What changed in this filing

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Item 1. Financial Statements

2026-08-14 compared with 2026-04-30 · 361 added, 183 removed, 349 unchanged (61% of the section changed)

16 unchanged sentences

Accrued expenses and other current liabilities

Income tax payables

Income tax payable

Current maturities of operating lease liabilities

5 unchanged sentences

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 March 31, 2026 and December 31, 2025, aggregate liquidation preference of $ 3,227,500 at March 31, 2026 and December 31, 2025, respectively

2,305,357 Series A shares issued and outstanding at June 30, 2026 and December 31, 2025, aggregate liquidation preference of $ 3,227,500 at June 30, 2026 and December 31, 2025, respectively

Common Stock, authorized:

1 unchanged sentence

issued and outstanding:

8,328,598 shares at March 31, 2026 and 7,934,122 shares at December 31, 2025, respectively

8,528,598 shares at June 30, 2026 and 7,934,122 shares at December 31, 2025, respectively

Additional paid-in capital

1 unchanged sentence

Accumulated other comprehensive loss

Total stockholders’ equity attributable to parent

Noncontrolling interests

Total stockholders’ equity

4 unchanged sentences

Three Months Ended

Six Months Ended

Cost of revenues

7 unchanged sentences

Interest income (expense), net

Foreign currency exchange Income

Foreign currency exchange income (loss)

Total other income (expense)

2 unchanged sentences

Net income (loss)

Attributable to noncontrolling interests

Net income (loss) attributable to owners of parent

Allocation to participating preferred stock

10 unchanged sentences

Condensed Consolidated Statements of Stockholders’ Equity (Deficit)

For the three months ended March 31, 2026

the three and six months ended June 30, 2026

Preferred Stock

Comprehensive

Noncontrolling

Balance at December 31, 2025

3 unchanged sentences

Balance at March 31, 2026

Acquisition of subsidiaries

Foreign currency translation

Issuance of vested shares

Stock-based compensation

Balance at June 30, 2026

See accompanying notes to unaudited condensed consolidated financial statements.

1 unchanged sentence

Condensed Consolidated Statements of Stockholders’ Equity (Deficit)

For the three months ended March 31, 2025

the three and six months ended June 30, 2025

Preferred Stock

2 unchanged sentences

Balance at March 31, 2025

Foreign currency translation

Common Stock Issuance

Balance at June 30, 2025

See accompanying notes to unaudited condensed consolidated financial statements.

1 unchanged sentence

Condensed Consolidated Statements of Cash Flows

Three Months Ended

Six Months Ended

Cash flows from operating activities:

Net income (loss)

Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

Depreciation and amortization

4 unchanged sentences

Allowance for credit losses - other receivables

Amortization of deferred financing costs

Changes in operating assets and liabilities:

6 unchanged sentences

Accrued expenses and other current liabilities

Due to related party

Operating lease liabilities

Net cash provided by (used in) operating activities

Net cash provided by operating activities

Cash flows from investing activities:

Cash acquired in acquisition of Yinlian Culture and its consolidated VIE

Purchase of property, equipment and software

Net cash used in investing activities

Net cash provided by investing activities

Cash flows from financing activities:

Proceeds from the issuance of common stock

Proceeds from the issuance of convertible note

Payment of deferred financing costs

Proceeds from debt

Net cash provided by financing activities

Effect of foreign exchange rate changes on cash

Net increase (decrease) in cash

Net increase in cash

Cash - beginning

3 unchanged sentences

Supplemental disclosures of non-cash activities:

Non-cash common stock issued and to

be issued that was recognized in deferred offering costs

Obtaining right-of-use assets in exchange for operating lease liability

Purchase of property, equipment, and intangible assets through increase in other payables

Addition to property, equipment and software through reclassification of prior year prepayment

Noncash settlement of accounts receivable through customers’ payments made directly to accounts payable, other payables, and investment deposits.

Non-cash settlement of accounts receivable through customers’ payments made directly to prepaid expenses, accounts payable, and other payables.

See accompanying notes to the unaudited condensed consolidated financial statements.

5 unchanged sentences

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 artificial intelligence (“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.

Our artificial intelligence (“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 - leading to higher customer satisfaction and decreased support burden.

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 to change the name of the Company from Minim, Inc.

to FiEE, Inc., effective as of February 27, 2025.

During the three months ended March 31, 2026, the Company incorporated two new wholly owned subsidiaries:

FiEE Channel Limited in Hong Kong on March 5, 2026, and FiEE Singapore Pte.

in Singapore on March 26, 2026.

As of March 31, 2026, neither subsidiary had commenced operations.

and its wholly owned subsidiaries—FiEE (HK) Limited (incorporated in March 2025), Houren-Geiju Kabushikikaisha (acquired in November 2025), MTRLC LLC, Minim Asia Private Limited, FiEE Channel Limited, and FiEE Singapore Pte.

Ltd.—are herein collectively referred to as “FiEE” or the “Company.”

We continue to grow and expand our operations as a digital service provider focused on integrating AI and data analytics into content creation and brand management.

We offer a wide range of Software as a Service (“SaaS”) solutions through a cloud-based platform 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 offer a wide range of Software as a Service (“SaaS”) solutions through a cloud-based platform designed to support our clients in developing, managing, and optimizing their digital presence across global platforms, including customized graphics and posts, short videos, and editorial calendars aligned with brand goals.

Additionally, we offer comprehensive software development and maintenance services, delivering custom software solutions from system design and development to deployment and post-launch maintenance.

1 unchanged sentence

This acquisition introduces AI image recognition and blockchain authentication technologies to the Company’s service portfolio, further bolstering our technological capabilities and optimizing our comprehensive brand management solutions for customers.

Equity Investment and Loan

On March 23, 2026, FiEE (HK) Limited (“FiEE HK”) entered into an Investment Agreement (the “Investment Agreement”) by and among FiEE HK, Guangzhou Yinlian Culture Co., Ltd., a limited liability company formed under the laws of the People’s Republic of China (the “PRC”) (“Yinlian Culture”), Guangzhou Maltose Culture Communication Co., Ltd., a limited liability company formed under the laws of the PRC (“Maltose Culture”), Guangzhou Qingniao Culture Co., Ltd., a limited liability company formed under the laws of the PRC (“Qingniao Culture”), Shenzhen Yaojin Creative Media Co., Ltd., a limited liability company formed under the laws of the PRC (“Yaojin Media”), Cai Yuanyao, Zhang Dingcheng, and Zhang Rong, pursuant to which (i) FiEE HK agreed to acquire a 51% equity interest (and 60% of the voting rights) in Yinlian Culture, for an aggregate purchase price of $51,000 (the “Equity Investment”) and (ii) FiEE HK, or an entity designated by FiEE HK, will provide a zero-interest convertible loan to Yinlian Culture in the principal amount of up to approximately $2.9 million (the “Loan” and, together with the Equity Investment, the “Transactions”).

