30, 2025 and 2024 excludes the effects of 7,242,339 and 5,230,769 common share equivalents, respectively, since such inclusion would be anti-dilutive. The common share equivalents consist of shares of common stock issuable upon the exercise or conversion of outstanding convertible preferred stock, warrants, restricted stock units, stock options and convertible note (including certain securities requiring stockholder approval prior to exercise or conversion). (11) EQUITY Preferred Stock and Warrants On January 23, 2024, the Company entered into a Securities Purchase Agreement (the “Purchase Agreement”) with David Lazar (“Lazar”), a member of our Board of Directors, whereby, at the closing of the transactions contemplated by the Purchase Agreement (the “Closing”), the Company sold and Lazar (or to any transferee of Lazar’s which acquires the Securities Purchase Rights, as defined below, hereinafter a “Lazar Transferee”) purchased 2,000,000 shares of the Company’s preferred stock, $ 0.001 par value per share (the “Preferred Stock”), at a price per share of $ 1.40 , for an aggregate purchase price of $2,800,000, subject to the conditions described below, pursuant to the exemptions afforded by the Securities Act of 1933, as amended, and Regulation S thereunder. Under the Purchase Agreement, the Company agreed to designate 2,000,000 of the Preferred Stock as Series A Preferred Stock (the “Series A Preferred Stock”) for the sale to Lazar (or a Lazar Transferee). Each share of Series A Preferred Stock shall be convertible, at the option of the holder, into 1.4 shares of common stock of the Company, $0.01 par value per share (the “Common Stock”), and vote on an “as-if-converted” basis and shall have full ratchet protection in any subsequent offerings. Pursuant to the Purchase Agreement, the Company shall also issue Lazar (or a Lazar Transferee) warrants to purchase up to an additional 2,800,000 shares of Common Stock, with an exercise price equal to $1.00 per share, subject to adjustment therein (the “Warrants”, and together with the Series A Preferred Stock, the “Purchased Securities”). 15 The Company evaluated the Series A Preferred Stock and Warrants for liability or equity classification in accordance with the provisions of ASC 480, Distinguishing Liabilities from Equity , and determined that equity treatment was appropriate because neither the Series A Preferred Stock nor the Warrants met the definition of liability instruments. The Warrants are classified as component of permanent equity because they are freestanding financial instruments that are legally detachable and separately exercisable from the shares of common stock with which they were issued, are immediately exercisable, do not embody an obligation for the Company to repurchase its shares, and permit the holder to receive a fixed number of shares of common stock upon exercise. In addition, the Warrants do not provide any guarantee of value or return. The Company valued the Warrants at issuance using the Black-Scholes option pricing model and determined the fair value of the Warrants to purchase 2,800,000 shares of the Company’s common stock at $ 4.7 million. The key inputs to the valuation model included a weighted average volatility of 162.0 % and an expected term of 3.0 years. The proceeds from the issuance of the Series A Preferred Stock to the Company were allocated based on the relative fair value of the Warrants as compared to the fair value of the Series A Preferred Stock. The fair value of the Warrants incorporates assumptions regarding our common stock price, dividend yield, stock price volatility, as well as assumptions regarding the risk-free interest rate. Using this model, the Warrants was valued at $ 1.4 million at January 23, 2024 and was included in additional paid in capital on our condensed consolidated balance sheet. The fair value of the Series A Preferred Stock was determined based on assumptions that incorporated our common stock price and dividend rate. The Company valued the Series A Preferred Stock at $ 4.5 million. Based on the fair value model to allocate the Series A Preferred Stock proceeds, the Series A Preferred Stock was valued at $ 1.4 million at January 23, 2024 and was included in Series A Preferred Stock on our condensed consolidated balance sheet. On February 26, 2024, the Company held a special meeting of stockholders, who voted and approved (i) the issuance of shares of our Common Stock upon conversion of Series A Preferred Stock or exercise of the Warrants to be issued at Closing of the Purchase Agreement, which conversions or exercise would result in a “change of control” of the Company under the applicable rules of Nasdaq and (ii) an amendment to the Company’s Amended and Restated Certificate of Incorporation (the “Existing Charter”) to effect the increase in authorized shares of Preferred Stock to 10,000,000 . Except for stock dividends or distributions for which adjustments are to be made pursuant to the Existing Charter, Holders of Series A Preferred Stock shall be entitled to receive, and the Company shall pay, dividends on shares of Series A Preferred Stock equal (on an as-if-converted-to-Common-Stock basis, without regard to conversion limitations herein) to and in the same form as dividends actually paid on shares of the Common Stock when, as and if such dividends are paid on shares of the Common Stock. No other dividends shall be paid on shares of Series A Preferred Stock. On February 18, 2025, the Company entered into a Securities Purchase Agreement (the “February 18, 2025 SPA”) with David Lazar (“Seller”), and Cao Yu, Hu Bin, and