What changed in this filing

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Item 1. Financial Statements

2023-08-14 compared with 2023-05-11 · 245 added, 262 removed, 104 unchanged (83% of the section changed)

2 unchanged sentences

UNAUDITED FINANCIAL STATEMENTS

Balance Sheets as of March 31, 2023 (unaudited) and December 31, 2022

Balance Sheets as of June 30, 2023 (unaudited) and December 31, 2022

Statements of Operations

3 unchanged sentences

ASSET ENTITIES INC.

Balance Sheets

Current Assets

Accounts receivable, net

Prepaid expenses

18 unchanged sentences

Additional paid in capital

Subscription receivable

Accumulated deficit

1 unchanged sentence

Total Stockholders’ Equity

TOTAL LIABILITIES

AND STOCKHOLDERS’ EQUITY

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY

The accompanying notes are an integral part

3 unchanged sentences

Three Months Ended

Six months ended

Operating expenses

6 unchanged sentences

( 2,392,308 )

$ ( 1,321,057 )

$ ( 245,139 )

$ ( 2,392,308 )

$ ( 329,339 )

Loss per share of common stock - basic and diluted

4 unchanged sentences

Statement of Stockholders’

Three months ended March 31, 2023

Preferred Stock

For the six months ended June 30, 2023:

A Common Stock

B Common Stock

Balance - December

$ ( 627,118 )

Class B common stock and warrant issued

Class B common stock issued as restricted stock awards

Class B common stock and warrant

Class B Common stock issued

for restricted stock awards

( 1,071,251 )

2 unchanged sentences

$ ( 1,698,369 )

Three months ended March 31, 2022

Preferred Stock

Retained earnings

Balance, December 31, 2021

Class B Common stock issued

for restricted stock awards

( 1,321,057 )

Subscription received

Balance, March 31, 2022

( 1,321,057 )

- June 30, 2023

$ ( 3,019,426 )

For the six months ended June 30, 2022:

– December 31, 2021

$ ( 225,976 )

– March 31, 2022

$ ( 150,976 )

from Class A Common Stock to Class B Common Stock

B Common Stock issued

- June 30, 2022

$ ( 311,202 )

The accompanying notes are an integral part

2 unchanged sentences

Statements of Cash Flows

Three months ended

Six months ended

CASH FLOWS FROM OPERATING ACTIVITIES

$ ( 2,392,308 )

$ ( 329,339 )

Adjustments to reconcile net loss to net cash used in operating activities:

6 unchanged sentences

Net cash used in operating activities

( 1,966,045 )

CASH FLOWS FROM FINANCING ACTIVITIES

Class B common stock subscription proceeds received, net

Deferred offering costs

Net cash provided by financing activities

Net increase (decrease) in cash

Net change in cash

Cash at beginning of period

3 unchanged sentences

Cash paid for interest

NON CASH INVESTING AND FINANCING ACTIVITIES

Conversion from Class A to Class B common stock

The accompanying notes are an integral part

2 unchanged sentences

NOTES TO FINANCIAL

March 31, 2023

Organization, Description of

Business and Liquidity

Asset Entities Inc.

June 30, 2023

Organization, Description of Business and Liquidity

Asset Entities

“we”, “us” or the “Company”), began operations as a general partnership in August 2020 and formed

Assets Entities Limited Liability Company in the state of California on October 20, 2020.

The financial statements reflect the operations

of the Company from inception of the general partnership.

On March 15, 2022, the Company filed Articles of Merger to register and incorporate

with the state of Nevada and changed the company name to Asset Entities Inc.

On March 9, 2022, the Company filed Articles

of Incorporation with the state of Nevada to authorize the Company to issue 250,000,000 shares, consisting of 10,000,000 shares

of Class A Common Stock, $ 0.0001 par value per share (“Class A Common”), 190,000,000 shares of Class B Common

stock, $ 0.0001 par value per share (“Class B Common”), and 50,000,000 shares of Preferred Stock, $ 0.0001 par

value (the “Preferred Stock”).

On March 28, 2022, all 51,250,000 units

of the previously outstanding membership interests were exchanged for 9,756,000 shares of Class A Common Stock and 244,000 shares

of Class B Common Stock.

Description of Business

Asset Entities is an Internet company providing

social media marketing, content delivery, and development and design services across Discord, TikTok, and other social media platforms.

Based on the rapid growth of our Discord servers and social media following, we have developed three categories of services.

provide subscription upgrades to premium content on our investment education and entertainment servers on Discord.

