KIDZ AI Inc. 10-Q

Item 1 – Financial Statements CLASSOVER HOLDINGS, INC. AND SUBSIDIARIES UNAUDITED INTERIM CONDENSED CONSOLIDATED BALANCE SHEETS (EXPRESSED IN US DOLLARS) March 31, December 31, 2025 2024 (Unaudited) ASSETS Current assets: Cash $ 80,416 $ 50,682 Prepayments and other current assets 3,438 15,557 Due from related parties 1,830 8,251 Total current assets 85,684 74,490 Noncurrent assets: Property and equipment, net 202,396 218,617 Operating lease right-of-use assets, net 1,477,021 1,552,242 Deposit 5,000 - Total noncurrent assets 1,684,417 1,770,859 TOTAL ASSETS $ 1,770,101 $ 1,845,349 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 7,730 $ 7,200 Interest payable 19,072 19,072 Deferred revenues 2,615,047 2,719,091 Due to related parties 615,910 249,545 Operating lease liabilities - current 238,119 314,685 Accrued liabilities and other payables 99,586 63,415 Total current liabilities 3,595,464 3,373,008 Noncurrent liabilities: Convertible notes payable 1,750,000 1,750,000 Operating lease liabilities - noncurrent 1,240,998 1,241,495 Total noncurrent liabilities 2,990,998 2,991,495 TOTAL LIABILITIES 6,586,462 6,364,503 Commitments and contingencies - - Stockholders' equity: Preferred Stock, $ 0.0001 par value, 10,000,000 shares authorized, -Series A, 1,000,000 shares issued and outstanding as of March 31, 2025 and December 31, 2024* 100 100 -Series B, no shares issued and outstanding as of March 31, 2025 and December 31, 2024* - - Class A Common Stock, $ 0.0001 par value, 50,000,000 shares authorized, 6,535,014 shares issued and outstanding as of March 31, 2025 and December 31, 2024* 654 654 Class B Common Stock $ 0.0001 par value, 450,000,000 shares authorized, 1,531,864 shares issued and outstanding as of March 31, 2025 and December 31, 2024* 153 153 Additional paid-in capital 79,663 79,663 Accumulated deficit ( 4,896,931 ) ( 4,599,724 ) Total stockholders' (deficit) ( 4,816,361 ) ( 4,519,154 ) TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY $ 1,770,101 $ 1,845,349 * Giving retroactive effect to reverse recapitalization effected on April 4, 2025 See accompanying notes to the consolidated financial statements. 3 Table of Contents CLASSOVER HOLDINGS, INC. AND SUBSIDIARIES UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (EXPRESSED IN US DOLLARS) For the Three Months Ended March 31, 2025 2024 (Unaudited) (Unaudited) Revenues: Service revenues $ 816,016 $ 785,285 Consulting revenues (related party) - 100,000 Total revenues 816,016 885,285 Cost of revenues: Cost of revenues 410,650 410,149 Total cost of revenues 410,650 410,149 Gross profit 405,366 475,136 Operating expenses: Selling and marketing 121,427 112,859 General and administrative 573,539 508,902 Research and development 6,307 18,492 Total operating expenses 701,273 640,253 (Loss) from operations ( 295,907 ) ( 165,117 ) Interest and other expense ( 1,300 ) ( 1,972 ) (Loss) before provision for income taxes ( 297,207 ) ( 167,089 ) Provision for income taxes - - Net (loss) $ ( 297,207 ) $ ( 167,089 ) Weighted average shares outstanding-Preferred Stock-Series A* 1,000,000 1,000,000 Basic and diluted net income per share-Preferred Stock-Series A* $ ( 32,779 ) $ ( 18,492 ) Weighted average shares outstanding-Class A Common Stock* 6,535,014 6,535,014 Basic and diluted net income per share-Class A Common Stock* $ ( 214,214 ) $ ( 120,846 ) Weighted average shares outstanding-Class B Common Stock* 1,531,864 1,500,662 Basic and diluted net income per share-Class B Common Stock* $ ( 50,214 ) $ ( 27,750 ) * Giving retroactive effect to reverse recapitalization effected on April 4, 2025 See accompanying notes to the consolidated financial statements. 4 Table of Contents CLASSOVER HOLDINGS, INC. AND SUBSIDIARIES UNAUDITED INTERIM CONDENSED CONSOLIDATED BALANCE SHEETS (EXPRESSED IN US DOLLARS) Preferred Stock-Series A* Preferred Stock-Series A amount Class A Common Stock* Class A Common Stock amount Class B Common Stock* Class B Common Stock amount Additional Paid-in Capital Accumulated deficit Total Balance at December 31, 2023 1,000,000 $ 100 6,535,014 $ 654 1,130,691 $ 113 $ 54,583 $ ( 3,756,676 ) $ ( 3,701,226 ) Stock compensation issued for consulting services - - - - 401,173 40 25,080 - 25,120 Net loss - - - - - - - ( 167,089 ) ( 167,089 ) Balance at March 31, 2024 (unaudited) 1,000,000 $ 100 6,535,014 $ 654 1,531,864 $ 153 $ 79,663 $ ( 3,923,765 ) $ ( 3,843,195 ) Balance at December 31, 2024 1,000,000 $ 100 6,535,014 $ 654 1,531,864 $ 153 79,663 ( 4,599,724 ) ( 4,519,154 ) Net loss - - - - - - - ( 297,207 ) ( 297,207 ) Balance at March 31, 2025 (unaudited) 1,000,000 $ 100 6,535,014 $ 654 1,531,864 $ 153 $ 79,663 $ ( 4,896,931 ) $ ( 4,816,361 ) * Giving retroactive effect to reverse recapitalization effected on April 4, 2025 See accompanying notes to the consolidated financial statements. 5 Table of Contents CLASSOVER HOLDINGS, INC. AND SUBSIDIARIES UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (EXPRESSED IN US DOLLARS) For the Three Months Ended March 31, 2025 2024 (Unaudited) (Unaudited) Cash flows from operating activities: Net (loss) $ ( 297,207 ) $ ( 167,089 ) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 16,221 9,756 Amortization of operating lease right-of-use assets 75,221 72,304 Stock compensation issued for consulting services - 25,120 Changes in operating assets and liabilities: Due from related parties 6,421 ( 5,703 ) Prepayments and other current assets 12,119 ( 1,058 ) Deposit ( 5,000 ) - Accounts payable 530 750 Interest payable - 1,551 Deferred revenues ( 104,044 ) 38,350 Operating lease liabilities ( 77,063 ) ( 72,340 ) Due to related parties 48,365 ( 88,144 ) Accrued liabilities and other payables 36,171 ( 3,182 ) Net cash (used in) operating activities ( 288,266 ) ( 189,685 ) Cash flows from investing activities: Purchases of property and equipment - ( 128,554 ) Net cash (used in) investing activities - ( 128,554 ) Cash flows from financing activities: Proceeds from convertible notes payable - 100,000 Proceeds from promissory notes related party 318,000 - Net cash provided by financing activities 318,000 100,000 Net (decrease) increase in cash 29,734 ( 218,239 ) Cash, beginning of period 50,682 787,652 Cash, end of period $ 80,416 $ 569,413 Supplemental disclosure of cash flow information: Cash paid during the period for: Interest $ - $ - Income taxes $ - $ - See accompanying notes to the consolidated financial statements. 