The Loan is to be funded in three tranches:

(i) approximately $720,000 to be funded within 14 business days following the full payment for the Equity Investment, provided that Yinlian Culture has delivered its financial seals and bank-related documents (including online banking access) to FiEE HK;

(ii) approximately $720,000 to be funded within one month of the simultaneous satisfaction of the following conditions:

(a) Yinlian Culture and its subsidiaries and controlled entities (collectively, the “Group”) have achieved positive consolidated net profit after tax within six months from the date of the Investment Agreement, (b) the Group has provided FiEE HK with a profit forecast for the following 12 months following the date of the Investment Agreement that is acceptable to FiEE HK and reflects positive consolidated net profit after tax, and (c) the Group has undertaken in writing to meet such performance targets within the agreed timeframe;

and (iii) approximately $1.44 million to be funded within one month of the realization of the 12-month profit forecast described in clause (ii)(b) above.

Under the terms of the Loan, FiEE HK, or an entity designated by FiEE HK, has the option, exercisable at any time by written notice, to either (i) require Yinlian Culture to repay all or any portion of the Loan in cash, or (ii) convert all or any portion of the Loan into additional equity in Yinlian Culture, which, upon full conversion, would result in FiEE HK and its designated entities collectively holding 60% of the total equity interests in Yinlian Culture.

Yinlian Culture was incorporated on February 11, 2026 to facilitate the investment in Maltose Culture.

Through this investment, the Company aims to combine Maltose Culture’s music expertise with its AI capabilities to build an advanced AI music infrastructure and strengthen its position in the global music revolution.

In connection with the signing of the Investment Agreement, FiEE HK, Yinlian Culture, Maltose Culture, Qingniao Culture, Yaojin Media, Cai Yuanyao, Zhang Dingcheng, and Zhang Rong entered into a Shareholder Agreement, dated as of March 23, 2026, governing the rights and obligations of the shareholders of Yinlian Culture, including, but not limited to, board composition and governance, voting rights, dividend rights and distribution thresholds, liquidation preference, and transfer restrictions.

The closing of the Equity Investment is expected to occur before June 30, 2026, upon which FiEE HK will acquire 51% of the equity interests (and 60% of the voting rights) in Yinlian Culture and the VIE Agreements (as defined below) will become effective.

The closing of the Loan is expected to occur following the satisfaction of the applicable conditions precedent described above.

As of March 31, 2026, the Company had paid approximately CNY 7.6 million (approximately $ 1.1 million) to Maltose Culture in connection with the proposed convertible loan.

The funds are held in a separate designated bank account and are regularly reviewed by the Company for appropriate use.

VIE Agreements

Maltose Culture is an AI-empowered music ecosystem that integrates content creation, intelligent platform distribution, and next-generation home entertainment.

At or immediately prior to the closing of the Equity Investment, Maltose Culture is owned 40% by Zhang Dingcheng and 60% by Yang Kai, the spouse of Cao Yu, who serves as Chief Financial Officer and a member of the board of directors of the Company (the “Board”).

In order to establish effective control over, and the right to receive the economic benefits of, Maltose Culture, pursuant to the requirements of PRC law, Yinlian Culture entered into the following agreements (collectively, the “VIE Agreements”) with Maltose Culture, Yang Kai, and Zhang Dingcheng.

The VIE Agreements were signed on March 23, 2026, and the related business registration changes were completed on March 26, 2026.

Exclusive Purchase Option Agreement

Pursuant to the Exclusive Purchase Option Agreement, dated as of March 23, 2026, in connection with the signing of the Investment Agreement, each of Yang Kai and Zhang Dingcheng granted to Yinlian Culture an exclusive and irrevocable option to acquire 100% of the equity interests of Maltose Culture at the lowest price permitted by applicable PRC law, together with the right to acquire all of the assets of Maltose Culture.

The option may be exercised by Yinlian Culture at any time, subject to applicable PRC regulatory requirements and approvals.

Irrevocable Proxy Agreement

Pursuant to the Irrevocable Proxy Agreement, dated as of March 23, 2026, in connection with the signing of the Investment Agreement, each of Yang Kai and Zhang Dingcheng irrevocably appointed Yinlian Culture as their exclusive proxy to exercise all shareholder voting rights with respect to their respective equity interests in Maltose Culture, including without limitation all voting rights, the right to appoint directors and senior management, and the right to transfer, pledge, or otherwise dispose of their equity interests.

The proxy is irrevocable and remains effective for the entire operating term of Maltose Culture, unless earlier terminated by Yinlian Culture.

Business Cooperation Agreement

Pursuant to the Business Cooperation Agreement, dated as of March 23, 2026, in connection with the signing of the Investment Agreement, Yinlian Culture agreed to provide exclusive consulting and technical services to Maltose Culture and to license certain intellectual property to Maltose Culture on a non-exclusive, non-transferable basis, in exchange for service fees payable by Maltose Culture to Yinlian Culture.

Equity Pledge Agreement

Pursuant to the Equity Pledge Agreement, dated as of March 23, 2026, in connection with the signing of the Investment Agreement, each of Yang Kai and Zhang Dingcheng pledged all of their respective equity interests in Maltose Culture to Yinlian Culture as security for the performance of all of their obligations and Maltose Culture’s obligations under the VIE Agreements.

Spousal Consent

In connection with the signing of the Investment Agreement, Cao Yu executed a Spousal Consent, dated as of March 23, 2026, acknowledging and consenting to Yang Kai’s entry into and performance of the VIE Agreements, and confirming that she has no claim to the equity interests of Maltose Culture held by Yang Kai.

During the six months ended June 30, 2026, the Company incorporated two new wholly owned subsidiaries:

FiEE Channel Limited in Hong Kong on March 5, 2026, and FiEE Singapore Pte.

in Singapore on March 26, 2026.

As of June 30, 2026, FiEE Singapore Pte.

had commenced its authentication services business, while FiEE Channel Limited had not yet commenced operations.

On May 31, 2026, the Company, through its wholly owned subsidiary FiEE (HK) Limited (“FiEE HK”), completed the acquisition of a 51% equity interest (and 60% of the voting rights) in Guangzhou Yinlian Culture Co., Ltd.

(“Yinlian Culture”), a limited liability company formed under the laws of the People’s Republic of China (the “PRC”).

Upon the closing of the acquisition, Yinlian Culture became a consolidated subsidiary of the Company.

Through the variable interest entity (“VIE”) Agreements between Yinlian Culture and Guangzhou Maltose Culture Communication Co., Ltd., a limited liability company formed under the laws of the PRC (“Maltose Culture”), Maltose Culture is consolidated as a VIE of the Company.