Second, we codevelop

and execute influencer social media and marketing campaigns for clients.

Third, we design, develop and manage Discord servers for clients

under our “AE.360.DDM” brand.

(“Asset Entities”, “we”, “us” or the “Company”), began operations as a general partnership

in August 2020 and formed Assets Entities Limited Liability Company in the state of California on October 20, 2020.

The financial statements

reflect the operations of the Company from inception of the general partnership.

On March 15, 2022, the Company filed Articles of Merger

to register and incorporate with the state of Nevada and changed the company name to Asset Entities Inc.

9, 2022, the Company filed Articles of Incorporation with the state of Nevada to authorize the Company to issue 250,000,000 shares,

consisting of 10,000,000 shares of Class A Common Stock, $ 0.0001 par value per share (“Class A Common”), 190,000,000 shares

of Class B Common stock, $ 0.0001 par value per share (“Class B Common”), and 50,000,000 shares of Preferred

Stock, $ 0.0001 par value (the “Preferred Stock”).

28, 2022, all 51,250,000 units of the previously outstanding membership interests were exchanged for 9,756,000 shares

of Class A Common Stock and 244,000 shares of Class B Common Stock.

Asset Entities

is an Internet company providing social media marketing, content delivery, and development and design services across Discord, TikTok,

and other social media platforms.

Based on the rapid growth of our Discord servers and social media following, we have developed three

categories of services.

First, we provide subscription upgrades to premium content on our investment education and entertainment servers

Second, we codevelop and execute influencer social media and marketing campaigns for clients.

Third, we design, develop and

manage Discord servers for clients under our “AE.360.DDM” brand.

Our AE.360.DDM service was just released in December 2021.

All of these services – our

Discord investment education and entertainment, social media and marketing, and AE.360.DDM services – are therefore based on our

effective use of Discord in combination with ongoing social media outreach on TikTok, Facebook, Twitter, Instagram, and YouTube.

The Company had an accumulated deficit of $ 1,698,369 as

of March 31, 2023 and a net loss of $ 1,071,251 during the three months ended March 31, 2023.

However, in February 2023, the Company

completed an equity offering which generated net proceeds of $ 6.6 million.

Consequently, the Company’s existing cash resources

and the cash received from the equity offering are expected to provide sufficient funds to carry out the Company’s planned operations

through the next twelve (12) months.

Summary of Significant Accounting

Basis of Presentation

The Company prepares

its financial statements in accordance with rules and regulations of the U.S.

All of these services – our Discord investment education and entertainment, social media and marketing, and AE.360.DDM services

– are therefore based on our effective use of Discord in combination with ongoing social media outreach on TikTok, Facebook, Twitter,

Instagram, and YouTube.

had an accumulated deficit of $ 3,019,426 as of June 30, 2023 and a net loss of $ 2,392,308

during the six months ended June 30, 2023.

However, in February 2023, the Company completed an equity offering which generated net proceeds

of $ 6.6 million.

Consequently, the Company’s existing cash resources and the cash received from the equity offering are expected

to provide sufficient funds to carry out the Company’s planned operations through the next twelve (12) months.

Summary of Significant Accounting Policies

of Presentation

prepares its financial statements in accordance with rules and regulations of the U.S.

Securities and Exchange Commission (“SEC”)

5 unchanged sentences

opinion, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included.

results for the three months ended March 31, 2023, are not necessarily indicative of the results for the full year.

While management

of the Company believes that the disclosures presented herein are adequate and not misleading, these interim financial statements should

be read in conjunction with the audited financial statements and the footnotes thereto for the year ended December 31, 2022, contained

in the Company’s Form 10-K filed on March 31, 2023.

Use of Estimates

The preparation of financial statements in conformity

with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure

of contingent assets and liabilities at the date of the financial statements and the reported amounts of expenses during the reporting

Some of these judgments can be subjective and complex, and, consequently, actual results may differ from these estimates.

Cash and Cash Equivalents

For purposes of balance sheet presentation and

reporting of cash flows, the Company considers all unrestricted demand deposits, money market funds and highly liquid debt instruments

with an original maturity of less than 90 days to be cash and cash equivalents.

The Company had no cash equivalents at March 31, 2023

and December 31, 2022.

Periodically, the Company may carry cash balances

at financial institutions more than the federally insured limit of $ 250,000 per institution.