Youxin Consulting Limited (collectively, the “Purchasers”), which was subsequently amended on May 9, 2025. Pursuant to the February 18, 2025 SPA and its amendment, Seller, a former director and officer of the Company, sold to the Purchasers (i) 2,219,447 shares of Series A Preferred Stock, (ii) a warrant to purchase up to 2,800,000 shares of Common Stock at an exercise price of $1.00 per share, subject to adjustment (the “Warrant”), and (iii) certain receivables owed by the Company to Seller associated with the transaction (the “Lazar Receivables”). On April 10, 2025, Seller transferred an additional 31,258 shares of Series A Preferred Stock to the Purchasers (together with the previously transferred shares and the Warrant, the “Securities”). The aggregate purchase price for the Securities and the Lazar Receivables was $500,000, of which $300,000 was directed by Seller to be paid to the Company in exchange for a convertible note (see Note 8). The Purchasers also paid a $3.4 million earn-out payment to Seller for his efforts related to the Company’s successful relisting on Nasdaq as of June 30, 2025. As of June 30, 2025, the Lazar Receivables were forgiven for the benefit of the Company, and the Warrant was amended and restated to eliminate the beneficial ownership limitations previously contained therein. 16 On May 9, 2025, the Company entered into, and simultaneously closed the transactions under, Securities Purchase Agreements with Cao Yu and Hu Bin, pursuant to which the Company sold an aggregate of 2,439,025 shares of its common stock— 1,585,366 shares to Cao Yu for a purchase price of $ 2,600,000 and 853,659 shares to Hu Bin for a purchase price of $ 1,400,000 . On May 9, 2025, the Company entered into a Purchase Agreement (the “Helena Purchase Agreement”) with Helena Global Investment Opportunities I Ltd. (“Helena”) whereby the Company shall have the right to issue and sell to Helena, from time to time, and Helena shall purchase from the Company, up to $15,000,000 of Common Stock, during the period commencing on May 9, 2025 and ending on the first day of the month immediately following the 36-month anniversary of May 9, 2025. The closing of each Advance and each sale and purchase of Common Stock related to each Advance (each, a “Closing”) shall take place on the applicable Settlement Date (as defined in the Helena Purchase Agreement), at a Purchase Price (as defined in the Helena Purchase Agreement) based on 95% of the lowest VWAP for the Common Stock, in respect of any Advance, during the three (3) Trading Days commencing on the date of Helena’s receipt of the shares of Common Stock relating to such Advance. In consideration for Helena’s execution and delivery of the Helena Purchase Agreement, the Company issued to Helena, as a commitment fee, shares of Common Stock (the “Commitment Fee Shares”), having an aggregate value of $150,000, of which (i) 71,572 shares were issued on May 14, 2025, and (ii) 71,572 shares were issued on August 11, 2025, the value of which was included in the balance of accrued expenses and other current liabilities as of June 30, 2025. The Commitment Fee Shares were fully earned as of the agreement date, and the issuance of the Commitment Fee Shares was not contingent upon any other event or condition. The number of the Commitment Fee Shares issued in each tranche was determined by dividing $75,000 by the lowest Volume Weighted Average Price (VWAP) of the Company’s common stock during the five trading days immediately preceding the agreement date. (12) SUBSEQUENT EVENTS Change in Independent Registered Public Accounting Firm On July 11, 2025, the Company’s Board of Directors approved the dismissal of Beckles & Co., Inc. (“Beckles”) and engaged UHY LLP (“UHY”) as the Company’s independent registered public accounting firm. There were no disagreements with Beckles on any matter of accounting principles or practices, financial statement disclosure or auditing scope or procedures during the periods they audited or reviewed. Amendment to Certificate of Incorporation On August 1, 2025, the Company filed a certificate of amendment (the “Charter Amendment”) to the Existing Charter, with the Delaware Secretary of State to, among other things, (i) correct a scrivener’s error with respect to the number of authorized shares and par value of preferred stock, which was incorrectly stated as 3,000,000 shares, par value $ 0.01 per share, rather than the correct amount of 10,000,000 shares, par value $0.001 per share, (ii) modify the voting rights of the Series A Preferred Stock, which had previously voted on an as-converted basis to shares of the Common Stock, without regard to conversion limitations in the Existing Charter, and would under the amended terms vote, on an as-converted basis if it was converted at a conversion ratio equal to the Stated Value (as defined therein and currently $1.40) divided by the “Minimum Price” (as of the original issue date of the Series A Preferred Stock) as defined in Nasdaq Listing Rule 5635(d), without regard to conversion limitations in the Existing Charter, (iii) limit the “full ratchet” anti-dilution protection in the Existing Charter so that any adjustment to the Stated Value of the Series A Preferred Stock thereunder would not require stockholder approval under Nasdaq Listing Rule 5635(d), and (iv) allow a majority of the voting power of all then outstanding shares of Series A Preferred Stock to waive the “full-ratchet” anti-dilution protection, which Charter Amendment had been previously approved by the Company’s board of directors and the Company’s stockholders on May 9, 2025. 17