Through this acquisition, the Company commenced its music-related business, combining Maltose Culture’s music expertise with its AI capabilities to build an advanced AI music infrastructure and strengthen its position in the global music ecosystem.

See Note 4 – Business Combination and Note 5 –VIE Arrangements for further details.

and its subsidiaries and consolidated VIE are herein collectively referred to as “FiEE,” the “Company,” “we,”

“our,” “us,” or similar terms.

The following table lists all of the Company’s subsidiaries and consolidated

Schedule of The Company’s subsidiaries and consolidated

Place of Incorporation

Principal Activities

FiEE (HK) Limited

SaaS service - Multi-Channel Network Digital Service, Software Service, Digital authentication services

Houren-Geiju Kabushikikaisha

Digital authentication services

United States

Minim Asia Private Limited

FiEE Channel Limited

Not yet commenced operations

FiEE Singapore Pte.

Digital authentication services

Guangzhou Yinlian Culture Co., Ltd.

Investment holding

Guangzhou Maltose Culture Communication Co., Ltd.

100 % controlled by VIE arrangements

Music services

Basis of Presentation

8 unchanged sentences

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.

Principles of Consolidation

The condensed consolidated financial statements include the accounts and operations of the Company, its wholly owned subsidiaries and its consolidated variable interest entity.

All intercompany accounts and transactions have been eliminated upon consolidation.

Use of Estimates

4 unchanged sentences

Actual results may differ from those estimates under different assumptions or conditions and the differences may be material.

Company’s operations have historically been primarily financed through the issuance of its common stock, $0.01 par value per

share (the “Common Stock”), and preferred stock, $0.001 par value per share (the “Preferred Stock”).

inception, the Company has incurred significant losses and negative cash flows from operations.

The Company began generating

operating profit in the fourth quarter of 2025 and has continued to do so thereafter.

During the three months ended March 31,

2026, the Company reported a net income of $352 thousand 351,516 , a positive working capital of $ 3.3

million and an increase in cash of $ 1.5

The increase in cash was primarily attributable to $67 thousand 66,588

of cash provided by operating activities and $2.0 million 1,974,993

of cash provided by financing activities, partially offset by $518 thousand ( 518,047 )

of cash used in investing activities.

As of March 31, 2026, the Company had an accumulated deficit of $95.3 million ( 95,270,063 )

and cash on hand of $4.6 million 4,579,910 .

Although the Company generated net income, positive working capital, and positive operating cash flows during the three months ended

March 31, 2026 following changes in management and business strategy, it has incurred significant losses in prior years and has

a limited history of profitability.

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 March 31, 2026 do not include any adjustments to the carrying amounts or classification of assets, liabilities, and reported expenses that may be necessary should the Company be unable to continue as a going concern.

The Company’s operations have historically been primarily financed through the issuance of its common stock, $0.01 par value per share (the “Common Stock”), and preferred stock, $0.001 par value per share (the “Preferred Stock”).

Since inception, the Company has incurred significant losses and negative cash flows from operations.

The Company began generating operating profit in the fourth quarter of 2025 and has continued to do so thereafter.

During the six months ended June 30, 2026, the Company reported a net income of $2.5 2,462,712 million, a positive working capital of $ 7.1 million and an increase in cash of $ 2.4 million.

The increase in cash was primarily attributable to $90 90,378 thousand of cash provided by operating activities, $1.9 1,917,393 million of cash provided by financing activities, and $366 366,431 thousand of cash provided by investing activities.

As of June 30, 2026, the Company had an accumulated deficit of $93.2 93,158,867 million and cash on hand of $5.4 5,435,709 million.

Although the Company generated net income, positive working capital, and positive operating cash flows during the six months ended June 30, 2026 following changes in management and business strategy, it has incurred significant losses in prior years and has a limited history of profitability.

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, 2026 do not include any adjustments to the carrying amounts or classification of assets, liabilities, and reported expenses that may be necessary should the Company be unable to continue as a going concern.

If the Company is unable to raise additional capital, it may be forced to liquidate its assets at amounts less than their carrying values, and investors could lose all or a portion of their investment.

1 unchanged sentence

The Company’s significant accounting policies are disclosed in its Annual Report on Form 10-K for the year ended December 31, 2025.

The Company’s significant accounting policies have no material changes during the three months ended March 31, 2026, except for the following updates resulting from transactions that occurred during the three months ended March 31, 2026.

There were no material changes to the Company’s significant accounting policies during the six months ended June 30, 2026, except for the following updates resulting from transactions that occurred during the period.

Functional Currency

The functional

currency of FiEE (HK) Limited is the Hong Kong dollar (“HKD”).

The functional currency of HGK is the Japanese Yen (JPY).

The functional currency of FiEE Singapore Pte.

Dollar (USD).

The functional currency of Yinlian Culture and Maltose

Culture is the Chinese Renminbi (RMB).

Foreign currency transactions are translated into their respective functional currencies using

exchange rates at the transaction dates, while monetary assets and liabilities denominated in foreign currencies are remeasured at period-end

The functional currency of all other entities of the Company is U.S.

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 period-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 income (loss) in the consolidated statements of changes in stockholders’ equity (deficit).

Property, Equipment and Software

6 unchanged sentences

Internal use software

Noncontrolling interests

The Company presents noncontrolling interests as a component of equity on its condensed consolidated balance sheets and reports the portion of its earnings or loss for noncontrolling interests as net earnings or loss attributable to noncontrolling interests in the condensed consolidated statements of operations.

Noncontrolling interests represent interests in

the net assets of the Company’s consolidated subsidiary and VIE that are not attributable, directly or indirectly, to the Company.

Noncontrolling interests are adjusted, as applicable, for their respective shares of net income or loss, other comprehensive income or

loss, and distributions.

Entities incorporated in Hong Kong are subject to Hong Kong Profits Tax at a rate of 8.25 % on the first HKD 2 million of assessable profits and at 16.5% thereon.

There are no withholding taxes on the payment of dividends by entities incorporated in Hong Kong to their stockholders.

Entities incorporated in Japan are subject to Japanese corporate income tax at an effective rate of approximately 37 % (including national and local taxes).

Entities incorporated in Singapore are subject to Singapore corporate income tax at a flat rate of 17 % on chargeable income.

There are no withholding taxes upon payment of dividends by an entity incorporated in Singapore to its shareholders.

For the three and six months ended June 30, 2026, the Company recorded income tax expense of $ 526,897 and $ 663,726 , respectively, primarily attributable to its Hong Kong, Singapore, and Japan subsidiaries’ taxable income.

The Company recognized deferred tax assets of $ 26,371 as of June 30, 2026, which arose primarily from the allowance for credit losses on other receivables.

Segment reporting

Company operates as a single operating segment.