The amount in excess of the FDIC insurance

as of March 31, 2023, was approximately $ 5.7 million.

The Company has not experienced losses on account balances and management believes,

based upon the quality of the financial institutions, that the credit risk with regard to these deposits is not significant.

Accounts Receivable

Accounts receivable are recorded in accordance

with ASC 310, “Receivables.” Accounts receivable are recorded at the invoiced amount and do not bear interest.

The allowance

for doubtful accounts is the Company’s best estimate of the amount of probable credit losses in its existing accounts receivable.

The Company had accounts receivable of $ 7,995 and recorded specific allowance for doubtful accounts of $ 5,000 as of March 31,

2023 to account for the delinquency related to one specific transaction.

Based on management’s estimate under the expected credit

loss model and based on all other accounts being current and settled, the Company has not deemed it necessary to make any additional

general provision for doubtful accounts at the time of this report.

To measure expected credit losses, accounts receivable are grouped

based on shared risk characteristics and days past due.

Deferred Offering Costs

As of December 31, 2022, deferred offering costs

represent legal fees for preparation of any securities purchase agreements or current registration statement.

The Company records these

fees as a current asset that will be netted against gross proceeds received from any offering or placements.

In February 2023, the Company

issued common stock as initial public offering and recorded offering cost as additional paid in capital.

Fair Value Measurements

The Company uses a three-tier fair value hierarchy

to classify and disclose all assets and liabilities measured at fair value on a recurring basis, as well as assets and liabilities measured

at fair value on a non-recurring basis, in periods subsequent to their initial measurement.

The hierarchy requires the Company to use

observable inputs when available, and to minimize the use of unobservable inputs, when determining fair value.

The three tiers are defined

● Level 1—Observable inputs

that reflect quoted market prices (unadjusted) for identical assets or liabilities in active markets;

● Level 2—Observable inputs

other than quoted prices in active markets that are observable either directly or indirectly in the marketplace for identical or similar

assets and liabilities;

● Level 3—Unobservable

inputs that are supported by little or no market data, which require the Company to develop its own assumptions.

The Company’s financial instruments, including

cash, accounts receivable, prepaid expense, deferred offering costs and contract liabilities, other current liabilities are carried at

historical cost.

At March 31, 2023 and December 31, 2022, the carrying amounts of these instruments approximated their fair values because

of the short-term nature of these instruments.

Revenue Recognition

The Company recognizes revenue utilizing the

following steps:

results for the six months ended June 30, 2023, are not necessarily indicative of the results for the full year.

While management of the

Company believes that the disclosures presented herein are adequate and not misleading, these interim financial statements should be read

in conjunction with the audited financial statements and the footnotes thereto for the year ended December 31, 2022, contained in the

Company’s Form 10-K filed on June 30, 2023.

The preparation

of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts

of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported

amounts of expenses during the reporting period.

Some of these judgments can be subjective and complex, and, consequently, actual results

may differ from these estimates.

and Cash Equivalents

of balance sheet presentation and reporting of cash flows, the Company considers all unrestricted demand deposits, money market funds

and highly liquid debt instruments with an original maturity of less than 90 days to be cash and cash equivalents.

The Company had no

cash equivalents at June 30, 2023 and December 31, 2022.

Periodically,

the Company may carry cash balances at financial institutions more than the federally insured limit of $ 250,000 per institution.

The amount in excess of the FDIC insurance as of June 30, 2023, was approximately $ 4.8 million.

The Company has not experienced losses

on account balances and management believes, based upon the quality of the financial institutions, that the credit risk with regard to

these deposits is not significant.

receivable are recorded in accordance with ASC 310, “Receivables.” Accounts receivable are recorded at the invoiced amount

and do not bear interest.

The allowance for doubtful accounts is the Company’s best estimate of the amount of probable credit losses

in its existing accounts receivable.

The Company had no accounts receivable of as of June 30, 2023 to account for the delinquency related

to one specific transaction.

Based on management’s estimate under the expected credit loss model and based on all other accounts

being current and settled, the Company has not deemed it necessary to make any additional general provision for doubtful accounts at the

time of this report.

To measure expected credit losses, accounts receivable are grouped based on shared risk characteristics and days

Offering Costs

As of December

31, 2022, deferred offering costs represent legal fees for preparation of any securities purchase agreements or current registration statement.

The Company records these fees as a current asset that will be netted against gross proceeds received from any offering or placements.