6 Table of Contents CLASSOVER HOLDINGS, INC. AND SUBSIDIARIES NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS THREETHREE MONTHS ENDED March 31, 2025 AND 2024 (UNAUDITED) Note 1. Description of the Business and Basis of Presentation Classover Holdings, Inc. (the “Company”) is a company incorporated on May 2, 2024 under Delaware law as a wholly owned subsidiary of Battery Future Acquisition Corp., a Cayman Islands exempted Company ( “BFAC”), to effectuate a business combination transaction. On April 4, 2025, upon the closing of the business combination (the “Closing”), BFAC Merger Sub 1 Corp. (“Merger Sub 1”) merged with and into BFAC (the “Reorganization Merger”), with BFAC being the surviving corporation of the Reorganization Merger and becoming a wholly-owned subsidiary of the Company, and then, immediately following the consummation of the Reorganization Merger, BFAC Merger Sub 2 Corp. (“Merger Sub 2”) merged with and into Class Over Inc. (“Classover DE”), with Classover DE being the surviving corporation of the acquisition merger and becoming a wholly-owned subsidiary of the Company. The merger is considered as a reverse recapitalization in accordance with Accounting Standards Codification (“ASC”) 805-40. Under this method of accounting, BFAC will be treated as the “acquired” company for financial reporting purposes. This determination is primarily based on Classover DE stockholders comprising a majority of the voting power of the Company, directors appointed by Classover DE constituting majority of the Company’s board of directors, Classover DE’s operations prior to the merger comprising the only ongoing operations of the Company, and Classover DE’s senior management comprising all of the senior management of the Company. Accordingly, for accounting purposes, the financial statements of the Company will represent a continuation of the financial statements of Classover DE with the merger treated as the equivalent of Classover DE issuing stock for the net assets of BFAC, accompanied by a recapitalization. The net assets of BFAC will be stated at historical cost, with no goodwill or other intangible assets recorded. Operations prior to the merger will be presented as those of Classover DE in financial statements of the Company. The consolidation of the Company and its subsidiaries have been accounted for at historical cost and prepared on the basis as if the aforementioned transactions had become effective as of the beginning of the first period presented in the accompanying consolidated financial statements in accordance with ASC 805-50-45-5. All share and per share data has been retroactively restated to reflect the current capital structure of the Company. Classover DE was formed on March 16, 2022 as a holding company in Delaware, which was 100% controlled by the sole owner Hui Luo. Class Over Inc. (“Classover NJ”) was formed on June 16, 2020 in New Jersey, which was 100% controlled by the sole owner Hui Luo. Classover NJ is an online enrichment program that offers over 20 courses taught by certified instructors. It caters to children aged 4 to 17, providing personalized attention and a supportive learning environment. On April 19, 2022, Classover DE entered into a stock transfer agreement with Classover NJ. After the share exchange, Classover DE owned 100 % of Classover NJ. Basis of Presentation The accompanying unaudited interim condensed consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and applicable rules and regulations of the Securities and Exchange Commission (“SEC”), regarding financial reporting, and include all normal and recurring adjustments that management of the Company considers necessary for a fair presentation of its financial position and operating results. The results of operations for the three months ended March 31, 2025 are not necessarily indicative of results to be expected for any other interim period or for the full year of 2025. Accordingly, these statements should be read in conjunction with the Company’s audited financial statements and notes thereto as of and for the years ended December 31, 2024 and 2023. Note 2. Summary of Significant Accounting Policies Accounting Principles —The consolidated financial statements and accompanying notes are prepared in accordance with generally accepted accounting principles in the United States of America (GAAP). 7 Table of Contents Principles of C onsolidation —The consolidated financial statements include the financial statements of the Company and its subsidiary. All significant intercompany transactions and balances between the Company and its subsidiary are eliminated upon consolidation. Liquidity and Going Concern— As of March 31, 2025, the Company had cash of $ 80,416 , current liabilities of $ 3,595,464 , a working capital deficit of $ 3,509,780 , and a stockholders’ deficit of $ 4,816,361 . For the three months ended March 31, 2025 and 2024, the Company had losses of $ 297,207 and $ 167,089 , respectively. These factors among others, raise substantial doubt about the ability of the Company to continue as a going concern. The Company completed business combination with BFAC on April 4, 2025 and received $ 1,075,936 from BFAC’s trust account. Additionally, the Company received an aggregate of $ 4,700,000 from a PIPE investor in connection with the business combination, and entered into an equity purchase facility agreement (the “EPFA”) with Solana Strategic Holdings LLC (the “Solana”) for up to an aggregate of $ 400 million in newly issued shares of the Company’s Class B common stock. Management of the Company has evaluated the mitigation plans and determined that the subsequent financing is sufficient to support its continuous operations and to meet its payment obligations when liabilities fall due within the next twelve months from the date of issuance of these combined and consolidated financial statements. Accordingly, the Company’s combined and consolidated financial statements are prepared on going concern basis, which assumes that the Company will continue in operation for the foreseeable future and, accordingly, will be able to realize its assets and discharge its liabilities in the normal course of operations as they come due. Use of Estimates— The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Significant estimates and assumptions reflected in the consolidated financial statements include, but are not limited to, useful lives of property and equipment, valuation of deferred tax assets and liabilities, operating lease right-of-use assets and liabilities and deferred revenue. Actual results may differ materially from such estimates. Management believes that the estimates, and judgments upon which they rely, are reasonable based upon information available to them at the time that these estimates and judgments are made. To the extent that there are material differences between these estimates and actual results, the Company’s consolidated financial statements will be affected. Revenue Recognition— The Company has three predominant sources of revenue: time-based subscriptions, credit-based subscriptions to our online courses, and marketing consulting services. Subscription Revenue Customers are required to pay in advance to enroll for courses. For time-based subscriptions, we are obligated to provide students with unlimited access to our course for a specified term. For credit-based subscriptions, we offer our students the flexibility to take courses at any time up to the limit of their prepaid balance. Each contract of the online education service is accounted for as a single performance obligation which is satisfied ratably over the service period. We charge fixed fees for the services contracts. The proceeds collected are initially recorded as deferred revenue. For credit-based subscriptions, revenues are recognized proportionately as the courses are delivered. For time-based subscriptions, revenues are recognized on a straight-line basis over the subscription period from the date in which the students activate the courses to the date of expiration. Refunds are provided to the students who decide to withdraw from the subscribed courses within the course offer period and a proportional refund is based on the percentage of untaken courses to the total courses purchased. Historically, the Company has not experienced material refunds. Consulting Revenue The Company also generates revenue from consulting services. The Company’s consulting program is designed to teach startup founders within the education sector how to market their product, refine their course content, infrastructure, and business models, achieve market fit and operating efficiency, and scale the startup into a high growth education business. The Company’s performance obligation is to provide consulting services to startup founders for a specific term. Customers are required to prepay the full consulting service charge, which is fixed and determinable, at contract inception to secure program spot, and revenue is recognized over time on a straight-line basis through the service term. 8 Table of Contents Principal Agent Considerations — The Company makes its application available to be downloaded through third-party digital distribution service providers. Users who intend to enroll our courses are directed to third-party payment platforms before completing the subscription with us. The Company evaluates the purchases via third-party payment processors to determine whether its revenues should be reported gross or net of fees retained by the payment processor. The Company is the principal in the transaction with the end user as a result of controlling, hosting, and integrating the delivery of the virtual items to the end user. The Company records revenue on a gross basis as a principal and records fees paid to third-party payment platforms as cost of revenues. Deferred Revenue — Deferred revenue mostly consists of payments we receive in advance of revenue recognition. Revenue is recognized over the life of the subscription, or as the delivery of the pre-purchased class sessions occurs. The Company classifies deferred revenue as a short-term liability on the balance sheets as the longest subscription plan is for twelve months and the remaining sessions are expected to be delivered within twelve months or less. Cost of Revenue— Cost of revenue predominantly consists of streaming services, third-party payment processing fees, and wages for teachers and certain employees engaged in producing the revenue. Referral Incentives – Referral incentives are course credits that we offer to our customers for referring new customers. The incentives are expensed as incurred when the credits are consummated and the corresponding expenses, which are independent educators’ compensation allocated to service the referral credits, are included in selling expenses Cash and Cash Equivalents— Cash consists primarily of cash on hand and bank deposits. The Company maintains cash deposits with financial institutions that may exceed federally insured limits at times. The following table shows the breakout between cash on hand and bank deposits. March 31, 2025 December 31, 2024 Cash on hand $ 3,144 $ 3,144 Bank deposits 77,272 47,538 Total cash shown in the Statement of Cash Flows $ 80,416 $ 50,682 Deposits Deposits consist of credit card security deposits, which paid to the bank upon the account open. Management regularly reviews the age of these deposits and changes in payment trends and records an allowance when management believes collection of amounts due are at risk. Accounts considered uncollectible are written off against the allowance after exhaustive efforts at collection is made. As of March 31,2025, there was no allowance for deposits. Property and Equipment— Property and equipment primarily includes computers and furniture stated at cost, less accumulated depreciation. Depreciation is computed on the straight-line method over 5 years. Leasehold improvements are amortized over the lesser of the life of the lease or the estimated useful life of the leasehold improvements. Costs related to maintenance and repairs that do not extend the assets’ useful life are expensed as incurred. Income Taxes— The Company provides for income taxes in accordance with the asset and liability method. Under this method, deferred tax assets and liabilities are recognized for future tax consequences attributable to differences between the carrying amounts of existing assets and liabilities for financial reporting and for income tax reporting. The deferred tax asset or liability represents the future tax return consequences of those differences, which will either be taxable or deductible when the assets and liabilities are recovered or settled. A valuation allowance is established for any deferred tax asset for which it is determined that it is more likely than not that some or all of the deferred tax assets will not be realized. 9 Table of Contents The Company utilizes a two-step approach to recognizing and measuring uncertain tax positions accounted for in accordance with the asset and liability method. The first step is to evaluate the tax position for recognition by determining whether evidence indicates that it is more likely than not that a position will be sustained if examined by a taxing authority. The second step is to measure the tax benefit as the largest amount that is 50% likely of being realized upon settlement with a taxing authority. There were no amounts recorded at March 31, 2025 and December 31, 2024 related to uncertain tax positions. Fair Value of Financial Instruments —The Company accounts for certain assets and liabilities at fair value in accordance with the accounting guidance applicable to fair value measurements and disclosures. The carrying values of cash, accounts payable, deferred revenues, interest payable, due to related parties, and accrued liabilities and other payables are deemed to be reasonable estimates of their fair values because of their short-term nature. Research and Development Costs — Research and development expenses are expensed as incurred and include compensation-related expenses to the outsourced subcontractors for maintenance of our online learning platform. Segment I nformation and G eographic D ata —FASB ASC 280, Segment Reporting, establishes standards for reporting information about operating segments on a basis consistent with the Company’s internal organizational structure as well as information about geographical areas, business segments and major customers in consolidated financial statements for details on the Company’s business segments. The Company uses the management approach to determine reportable operating segments. The management approach considers the internal organization and reporting used by the Company’s chief operating decision maker (“CODM”) for making decisions, allocating resources and assessing performance. The Company’s CODM has been identified as the CEO, who reviews consolidated results when making decisions about allocating resources and assessing performance of the Company. Based on management’s assessment, the Company determined that it has only one operating segment and therefore one reportable segment as defined by ASC 280. Advertising C osts— Advertising costs amounted to $ 7,402 and $ 20,349 for the three months ended March 31, 2025 and 2024, respectively. Advertising costs are expensed as incurred and included in selling expenses. Contingencies— The Company records accruals for contingencies and legal proceedings expected to be incurred in connection with a loss contingency when it is probable that a liability has been incurred and the amount can be reasonably estimated. If a loss contingency is not probable, but is reasonably possible, or is probable but cannot be estimated, the nature of the contingent liability, together with an estimate of the range of possible loss, would be disclosed. Operating L eases— Effective January 1, 2022, the Company adopted ASU 2016-02, “Leases” (Topic 842), and elected the practical expedients that does not require the Company to reassess: (1) whether any expired or existing contracts are, or contain, leases, (2) lease classification for any expired or existing leases and (3) initial direct costs for any expired or existing leases. For lease terms of twelve months or fewer, a lessee is permitted to make an accounting policy election not to recognize lease assets and liabilities. The Company also adopted the practical expedient that allows lessees to treat the lease and non-lease components of a lease as a single lease component. On November 1, 2022, the Company recognized approximately $ 2.2 million of right of use (“ROU”) assets and operating lease liabilities based on the present value of the future minimum rental payments of the sublease with related party Dream Go for its office space expiring on October 31, 2029, using an incremental borrowing rate of 4 %. The Company determines if a contract contains a lease at inception. US GAAP requires that the Company’s leases be evaluated and classified as operating or finance leases for financial reporting purposes. The classification evaluation begins at the commencement date and the lease term used in the evaluation includes the non-cancellable period for which the Company has the right to use the underlying asset, together with renewal option periods when the exercise of the renewal option is reasonably certain and failure to exercise such option would result in an economic penalty. The Company’s real estate sublease has been classified as an operating lease. 10 Table of Contents Since the implicit rate for the Company’s sublease was not readily determinable, the Company used its incremental borrowing rate based on the information available at the commencement date in determining the present value of lease payments. The incremental borrowing rate is the rate of interest that the Company would have to pay to borrow, on a collateralized basis, an amount equal to the lease payments, in a similar economic environment and over a similar term. The Company generally considers the economic life of its operating lease ROU assets to be comparable to the useful life of similar owned assets. The Company has elected the short-term lease exception; therefore operating lease ROU assets and liabilities do not include leases with a lease term of twelve months or less. Our sublease does not provide a residual guarantee. The operating lease ROU asset also excludes lease incentives. Lease expense is recognized on a straight-line basis over the lease term. The Company reviews the impairment of its ROU assets consistent with the approach applied for its other long-lived assets. The Company reviews the recoverability of its long-lived assets when events or changes in circumstances occur that indicate that the carrying value of the asset may not be recoverable. The assessment of possible impairment is based on its ability to recover the carrying value of the asset from the expected undiscounted future pre-tax cash flows of the related operations. The Company has elected to include the carrying amount of operating lease liabilities in any tested asset group and includes the associated operating lease payments in the undiscounted future pre-tax cash flows. Earnings (loss) per S hare The Company computes earnings (loss) per share (“EPS”) in accordance with FASB ASC 260, “Earnings per Share”. ASC 260 requires companies to present basic and diluted EPS. Basic EPS is measured as net income (loss) divided by the weighted average ordinary shares outstanding for the period. Diluted EPS presents the diluted effect on a per share basis of the potential ordinary shares (e.g., convertible securities, options and warrants) as if they had been converted at the beginning of the periods presented, or issuance date, if later. Potential ordinary shares that have an anti-dilutive effect (i.e., those that increase income per share or decrease loss per share) are excluded from the calculation of diluted EPS. For the three months ended March 31, 2025 and 2024, the convertible notes payable were excluded from the calculation of diluted EPS as their inclusion would have been anti-dilutive. Recently Adopted Accounting Pronouncements— In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (ASU 2016-13) , which modifies the measurement of expected credit losses of certain financial instruments. This new guidance was effective for private companies for fiscal years beginning after December 15, 2021, but early adoption was permitted. The adoption of this guidance did not have an impact on our consolidated financial statements and related disclosures. Note 3. Property and Equipment, net Property and equipment consists of the following as of March 31, 2025 and December 31, 2024: March 31, 2025 December 31, 2024 Computers and electronic equipment $ 55,532 $ 55,532 Furniture and fixtures 91,018 91,018 Leasehold improvements 177,865 177,865 Total property and equipment 324,415 324,415 Less: accumulated depreciation ( 122,019 ) ( 105,798 ) Total property and equipment, net $ 202,396 $ 218,617 11 Table of Contents Depreciation expense was $ 16,221 and $ 9,756 for the three months ended March 31, 2025 and 2024, respectively, and is included within general and administrative expenses in the Company’s statements of operations. Note 4. Leases On November 1, 2022, the Company entered into an operating sublease with a related party Dream Go for its office space located at 450 7 th Avenue, Suite 905, New York, NY 10123 expiring on October 31, 2029. On November 1, 2022, the Company recognized approximately $ 2.2 million of right of use (“ROU”) assets and operating lease liabilities based on the present value of the future minimum rental payments of the sublease, using an incremental borrowing rate of 4 %. As of March 31, 2025, the Company’s operating sublease had a remaining lease term of approximately 4.6 years. For the three months ended March 31, 2025 and 2024, rent expense for the operating sublease was $ 90,253 and $ 90,253 , respectively. The Company’s sublease obligations as of March 31, 2025 are presented below: Year ending December 31, 2025 $ 278,126 2026 242,211 2027 388,790 2028 407,405 Remaining 310,114 Total future lease payments 1,626,647 Less: Interest ( 147,530 ) Present value of lease liabilities $ 1,479,117 Future amortization of the Company’s ROU assets is presented below: Year ended December 31, 2025 $ 230,255 2026 314,154 2027 326,161 2028 340,709 Remaining 265,743 Total $ 1,477,021 Subleases On November 1, 2022, the Company entered into sublease agreements with related parties (1) Dream Legal Group, Inc., (2) Tigerless Health, Inc., and (3) First Cover, Inc. to sub rent portions of its office space located at 450 7th Avenue, Suite 905, New York, NY 10123. These subleases are month-to-month leases starting on November 1, 2022 and ending upon a notice of 30 days from either party. On July 1, 2024, the Company terminated the subleases with Tigerless Health, Inc, and First Cover, Inc. Sublease income is recognized on the straight line basis over the lease term. Billed and uncollected operating lease receivables will be included in due from related parties which are stated at their estimated net realizable value. For the three months ended March 31, 2025 and 2024, the Company’s income from these three subleases totaled $ 24,854 and $ 15,000 (which has been reflected as a reduction of general and administrative expenses in the accompanying consolidated Statements of Operations). 12 Table of Contents Note 5. Accrued Liabilities and Other Payables Accrued liabilities and other payables consisted of the following: March 31, 2025 December 31, 2024 Credit card payable $ 92,809 $ 58,269 Payroll tax payable 6,777 5,146 Total $ 99,586 $ 63,415 Note 6. Income Taxes The Company had no income tax provision for the three months ended March 31, 2025 and 2024. The Company has the following deferred tax assets (liabilities) as of March 31, 2025 and December 31 2024: March 31, 2025 December 31, 2024 Net operating loss carryforwards $ 1,045,502 $ 965,019 Other expense temporary difference 6,593 2,813 Total deferred tax assets 1,052,095 967,833 Deferred revenue ( 21,849 ) - Deferred tax liability- Depreciation ( 2,263 ) ( 2,263 ) Allowance ( 1,027,983 ) ( 965,570 ) Net deferred taxes $ - $ - The Company evaluated the recoverable amounts of deferred tax assets, and provided a valuation allowance to the extent that future taxable profits will not be available against which the net operating loss and temporary differences can be utilized. A valuation allowance is provided against deferred tax assets when the Company determines that it is more likely than not that the deferred tax assets will not be utilized in the future. In making such determination, the Company considered factors including future taxable income exclusive of reversing temporary differences and tax loss carry forwards. The Company has provided a full valuation allowance for the net deferred tax asset as it is not more likely than not that the asset will be realized. The provision for income taxes differs from the amounts computed by applying the federal statutory rate as follows for the periods ended March 31, 2025 and 2024: March 31, 2025 March 31, 2024 Federal statutory rate 21.0 % 21.0 % Valuation allowance ( 21.0 ) ( 21.0 ) Effective income tax rate 0.0 % 0.0 % The effective tax rate for the three months ended March 31, 2025 and 2024 is less than the statutory rate primarily as a result of the valuation allowance for net deferred tax assets. No uncertain tax benefits have been recorded for the three months ended March 31, 2025 and 2024 13 Table of Contents On March 27, 2020, the “Coronavirus Aid, Relief and Economic Security (CARES) Act” (the “Act”) was signed into law. The Act includes provisions relating to refundable payroll tax credits, deferment of the employer portion of certain payroll taxes, net operating loss carryback periods, alternative minimum tax credit refunds, modifications to the net interest deduction limitations and technical corrections to tax depreciation methods for qualified improvement property. The Company analyzed the provisions of the Act and determined there was no significant impact to its income taxes for the periods presented. As of March 31, 2025, the Company has approximately $ 4,979,000 in federal net operating loss carryforwards. These loss carryforwards have an indefinite life. The Company’s tax years 2022 and forward generally remain subject to examination by federal and state tax authorities. Note 7. Related parties As of March 31, 2025 and December 31, 2024, the Company has related party transactions with the following affiliates and affiliated entities: Related Party Name Relationship Hui Luo Majority owner of the Company Liu Yi Spouse of Hui Luo Genius Kid Class LLC An entity controlled by Yi Liu Dream Legal Group, Inc An entity controlled by Hui Luo Ideal Force LLC An entity controlled by Yi Liu Dreamgo Inc. An entity controlled by Hui Luo Due from related parties March 31, 2025 December 31, 2024 Dream Legal Group, Inc. 1,830 8,251 Total due from related parties $ 1,830 $ 8,251 Due to related parties March 31, 2025 December 31, 2024 Yi Liu- accrued interest on promissory note $ 161 $ — Luo Hui-accrued interest on promissory note 3,466 2,166 Luo Hui – promissory note, due on August 15, 2025; at a rate of 4% per annum 130,000 130,000 Luo Hui – promissory note, due on March 31, 2026; at a rate of 4% per annum 40,000 - Yi Liu – promissory note, due on March 17, 2026; at a rate of 4% per annum 100,000 - Dream Legal Group, Inc-rent income received in advance 29,800 - Due to Dream Go Inc.* 312,483 117,379 Total due to related parties - current $ 615,910 $ 249,545 *During three months ended March 31, 2025, Dream Go Inc advanced $to the Company for operating expenses which is interest free and due on demand. 14 Table of Contents The following table represents related party transactions for the three months ended March 31, 2025 and 2024: Three Months Ended Name Business Purpose of Transaction March 31, 2025 March 31, 2024 Dream Legal Group, Inc Sublease income $ 23,471 $ 15,000 Dreamgo Inc. Rent expense 90,253 90,253 Genius Kid Class LLC Consulting revenue — 100,000 Yi Liu Interest expense 161 - Luo Hui Interest expense 1,300 - Sublease income has been reflected as a reduction of general and administrative expenses in the accompanying consolidated statements of operations. As of March 31, 2025 and December 31, 2024, the Company has the following ROU assets and operating lease liabilities recognized from related party under ASC 842 (Note 4): March 31, 2025 December 31, 2024 Dreamgo Inc. ROU assets $ 1,477,021 $ 1,552,242 Dreamgo Inc. Short term obligation under operating leases $ ( 238,119 ) $ ( 314,685 ) Dreamgo Inc. Long term obligation under operating leases $ ( 1,240,998 ) $ ( 1,241,495 ) Note 8. Convertible Notes Payable Promissory convertible notes are unsecured obligations subordinated to the Company’s senior debts, if any. These notes have a principal balance that accrues simple interest at a rate of 0.44% per annum and matures five years from the date of issuance. The conversion of these notes into equity occurs at the earliest of: 1) the closing of the next qualified equity financing, which is the next sale of preferred stock for purpose of raising capital following the issuance of convertible notes; or 2) at the election of the requisite noteholders following a corporate transaction, which occurs at i) the sale, transfer, or disposition of all or substantially all of the Company’s assets; or ii) the consummation of a merger or consolidation of the Company with or into entity; or iii) the transfer of more than 50 % of outstanding voting securities of the Company; or 3) at the maturity. The conversion price is calculated based on: 1) the product of 80% and the lowest per share purchase price of preferred stock issued in the next equity financing ; or 2) the quotient resulting from dividing a conversion valuation cap by the fully diluted capitalization of the Company immediately prior to the closing of a corporate transaction; or 3) the quotient resulting from dividing a conversion valuation cap by the fully diluted capitalization of the Company immediately prior to maturity. 15 Table of Contents Convertible notes payable is comprised of the following as of March 31, 2025 and December 31, 2024: Borrower No. Amount Interest Rate Conversion Cap Closing Date Maturity Date March 31, 2025 December 31, 2024 1 $ 250,000 0.44 % $ 3,000,000 2/7/2022 2/7/2027 $ 250,000 $ 250,000 2 62,500 0.44 % 3,000,000 2/7/2022 2/7/2027 62,500 62,500 3 62,500 0.44 % 3,000,000 2/7/2022 2/7/2027 62,500 62,500 4 35,000 0.44 % 3,000,000 2/7/2022 2/7/2027 35,000 35,000 5 90,000 0.44 % 3,000,000 2/7/2022 2/7/2027 90,000 90,000 6 50,000 0.44 % 3,000,000 2/7/2022 2/7/2027 50,000 50,000 7 50,000 0.44 % 3,000,000 2/7/2022 2/7/2027 50,000 50,000 8 10,000 0.44 % 3,000,000 2/7/2022 2/7/2027 10,000 10,000 9 50,000 0.44 % 3,000,000 2/7/2022 2/7/2027 50,000 50,000 10 30,000 0.44 % 3,000,000 2/7/2022 2/7/2027 30,000 30,000 11 100,000 0.44 % 3,000,000 2/7/2022 2/7/2027 100,000 100,000 12 50,000 0.44 % 3,000,000 2/7/2022 2/7/2027 50,000 50,000 13 20,000 0.44 % 3,000,000 2/7/2022 2/7/2027 20,000 20,000 14 20,000 0.44 % 3,000,000 2/7/2022 2/7/2027 20,000 20,000 15 20,000 0.44 % 3,000,000 3/3/2022 3/3/2027 20,000 20,000 16 18,176 0.44 % 3,000,000 2/7/2022 2/7/2027 18,176 18,176 17 53,015 0.44 % 3,000,000 2/7/2022 2/7/2027 53,015 53,015 18 53,015 0.44 % 3,000,000 2/7/2022 2/7/2027 53,015 53,015 19 27,265 0.44 % 3,000,000 2/7/2022 2/7/2027 27,265 27,265 20 98,529 0.44 % 3,000,000 2/7/2022 2/7/2027 98,529 98,529 21 50,000 0.44 % 3,000,000 4/7/2022 4/7/2027 50,000 50,000 22 200,000 0.44 % 5,000,000 12/6/2023 12/6/2028 200,000 200,000 23 50,000 0.44 % 5,000,000 3/15/2024 3/15/2029 50,000 50,000 24 50,000 0.44 % 5,000,000 3/15/2024 3/15/2029 50,000 50,000 25 87,500 0.44 % 3,000,000 2/7/2022 2/7/2027 87,500 87,500 26 62,500 0.44 % 3,000,000 2/7/2022 2/7/2027 62,500 62,500 27 100,000 0.44 % 3,000,000 2/7/2022 2/7/2027 100,000 100,000 Totals $ 1,750,000 $ 1,750,000 $ 1,750,000 Note 9. Segment information and revenue analysis The Company follows ASC 280, Segment Reporting, which requires that companies disclose segment data based on how management makes decisions about allocating resources to each segment and evaluating their performances. The Company has one reporting segment. The Company’s chief operating decision maker has been identified as the chief executive officer, who reviews consolidated results when making decisions about allocating resources and assessing performance of the Company and hence the Company has only one reportable segment. The Company does not distinguish between markets or segments for the purpose of internal reporting. Disaggregated information of revenues by stream are as follows: Three Months Ended March 31, 2025 March 31, 2024 Revenues: Time-based subscriptions $ 253,238 $ 263,903 Credit-based subscriptions 562,778 521,382 Marketing revenues (related party) — 100,000 Total revenues $ 816,016 $ 885,285 16 Table of Contents Note 10. Commitments and Contingencies Acquisition Agreement On May 12, 2024, the Company executed an Agreement and Plan of Merger with BFAC, BFAC Merger Sub 1 Corp. and BFAC Merger Sub 2 Corp. and Classover DE. The agreement provides for the Company’s acquisition of 100 % of the issued and outstanding equity of Classover DE in exchange for the issuance of 1) an aggregate of 6,534,014 shares of Class A common stock and 2) an aggregate of 5,964,986 shares of Class B common stock and 3) an aggregate of 1,000,000 shares of Series A preferred stock. Legal Proceedings The Company may be involved in various claims and legal actions arising in the ordinary course of business. The Company establishes an accrued liability for legal proceedings only when those matters present loss contingencies that are both probable and reasonably estimable. At March 31, 2025, the Company was not involved in any material legal proceedings regarding claims or legal actions against the Company. Note 11 — Equity The total number of shares which the Company shall have the authority to issue is five hundred and ten million ( 510,000,000 ) shares, which include 50,000,000 shares of Class A common stock, par value $ 0.0001 per share, 450,000,000 shares of Class B common stock, par value $ 0.0001 per share, and 10,000,000 shares of preferred stock. The Preferred Stock authorized by this Certificate of Incorporation may be issued in series. Holders of shares of Common Stock will exclusively possess all voting power with respect to the Company and are entitled vote on all matters submitted to the Company’s stockholders for their vote or approval. Each share of Class A Common Stock has the voting power of twenty-five votes and each share of Class B Common Stock has the voting power of one vote. As a result of the Merger as described in Note 13, all share and per share data has been retroactively restated to reflect the current capital structure of the Company. As of March 31, 2025 and December 31, 2024, 1,000,000 shares of Series A Preferred Stock, 6,535,014 shares of Class A Common Stock and 1,531,864 shares of Class B Common Shares were issued and outstanding. Note 1 2 . Concentration of risk Credit risk —The Company’s concentration of credit risk relates to financial institutions holding the Company’s cash. The Company maintains cash deposits with financial institutions that may exceed federally insured limits at times. The insurance coverage for cash deposits at each bank is $ 250,000 . As of March 31, 2025, the cash balance in each financial institution is insured by the FDIC. Management believes that the financial institutions that hold the Company’s deposits are financially credit worthy and, accordingly, minimal credit risk exists with respect to those balances. Customer concentration ris k—For the three months ended March 31, 2025 and 2024, no customer accounted for more than 10 % of the Company’s total revenues. Vendor concentration risk —For the three months ended March 31, 2025 and 2024, no vendor accounted for over 10 % of the Company’s total purchases. 17 Table of Contents Note 1 3 . Subsequent Events As described above, on May 12, 2024, the Company entered into an Agreement and Plan of Merger (the “Business Combination Agreement”) by and among the Company, BFAC, Merger Sub 1, Merger Sub 2 and Classover DE. Pursuant to the Business Combination Agreement, upon the closing of the Business Combination (the “Closing”), Merger Sub 1 was to merge with and into BFAC (the “Reorganization Merger”), with BFAC being the surviving corporation of the Reorganization Merger and becoming a wholly-owned subsidiary of the Company, and then, immediately following the consummation of the Reorganization Merger, Merger Sub 2 was to merge with and into Classover DE (the “Acquisition Merger”, and together with the Reorganization Merger the “Mergers”), with Classover DE being the surviving corporation of the Acquisition Merger and becoming a wholly-owned subsidiary of the Company. On April 4, 2025 (the “Closing Date”), the parties consummated the Mergers and the transactions contemplated by the Business Combination Agreement. The Company issued to the former security holders of Classover DE an aggregate of 6,535,014 shares of Class A Common Stock, 5,964,986 shares of Class B Common Stock and 1,000,000 shares of Series A preferred stock in exchange for their equity interests in the Company. In addition, at Closing, the Company issued to a certain investor (the “PIPE Investor”) ( i) 2,400 shares of Series B preferred stock, par value $0.0001 per share (“Series B Preferred Stock”), (ii) a warrant to purchase 1,600 shares of Series B Preferred Stock (the “First Preferred Warrant”), and (iii) a warrant to purchase 1,000 shares of Series B Preferred Stock (the “Second Preferred Warrant,” and together with the First Preferred Warrant, the “Preferred Warrants”), pursuant to the terms of a PIPE Agreement, dated November 22, 2024 (the “PIPE Agreement”), entered into by the Company, BFAC, Classover DE and the PIPE Investor . At the Closing, the PIPE Investor exercised the First Preferred Warrant to purchase 1,000 shares of Series B Preferred Stock. The PIPE Agreement and the Preferred Warrants together provide for the issuance of up to an aggregate of 5,000 shares of Series B Preferred Stock, with 3,400 shares issued at Closing for $3,230,000 (net of original issue discount), and the remaining shares issuable upon the exercise of the Second Preferred Warrant at later dates, subject to certain conditions, for an aggregate exercise price of up to $ 1,520,000 (net of original issue discount). In connection with the PIPE, certain former shareholders of the Company transferred an aggregate of 1,000,000 shares of Class B Common Stock to the PIPE Investor. On April 18, 2025, the PIPE investor exercised the remaining Preferred Warrants. Accordingly, the Company issued 1,600 Series B Preferred Stock in exchange for an aggregate net proceed of $ 1,520,000 . On April 19, 2025, the Company entered into a settlement agreement with Benjamin Securities, Inc. (the “Benjamin”) to settle an aggregate of $ 525,000 outstanding advisory services fees by repaying a cash payment of $ 95,000 and an issuance of 190,000 shares of Class B common stock of the Company. On April 21, 2025, the Company issued an aggregate of 820,000 shares of restricted Class B common stock of the Company to two employees under the Company’s 2024 Long-Term Incentive Equity Plan. On April 30, 2025, the Company entered into an Equity Purchase Facility Agreement (the “EPFA”) with Solana Strategic Holdings LLC (“SSH”). Pursuant to the EPFA, subject to certain conditions precedent contained therein, the Company has the right to issue and sell to SSH, and SSH shall purchase from the Company, up to an aggregate of $400 million in newly issued shares of the Company’s Class B common stock; provided, however, that the Company will not issue a number of Shares in excess of 19.9% of the issued and outstanding shares of the Company on the date of the EPFA without first obtaining stockholder approval for such issuance as required by Nasdaq rules. The Company will control the timing and amount of any sales of Shares to the Investor pursuant to the EPFA. In connection with the EPFA, the Company has adopted a Solana-centric digital asset treasury strategy pursuant to which the Company will, subject to certain limitations, allocate a significant portion of the proceeds received from the sale of any shares under the EPFA to the purchasing, long-term holding, and staking of Solana tokens, including operating Solana validators to earn staking rewards and contribute to the network’s security and decentralization and reinvesting staking yields to further expand the Company’s Solana holdings and strengthen its engagement within the Solana ecosystem. The Company has engaged Chaince Securities LLC as advisor to assist it with this treasury strategy and issued an aggregate of 100,000 shares of restricted Class B common stock of the Company as consideration for such services. From May 2, 2025, to May 8, 2025, certain shareholders of Series A Preferred Stocks converted an aggregate of 410,777 Series A Preferred Stock to equal number of Class B Common Stock on a one-to-one basis. 18 Table of Contents