The Company’s chief operating decision maker (“CODM”), its Chief

Executive Officer, reviews financial information on an aggregate basis for the purposes of allocating resources and evaluating

financial performance.

The measure of segment profit or loss reviewed by the CODM is operating income.

The Company’s primary

operations were historically in the U.S., and during the year ended December 31, 2025, primarily Hong Kong.

Beginning in March 2026, following the incorporation of its

subsidiary in Singapore, the Company has derived substantially all of its revenues from Hong Kong and Singapore.

As of June 30,

2026, the Company’s long-lived assets are mainly located in U.S., Hong Kong and Japan.

the three and six months ended June 30, 2026 and 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.

These expenses are consistent with the

amounts presented in the consolidated statements of operations.

There are no other segment items as there are no significant assets

or operations not regularly reviewed by the CODM.

Recently Issued Accounting Standards

20 unchanged sentences

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.

The Company offers MCN digital services under two payment structures:

(i) prepaid arrangements, where customers are required to make an upfront payment for the services, which is non-refundable upon execution of the contract and are recorded as contract liabilities until recognized as revenue;

and (ii) post-paid arrangements, where customers are granted payment terms of 90 days from the contract signing date.

The 90-day credit period is offered to customers who satisfy the Company’s internal credit assessment criteria, which consider factors such as the customer’s credit profile, contract size, and historical relationship.

For post-paid arrangements, the Company records accounts receivable when the services are performed and the Company has an unconditional right to consideration.

Customers retain the right to terminate the contract prior to its expiration date, subject to the early termination fees, including information transfer fees and fan development fees.

The Company regularly monitors the collectability of receivables arising from post-paid arrangements.

Revenues from Software Service

12 unchanged sentences

These warranties do not constitute a separate performance obligation as they cannot be purchased separately and do not provide a service beyond remedying defects to bring the software to the specified standard.

The Company’s contracts typically specify a payment schedule whereby payments from the customer are linked to the signing of the contract and the achievement of specific milestones for customized arrangements, while for standard arrangements, payment is due after final acceptance with no prepayment or milestone-based payments.

The Company’s contracts typically specify a payment schedule whereby payments from the customer are linked to the signing of the contract and the achievement of specific milestones for customized arrangements, while for standard arrangements, customers are granted payment terms with an initial payment due within three months after acceptance and a final payment due within nine months after acceptance.

Contracts are generally fixed price, and the Company has elected the practical expedient not to adjust the promised consideration for the effects of a significant financing component when the period between transfer of goods or services and customer payment is one year or less.

7 unchanged sentences

Services include microstructure analysis, AI image comparison, authenticity determination, blockchain registration, and issuance of digital authentication reports.

Service packages are offered in standard and expedited editions, with fees calculated based on the dimensions of the artwork and required to be fully paid in advance.

Service packages are offered in standard and expedited editions, with fees calculated based on the dimensions of the artwork.

The Company’s services comprise a single performance obligation, as the promised services are highly interdependent and integrated to deliver a conclusive authentication outcome.

1 unchanged sentence

Revenue is recognized at a point in time upon delivery of the final digital authentication report and blockchain certificate to the client, when the client obtains control of the completed authentication package.

The Company offers these services under two payment structures:

(i) prepaid arrangements, where customers are required to make an upfront payment for the services, which is non-refundable upon execution of the contract and is recorded as a contract liability until recognized as revenue;

and (ii) post-paid arrangements, where customers are granted payment terms of 90 days from the contract signing date.

For post-paid arrangements, the Company records accounts receivable when the services are performed and the Company has an unconditional right to consideration.

Revenues from others

the acquisition of Yinlian Culture and the Company’s VIE, Maltose Culture in May 2026, the Company commenced its music services

As the acquisition was completed on May 31, 2026, the Company recorded only one month of revenue from music services during

the three and six months ended June 30, 2026, and the amount was immaterial to the condensed consolidated financial statements.

Remaining Performance Obligations

2 unchanged sentences

Non-cancellable backlog includes service orders for which customer purchase orders have been accepted, that are scheduled or in the process of being scheduled for delivery or performance, and that are not yet invoiced.

March 31, 2026 and December 31, 2025, the remaining performance obligations related to MCN digital services purchased and

paid for in advance by customers for basic and value-added packages amounted to $ 568,973

and $ 1,497,721 ,

respectively, equaling the balances of contract liabilities.

These amounts are expected to be recognized as revenue within the next

The remaining performance obligations for software service as of March 31, 2026 and December 31, 2025 were $ 181,521 and $ 521,082 , respectively, excluding retention fees.

As of June 30, 2026 and December 31, 2025, the remaining performance obligations related to MCN digital services purchased and paid for in advance by customers for basic and value-added packages amounted to $ 507,140 and $ 1,497,721 , respectively.

These amounts are expected to be recognized as revenue within the next 12 months.

The remaining performance obligations for software services as of June 30, 2026 and December 31, 2025, were $ 465,354 and $ 521,082 , respectively, excluding retention fees.

These amounts relate to unsatisfied performance obligations for the combined software license and customized modules, which are expected to be recognized as revenue upon the completion and customer acceptance of specific milestones, predominantly within the next three months.

As of March 31, 2026 and December 31, 2025, the remaining performance obligations related to digital authentication services purchased and paid for in advance by customers amounted to $ 99,930 and $ 0 , respectively, equaling the balances of contract liabilities.

These amounts are expected to be recognized as revenue within the next one month.

As of June 30, 2026 and December 31, 2025, there were no remaining performance obligations related to digital authentication services.

Contract Costs

1 unchanged sentence

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.

Total capitalized costs to obtain a contract were immaterial during the periods presented and are included in other current and long-term assets on the Company’s 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 – MCN and software 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.

The accounts receivable balances were $ 1,422,013 and $ 2,110,715 as of March 31, 2026 and December 31, 2025, respectively.

The accounts receivable balances were $ 5,134,459 and $ 2,110,715 as of June 30, 2026 and December 31, 2025, respectively.

Subsequent to June 30, 2026 and through the date of this filing, the Company collected approximately $2,282,433 of the accounts receivable balance outstanding as of June 30, 2026.

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 contract liabilities balances were $ 668,903 and $ 1,497,721 as of March 31, 2026 and December 31, 2025, respectively.

The contract liabilities balances were $ 343,015 and $ 1,497,721 as of June 30, 2026 and December 31, 2025, respectively.