In February 2023, the Company issued common stock as initial public offering and recorded offering cost as additional paid in capital.

Value Measurements

uses a three-tier fair value hierarchy to classify and disclose all assets and liabilities measured at fair value on a recurring basis,

as well as assets and liabilities measured at fair value on a non-recurring basis, in periods subsequent to their initial measurement.

The hierarchy requires the Company to use observable inputs when available, and to minimize the use of unobservable inputs, when determining

The three tiers are defined as follows:

1—Observable inputs that reflect quoted market prices (unadjusted) for identical assets or liabilities in active markets;

2—Observable inputs other than quoted prices in active markets that are observable either directly or indirectly in the marketplace

for identical or similar assets and liabilities;

3—Unobservable inputs that are supported by little or no market data, which require the Company to develop its own assumptions.

The Company’s

financial instruments, including cash, accounts receivable, prepaid expense, deferred offering costs and contract liabilities, other current

liabilities are carried at historical cost.

At June 30, 2023 and December 31, 2022, the carrying amounts of these instruments approximated

their fair values because of the short-term nature of these instruments.

recognizes revenue utilizing the following steps:

(i) Identify the contract, or contracts, with a customer;

(ii) Identify the performance obligations in the contract;

(ii) Identify the performance

obligations in the contract;

(iii) Determine the transaction price;

(iv) Allocate the transaction price to the performance obligations in the contract;

(v) Recognize

revenue when the Company satisfies a performance obligation.

(iv) Allocate the transaction price to the performance obligations

in the contract;

(v) Recognize revenue when the Company satisfies a performance obligation.

Subscriptions

Subscription revenue is related to a single performance

obligation that is recognized over time when earned.

Subscriptions are paid in advance and can be purchased on a monthly, quarterly,

or annual basis.

Any quarterly or annual subscription revenue is recognized as a contract liability expensed over the contracted

service period.

Revenue related to marketing campaign contracts

with customers are normally of a short duration, typically less than two weeks.

AE.360.DDM Contracts

Revenue related to AE.360.DDM contracts with

customers are normally of a short duration, typically less than one week.

Contract Liabilities

Contract liabilities consist of quarterly and

annual subscription revenue that have not been recognized.

As of March 31, 2023 and December 31, 2022, total contract liabilities were

$ 4,045 and $ 4,648 , respectively.

Contract liabilities are typically expected to be recognized to revenue over a period not to exceed

twelve (12) months.

Earnings per Share of Common Stock

The Company has adopted ASC Topic 260, “Earnings

per Share” which requires presentation of basic earnings per share on the face of the statements of operations for all

entities with complex capital structures and requires a reconciliation of the numerator and denominator of the basic earnings per share

In the accompanying financial statements, basic loss per share is computed by dividing net loss by the weighted average

number of shares of common stock outstanding during the year.

Diluted earnings per share is computed by dividing net income by the weighted

average number of shares of common stock and potentially dilutive outstanding shares of common stock during the period to reflect the

potential dilution that could occur from common stock issuable through contingent share arrangements, stock options and warrants unless

the result would be antidilutive.

The Company would account for the potential dilution from convertible securities using the as-if converted

revenue is related to a single performance obligation that is recognized over time when earned.

Subscriptions are paid in advance and

can be purchased on a monthly, quarterly, or annual basis.

Any quarterly or annual subscription revenue is recognized as a contract

liability expensed over the contracted service period.

related to marketing campaign contracts with customers are normally of a short duration, typically less than two weeks.

related to AE.360.DDM contracts with customers are normally of a short duration, typically less than one week.

liabilities consist of quarterly and annual subscription revenue that have not been recognized.

As of June 30, 2023 and December 31, 2022,

total contract liabilities were $ 24,874 and $ 4,648 , respectively.

Contract liabilities are typically expected to be recognized to

revenue over a period not to exceed twelve (12) months.

per Share of Common Stock

has adopted ASC Topic 260, “Earnings per Share” which requires presentation of basic earnings per share on

the face of the statements of operations for all entities with complex capital structures and requires a reconciliation of the numerator

and denominator of the basic earnings per share computation.

In the accompanying financial statements, basic loss per share is computed

by dividing net loss by the weighted average number of shares of common stock outstanding during the year.

Diluted earnings per share

is computed by dividing net income by the weighted average number of shares of common stock and potentially dilutive outstanding shares

of common stock during the period to reflect the potential dilution that could occur from common stock issuable through contingent share

arrangements, stock options and warrants unless the result would be antidilutive.