Disaggregation of Revenue

The following table sets forth our revenues by distribution channel:

Schedule of disaggregation of revenue

Three Months Ended

Online and offline channels

The following table sets forth our revenues by product:

1 unchanged sentence

Three Months Ended

Six Months Ended

SaaS – MCN digital services

4 unchanged sentences

Three Months Ended

Six Months Ended

Recognized at a point in time

Recognized over time

(4) BUSINESS COMBINATION

On March 23, 2026, FiEE HK

entered into an Investment Agreement with Yinlian Culture, Maltose Culture, Guangzhou Qingniao Culture Co., Ltd., Shenzhen Yaojin Creative

Media Co., Ltd., Cai Yuanyao, Zhang Dingcheng, and Zhang Rong (the “Investment Agreement”), pursuant to which (i) FiEE HK

agreed to acquire a 51% equity interest (and 60% of the voting rights) in Yinlian Culture for an aggregate purchase price of $51,000.

Yinlian Culture was incorporated on February 11, 2026 to facilitate the investment in Maltose Culture.

In connection with the signing

of the Investment Agreement, a Shareholder Agreement was also entered into on March 23, 2026 (the “Shareholder Agreement”

and, together with the Investment Agreement, the “VIE Agreements”), governing the rights and obligations of the shareholders

of Yinlian Culture, including, but not limited to, board composition and governance, voting rights, dividend rights and distribution

thresholds, liquidation preference, and transfer restrictions.

The acquisition closed on May 31, 2026.

Through the VIE Agreements between

Yinlian Culture and Maltose Culture, the Company obtained control over Maltose Culture, which is consolidated as a VIE of the Company.

In accordance with ASC 810-10-40-6, the Investment Agreement, the Shareholder Agreement, and the VIE Agreements were entered into in contemplation of one another and were essentially a single transaction designed to achieve an overall commercial effect.

Accordingly, these agreements have been combined and accounted for as a single transaction for financial reporting purposes.

The Company evaluated the transaction in accordance with the guidance in ASC 805 and determined that the acquired set met the definition of a business.

The acquired set includes both inputs and a substantive process that together significantly contribute to the ability to create outputs, including two key employees forming an organized workforce and the ability to continue revenue-generating operations without significant disruption.

Accordingly, the transaction was accounted for as a business combination.

The aggregate purchase price for the 51 % equity interest was $ 51,000 in cash, which represents a capital contribution to be made by FiEE HK to Yinlian Culture.

As of June 30, 2026, this amount remained unpaid.

May 31, 2026, FiEE HK and Yinlian Culture entered into a Supplemental Agreement to the Investment Agreement (the “Supplemental Agreement”),

filed as Exhibit 10.1 to this Quarterly Report on Form 10-Q.

Under the Supplemental Agreement, (i) FiEE HK waived, solely as a condition

precedent to the first closing, the requirement that Yinlian Culture open a foreign exchange capital account capable of receiving the

capital increase payment, provided that Yinlian Culture remains obligated to open such account following the first closing;

parties agreed that the first closing under the Investment Agreement occurs on the date the conditions precedent to the first closing

are satisfied or waived, rather than within five business days thereafter, and that the signing date of the Supplemental Agreement is

deemed the First Closing Date;

and (iii) the parties agreed that FiEE HK’s payment of the RMB 354,807 (approximately $51,000) investment

amount is due within seven business days from the date Yinlian Culture opens its foreign exchange capital account, rather than within

seven business days following the first closing as originally provided.

Fair Value of Identifiable Assets Acquired and Liabilities Assumed

purchase consideration was allocated to the identifiable assets acquired and liabilities assumed based on their estimated

acquisition-date fair values.

The noncontrolling interests were also measured at their acquisition date fair value, which consist of

(i) the 49% equity interest in Yinlian Culture not acquired by the Company and (ii) the interest in Maltose Culture’s

acquisition-date net assets attributable to its registered equity shareholders.

The allocation is as follows:

Schedule of Fair Value of Identifiable Assets Acquired and Liabilities Assumed

Total investment consideration

Accounts receivable

Prepaid expenses and other current assets

Stock-subscription receivable

Contract liabilities

Convertible note payable

Accrued expenses and other current liabilities

Total identifiable net assets acquired

Noncontrolling interests

Net identifiable assets acquired attributable to the Company

The fair value of the identifiable net assets was determined using an asset approach, which estimates fair value based on the replacement cost or reproduction cost of the assets, adjusted for physical deterioration, functional obsolescence, and economic obsolescence.

The fair values of financial assets and liabilities, including cash and cash equivalents, other current assets, and accrued liabilities, approximated their respective carrying amounts at the acquisition date due to their short-term nature.

Convertible Note

the same Investment Agreement, FiEE HK also agreed to provide, or cause an entity designated by FiEE HK to provide, a zero-interest

convertible loan to Yinlian Culture in the principal amount of up to RMB 20,000,000 (approximately $ 2.9

The convertible loan is to be funded in three tranches and provides FiEE HK with the option, exercisable at any time by

written notice, to either (i) require Yinlian Culture to repay all or any portion of the convertible loan in cash, or (ii) convert all or any

portion of the convertible loan into additional equity in Yinlian Culture, which, upon full conversion, would result in FiEE HK and its

designated entities collectively holding 60% of the total equity interests in Yinlian Culture.

This convertible loan is accounted

for as a separate financing arrangement and does not form part of the equity consideration in accordance with ASC 805-10-55-18.

of June 30, 2026, the Company had disbursed approximately RMB 7.6 million (approximately $1.1 million) of the convertible loan.

consolidation, the intercompany loan receivable and payable were eliminated in their entirety, and no liability or receivable

related to this convertible loan is recognized in the condensed consolidated balance sheets.

The convertible loan effectively

represents a cash transfer from FiEE, Inc.

(the parent) to Yinlian Culture (the acquired subsidiary), of which $ 51,000

can be designated as capital contribution.

(5) VIE ARRANGEMENTS

VIE Agreements

Maltose Culture is an AI-empowered music ecosystem that integrates content creation, intelligent platform distribution, and next-generation home entertainment.

At or immediately prior to the closing of the Equity Investment, Maltose Culture was owned 40 % by Zhang Dingcheng and 60 % by Yang Kai, the spouse of Cao Yu, who serves as Chief Financial Officer and a member of the board of directors of the Company.

The VIE Agreements were effective on March 23, 2026, and the related business registration changes were completed on March 26, 2026.

Exclusive Purchase Option Agreement

The option may be exercised by Yinlian Culture at any time, subject to applicable PRC regulatory requirements and approvals.

Irrevocable Proxy Agreement

The proxy is irrevocable and remains effective for the entire operating term of Maltose Culture, unless earlier terminated by Yinlian Culture.

Business Cooperation Agreement

The service fees under the agreement are structured to equal substantially all of the net income of Maltose Culture, thereby transferring the economic benefits of Maltose Culture to Yinlian Culture.

Equity Pledge Agreement

Spousal Consent

Based on the terms of the VIE Agreements, the Company has determined that it is the primary beneficiary of Maltose Culture for the following reasons:

(i) through the Irrevocable Proxy Agreement, Yinlian Culture has the power to direct the voting and operational activities of Maltose Culture, including the appointment of directors and senior management;

(ii) through the Exclusive Purchase Option Agreement, Yinlian Culture has the right to acquire 100% of the equity interests of Maltose Culture at any time;

(iii) through the Business Cooperation Agreement, Yinlian Culture provides consulting and technical services that are essential to Maltose Culture’s operations;

and (iv) through the Equity Pledge Agreement, Yinlian Culture has security interest over the equity interests of Maltose Culture.

Accordingly, the Company has both the power to direct the activities that most significantly impact Maltose Culture’s economic performance and the obligation to absorb losses or the right to receive benefits that could be significant to Maltose Culture.

Therefore, the Company is the primary beneficiary of Maltose Culture and consolidates Maltose Culture as a VIE.

Assets and Liabilities of VIE

The Company’s condensed consolidated financial statements include the assets, liabilities and results of operations of the VIE for which the Company is the primary beneficiary.

The noncontrolling interest holder’s interest is reflected in “Net income (loss) attributable to noncontrolling interests” in the condensed consolidated statements of operations and “Noncontrolling interests” in the condensed consolidated balance sheets.

See Note 4 – Business Combination for details of noncontrolling interests.

The creditors of the consolidated VIE do not have recourse to the Company other than to the assets of the consolidated VIE.

The following table summarizes the carrying amounts of the Company’s VIE assets and liabilities, after elimination of any intercompany transactions and balances, included in the Company’s condensed consolidated balance sheets at June 30, 2026:

Schedule of Variable interest entities

Prepaid expenses

Total Current Assets

Equipment, net

Accrued expenses and other current liabilities

Total Liabilities

(6) BALANCE SHEET COMPONENTS

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Total property, equipment and software, net

Depreciation and amortization expense was $ 29 thousand and $ 50 thousand for the three months ended March 31, 2026 and 2025, respectively.

For the three months ended June 30, 2026 and 2025, depreciation and amortization was $ 35 thousand and $ 22 thousand, respectively.

Depreciation and amortization expense was $ 64 thousand and $ 72 thousand for the six months ended June 30, 2026 and 2025, respectively.

Intangible assets

part of the asset acquisitions completed on June 30, 2025 and November 30, 2025, the amount allocated to the intangible

assets acquired was approximately $ 1.3

million and $ 2.5

million, respectively, primarily consisting of acquired proprietary software, which represent a group of copyrights, associated

patents and software source codes 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 three 3 years, its estimated useful life.

Intangible assets consisted of the following at March 31, 2026 and December 31, 2025:

As part of the asset acquisitions completed on June 30, 2025 and November 30, 2025, the amount allocated to the intangible assets acquired was approximately $ 1.3 million and $ 2.5 million, respectively, primarily consisting of acquired proprietary software, which represent a group of copyrights, associated patents and software source codes 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 three 3 years, its estimated useful life.

Intangible assets consisted of the following at June 30, 2026 and December 31, 2025:

Schedule of intangible assets

As of June 30, 2026

As of December 31, 2025

Gross Carrying

1 unchanged sentence

Acquired group of proprietary software

Amortization expense was $ 315 thousand and $ 0 thousand in the three months ended March 31, 2026 and 2025, respectively.

Amortization expense was $ 316 thousand and $ 0 thousand in the three months ended June 30, 2026 and 2025, respectively.

Amortization expense was $ 631 thousand and $ 0 thousand in the six months ended June 30, 2026 and 2025, respectively.

Estimated amortization expenses for the future years are as follows:

2 unchanged sentences

Other receivables, net

receivables, net primarily consisted of $ 18,051

receivables, net as of June 30, 2026 and December 31, 2025 included gross amounts of $ 70,012

and $ 85,134 ,

as of March 31, 2026 and December 31, 2025, respectively, representing funds temporarily held in a settlement platform and pending transfer to the Company’s bank account.

respectively.

During the six months ended June 30, 2026, the Company recorded a full allowance of $ 70,012

against the outstanding balance due from a third party.

In addition, other receivables, net included $ 1,132,558

as of March 31, 2026 and December 31, 2025, respectively, due from third‑party entities.

The entire $70,966 balance

due from a third‑party entity as of March 31, 2026 was fully reserved.

as of December 31, 2025, representing funds temporarily held in a settlement platform and pending transfer to the Company’s

bank account, and no such funds were held as of June 30, 2026.

Prepaid and other current assets

1 unchanged sentence

Schedule of inventories

Insurance fee

Insurance fees

Cloud hosting fee

1 unchanged sentence

Nasdaq annual listing fee

Prepaid music costs

Total prepaid and other current assets

2 unchanged sentences

Insurance fees

Investment deposit to a related party (1)

Deferred offering costs

Total other assets

The Company made an investment deposit of $1,097,098 to Maltose Culture, which is considered a related party as it is 60% owned by Yang Kai, the spouse of Cao Yu, the Company’s Chief Financial Officer and director.

The deposit was made in connection with a convertible loan toward the Transactions contemplated under the Investment Agreement (see Note 1 -Equity Investment and Loan).

Accrued expenses and other current liabilities

6 unchanged sentences

Other payable to Yixuntong (1)

Project investment from partners

Total accrued expenses and other current liabilities

As of March 31, 2026, other payables to Yixuntong primarily included $94 thousand for a software development and $21 thousand for advanced cloud hosting fee.

As of June 30, 2026, other payables to Yixuntong primarily included $95 thousand for a software development and $21 thousand for advanced cloud hosting fee.

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.

The remaining balance was primarily for the reimbursement payable to employees.

The Company’s newly established Hong Kong subsidiary executed new office lease agreements in March 2025 and the Company’s newly acquired Japan subsidiary executed office lease agreements in October 2024, which expire in July and September 2026, respectively.

The Company recognizes lease expense for these leases on a straight-line basis over the lease term.

Right-of-use 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

Operating lease costs

Cash paid for amounts included in the measurement of lease liabilities

The weighted-average remaining lease term and discount rate were as follows:

Schedule of weighted average remaining lease term and discount rate

Three months ended

Operating leases:

Weighted average remaining lease term (years)

Weighted average discount rate

The remaining balance was primarily for the reimbursement payable to employees and accrued rent.

(7) COMMITMENTS AND CONTINGENCIES

(a) Commitments

Except as disclosed elsewhere in the accompanying notes, the Company had no other material commitments as of March 31, 2026.

Except as disclosed elsewhere in the accompanying notes, the Company had no other material commitments as of June 30, 2026.

(b) Contingencies

5 unchanged sentences

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 March 31, 2026, 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.

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, or that the amount is not material, or that an estimate of the loss cannot be made.

At June 30, 2026, 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.

In the ordinary course of its business, the Company is subject to lawsuits, arbitrations, claims, and other legal proceedings in connection with its business.