The Company would account for the potential dilution

from convertible securities using the as-if converted method.

The Company accounts for warrants and options using the treasury stock method.

As of March 31, 2023, dilutive potential common

shares include outstanding warrants.

As described in more detail above, the business

now conducted by the Company was operated as a partnership from August 1, 2020 until October 19, 2020, when it was reorganized as a limited

liability company, or LLC, and that LLC was merged into the Company on March 28, 2022.

Prior to that date, the partnership and the subsequent

LLC were not subject to federal income tax and all income, deductions, gains and losses were attributed to the partners or members.

The Company adopted FASB ASC 740, Income Taxes,

at its inception.

Under FASB ASC 740, deferred tax assets and liabilities are recognized for the future tax consequences attributable

to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases.

tax assets, including tax loss and credit carryforwards, and liabilities are measured using enacted tax rates expected to apply to taxable

income in the years in which those temporary differences are expected to be recovered or settled.

The effect on deferred tax assets and

liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.

Deferred income tax expense

represents the change during the period in the deferred tax assets and deferred tax liabilities.

The components of the deferred tax assets

and liabilities are individually classified as current and non-current based on their characteristics.

Deferred tax assets are reduced

by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax

assets will not be realized.

Related Parties

The Company follows ASC 850, “ Related

Party Disclosures ”, for the identification of related parties and disclosure of related party transactions and balances.

Commitments and Contingencies

The Company follows ASC 450-20, “Loss

Contingencies” , to report accounting for contingencies.

Liabilities for loss contingencies arising from claims, assessments,

litigation, fines and penalties and other sources are recorded when it is probable that a liability has been incurred and the amount

of the assessment can be reasonably estimated.

Recent Accounting Pronouncements

In June 2022, the FASB issued ASU 2022-03, ASC

Subtopic “Fair Value Measurement (Topic 820):

Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions”.

These amendments clarify that a contractual restriction on the sale of an equity security is not considered part of the unit of account

of the equity security and, therefore, is not considered in measuring fair value.

The amendments in this update are effective for public

business entities for fiscal years, including interim periods within those fiscal years, beginning after December 15, 2023.

Early adoption

is permitted.

The Company is currently assessing the impact of the adoption of this standard on its financial statements.

The Company has considered all other recently

issued accounting pronouncements and does not believe the adoption of such pronouncements will have a material impact on its financial

As of June 30, 2023, dilutive potential common shares include outstanding warrants.

in more detail above, the business now conducted by the Company was operated as a partnership from August 1, 2020 until October 19, 2020,

when it was reorganized as a limited liability company, or LLC, and that LLC was merged into the Company on March 28, 2022.

Prior to that

date, the partnership and the subsequent LLC were not subject to federal income tax and all income, deductions, gains and losses were

attributed to the partners or members.

adopted FASB ASC 740, Income Taxes, at its inception.

Under FASB ASC 740, deferred tax assets and liabilities are recognized for the future

tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their

respective tax bases.

Deferred tax assets, including tax loss and credit carryforwards, and liabilities are measured using enacted tax

rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.

effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment

Deferred income tax expense represents the change during the period in the deferred tax assets and deferred tax liabilities.

components of the deferred tax assets and liabilities are individually classified as current and non-current based on their characteristics.

Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion

or all of the deferred tax assets will not be realized.

follows ASC 850, “ Related Party Disclosures ”, for the identification of related parties and disclosure of related party

transactions and balances.

and Contingencies

follows ASC 450-20, “Loss Contingencies” , to report accounting for contingencies.

Liabilities for loss contingencies

arising from claims, assessments, litigation, fines and penalties and other sources are recorded when it is probable that a liability

has been incurred and the amount of the assessment can be reasonably estimated.

Accounting Pronouncements

2022, the FASB issued ASU 2022-03, ASC Subtopic “Fair Value Measurement (Topic 820):

Fair Value Measurement of Equity Securities

Subject to Contractual Sale Restrictions”.

These amendments clarify that a contractual restriction on the sale of an equity security

is not considered part of the unit of account of the equity security and, therefore, is not considered in measuring fair value.

The amendments

in this update are effective for public business entities for fiscal years, including interim periods within those fiscal years, beginning

after December 15, 2023.

Early adoption is permitted.

The Company is currently assessing the impact of the adoption of this standard on

its financial statements.

has considered all other recently issued accounting pronouncements and does not believe the adoption of such pronouncements will have

a material impact on its financial statements.

Stockholders’ Equity

Authorized Capital Stock

On March 9, 2022, the Company filed Articles

of Incorporation with the state of Nevada to authorize the Company to issue 250,000,000 shares, consisting of 10,000,000 shares

of Class A Common Stock, $ 0.0001 par value per share (“Class A Common”), 190,000,000 shares of Class B Common

stock, $ 0.0001 par value per share (“Class B Common”), and 50,000,000 shares of Preferred Stock, $ 0.0001 par

value (the “Preferred Stock”).

On March 28, 2022, all 51,250,000 units

of the previously outstanding membership interests were exchanged for 9,756,000 shares of Class A Common Stock and 244,000 shares

of Class B Common Stock.

Preferred Stock

The Company shall have the authority to issue

the shares of Preferred Stock in one or more series with such rights, preferences and designations as determined by the Board of Directors

of the Company.

Class A Common Stock

Each share of Class A Common Stock entitles the

holder to ten (10) votes, in person or proxy, on any matter on which an action of the stockholders of the Company is sought and is convertible

by the holder into one (1) share of Class B Common Stock.

The Company had 8,385,276 shares of

Class A Common Stock issued and outstanding as of March 31, 2023 and December 31, 2022.

Class B Common Stock

Each share of Class B Common Stock entitles the

holder to one (1) vote, in person or proxy, on any matter on which an action of the stockholders of the Company is sought.

On February 3, 2023, the Company closed an initial

public offering of its class B common stock.

The Company raised total gross proceeds of $ 7,500,000 in the offering, and after deducting

$ 884,880 of underwriting discounts and commissions, the non-accountable expense allowance, and other expenses from the offering,

the Company received net proceeds of $ 6,615,120 .

On February 7, 2023, the Company granted 1,411,000

shares of class B restricted stock awards (“RSA”) under the 2022 Equity Incentive Plan (“2022 Plan”) to directors

and executive officers, valued at $ 3,428,730 .

The Company had 5,275,724 and 2,364,724

shares of Class B Common Stock issued and outstanding as of March 31, 2023 and December 31, 2022, respectively.

Capital Stock

9, 2022, the Company filed Articles of Incorporation with the state of Nevada to authorize the Company to issue 250,000,000 shares,

consisting of 10,000,000 shares of Class A Common Stock, $ 0.0001 par value per share (“Class A Common”), 190,000,000 shares

of Class B Common stock, $ 0.0001 par value per share (“Class B Common”), and 50,000,000 shares of Preferred

Stock, $ 0.0001 par value (the “Preferred Stock”).

28, 2022, all 51,250,000 units of the previously outstanding membership interests were exchanged for 9,756,000 shares

of Class A Common Stock and 244,000 shares of Class B Common Stock.

shall have the authority to issue the shares of Preferred Stock in one or more series with such rights, preferences and designations as

determined by the Board of Directors of the Company.

A Common Stock

of Class A Common Stock entitles the holder to ten (10) votes, in person or proxy, on any matter on which an action of the stockholders

of the Company is sought and is convertible by the holder into one (1) share of Class B Common Stock.

had 8,385,276 shares of Class A Common Stock issued and outstanding as of June 30, 2023 and December 31, 2022.

B Common Stock

of Class B Common Stock entitles the holder to one (1) vote, in person or proxy, on any matter on which an action of the stockholders

of the Company is sought.

3, 2023, the Company closed an initial public offering of its class B common stock.

The Company raised total gross proceeds of $ 7,500,000 in

the offering, and after deducting $ 884,880 of underwriting discounts and commissions, the non-accountable expense allowance, and

other expenses from the offering, the Company received net proceeds of $ 6,615,120 .

six months ended June 30, 2023, the Company granted 1,511,000 shares of class B restricted stock awards (“RSA”)

under the 2022 Equity Incentive Plan (“2022 Plan”) to directors and executive officers, valued at $ 3,532,130 .

had 5,375,724 and 2,364,724 shares of Class B Common Stock issued and outstanding as of June 30, 2023 and December

31, 2022, respectively.

Equity Incentive Plan

The maximum number of shares of Class B Common

Stock that may be issued pursuant to awards granted under the 2022 Plan is 2,750,000 shares.

number of shares of Class B Common Stock that may be issued pursuant to awards granted under the 2022 Plan is 2,750,000 shares.

Awards that may be granted include:

Incentive Stock Options, or ISO (b) Non-statutory Stock Options, (c) Stock Appreciation Rights, (d) Restricted Stock, (e) Restricted

Stock Units, or RSUs, (f) Stock granted as a bonus or in lieu of another award, and (g) Performance Awards.

These awards offer us and

our shareholders the possibility of future value, depending on the long-term price appreciation of our Class B Common Stock and the award

holder’s continuing service with us.

The RSA shares to directors vest quarterly for

one year from the date of grantee’s appointment as a director.

The RSA shares to officers vest annually over three years from the

RSA shares are measured at fair market value on the date of grant and stock-based compensation expense is recognized as the

shares vest with a corresponding offset credited to additional paid-in-capital.

For the three months ended March 31, 2023, the Company

recorded stock-based compensation expense of $ 200,210 .

As of March 31, 2023, no RSA shares have vested.

On February 7, 2023, the Company issued 105,000 warrants

exercisable into 105,000 shares of the Company’s Class B Common Stock which is equal to 7 % of the aggregate number

of shares of Class B Common Stock sold in the above mentioned initial public offering.

These warrants carry an exercise price of $ 6.25 per

share, which is equal to 125 % of the public offering price, subject to adjustment, the warrants also include a cashless exercise

these warrants may be exercised at any time for five years following the date of issuance.

A summary of activity for three months ended

March 31, 2023, follows:

(a) Incentive Stock Options, or ISO (b) Non-statutory Stock Options, (c) Stock Appreciation Rights,

(d) Restricted Stock, (e) Restricted Stock Units, or RSUs, (f) Stock granted as a bonus or in lieu of another award, and (g) Performance

These awards offer us and our shareholders the possibility of future value, depending on the long-term price appreciation of our

Class B Common Stock and the award holder’s continuing service with us.

shares to directors vest quarterly for one year from the date of grantee’s appointment as a director.

The RSA shares to officers

vest annually over three years from the grant date.

RSA shares are measured at fair market value on the date of grant and stock-based

compensation expense is recognized as the shares vest with a corresponding offset credited to additional paid-in-capital.

months ended June 30, 2023, the Company recorded stock-based compensation expense of $ 603,925 .

As of June 30, 2023, 118,000 RSA shares

7, 2023, the Company issued 105,000 warrants exercisable into 105,000 shares of the Company’s Class B Common

Stock which is equal to 7 % of the aggregate number of shares of Class B Common Stock sold in the above mentioned initial public offering.

These warrants carry an exercise price of $ 6.25 per share, which is equal to 125 % of the public offering price, subject to adjustment,

the warrants also include a cashless exercise provision;

these warrants may be exercised at any time for five years following

the date of issuance.

of activity for six months ended June 30, 2023, follows:

Exercise Price

Outstanding, December 31, 2022

Outstanding, March 31, 2023

All of the outstanding warrants are exercisable

as of March 31, 2023.

The intrinsic value of the warrants as of March 31, 2023, is $ 0 .

Related Party Transactions

During the three months ended March 31, 2023

and 2022, the Company paid management fees to officers and directors totaling $ 749,864 and $ 58,854 , respectively.

Outstanding, June 30, 2023

outstanding warrants are exercisable as of June 30, 2023.

The intrinsic value of the warrants as of June 30, 2023, is $ 0 .

Subsequent Events

Management evaluated all events from the date

of the balance sheet, which was March 31, 2023 through May 11, 2023, which is the date these financial statements were available to

Based on our evaluation no material events have occurred that require disclosure.

On June 30, 2023, the

Company entered into a Closing Agreement (the “Closing Agreement”) with Triton Funds LP, a Delaware limited partnership (“Triton”).

Subject to the terms of the Closing Agreement, the Company had an option to deliver a closing notice (the “Closing Notice”)

to Triton at any time on or before September 30, 2023, pursuant to which Triton would have been obligated to purchase shares of Class

B Common Stock of the Company with an aggregate value of $ 1,000,000 .

On August 1, 2023, the Company and Triton entered

into an Amended and Restated Closing Agreement (the “Amended and Restated Closing Agreement”).

Subject to the terms of the

Amended and Restated Closing Agreement, the Company has an option to deliver the Closing Notice to Triton at any time on or before September

30, 2023, pursuant to which Triton will be obligated to purchase certain securities of the Company with an aggregate value of $ 1,000,000 .

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