Some of the legal actions include claims for substantial or unspecified compensatory and/or punitive damages.

3 unchanged sentences

Uncertainty on the business operations

For the three months ended March 31, 2026, the Company’s operations depended in part on the continued service of its senior management, whose relationships with artists support the expansion and development of the Company’s primary customer base.

For the three and six months ended June 30, 2026, the Company’s operations depended in part on the continued service of its senior management, whose relationships with artists support the expansion and development of the Company’s primary customer base.

The loss of key management or technical personnel could adversely affect the Company’s ability to maintain these relationships and develop its technology-driven services.

(7) SIGNIFICANT CUSTOMER AND DEPENDENCY ON KEY SUPPLIERS

the three months ended March 31, 2026, the Company did not have any customers that individually accounted for 10 %

or more of its total revenues.

Three customers each accounted for approximately 11 %

of the Company’s total accounts receivable as of March 31, 2026.

One supplier accounted for approximately 75 %

of the Company’s total accounts payable as of March 31, 2026.

Other than the foregoing, no other customer or supplier

accounted for 10% or more of the Company’s total revenue, accounts receivable, or accounts payable.

During the year ended

December 31, 2025, the Company had one customer that accounted for approximately 75 %

of its total accounts receivable.

The majority of this accounts receivable was acquired through the acquisition of HGK on

November 30, 2025, and this customer contributed approximately 1% of the Company’s total revenue for the year ended

December 31, 2025.

Additionally, one supplier accounted for approximately 33 %

of the Company’s total accounts payable as of December 31, 2025.

Other than the foregoing, no other customer or supplier

accounted for 10% or more of the Company’s total revenues, accounts receivable, or accounts payable for the year ended

December 31, 2025.

(8) SIGNIFICANT CUSTOMERS AND DEPENDENCY ON KEY SUPPLIERS

the three and six months ended June 30, 2026, the Company had one customer that individually accounted for approximately 14 %

of its total revenues for the three and six months ended June 30, 2026, respectively, and no customers that individually accounted for

or more of its accounts receivable.

Two suppliers accounted for approximately 43 %

respectively, of the Company’s total accounts payable as of June 30, 2026.

Other than the foregoing, no other customer or

supplier accounted for 10% or more of the Company’s total revenue, accounts receivable, or accounts payable.

During the three and six months ended June 30, 2025, two suppliers accounted for approximately 59 % and 19 % , respectively, of the Company’s

total cost of revenues, and no other customer or supplier accounted for 10% or more of the Company’s total revenue, accounts receivable,

or accounts payable.

(9) CONVERTIBLE NOTE PAYABLE TO RELATED PARTY

8 unchanged sentences

(10) RELATED PARTY TRANSACTIONS

The Company had the following related party transactions during the three months ended March 31, 2026 and 2025:

Amount paid by a stockholder for operating activities and the balance due as of March 31, 2026.

The Company had the following related party transactions during the three and six months ended June 30, 2026 and 2025:

Amount paid by a stockholder for operating activities and the balance due as of June 30, 2026.

See Note 6 for details.

Investment deposits paid to a related party.

VIE arrangement with related party.

See Note 5 for details.

14 unchanged sentences

Potential common shares are included only to the extent they are dilutive, and anti-dilutive securities are excluded.

Earnings (loss) per share for the three months ended March 31, 2026 and 2025, respectively, were as follows:

Earnings (loss) per share for the three and six months ended June 30, 2026 and 2025, respectively, were as follows:

Schedule of net income (loss) per share

Three Months Ended

Six Months Ended

Basic earnings per common share:

Net income (loss)

Net income (loss) attributable to owners of parent

Preferred stock dividend declared

1 unchanged sentence

Income allocated to participating securities

Net income (loss) available to common stockholders

Net income (loss) attributable to common stockholders

Weighted average basic shares outstanding

1 unchanged sentence

Diluted earnings per common share:

Net income (loss) available to common stockholders

Net income (loss) attributable to common stockholders

Weighted average basic shares outstanding

Dilutive effect related to warrants

Dilutive effect related to restricted stocks with service conditions

Weighted average diluted shares outstanding

Diluted earnings (loss) per common share

Diluted earnings (loss) per common share for the three months ended March 31, 2026 and 2025 excludes the effects of 3,227,500 and 7,236,180 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 Series A preferred stock, warrants, and restricted shares with a service condition.

Diluted earnings (loss) per common share for the three and six months ended June 30, 2026 and 2025 excludes the effects of 3,227,500 and 7,242,339 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 Series A Preferred Stock, warrants, restricted stock units and convertible note (including certain securities requiring stockholder approval prior to exercise or conversion).

Preferred Stock and Warrants

On January 23, 2024, the Company issued 2,000,000 shares of Series A Convertible Preferred Stock (the “Series A Preferred Stock”) and warrants to purchase up to 2,800,000 shares of Common Stock at an exercise price of $ 1.00 per share, subject to adjustment (the “Warrants”).

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 a 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.

On February 18, 2025, the Company entered into a Securities Purchase Agreement (the “February 18, 2025 SPA”) with Lazar, and Cao Yu, Hu Bin, and Youxin Consulting Limited (collectively, the “Purchasers”), which was subsequently amended on May 9, 2025.

4 unchanged sentences

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.

No dividends have been declared or paid on the Common Stock or the Series A Preferred Stock as of March 31, 2026 and December 31, 2025.

As of March 31, 2026 and December 31, 2025, the Company had 2,305,357 shares of Series A Preferred Stock issued and outstanding.

No dividends have been declared or paid on the Common Stock or the Series A Preferred Stock as of June 30, 2026 and December 31, 2025.

As of June 30, 2026 and December 31, 2025, the Company had 2,305,357 shares of Series A Preferred Stock issued and outstanding.

Each share of Series A Preferred Stock is convertible, at the option of the holder, into 1.4 shares of Common Stock, votes on an as-if-converted basis, and has full ratchet protection in any subsequent offerings.

The Warrants remained outstanding as of March 31, 2026.

The Warrants remained outstanding as of June 30, 2026.

Securities Purchase Agreements

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 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 .

May 9, 2025, the Company entered into, and simultaneously closed the transactions under, certain securities purchase agreements

with Cao Yu and Hu Bin, pursuant to which the Company sold an aggregate of 2,439,025 shares of Common Stock - 1,585,366

shares to Cao Yu for an aggregate purchase price of $ 2,600,000

shares to Hu Bin for an aggregate purchase price of $ 1,400,000 .

On January 30, 2026, the Company entered into a securities purchase agreement (the “2026 Purchase Agreement”) with certain purchasers named therein (the “2026 Purchasers”), pursuant to which the Company agreed to sell and issue to the 2026 Purchasers, at the closing of the private placement (the “Closing”) in March 2026, an aggregate of 394,476 shares of Common Stock (the “Shares”), at an offering price of $ 5.07 per Share.

1 unchanged sentence

The Company received total gross proceeds of $ 1,999,993 from the 2026 Purchasers.

As of March 31, 2026, $3,945 was recorded as Common Stock and $1,996,048 was recorded as additional paid-in capital (“APIC”), net of $53,823 of legal fees related to the offering, which were charged to APIC.

As of June 30, 2026, $3,945 was recorded as Common Stock and $1,996,048 was recorded as additional paid-in capital (“APIC”), net of $53,823 of legal fees related to the offering, which were charged to APIC.

Helena Purchase Agreement

5 unchanged sentences

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 Common Stock during the five trading days immediately preceding the agreement date.

As of June 30, 2026, the $ 150,000 commitment fee previously recorded as deferred offering costs was fully amortized and expensed, as the Company had not sold any shares and does not expect to sell any shares in the future under the Helena Purchase Agreement.

July 2025 Warrant

1 unchanged sentence

This warrant was issued as compensation for services provided by Lazar.

In accordance with the accounting requirements of ASC 718, “Compensation—Stock Compensation,” and ASC 505-50, “Equity—Equity-Based Payments to Non-Employees,” the Company measured this equity instrument at fair value and recognized the compensation cost immediately on the grant date.

In accordance with the accounting requirements of ASC 718, “Compensation - Stock Compensation,” the Company measured this equity instrument at fair value and recognized the compensation cost immediately on the grant date.

Using the Black-Scholes option pricing model, with key inputs including a fair value of the underlying Common Stock of $ 2.67 , an exercise price of $ 0.01 per share, an expected term of 0.405 years, a risk-free interest rate of 4.33 % , expected volatility of 90 % , and a dividend yield of 0 % , the fair value of this warrant was determined to be $ 1,074,715 .55 as of July 2, 2025.

3 unchanged sentences

The warrant was fully settled upon this exercise and no longer remains outstanding.

ATM Sales Agreement

In June 2026, the Company entered into a sales agreement (the “Sales

Agreement”) with A.G.P./Alliance Global Partners (“A.G.P.”) under which the Company may offer and sell up to an estimated

$6,272,809 of shares of Common Stock from time to time through an “at the market” offering program under which A.G.P.

act as sales agent.

Pursuant to the Sales Agreement, the Company has agreed to pay A.G.P.

a commission of 3.25% of the aggregate gross

proceeds from any shares of Common Stock sold by A.G.P.

The Company has no obligation to sell any shares under the Sales Agreement and

may at any time suspend solicitation and offers under the Sales Agreement.

During the six months ended June 30, 2026, the Company did

not sell any shares of Common Stock pursuant to the Sales Agreement.

Stock-Based Compensation

On April 29, 2025, the Company entered into Director Agreements with two independent directors, pursuant to which each director is entitled to receive 100,000 shares of Common Stock, provided they remain a director for one year from the effective date of the Director Agreements.

The grant date for these equity awards was April 29, 2025, with a one-year service period ending on April 29, 2026.

Director Equity Fees

2025, the Company entered into director agreements with two independent directors, pursuant to which each director is entitled to receive

100,000 shares of Common Stock, provided they remain a director for one year from the effective date of the director agreements.

grant date for these equity awards was April 29, 2025, with a one-year service period ending on April 29, 2026.

Compensation expense is recognized on a straight-line basis over the service period.

For the three months ended March 31, 2026, the Company recognized $46,000 of stock-based compensation expense related to these awards, representing the portion of the service period completed during the three months ended March 31, 2026.

For the six months ended June 30, 2026, the Company recognized $ 61,333 of stock-based compensation expense related to these awards, representing the portion of the service period completed during the six months ended June 30, 2026.

This amount is recorded as an increase to additional paid-in capital and is included in general and administrative expenses in the consolidated statements of operations.

On May 5, 2026, upon the completion of the requisite service period, the Company issued an aggregate of 200,000 shares of Common Stock to the two directors in settlement of these awards.

The issuance was recorded as an increase to common stock of $ 2,000 (representing the par value of $ 0.01 per share), with a corresponding reduction to additional paid-in capital of $ 2,000 .

The $ 2,000 reduction to additional paid-in capital represents the net effect of reclassifying the accumulated stock-based compensation expense previously recognized in additional paid-in capital upon the issuance of the shares.

The following table summarizes the stock-based compensation expense for the director equity fees by line item in the consolidated statements of operations and comprehensive income (loss):

Schedule of stock-based compensation expense

Three Months Ended

Six Months Ended

General and administrative

2025 Equity Incentive Plan

On October 27, 2025, the Company’s stockholders approved the 2025 Equity Incentive Plan (the “2025 Plan”), which authorized 1,394,230 shares of Common Stock for issuance to employees, directors, and other eligible participants.

The 2025 Plan permits the grant of stock options, stock appreciation rights (“SARs”), restricted stock, restricted stock units (“RSUs”), and other stock-based awards.

On May 12, 2026 (the “Grant Date”), the Company granted an aggregate of 585,288 RSUs under the 2025 Plan to two officers and six business partners in exchange for their future services.

The RSUs granted vest in three annual tranches on May 12, 2027, May 12, 2028, and May 12, 2029, subject to the grantee’s continued service through each applicable vesting date.

The fair value of the RSUs was determined based on the closing price of the Company’s common stock on the Grant Date, which was $ 6.81 per share.

The aggregate grant date fair value of the RSUs was approximately $ 3.99 million.

For employee awards, compensation cost is recognized using the graded vesting attribution method over the requisite service period for each separate vesting tranche.

For non-employee awards, compensation cost is recognized on a straight-line basis over the three-year service period as a whole.

The following table summarizes the stock-based compensation expense for the 2025 Plan by line item in the consolidated statements of operations and comprehensive income (loss):

Schedule of stock-based compensation expense

Three Months Ended

Six Months Ended

Selling and marketing

General and administrative

Total stock-based compensation expense

As of June 30, 2026, there was approximately $ 3.7 million of unrecognized compensation cost related to these RSUs, which is expected to be recognized over a weighted-average period of approximately 2.43 years.

(13) SUBSEQUENT EVENTS

The Company has evaluated subsequent events from March 31, 2026 through April 30, 2026, the date that the unaudited condensed consolidated financial statements were issued, and has determined that there are no additional events requiring recognition or disclosure in the financial statements except for the events as disclosed below:

On April 20, 2026, we relocated our principal executive offices from Hong Kong to 3-33, 2-chome Utajima, Nishiyodogawa District, Osaka, Japan.

The Company has evaluated subsequent events from June 30, 2026 through August 14, 2026, the date that the unaudited condensed consolidated financial statements were issued, and has determined that there are no additional events requiring recognition or disclosure in the financial statements.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements