UPEXI, INC. 10-K

Item 7A. Quantitative and Qualitative Disclosures About Market Risk. As a “smaller reporting company”, the Company is not required to provide the information required by this Item. 48 Table of Contents Item 8. Consolidated Financial Statements and Supplementary Data. UPEXI INC. INDEX TO CONSOLIDATED FINANCIAL STATEMENTS YEARS ENDED JUNE 30, 2025 AND 2024 Page Report of Independent Registered Public Accounting Firm PCAOB ID 1808 F-1 Consolidated Financial Statements Consolidated Balance Sheets F-2 Consolidated Statements of Operations F-3 Consolidated Statements of Stockholders’ (Deficit) Equity F-4 Consolidated Statements of Cash Flows F-5 Notes to Consolidated Financial Statements F-6 49 Table of Contents Board of Directors and Shareholders Upexi, Inc. Report of Independent Registered Public Accounting Firm Opinion on the Consolidated Financial Statements We have audited the accompanying consolidated balance sheets of Upexi, Inc. (the “Company”) as of June 30, 2025 and 2024, the related consolidated statements of operations, stockholders’ equity, and cash flows for the years then ended, and related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of June 30, 2025 and 2024, and the results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America. Basis for Opinion These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion. /s/ GBQ Partners LLC We have served as the Company’s auditor since 2024. Columbus, Ohio September 24, 2025 F-1 Table of Contents UPEXI, INC. CONSOLIDATED BALANCE SHEETS June 30, June 30, 2025 2024 ASSETS Current assets Cash $ 2,975,150 $ 661,415 Accounts receivable, net 157,515 606,885 Inventory, net 1,152,870 1,431,556 Due from VitaMedica transition 228,017 212,358 Prepaid expenses and other receivables 350,836 502,188 Current digital assets at fair value 49,913,655 - Assets available for sale - Building - 4,005,516 Purchase price receivable - VitaMedica 2,000,000 2,000,000 Purchase price receivable - E-core - 2,000,000 Total current assets 56,778,043 11,419,918 Property and equipment, net 2,052,573 2,356,556 Intangible assets, net 163,113 239,871 Goodwill 848,854 848,854 Deferred tax asset 5,948,858 5,948,858 Digital assets at fair value, net of current 56,083,525 - Other assets 192,123 278,435 Right-of-use asset, net 1,739,755 2,418,596 Total other assets 67,028,801 12,091,170 Total assets $ 123,806,844 $ 23,511,088 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities Accounts payable $ 1,039,370 $ 481,647 Accrued compensation 3,470,296 1,098,856 Deferred revenue 13,155 235,255 Accrued liabilities 356,064 736,407 Accrued interest 792,449 476,018 Acquisition payable 260,652 413,152 Related party advances, net - 100,000 Current portion of note payable 560,000 - Short-term treasury debt 20,000,000 - Current portion of Cygnet subsidiary notes payable 5,380,910 5,447,565 Note payable on building for sale - 2,634,538 Current portion of operating lease payable 691,010 1,031,714 Total current liabilities 32,563,906 12,655,152 Operating lease payable, net of current portion 1,145,440 1,732,606 Related party note payable - 500,000 Note payable - 557,429 Convertible notes payable - 1,550,000 Total long-term liabilities 1,145,440 4,340,035 Commitments and contingencies Stockholders' equity Preferred stock, $ 0.00001 par value, 10,000,000 shares authorized, and 150,000 and 25,000 shares issued and outstanding, respectively 2 1 Common stock, $ 0.00001 par value, 300,000,000 shares authorized, and 38,270,571 and 1,045,429 shares issued and outstanding, respectively 383 11 Additional paid in capital 150,640,935 53,375,502 Accumulated deficit ( 60,543,822 ) ( 46,859,613 ) Total stockholders' equity attributable to Upexi, Inc. 90,097,498 6,515,901 Total stockholders' equity 90,097,498 6,515,901 Total liabilities and stockholders' equity $ 123,806,844 $ 23,511,088 The accompanying notes are an integral part of these consolidated financial statements. F-2 Table of Contents UPEXI, INC. CONSOLIDATED STATEMENTS OF OPERATIONS Year Ended June 30, 2025 2024 Revenue Revenue $ 14,826,336 $ 26,000,652 Digital asset revenue 985,009 - Total revenue 15,811,345 26,000,652 Cost of revenue 4,943,305 13,176,073 Gross profit 10,868,040 12,824,579 Operating expenses Sales and marketing 4,001,094 5,989,727 Distribution costs 4,691,964 8,611,702 General and administrative expenses 11,935,582 6,771,937 Realized and unrealized (gain) loss on digital assets ( 105,474 ) - Share-based compensation 2,356,862 1,169,843 Amortization of acquired intangible assets 76,758 2,410,431 Depreciation 681,000 1,268,355 Impairment of long-lived asset - building - 336,434 Loss on the sale / abandonment of assets in relocation - 569,195 Impairment of intangible assets and goodwill - 7,869,425 Lease impairment (gain on settlement), Delray Beach facility ( 269,994 ) 289,969 23,367,792 35,287,018 Loss from operations ( 12,499,752 ) ( 22,462,439 ) Other income (expense), net Other ( 10,743 ) ( 16,443 ) Interest (expense) income, net ( 1,173,714 ) ( 3,124,723 ) Other income (expense), net ( 1,184,457 ) ( 3,141,166 ) Loss on operations before income tax ( 13,684,209 ) ( 25,603,605 ) Income tax benefit (expense) - 332,101 - 332,101 Net loss from continuing operations ( 13,684,209 ) ( 25,271,504 ) Gain (loss) from the sale of: Interactive Offers - 237,670 VitaMedica - 1,948,538 E-Core - ( 1,737,326 ) - 448,882 Income (loss) on discontinued operations Infusionz 71,976 Interactive offers - ( 187,003 ) VitaMedica - 213,636 E-core - 1,065,575 Income (loss) income from discontinued operations - 1,164,184 Net income (loss) attributable to Upexi, Inc. $ ( 13,684,209 ) ( 23,658,438 ) Basic income (loss) per share: Income (loss) per share from continuing operations $ ( 1.73 ) $ ( 24.60 ) (Loss) income per share from discontinued operations $ - $ 1.13 Total income (loss) per share attributable to Upexi shareholders $ ( 1.73 ) $ ( 23.03 ) Diluted income (loss) per share: Income (loss) per share from continuing operations $ ( 1.73 ) $ ( 24.60 ) (Loss) income per share from discontinued operations $ - $ 1.13 Total income (loss) per share attributable to Upexi shareholders $ ( 1.73 ) $ ( 23.03 ) Basic weighted average shares outstanding 7,914,268 1,027,232 Fully diluted weighted average shares outstanding 7,914,268 1,027,232 The accompanying notes are an integral part of these consolidated financial statements. F-3 Table of Contents UPEXI, INC. CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY Total Preferred Stock Preferred Stock Common Stock Common Stock Additional Paid Accumulated Non-controlling Stockholders' Shares* Par* ** Shares* Par* ** In Capital Deficit Interest Equity 2024 Balance, June 30, 2023 25,000 $ 1 1,010,843 $ 10 $ 51,542,933 $ ( 23,201,175 ) $ ( 505,147 ) $ 27,836,623 Stock based compensation, restricted stock grant - - 5,000 - 212,748 - - 212,748 Stock based compensation, amortization of stock options - - - - 957,095 - - 957,095 Issuance of stock and equity for purchase of Cygnet - - 4,505 - 162,727 505,147 667,873 Issuance of stock for conversion of debt - - 25,081 1 499,999 500,000 Net loss - - - - - ( 23,658,438 ) - ( 23,658,438 ) Balance, June 30, 2024 25,000 $ 1 1,045,429 $ 11 $ 53,375,502 $ ( 46,859,613 ) $ - $ 6,515,901 Stock based compensation, restricted stock grant - - - - 2,106,862 - - 2,106,862 Issuance of preferred series A stock 125,000 1 - - 324,999 - - 325,000 Issuance of stock for the conversion of debt - - 742,896 7 1,749,993 - - 1,750,000 Capitalized interest related to convertible debt - - - - 27,891 27,891 Issuance of stock for the exercise of warrant on convertible debt - - 83,334 1 249,999 - - 250,000 Issuance of stock for the cashless exercise of options - - 7,278 - - - - - Issuance of stock for vested restricted stock grants - - 102,583 1 ( 1 ) - - - Issuance of stock for services - - 19,577 1 249,999 - - 250,000 Issuance of stock for the exercise of cashless warrants - - 299,091 3 ( 3 ) - - - Issuance of common stock - - 35,970,383 359 92,555,694 - - 92,556,053 Net loss - - - - - ( 13,684,209 ) - ( 13,684,209 ) Balance, June 30, 2025 150,000 $ 2 38,270,571 $ 383 $ 150,640,935 $ ( 60,543,822 ) $ - $ 90,097,498 * Common stock has been restated to reflect the 1 for 20 reverse split ** Common stock par value has been adjusted to $0.00001 The accompanying notes are an integral part of these consolidated financial statements. F-4 Table of Contents UPEXI, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS Year ended June 30, 2025 2024 Cash flows from operating activities Net loss from operations $ ( 13,684,209 ) $ ( 23,658,438 ) Adjustments to reconcile net loss from continuing operations to net cash (used in) provided by operating activities: Depreciation and amortization 757,758 3,678,786 Unrealized (gain) loss on digital assets ( 101,332 ) - Digital asset revenue ( 985,009 ) - Gain on the sale of VitaMedica and income from discontinued operations - ( 1,948,538 ) Loss on the sale of New England Technology - 1,737,326 Amortization of loan costs 30,462 115,787 Amortization of consideration discount - 1,112,676 Impairment of goodwill and intangible assets - 7,869,425 Inventory write-off 748,874 1,812,319 Loss on impairment of building - 336,434 Loss on sale of assets related to relocation of facility - 569,195 Gain on sale of interactive offers - ( 237,670 ) Loss on the disposal of assets 10,743 - Bad debt reserve for Amazon receivable 933,950 - Reduction of acquisition payable ( 152,500 ) - Issuance of stock for services 250,000 - Lease impairment (gain on settlement) ( 269,994 ) - Change in deferred tax asset - ( 344,802 ) Stock based compensation 2,106,862 1,169,843 Changes in assets and liabilities, net of acquired amounts Accounts receivable ( 484,580 ) 675,709 Inventory ( 470,188 ) 2,651,252 Prepaid expenses and other assets 222,005 106,611 Operating lease payable 20,965 302,050 Accounts payable and accrued liabilities 2,865,251 ( 944,020 ) Deferred revenue ( 222,100 ) 101,305 Net cash provided by operating activities - Continuing Operations ( 8,423,042 ) ( 4,894,750 ) Net cash provided by (used in) operating activities - Discontinued Operations - 4,793,374 Net cash provided by operating activities ( 8,423,042 ) ( 101,376 ) Cash flows from investing activities Proceeds from the sale of the building, net 4,005,516 - Proceeds from the sale of VitaMedica, Inc. - 2,100,000 Proceeds from the sale of E-core 2,000,000 - Proceeds from the sale of Interactive Offers, net of liabilities paid - 203,025 Acquisition and sale of digital assets, net ( 104,910,839 ) - Acquisition of Cygnet Online LLC, net - ( 539,348 ) Acquisition of property and equipment ( 387,760 ) ( 932,565 ) Net cash provided by (used in) investing activities - Continuing Operations ( 99,293,083 ) 831,112 Net cash (used in) provided by investing activities - Discontinued Operations - ( 4,206,823 ) Net cash provided by (used in) investing activities ( 99,293,083 ) ( 3,375,711 ) Cash flows from financing activities Payment on acquisition notes payable ( 66,655 ) ( 246,761 ) Payment on convertible note ( 150,000 ) - Proceeds from issuance of short-term debt 20,000,000 - Proceeds from warrant exercise 250,000 - Proceeds from issuance of stock 92,556,053 - Issuance of preferred stock series A 325,000 - Repayment of related party advance ( 175,000 ) - Proceeds from related party advance 75,000 100,000 Proceeds from issuance of convertible notes 350,000 - Repayment of related party note payable ( 500,000 ) - Repayment on note payable on building ( 2,634,538 ) ( 207,028 ) Net cash used in financing activities - Continuing Operations 110,029,860 ( 353,789 ) Net cash (used in) provided by financing activities - Discontinued Operations - - Net cash used in financing activities 110,029,860 ( 353,789 ) Net increase (decrease) in cash - Continuing Operations 2,313,735 ( 4,417,427 ) Net (decrease) increase in cash - Discontinued Operations - 586,551 Cash, beginning of period 661,415 4,492,291 Cash, end of period $ 2,975,150 $ 661,415 Supplemental Cash Flow Disclosures Interest paid $ 805,880 $ 839,000 Income tax paid $ - $ - Non-cash Investing and Financing Activities Issuance of common stock for acquisition of Cygnet $ - $ 162,727 Non-cash proceeds in the sale of VitaMedica $ - $ 1,900,000 Issuance of common stock for the repayment of convertible notes payable $ 1,750,000 $ 500,000 Issuance of debt for acquisition of Cygnet $ - $ 300,000 Bloomios non-cash payment of receivables, net $ - $ 845,443 The accompanying notes are an integral part of these consolidated financial statements. F-5 Table of Contents Upexi, Inc. Notes to the Consolidated financial statements June 30, 2025 and 2024 Note 1. Basis of Presentation Nature of Operations Upexi, Inc., a Delaware corporation, originally formed as a Nevada corporation in September of 2018. The Company has seven active subsidiaries that are part of the Company. We are in the cryptocurrency industry and the management of cash assets through a cryptocurrency portfolio, primarily focused in Solana tokens and staking of those tokens. We continue to be a brand owner specializing in the development, manufacturing, and distribution of consumer products. Solana Treasury Strategy. We have recently diversified into the cryptocurrency industry and cash management of assets through a cryptocurrency portfolio, primarily focused in Solana tokens and staking of those tokens. Early in 2025, we updated and modified our cash management and treasury strategy to include holding digital currency assets directly on our balance sheet. This was a shift from before when we held excess cash primarily in FDIC-insured interest-bearing accounts. The change to adopt this strategy results from our intention to obtain the highest yield on excess cash. Under our new approach, our treasury policy focuses primarily on Solana (“SOL”). The approach involves applying a public-market treasury model to an asset that is considered earlier in its lifecycle, with respect to both development and usage, as well as institutional adoption, than Bitcoin. Management will focus its resources to this digital asset strategy and a significant portion of the balance sheet will be allocated to holding Solana in the Company’s digital asset treasury. Currently our treasury is exclusively dedicated to the SOL digital asset and currently we do not intend to dedicate any of the treasury allocated capital to other digital assets. Our products are distributed in the United States of America and internationally through multiple entities and managed through our locations in Florida. Upexi operates from our corporate location in Tampa, Florida, where direct to consumer, wholesale and Amazon sales are driven by on-site and remote teams for all brands. The Tampa, Florida location also supports all the other locations with accounting, corporate oversight, day-to-day finances, business development and operational management operating from this location. MW Products operates from our corporate headquarters and our Tampa, Florida warehouse, managing direct to consumer, wholesale and Amazon sales for multiple brands and develops new products through our research and development team in Henderson, Nevada and Odessa, Florida. Lucky Tail operates from our Tampa, Florida warehouse with sales and marketing driven by on-site and remote teams that operate the Amazon sales strategy and daily business operations. HAVZ, LLC, d/b/a/ Steam Wholesale operates manufacturing and/or distribution centers in Odessa, Florida, supporting our health and wellness products, including those products manufactured with hemp ingredients and our overall distribution operations. We have continued to manage these operations with corporate focus on larger opportunities that have warranted the majority of corporate focus and investments for the future. Upexi Distribution operates from our Tampa, Florida warehouse providing warehousing, distribution and other services in support of our product sales. Basis of Presentation The Company’s consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of America (GAAP). Interactive Offers, LLC a Delaware limited liability corporation; VitaMedica, a Nevada corporation; and E-Core Technology, Inc. d/b/a New England Technology, Inc. have been classified as discontinued operations for the year ended June 30, 2024. All intercompany accounts and transactions have been eliminated as a result of the consolidation. F-6 Table of Contents Note 2. Significant Accounting Policies The significant accounting policies followed are: Use of Estimates - The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America 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 consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant estimates underlying the Company’s reported financial position and results of operations include the allowance for credit losses, useful lives of property and equipment, impairment of long-lived assets, inventory valuation, fair value of stock-based compensation and valuation allowance on deferred tax assets. Cash - The Company considers all highly liquid investment instruments with a maturity of three months or less to be cash equivalents. Cash is maintained at financial institutions and at times, balances may exceed federally insured limits. The Company has never experienced any losses related to these balances. Accounts Receivable - Amounts receivable are uncollateralized customer obligations due under normal trade terms requiring payment within a specified time from the invoice date. The trade terms vary based on the customer and typically range from prepaid to 45 days from the invoice date. Interest is not charged by the Company on past due accounts. The carrying amount of receivables is reduced by an allowance for expected credit losses, as necessary, that reflects management’s best estimate of the amount that will not be collected. This estimation takes into consideration historical experience, current conditions and as applicable, reasonable supportable forecasts. Actual results could vary from the estimate. Accounts are charged against the allowance when management deems them to be uncollectible. The net accounts receivable balances at June 30, 2025, 2024 and 2023 were $ 157,515 , $ 606,885 and $ 1,125,394 respectively. Based on management’s review of accounts receivable, the allowance for credit losses was approximately $ 636,600 and $ 61,800 at June 30, 2025 and 2024, respectively. The Company had bad debt expenses of $ 933,950 , $ 24,500 and $ 4,750 for the years ended June 30, 2025, 2024 and 2023, respectively. The Company wrote off approximately $ 359,000 of accounts receivable balances in the year ended June 30, 2025 and no amount of accounts receivable in the year ended June 30, 2024. The increase in the reserve is related to the eliminated recommerce business and the reserve amounts held by Amazon for over six months. Inventory - The Company reviews the inventory level of all products and raw materials quarterly. For most products that have been in the market for one year or more, we consider inventory levels of greater than one year’s sales to be excess or other items that show slower than projected sales. Due to limited market penetration for our products, we have decided to write down 50% of the cost against certain raw materials and finished products. Products that are no longer part of the current product offering are considered obsolete. The potential for re-sale of slow-moving and obsolete inventories is based upon our assumptions about future demand and market conditions. The recorded cost of obsolete inventories is then reduced to zero. The slow-moving and obsolete inventory is written off and recorded as charges to cost of goods sold. All adjustments for obsolete inventory establish a new cost basis for that inventory as we believe such reductions are permanent declines in the market price of our products. Generally, obsolete inventory is sold to companies that specialize in the liquidation, while we continue to market slow-moving inventories until they are sold or become obsolete. Inventory consists of raw materials and finished goods and is stated at the lower of cost or net realizable value. Cost is determined by the weighted average moving cost inventory method. Net realizable value is determined, with appropriate consideration given to obsolescence, excessive levels, deterioration, and other factors. On June 30, 2025, the Company had $ 489,574 of raw materials and $ 663,296 of finished goods inventory. On June 30, 2024, the Company had $ 465,535 of raw material inventory and $ 966,021 of finished goods inventory. The Company had inventory reserves at June 30, 2025 and 2024 of $ 593,569 and $ 605,470 , respectively. F-7 Table of Contents Digital Assets – Pursuant to ASU 2023-08, Intangibles — Goodwill and Other — Crypto Assets: Accounting for and Disclosure of Crypto Assets, codified into ASC subtopic 350-60, in-scope crypto assets are required to be measured at fair value in the statement of financial position, with gains and losses from changes in the fair value of such crypto assets recognized in net income each reporting period. ASU 2023-08 also requires certain interim and annual disclosures for crypto assets within the scope of the standard. The Company adopted this guidance effective April 1, 2025 as this was the start of the Company first holding digital assets. SOL tokens are measured using Level 1 inputs under ASC 820, based on quoted prices from principal market. ASC 820 defines “principal market” as the market with the greatest volume and level of activity for the asset or liability. The determination of the principal market (and, as a result, the market participants in the principal market) is made from the perspective of the reporting entity. The digital assets held by the Company are traded on a number of active markets globally. The Company determines CoinMarketCap as its principal market, as it is one of the earliest and the most trusted sources by users, institutions, and media for comparing thousands of crypto assets and selected by the U.S. government. The Company recognizes revenue by utilizing daily close prices obtained from CoinMarketCap. Property and Equipment - Property and equipment is recorded at cost. Depreciation is calculated using the straight-line method over the estimated useful lives of the assets ranging from 3 to 20 years. Leasehold improvements are amortized over the shorter of their estimated useful lives of 5 years or the related lease term. Gains and losses upon disposition are reflected in the Statements of Operations in the period of disposition. Maintenance and repair expenditures are charged to expense as incurred. The Company disposed of certain equipment during the year ended June 30, 2024 upon relocation of a manufacturing facility from Nevada to Florida leading to a loss as reflected in the Statement of Operations. Goodwill - The Company evaluates its goodwill for possible impairment, simplifying the test for goodwill impairment at least annually and when one or more triggering events or circumstances indicate that the goodwill might be impaired. Under this guidance, annual or interim goodwill impairment testing is performed by comparing the estimated fair value of a reporting unit with its carrying amount. An impairment charge is recognized for the amount by which the carrying amount exceeds the reporting unit’s fair value, not to exceed the carrying value of goodwill. The Company performed its annual test as of June 30, 2025 and 2024, respectively. There was no impairment as of June 30, 2025. It was determined by management that the goodwill related to Cygnet was completely impaired at June 30, 2024 based on the strategic decision to exit the recommerce business. An impairment of goodwill in the amount of $ 3,594,745 was recorded at June 30, 2024 eliminating all of the goodwill related to Cygnet. Impairment of Long-lived Assets - Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the book value of the asset may not be recoverable. The Company periodically evaluates whether events and circumstances have occurred that indicate possible impairment. When impairment indicators exist, the Company estimates the future undiscounted net cash flows of the related asset or asset group over the remaining life in measuring whether or not the asset values are recoverable. The Company recognized an impairment on its building of $ 336,434 during the year ended June 30, 2024, based on the fair market value of the building’s pending sale, completed on July 8, 2024. The Company recognized a $ 569,195 loss on the sale of assets that were either liquidated or abandoned in the move of its manufacturing facility from Nevada to Florida. In addition, the Company recognized an impairment of intangible assets of $ 4,274,680 for the year ended June 30, 2024. $ 974,680 of the impairment is related to LuckyTail’s rapid decline of direct-to-consumer sales and $ 3,300,000 of the impairment is related to the unamortized vendor list of Cygnet, as the Company no longer purchases products from the majority of the original vendors Cygnet was using when the Company purchased Cygnet. Revenue Recognition - In accordance with ASC No. 606, Revenue from Contracts with Customers, the Company recognizes revenue when we satisfy performance obligations as evidenced by the transfer of control of our products or services to customers. In general, the Company generates revenue from product sales, either directly to customers or to distributors. In determining whether a contract exists, we evaluate the terms of the agreement, the relationship with the customer or distributor and their ability to pay. F-8 Table of Contents The Company recognizes revenue from sales of our products, including sales to our distributors, at a point in time, generally upon shipment or delivery to the customer or distributor, depending upon the terms of the sales order. Control is considered transferred when title and risk of loss pass, when the customer becomes obligated to pay and, where applicable, when the customer has accepted the products or upon expiration of the acceptance period. For sales to distributors, payment is due on our standard commercial terms and is not contingent upon the distributors’ resale of the products. Shipping and handling fees billed to customers are included in revenue. Shipping and handling fees associated with inbound freight, are generally included in cost of revenue. Our business is subject to contingencies related to customer orders, including: Right of Return: A large portion of our revenue comes from the sale of consumable products, which are sold in high-volume and low quantities, and are generally maintained at stock levels of less than ninety days in our facility. Customer returns have historically represented a very small percentage of sales on an annual basis. Other product sales relate to some pet products, including small mechanical devices. Warranties: The Company does not accept sales returns from wholesale customers, as the products are pre-approved prior to production and shipment. E-Commerce product returns must be completed within 45 days of the date of purchase. The Company accrues an allowance for refunds, returned deposits and discounts given by customer services post shipment of the product based on historical experience and management’s estimate of future expenses, including replacement, freight charges and other fulfilment expenses. Conditions of Acceptance: Sales of our consumable products and pet products, generally do not have customer acceptance terms. Revenue by Geography and Product Source: The following table, which excludes digital asset revenue, discloses disaggregated revenue for the year ended: June 30, 2025 June 30, 2024 Primary geographical markets United States of America $ 14,566,766 $ 25,455,480 Other 259,570 545,172 Total $ 14,826,336 $ 26,000,652 Product source Internally manufactured $ 9,262,857 $ 10,553,654 Contract manufactured 2,786,828 3,098,552 Purchased as finished good 2,776,651 12,348,446 Total $ 14,826,336 $ 26,000,652 F-9 Table of Contents Deferred Revenue - The Company records deposits as deferred revenue when a customer pays in advance of shipping the product. Once the product is shipped, the deposit is recorded as revenue and the related commissions are paid. All products were shipped related to deposits in deferred revenue, in less than one year. The following table discloses the deferred revenue: June 30, 2025 June 30, 2024 Deferred revenue $ 13,155 $ 235,255 Deferred revenue, also referred to as funded backlog, was $ 13,155 , $ 235,255 and $ 0 at June 30, 2025, June 30, 2024, and June 30, 2023, respectively. We expect to recognize approximately 100% of the deferred revenue as revenue in the year ended June 30, 2026. All of the deferred revenue at June 30, 2024 was recognized to revenue in the year ended June 30, 2025. Digital Assets Revenue, Realized and Unrealized Gains and Losses Acquisition of Solana tokens We acquire liquid Solana tokens through purchases. In the case of liquid bulk purchases, we recognize for cost basis the actual price paid. In the case of liquid VWAP (volume-weighted average price) or TWAP (time-weighted average price) over multiple hour or days, we recognize for cost basis the average price paid for all tokens purchases. The Company is able to acquire Solana tokens that are locked through direct negotiations with the owner or a third part at a discounted price from the Solana market value price. These locked tokens will unlock over a period of time and once unlocked can be sold on several Solana exchanges. With the purchase of locked Solana, we recognize the cost basis as the actual price paid. While the tokens remain locked, the Solana is marketed to fair value based on a 14% discount to the end of the period market price and the unrealized gain or loss is recognized. The unlocking of the purchased Solana occurs over a series of dates as prescribed by the purchase agreement. At the time of unlocking, tokens can remain in the original wallet or be transferred into the wallet at our custodian or sold on an open exchange. Once the Solana is unlocked, the fair value is measured at the end of the period at the market value without a discount. Per ASC 350-60-45-2, gains and losses from the remeasurement of crypto assets shall be included in net income and presented separately from changes in the carrying value of other intangible assets. Pursuant to this guidance, changes in fair value are reflected on the income statement in the line item “Realized and unrealized (gain) loss on digital assets” in the operating expense section of the consolidated statements of operations. We measure changes in fair value as the difference between the cost basis and the prevailing market price of the digital asset at the date of measurement, multiplied by the quantity held of the digital asset. Our policy on prevailing market price is the last trading price prior to midnight. Remeasurement on a recurring basis Subsequent to the acquisitions of Solana tokens, remeasurement of change in value fair is done by taking the spot price from coinmarketcap.com at the end of a month. Our tokens are bifurcated between liquid and locked tokens. In the case of liquid tokens, the aggregate fair value is computed by taking the number of liquid tokens and multiplying by the month-end spot price. In the case of locked tokens, the aggregate fair value is computed by taking the number of locked tokens, discounted by 14%, and multiplying by the month-end spot price. As locked tokens become unlocked over time, they will be added to the count of liquid tokens and accordingly, make up less of that discount percentage over time when computing aggregate fair value on locked tokens. The discount used by management is based on the historical purchases of locked Solana management has made on behalf of the Company. Management monitors this discount percentage and adjusts when appropriate. Per ASC 350-60-45-2, gains and losses from the remeasurement of crypto assets shall be included in net income and presented separately from changes in the carrying value of other intangible assets. Pursuant to this guidance, changes in fair value are reflected on the income statement in the line item “Realized and unrealized (gain) loss on digital assets” in the operating expense section of the consolidated statements of operations. F-10 Table of Contents Staking revenue We earn staking rewards by delegating our digital assets to third-party validators on proof-of-stake blockchain networks. These tokens remain under the Company’s control and are not derecognized, as the delegation does not constitute a transfer of control under ASC 610-20 or ASC 350-60. Rewards are recognized as income when the Company obtains control of the new tokens, typically upon receipt into its wallet. While there is no explicit guidance under U.S. GAAP for staking activities, the Company applies the principles of ASC 606, Revenue from Contracts with Customers, by analogy. Management evaluates whether a contract exists, identifies the performance obligations, and determines whether the Company acts as a principal or agent in the transaction. The transaction price is measured at the fair value of the digital assets received at the time control is obtained. Due to the evolving nature of blockchain protocols and limited regulatory guidance, management exercises significant judgment in evaluating validator reliability and the risk of slashing or forfeiture. Changes in protocol rules or accounting interpretations may materially impact how staking revenue is recognized and measured. Solana tokens held by the Company, whether liquid or locked, are eligible for staking. Staking revenue is calculated based on the number of tokens earned and the month-end spot price. This revenue is reported on the Statements of Operations under the line item “Digital Asset Revenue.” Changes in fair market value of the staking revenue after the initial Digital Asset Revenue is recognized are reflected on the income statement as “Realized and unrealized (gain) loss on digital assets”. Realized sales of the digital assets To the extent such digital assets may be sold, unrealized gain (or loss) shall reverse and realized gain (or loss) shall be recorded for the difference between price at which the digital asset sold and cost basis. Advertising - The Company supports its products with advertising to build brand awareness of the Company’s various products in addition to other marketing programs executed by the Company’s marketing team. The Company believes continual investment in advertising is critical to the development and sale of its branded products. Advertising costs of $ 1,830,096 and $ 3,353,361 were expensed as incurred during the years ended June 30, 2025 and 2024, respectively. Stock Based Compensation - The Company recognizes all share-based payments to employees, including grants of employee stock options and grants of restricted shares as compensation expense in the consolidated financial statements based on their fair values. That expense will be recognized over the period during which an employee is required to provide services in exchange for the award, known as the requisite service period (usually the vesting period) or immediately if the share-based payments vest immediately. Non-employee Stock-based Payments - The Company’s accounting policy for equity instruments issued to consultants and vendors in exchange for goods and services follows the provisions of Accounting Standards Codification (ASC) 2018-07, which simplifies the accounting for non-employee share-based payment transactions. The amendments specify that Topic 718 applies to all share-based payment transactions in which a grantor acquires goods or services to be used or consumed in a grantor’s own operations by issuing share-based payment awards. Stock-based payments related to non-employees are accounted for based on the fair value of the related stock or options or the fair value of the services, whichever is more readily determinable. The measurement date for the fair value of the equity instruments issued is determined at the earlier of (i) the date at which a commitment for performance by the consultant or vendor is reached or (ii) the date at which the consultant or vendor’s performance is complete. In the case of equity instruments issued to consultants, the fair value of the equity instrument is recognized over the term of the consulting agreement. Fair Value Measurements - The Company accounts for financial instruments in accordance with FASB ASC 820 “Fair Value Measurement and Disclosures” (ASC 820). ASC 820 defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. ASC 820 defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. ASC 820 also establishes a fair value hierarchy that distinguishes between (1) market participant assumptions developed based on market data obtained from independent sources (observable inputs) and (2) an entity’s own assumptions about market participant assumptions developed based on the best information available in the circumstances (unobservable inputs). F-11 Table of Contents The fair value hierarchy consists of three broad levels, which gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). The three levels of the fair value hierarchy are described below: · Level 1 - Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities. · Level 2 - Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly, including quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; inputs other than quoted prices that are observable for the asset or liability (e.g. interest rates); and inputs that are derived principally from or corroborated by observable market data by correlation or other means. · Level 3 - Inputs that are both significant to the fair value measurement and unobservable. The estimated fair value of certain financial instruments, including cash, accounts receivable, accounts payable, accrued expenses, deferred revenue and debt are carried at historical cost basis, which approximates their fair values because of the short-term nature of these instruments. Leases - The Company determines if a contract contains a lease at inception. A contract contains a lease if it conveys the right to control the use of an identified asset for a period of time in exchange for consideration. Control is defined as having both the right to obtain substantially all of the economic benefits from use of the asset and the right to direct the use of the asset. Management only reassesses its determination if the terms and conditions of the contract are changed. Leases with an initial term of 12 months or less are not recognized within the accompanying consolidated balance sheets. 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 will result in an economic penalty. All the Company’s real estate leases are classified as operating leases. Most real estate leases include one or more options to renew, with renewal terms that generally can extend the lease term for an additional two years. The exercise of lease renewal options is at the Company’s discretion. The Company evaluates renewal options at lease inception and on an ongoing basis and includes renewal options that it is reasonably certain to exercise in its expected lease terms when classifying leases and measuring lease liabilities. Lease agreements generally do not require material variable lease payments, residual value guarantees or restrictive covenants. The Company’s leases generally do not provide an implicit rate, and therefore the Company uses its incremental borrowing rate as the discount rate when measuring operating lease liabilities. The incremental borrowing rate represents an estimate of the interest rate the Company would incur at lease commencement to borrow an amount equal to the lease payments on a collateralized basis over the term of a lease within a particular currency environment. Income Taxes - Income taxes are provided for the tax effects of transactions reported in the consolidated financial statements and consist of taxes currently due plus deferred taxes resulting from temporary differences. Such temporary differences result from differences in the carrying value of assets and liabilities for tax and financial reporting purposes. The deferred tax assets and liabilities represent the future tax consequences of those differences, which will either be taxable or deductible when the assets and liabilities are recovered or settled. A valuation allowance is provided to reduce the deferred tax assets reported if based on the weight of the available positive and negative evidence, it is more likely than not some portion or all of the deferred tax assets will not be realized. A $ 10,092,765 and a $ 6,100,000 valuation allowance was recorded as of June 30, 2025 and June 30, 2024, respectively. The Company identifies and evaluates uncertain tax positions, if any, and recognizes the impact of uncertain tax positions for which there is a less than more-likely-than-not probability of the position being upheld when reviewed by the relevant taxing authority. Such positions are deemed to be unrecognized tax benefits and a corresponding liability is established on the balance sheet. The Company has not recognized a liability for uncertain tax positions. If there were an unrecognized tax benefit, the Company would recognize interest accrued related to unrecognized tax benefits in interest expense and penalties in operating expenses. F-12 Table of Contents The Company uses the asset and liability method of accounting for income taxes in accordance with ASC Topic 740, “Income Taxes.” Under this method, income tax expense is recognized for the amount of: (i) taxes payable or refundable for the current year and (ii) deferred tax consequences of temporary differences resulting from matters that have been recognized in an entity’s consolidated financial statements or tax returns. Deferred tax assets 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 the results of operations in the period that includes the enactment date. ASC Topic 740 clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s consolidated financial statements and prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. ASC Topic 740 provides guidance on de-recognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition. There were no material uncertain tax positions at June 30, 2025 or June 30, 2024. On December 22, 2017, the U.S. government enacted the Tax Act, which made significant changes to the Internal Revenue Code of 1986, as amended, including, but not limited to, reducing the U.S. corporate statutory tax rate and the net operating loss incurred after December 31, 2017 can be carried forward indefinitely and the two year net operating loss carried back was eliminated (prohibited). Reverse Stock Split On September 18, 2024, we filed a Certificate of Change with the Nevada Secretary of State to effect a reverse stock split of our common stock at a rate of 1-for-20 (the “Reverse Stock Split”), which became effective as of October 3, 2024 (the “Effective Date”). The Reverse Stock Split was approved by the board of directors in accordance with Nevada law. The Reverse Stock Split did not have any impact on the par value of common stock. On the Effective Date, every twenty shares of Common Stock issued and outstanding were automatically combined into one share of Common Stock, without any change in the par value per share. As the per-share par value did not change, we reclassified $ 19,860 from Common Stock to Additional Paid-in-Capital on the Effective Date. The exercise prices and the number of shares issuable upon exercise of outstanding stock options, equity awards and warrants, and the number of shares available for future issuance under the equity incentive plans were adjusted in accordance with their respective terms. The Reverse Stock Split affected all stockholders uniformly and did not alter any stockholder’s percentage interest in our Common Stock. We did not issue any fractional shares in connection with the Reverse Stock Split. Instead, fractional shares were initially rounded up to the next largest whole number, resulting in the issuance of 8 shares on October 3, 2024, the Effective Date, and an additional issuance of 38 shares on October 8, 2024. On October 10, 2024, the transfer agent received additional requests to issue a total of 202,183 shares of common stock for round up of fractional shares. These shares were issued on October 23, 2024. On October 30, 2024 we were notified that the shares were returned to the Company’s transfer agent. Although the Company did receive the common stock back after issuance, the potential dilution remains a risk, and is the subject of a complaint filed by the Company in the United States District Court for the District of Nevada with the purpose of eliminating any said risk. The Reverse Stock Split did not modify the relative rights or preferences of the Common Stock. Unless otherwise indicated, all issued and outstanding shares of common stock and all outstanding securities entitling their holders to purchase shares of our common stock or acquire shares of our common stock, including stock options, restricted stock units, and warrants per share data, share prices and exercise prices, as required by the terms of those securities, have been adjusted retroactively to reflect the Reverse Stock Split. On October 17, 2024, Company received written notice (the “Compliance Notice”) from The Nasdaq Stock Market LLC (“Nasdaq”) informing the Company that it has regained compliance with Nasdaq Listing Rule 5550(a)(2), which requires that companies listed on the Nasdaq Stock Market maintain a minimum bid price of $1.00 per share. Nasdaq notified the Company in the Compliance Notice that, from October 3, 2024 to October 16, 2024, the closing bid price of the Company’s common stock had been $1.00 per share or greater and, accordingly, the Company had regained compliance with Nasdaq Listing Rule 5550(a)(2) and that the matter was now closed. F-13 Table of Contents Earnings (loss) per Share - Basic earnings (loss) per share is computed by dividing net income (loss) attributable to common stockholders by the weighted average common shares outstanding for the period. Diluted income (loss) per share is computed giving effect to all potentially dilutive common shares. Potentially dilutive common shares may consist of incremental shares issuable upon the exercise of stock options and warrants and upon the conversion of notes. For the year ended, the dilutive common shares are as follows: June 30, June 30, 2025 2024 Stock options 621,353 200,714 Warrants 1,848,735 52,530 Prefunded warrants 7,889,266 - Preferred stock 138,889 13,889 Convertible debt 186,667 15,500 Restricted stock grants 221,917 12,500 Total potential dilutive weighted average shares outstanding 10,906,827 295,133 The dilutive effect of potentially dilutive securities is reflected in diluted earnings per common share by application of the treasury stock method. Under the treasury stock method, an increase in the fair market value of the Company’s common stock can result in a greater dilutive effect from potentially dilutive securities. During the year ended June 30, 2025 and 2024, the Company reported a net loss, so the potential effect is not reflected in the consolidated financial statements. Convertible Debt and Securities - The Company follows beneficial conversion feature guidance in ASC 470-20, which applies to convertible stock as well as convertible debt. A beneficial conversion feature is defined as a nondetachable conversion feature that is in the money at the commitment date. The beneficial conversion feature guidance requires recognition of the conversion option’s in-the-money portion, the intrinsic value of the option, in equity, with an offsetting reduction to the carrying amount of the instrument. The resulting discount is amortized as interest over the life of the instrument, if a stated maturity date exists, or to the earliest conversion date, if there is no stated maturity date. If the earliest conversion date is immediately upon issuance, the expense must be recognized at inception. When there is a subsequent change to the conversion ratio based on a future occurrence, the new conversion price may trigger the recognition of an additional beneficial conversion feature on occurrence. Non-controlling Interests in Consolidated financial statements - In December 2007, the FASB issued ASC 810-10-65, “Non-controlling Interests in consolidated financial statements”. This ASC clarifies that a non-controlling (minority) interest in subsidiaries is an ownership interest in the entity that should be reported as equity in the consolidated financial statements. It also requires consolidated net income to include the amounts attributable to both the parent and non-controlling interest, with disclosure on the face of the consolidated income statement of the amounts attributed to the parent and to the non-controlling interest. In accordance with ASC 810-10-45-21, those losses attributable to the parent and the non-controlling interest in subsidiaries may exceed their interests in the subsidiary’s equity. The excess and any further losses attributable to the parent and the non-controlling interest shall be attributed to those interests even if that attribution results in a deficit non-controlling interest balance. During the year ended June 30, 2024, the purchase of all remaining ownership of Cygnet resulted in no remaining non-controlling interests in the consolidated financial statements. Recent Accounting Pronouncements – From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board, (“FASB”), or other standard setting bodies and adopted by us as of the specified effective date. Unless otherwise discussed, the impact of recently issued standards that are applicable and not yet effective will not have a material impact on the Company’s financial position or results of operations upon adoption. What follows below are accounting pronouncements adopted or issued but not yet adopted. In December 2023, the FASB issued ASU No. 2023-09, Improvements to Income Tax Disclosures (“ASU 2023-09”). The amendments expand income tax disclosure requirements by requiring an entity to disclose (i) specific categories in the rate reconciliation, (ii) additional information for reconciling items that meet a quantitative threshold, and (iii) the amount of taxes paid disaggregated by jurisdiction. The standard is effective for annual reporting periods beginning after December 15, 2024. The Company will adopt this guidance effective for the annual reporting period beginning July 1, 2025 (fiscal year ended June 30, 2026). The adoption of ASU 2023-09 will impact the Company’s disclosures but will not impact financial position nor results of operations. F-14 Table of Contents In December 2023, the FASB issued ASU 2023-08, Intangibles - Goodwill and Other - Crypto Assets (Subtopic 350-60): Accounting for and Disclosure of Crypto Assets (“ASU 2023-08”) , which establishes accounting guidance for crypto assets meeting certain criteria. Solana meets these criteria. The amendments require crypto assets meeting the criteria to be recognized at fair value with changes recognized in net income each reporting period. Upon adoption, a cumulative-effect adjustment was made to the opening balance of retained earnings as of the beginning of the annual reporting period of adoption. ASU 2023-08 is effective for fiscal years beginning after December 15, 2024, including interim periods within those fiscal years, with early adoption permitted. The Company elected to early adopt ASU 2023-08 for the year ended June 30, 2025, effective as of July 1, 2024. As a result of the adoption, the Company did not have a cumulative-effect adjustment as the Company did not have any Crypto Assets prior to January 1, 2025. In the current year ended and date as of June 30, 2025, SOL, the token of Solana blockchain, is recognized at fair value. In November 2024, the FASB issued ASU 2024-03, “Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures.” The ASU requires disclosure, in the notes to financial statements, of specified information about certain costs and expenses. The amendments require that at each interim and annual reporting period an entity: (1) disclose the amounts of (a) purchases of inventory, (b) employee compensation, (c) depreciation, (d) intangible asset amortization, and (e) depreciation, depletion, and amortization recognized as part of oil and gas-producing activities (“DD&A”) (or other amounts of depletion expense) included in each relevant expense caption. A relevant expense caption is an expense caption presented on the face of the income statement within continuing operations that contains any of the expense categories listed in (a)–(e), (2) include certain amounts that are already required to be disclosed under current GAAP in the same disclosure as the other disaggregation requirements, (3) disclose a qualitative description of the amounts remaining in relevant expense captions that are not separately disaggregated quantitatively, and (4) disclose the total amount of selling expenses and, in annual reporting periods, an entity’s definition of selling expenses. An entity is not precluded from providing additional voluntary disclosures that may provide investors with additional decision-useful information. The ASU is effective for annual periods beginning after December 15, 2026, and interim report periods beginning after December 15, 2027. Early application of the amendment is permitted. The ASU should be applied either (1) prospectively to financial statements issued for reporting periods after the effective date of this ASU or (2) retrospectively to any or all prior periods presented in the financial statements. The Company is evaluating the effect that ASU 2024-03 will have on its consolidated financial statements and related disclosures. In July 2025, the FASB issued ASU 2025-05, which provides for all entities with the option to elect a practical expedient that assumes that current conditions as of the balance sheet do not change for the remaining life of an asset, with respect to estimates of expected credit losses. This guidance is effective for annual reporting periods beginning after December 15, 2025 and interim periods within those annual reporting periods, with early adoption permitted and application of guidance prospectively. We are currently evaluating the effect of this pronouncement. Note 3. Digital Assets The following table summarizes the Company’s digital asset holdings as of: June 30, June 30, 2025 2024 Approximate number of Solana Tokens held 744,026 - Digital assets, fair value $ 105,997,180 $ - F-15 Table of Contents The following table summarizes the Company’s digital asset purchases, losses (gains) on digital assets, and revenue from staking for the year ended June 30, 2025 and 2024: Year Ended June 30, 2025 2024 Approximate number of Solana Tokens purchased 737,692 - Digital asset purchases $ 104,910,839 $ - Unrealized (loss) on digital assets $ 101,332 $ - Revenue from staking $ 985,009 $ - Cost basis is reflected in the above table as “Digital asset purchases”. The following table summarizes the composition of Solana tokens held broken out by liquid and locked as of: June 30, June 30, 2025 2024 Approximate number of Solana Tokens liquid 322,575 - Approximate number of Solana Tokens locked 421,451 - The Company has approximately 95% of its Solana treasury staked at June 30, 2025. The Company maintains control over the delegated SOL tokens throughout the staking period. Although the tokens undergo a bonding process with validators, the Company retains the ability to initiate unbonding at any time. Upon notification to the validator, the unbonding process begins, which typically takes up to two days. During this period, the tokens remain unavailable for transfer or sale on the open market. Validators do not gain control over the tokens in a manner that meets derecognition criteria. They cannot sell, pledge, or otherwise dispose of the tokens. As such, the Company continues to recognize the delegated SOL tokens as part of its digital asset holdings. The Company has 421,451 tokens that are considered locked at June 30, 2025. The following table summarizes the unlocking schedule of Solana tokens currently locked as of June 30, 2025: June 30, 2026 161,041 June 30, 2027 156,453 June 30, 2028 103,957 421,451 The Company did not sell any of its Solana in its Digital Asset Treasury during the year ended June 30, 2025 or 2024. The Company valued the Solana treasury at $ 154 .74 per liquid token and $ 133 .07 per locked token. The aggregate fair value of our locked tokens is computed by taking the number of locked tokens and discounting the month-end spot price by 14%. The discount used by management is based on the historical purchases of locked Solana management has made on behalf of the Company. Management monitors this discount percentage and adjusts when appropriate. The $154.74 is the market price from the closing price listed on coinmarketcap.com for June 30, 2025 . Note 4. Inventory Inventory consisted of the following: June 30, 2025 June 30, 2024 Raw materials $ 489,574 $ 465,535 Finished goods 663,296 966,021 $ 1,152,870 $ 1,431,556 The Company writes off the value of inventory deemed excessive or obsolete. During the years ended June 30, 2025 and 2024, the Company wrote off inventory valued at $ 748,874 and $ 1,812,319 , respectively. The Company had inventory reserves at June 30, 2025 and 2024 of $ 593,539 and $ 605,470 , respectively. F-16 Table of Contents Note 5. Property and Equipment Property and equipment consist of the following: June 30, 2025 June 30, 2024 Furniture and fixtures $ 127,050 $ 127,050 Computer equipment 102,279 112,397 Internal use software 570,645 570,645 Manufacturing equipment 2,112,561 1,927,975 Leasehold improvements 852,825 767,418 Building - 4,005,516 Vehicles 206,501 89,359 Property and equipment, gross 3,971,861 7,600,360 Less accumulated depreciation ( 1,919,288 ) ( 1,238,288 ) Less building classified as available for sale - ( 4,005,516 ) $ 2,052,573 $ 2,356,556 Depreciation expense for the years ended June 30, 2025 and 2024 was $ 681,000 and $ 1,268,355 , respectively. For the period ended June 30, 2025 there was a $ 10,743 loss on the disposal of assets. Note 6. Intangible Assets Intangible assets as of June 30, 2025: Estimated Life Cost Accumulated Amortization Net Book Value Customer relationships 4 years $ 1,834,692 $ 1,834,692 $ - Trade name 5 years 383,792 220,679 163,113 Online sales channels 2 years 1,800,000 1,800,000 - Vendor relationships 5 years 6,000,000 6,000,000 - $ 10,018,484 $ 9,855,371 $ 163,113 For the years ended June 30, 2025 and 2024, the Company amortized approximately $ 76,758 , and $ 2,410,400 , respectively. For the year ended June 30, 2025 and 2024, the Company impaired approximately $ 0 and $ 3,300,000 , respectively, related to the vendor relationships of Cygnet and impaired approximately $ 0 and $ 974,000 related to the customer relationships of LuckyTail. F-17 Table of Contents Intangible assets as of June 30, 2024: Estimated Life Cost Accumulated Amortization Net Book Value Customer relationships 4 years $ 1,834,692 $ 1,834,692 $ - Trade name 5 years 383,792 143,921 239,871 Online sales channels 2 years 1,800,000 1,800,000 - Vender relationships 5 years 6,000,000 6,000,000 - $ 10,018,484 $ 9,778,613 $ 239,871 Future amortization of intangible assets at June 30, 2025 is set forth below: June 30, 2026 76,758 June 30, 2027 76,758 June 30, 2028 9,597 $ 163,113 Note 7. Prepaid Expense and Other Current Assets Prepaid and other receivables consist of the following: June 30, 2025 June 30, 2024 Insurance $ 107,256 $ 116,074 Prepayment to vendors 201,192 203,556 Deposits on services 10,000 25,550 Prepaid monthly rent - 60,041 Subscriptions and services being amortized over the service period 26,500 32,500 Stock issued for prepaid interest on convertible note payable - 64,320 Other receivables 5,888 147 Total $ 350,836 $ 502,188 All prepaid expenses will be expensed during the following 12 months. Note 8. Operating Leases We have entered into various non-cancellable operating and finance lease agreements for certain of our offices, manufacturing, technology, and equipment. We determine if an arrangement is a lease, or contains a lease, at inception, and record the leases in our financial statements upon lease commencement, which is the date when the underlying asset is made available for use by the lessor. Our lease terms may include one or more options to extend the lease terms, for periods from one year to 20 years , when it is reasonably certain that we will exercise that option. As of June 30, 2025, no option to extend the lease was recognized as right-of-use (“ROU”) assets and lease liabilities. We have lease agreements with lease and non-lease components, and non-lease components are accounted for separately and not included in our ROU assets and corresponding liabilities. We have elected not to present short-term leases on the Consolidated Balance Sheets as these leases have a lease term of 12 months or less at lease inception. During November 2019, the Company entered into a lease for a Nevada facility that commenced on November 13, 2019, and recorded a right of use asset and corresponding lease liability. The Company uses this leased facility for office, manufacturing, and warehouse space. The Company is responsible for real estate taxes, utilities, and repairs under the terms of certain of the operating leases. The operating lease expired during the year ended June 30, 2023 and the Company continued to occupy the facility and pays rent on a month-to-month basis. During the year ended June 30, 2025 there were no expenses incurred for this facility and for the year ended June 30, 2024 the Company used the facility for ongoing operations and recognized approximately $ 670,200 of expense during the year. The Company moved out of the facility in July 2024. F-18 Table of Contents During May 2021, the Company entered into a lease for an additional Nevada facility that commenced on May 1, 2021, and recorded a right of use asset and corresponding lease liability. The Company uses this leased facility for additional warehouse space. The minimum lease payments were $ 95,548 for the year ended June 30, 2024. The lease expense, including all additional lease expenses was approximately $ 106,100 . The Company moved out of the facility April of 2024 when the lease term ended, there were no expenses related to this facility for the year ended June 30, 2025. During November 2018, the Company entered into a lease for equipment that commenced on November 1, 2018, and recorded a right of use asset and corresponding lease liability. Lease expenses were $ 7,640 and $ 7,640 for the years ended June 30, 2025 and June 30, 2024, respectively. On April 1, 2022, the Company acquired Cygnet which had entered into a lease for a Florida facility that commenced on October 8, 2021, and Cygnet had recorded a right of use asset and corresponding lease liability. The lease expires on October 8, 2026 . The Company uses this leased facility for warehouse and office space. The Company is responsible for real estate taxes, utilities, and repairs under the terms of certain of the operating leases and accounted for as non-lease components and not part of the ROU. Lease expense was $ 43,180 for the year ended June 30, 2024. The Company abandoned the facility in October of 2023. On March 15, 2023, the Company entered into a lease for approximately 20,400 square feet of warehouse and office space, located in Tampa, Florida, to be used as the Company’s distribution center . The initial term of the lease is thirty-eight months and was not completed when the lease was signed. The Company moved into the facility in July 2023 and started operations. The Company is responsible for real estate taxes, utilities, and repairs under the terms of certain of the operating leases and accounted for as non-lease components and not part of the ROU. During the year ended June 30, 2025, the Company recognized approximately $ 391,100 of expense and approximately $ 374,500 for the year ended June 30, 2024. On July 25, 2023, the Company entered into a lease for approximately 5,700 square feet of office space, located in Tampa, Florida, to be used as the Company’s corporate headquarters . The initial term of the lease is sixty-one months. During the year ended June 30, 2024, the Company recognized approximately $ 140,658 of expense and approximately $ 232,350 of expense for the year ended June 30, 2025. On April 1, 2024, the Company entered into a lease agreement with MFA 2510 Merchant LLC, which is owned by our CEO, Allan Marshall. The lease is for approximately 10,000 square feet of warehouse and office space, located in Odessa, Florida for $20,060 per month. The initial term of the lease is five years . The Company is responsible for real estate taxes, utilities, and repairs under the terms of certain of the operating leases and accounted for as non-lease components and not part of the ROU. The Company spent $ 611,768 in leasehold improvements to prepare the facility for product manufacturing, which will be amortized over the five year lease term. Product manufacturing was at full capacity and fully moved from the Nevada facility as of August 1, 2024. During the years ended June 30, 2025 and 2024 the Company recognized approximately $ 320,050 and $ 79,950 of expense, respectively. Operating leases are included in operating ROU assets, current and non-current operating lease liabilities, and finance leases are included in property, plant and equipment, accrued expenses and other current liabilities, and other liabilities on the Consolidated Balance Sheets. As of June 30, 2025, our finance leases are not material. The table below reconciles the undiscounted future minimum lease payments (displayed by year and in the aggregate) under noncancelable operating leases with terms of more than one year to the total operating lease liabilities recognized in the consolidated balance sheet as of June 30, 2025: 2026 $ 762,364 2027 504,795 2028 486,733 2029 221,755 Total undiscounted future minimum lease payments 1,975,647 Less: Imputed interest ( 139,197 ) 1,836,410 Less: current portion ( 691,010 ) Present value of operating lease obligation $ 1,145,440 F-19 Table of Contents The Company’s weighted average remaining lease term and weighted average discount rate for operating leases as of June 30, 2025 are: Weighted average remaining lease term 26 Months Weighted average incremental borrowing rate 5.0 % The Company’s weighted average remaining lease term and weighted average discount rate for operating leases as of June 30, 2024 are: Weighted average remaining lease term 47 Months Weighted average incremental borrowing rate 5.0 % For the years ended June 30, 2025 and 2024, the components of lease expense, included general and administrative expenses and interest expense in the condensed consolidated statement of operations, are as follows: June 30, 2025 June 30, 2024 Operating lease expense: Amortization of ROU assets $ 741,745 $ 669,260 Interest expense 103,805 99,633 Operating lease cost 15,029 16,181 Short-term lease expense - 670,173 Variable lease expense 293,292 169,309 Total lease cost $ 1,153,871 $ 1,624,556 Note 9. Accrued Liabilities and Acquisition Payable Accrued liabilities consist of the following: June 30, 2025 June 30, 2024 Accrued professional fees $ 300,000 312,500 Accrued sales tax 38,281 28,539 Other accrued liabilities 17,783 395,368 $ 356,064 $ 736,407 Acquisition Payable consists of the following: June 30, 2025 June 30, 2024 Payable accrued related to the acquisition of Cygnet $ 260,652 $ 413,152 $ 260,652 $ 413,152 F-20 Table of Contents These payables are amounts estimated by management that are due to the sellers of the acquisition and include the original purchase price installment payments not represented with a debt, equity, or other instrument, estimates of excess or deficiencies in working capital and estimates of future earnout payments. Note 10. Convertible Promissory Notes, Notes Payable, and Related Party Note Payable Convertible promissory notes, notes payable, and related party note payable outstanding as of June 30, 2025 and 2024 are summarized below: Maturity June 30, June 30, Date 2025 2024 Convertible Notes: Promissory Note, 21- month term, as amended, 18.11% interest payable with common stock and subordinate to the Convertible Notes. This note was amended as of November 15, 2023, extending the note to June 1, 2026 and adjusted the interest rate to 12%, paid in cash monthly. June 1, 2026 $ - $ 1,550,000 2025 Convertible Notes, 24 month term, 3% interest and is convertible into the Company’s common stock at a per share price of $3.00 per common share. No payment of interest or principal is due until the end of the two year term if the loan is not converted. The loan also included a detachable warrant to purchase 116,668 shares of the Company’s common stock at a per share price of $3.00. These notes were converted into 116,668 shares of common stock in June of 2025. March 7, 2027 $ - - Unamortized discount on convertible note $ - Less current portion of notes payable - - Notes payable, net of current portion $ - $ 1,550,000 Notes payable, Cygnet subsidiary: SBA note payable, 30-year term note, 6% interest rate and collateralized with all assets of the Company October 6, 2051 $ 3,694,721 $ 3,761,376 Inventory consignment note, 60 monthly payments, with first payment due June 30, 2022, 3.5% interest rate and no security interest in the assets of the business June 30, 2027 1,000,290 1,002,221 GF Note, 6 annual payments, with first payment due December 31, 2022, 3.5% interest rate and no security interest in the assets of the business November 7, 2026 685,899 683,968 Total $ 5,380,910 $ 5,447,565 Notes payable, Cygnet subsidiary, current 5,380,910 5,447,565 Notes payable, Cygnet subsidiary, net of current $ - $ - Notes Payable on Building for sale: Mortgage Loan, 10-year term note, 4.8% interest, collateralized by land and warehouse building September 26, 2032 $ - $ 2,634,538 Note Payable: Promissory Note, 21-month term note, 10% cash interest and subordinate to the Convertible Notes. This note was amended as of November 15, 2023, extending the note to June 1, 2026 and adjusted the interest rate to 12%, paid in cash monthly. June 1, 2026 $ 560,000 $ 560,000 Notes payable, current 560,000 - Discount on notes payable, current - - Notes payable, current net of discount $ 560,000 $ - Notes payable, long-term - 560,000 Discount on notes payable, long-term - ( 2,571 ) Notes payable, long-term, net $ - $ 557,429 Related Notes Payable: Marshall Loan, 2-year term note, 12% cash interest, 3.5% PIK interest and subordinate to the Convertible Notes. November of 2023 extended to June 1, 2026 and interest was adjusted to 12% cash interest, paid monthly June 1, 2026 $ - $ 500,000 Discount on related party note payable, current $ - $ - Notes payable, current, net of discount $ - $ - Discount on related party note payable, long term $ - $ - Notes payable, long term, net $ - $ 500,000 Total convertible notes payable, notes payable and related party note payable $ 5,940,910 $ 10,689,532 F-21 Table of Contents Future payments on notes payable are set forth below: For the year ended June 30: Note Payable Cygnet Subsidiary Notes Payable Total 2026 $ 560,000 $ 5,380,910 $ 5,940,910 In June 2022, the Company executed a promissory note with Allan Marshall, the Company’s Chief Executive Officer, in the original principal amount of $ 1,500,000 (“Marshall Loan”). The promissory note has a 2-year term and bears cash interest at the rate of 8.5 % per annum with an additional PIK of 3.5 % per annum. The promissory note provides for monthly payments of principal, on an even line 36-month basis, plus cash interest, with a balloon payment of all outstanding principal, cash interest, and PIK interest at maturity. The Company received and deposited the principal amount on July 31, 2022. On November 15, 2023, the Company executed an amendment to the promissory note with Mr. Marshall, providing for the payment of interest only for 18 months at an interest rate of 12% per annum and thereafter the amortization of the note over a 12 month period, starting in June of 2025. No principal is currently outstanding as of June 30, 2025 . In addition to this, the Company issued Mr. Marshall a warrant to purchase up to 18,750 shares of the Company’s common stock for five years at a per share price of $ 22.00 . $ 1,000,000 of the promissory note was used by the investor in the purchase of VitaMedica. On October 19, 2022, Upexi, Inc. (the “Company”) and its indirect wholly owned subsidiary, Upexi 17129 Florida, LLC entered into a loan agreement, promissory note and related agreements with Professional Bank, a Florida state-chartered bank, providing for a mortgage on the Company’s principal office in N. Clearwater, Florida. The Company received $ 3,000,000 in connection with the transaction. The principal is to be repaid to Professional Bank over a term of ten years. The proceeds of the loan were utilized by the Company to pay down its loan facility with Acorn Capital, LLC in the amount of $ 2,780,200 . As of March 31, 2023, the Company was not in compliance with the debt service ratio. The Company received a forbearance agreement from the bank until June 30, 2024 to return to compliance of the debt service ratio of 1.25 to 1, until that time the Company will pay an interest rate of 10% instead of the contractual terms of 4.8% and has paid the original principal and adjusted interest through this report. The building was sold for $ 4,300,000 on July 8, 2024. On February 22, 2023, the Company executed a promissory note with an investor, in the original principal amount of $ 560,000 . On November 15, 2023, the Company executed an amendment to the promissory note with the investor, providing for the payment of interest only for 18 months at 12% per annum and thereafter the amortization of the note over a 12-month period, starting in June of 2025 . The principal currently outstanding is $ 560,000 . In addition to this, the Company issued the investor a warrant to purchase up to 6,250 shares of the Company’s common stock for five years at a per share price of 22.00 . The note has been classified as current in the consolidated financial statements. On February 22, 2023, the Company executed a promissory note with an investor, in the original principal amount of $ 2,150,000 . In November of 2023, the Company executed an amendment to the promissory note with the investor, providing for the payment of interest only for 18 months at 12% per annum and thereafter the amortization of the note over a 12-month period, starting in June of 2025 . No principal is currently outstanding as of June 30, 2025. In addition to this, the Company issued the investor a warrant to purchase up to 25,000 shares of the Company’s common stock at a per share price of $ 22.00 . In addition, $ 100,000 of the promissory note was used by the investor in the purchase of VitaMedica. On March 7, 2025, the Company executed a convertible note with two investors, in the original principal amount of $350,000. The term of the note is two (2) years and has an interest rate of three (3) percent. There are no interest or principal payments due during the term of the note. All principal and interest not converted during the term of the note is payable on March 7, 2027 . The convertible note and interest is convertible into the Company’s common stock at $3.00 per common share. Additionally, there were 116,668 warrant shares issued associated with these debt agreements. The warrants are classified as equity instruments and are not subject to remeasurement. At the time of issuance, the market price of the Company’s common stock was $ 2.74 per share. In accordance with ASC 470-20, the Company allocated the proceeds between the debt, beneficial conversion feature (BCF) and the warrants based on their relative fair values. The fair value of the BCF and the warrants were calculated using the Black-Scholes option pricing model and had the following assumptions: expected volatility of 253 %, risk-free interest rate of 3.99 %, expected term of 2 years, and no expected dividends. The intrinsic values of the BCF and warrants were $ 107,262 and $ 115,865 , respectively. These balances were recorded as a debt discount, with a corresponding credit to Additional Paid-In Capital. The discounts are being amortized over the two-year term of the notes. As of June 30, 2025, the two convertible notes have been converted into 116,668 shares of common stock. There was $ 27,891 of the debt discount amortized prior to the conversion of the debt. The $ 27,891 was expensed during the period as interest expense. Short-term Treasury Debt The Company entered into a credit facility with BitGo Prime, LLC (“BitGo”). Pursuant to a Master Loan Agreement (the “Agreement”) the Company may borrow up to $ 20,000,000 of Digital Currency or United States Dollars with interest at the rate of 11.5 % per year. The term of the credit facility is for one year and is renewable for successive one year options . Each individual loan under the facility is negotiable as to the amount, term prepayment or recall (payment demand). The loans shall be collateralized by the Company’s treasury assets, already held at BitGo, the initial availability is based on 260% collateral level and a margin call level of 175% . There are no requirements or fees for non-use of the credit facility and the facility can be increased in the future based on the value of the assets BitGo is the custodian of for the Company. At June 30,2025, the outstanding balance of the credit facility was $ 20,000,000 . Subsequent to June 30, 2025 the credit facility increased to $ 50,000,000 . The $ 50,000,000 credit facility is outstanding as of the date of this report and was used for the purchase of Solana. F-22 Table of Contents Note 11. Related Party Transactions In March 2025, Allan Marshall purchased 125,000 shares of Series A preferred shares from the Company at a per share price of $ 2.60 per preferred share. This purchase was settled through the cancellation of the $ 400,000 advance previously mentioned. At March 31, 2025 there was $ 75,000 of this advance remaining and was paid subsequent to the period end, March 31, 2025. In June 2024, Allan Marshall, the Company’s CEO advanced the Company $ 100,000 to enable the Company to purchase equipment needed for the new warehouse facility. This advance was paid in July 2024. No interest or other fees were paid related to this transaction. On April 1, 2024, the Company entered into a lease agreement with MFA 2510 Merchant LLC, which is owned by our CEO, Allan Marshall. The lease is for approximately 10,000 square feet of warehouse and office space, located in Odessa, Florida for $ 20,060 per month on a triple net basis. The initial term of the lease is five years. The Company spent $ 611,768 in leasehold improvements to prepare the facility for product manufacturing, which will be amortized over the five year lease term. At June 30, 2024 there was $ 100,004 accrued for the deposit, 3 months’ rent, and 3 months estimated expenses, this was paid in July 2024 and is now kept current. Product manufacturing was at full capacity and fully moved from the Nevada facility as of August 1, 2024. On June 13, 2024, the Company entered into a Stock Purchase Agreement (“SPA”) pursuant to which the Company sold one hundred percent (100%) of the issued and outstanding equity (the “Interests”) of its wholly owned subsidiary VitaMedica, Inc. to three investors (the “Buyers”). One of the minority interest buyers is Allan Marshall, the Company’s CEO. The purchase price for the stock was Six Million Dollars ($ 6,000,000 ), subject to certain customary post-closing adjustments. The proceeds of the transaction will be used for working capital, the reduction of debt and the reduction of other liabilities currently outstanding. In June 2022, the Company entered into a promissory note with a member of management. The loan was for $ 1,500,000 and has a two-year term with an interest rate of 8.5 % per annum with an additional PIK of 3.5 % per annum. On November 15, 2023, the Company executed an amendment to the promissory note with Mr. Marshall, providing for the payment of interest only for 18 months at an interest rate of 12% per annum and thereafter, the amortization of the note over a 12-month period, starting in June of 2025 . $ 1,000,000 of the principal was used as part of the VitaMedica purchase price. The principal outstanding and accrued interest at June 30, 2025 and 2024 was $ 0 and $ 500,000 , respectively. The accrued interest was paid in July of 2024. In addition, the Company issued Mr. Marshall a warrant to purchase up to 18,750 shares of the Company’s common stock for five years at a per share price of $ 22.00 . On April 23, 2025, the Company entered into an Asset Management Agreement (the “Asset Management Agreement”) with GSR Strategies LLC (the “Asset Manager”), pursuant to which the Asset Manager shall provide discretionary investment management services with respect to the Company’s cryptocurrency treasury (the “Account Assets”). The Company shall pay the Asset Manager an asset-based fee (the “Asset-based Fee”) equal to 1.75% per annum, of the assets under the Asset Manager’s management, which shall be calculated and paid in advance as of the first business day of each calendar month, as determined by the Asset Manager in a commercially reasonable manner. The Company issued warrants (the “GSR Warrants”) to the Asset Manager to purchase 2,192,982 shares of Common Stock at various prices per share of common stock as follows: (i) 877,193 shares of Common Stock at an exercise price of $2.28 per share of Common Stock; (ii) 438,596 shares of Common Stock at an exercise price of $3.42 per share of Common Stock; (iii) 438,596 shares of Common Stock at an exercise price of $4.56 per share of Common Stock; (iv) 438,597 shares of Common Stock at an exercise price of $5.70 per share of Common Stock. The Asset Management Agreement will, unless early terminated in accordance with its terms, continue in effect until the twentieth (20th) anniversary of April 23, 2025 . The Asset Management Agreement may be terminated by the Company without cause solely upon a two-thirds majority vote of the Company’s common stockholders. If the Company terminates the Asset Management Agreement for any other reason other than for cause, the Company shall pay the Asset Manager an early termination fee (the “Termination Fee) in the amount equal or greater of (i) five (5) times the aggregate amount of the management fees paid by the Company to the Asset Manager over the prior ten (10) year period, or (ii) $ 15 million. The Asset Management Agreement may be terminated for Cause (i) by the Company upon at least thirty (30) days prior written notice to the Asset Manager and (ii) by the Asset Manager upon at least sixty (60) days prior written notice to the Company. GSR Growth Investments LP, a related party of the Asset Manager, holds shared voting power over 4,006,210 shares of common stock, or approximately 7.45%, of the Company’s outstanding common stock. The above related party transactions are not necessarily indicative of the amounts and terms that would have been incurred had comparable transactions been entered into with independent parties. F-23 Table of Contents Note 12. Equity Transactions Convertible Preferred Stock The Company has 150,000 shares of Preferred Stock issued and outstanding to Allan Marshall, CEO. The preferred stock is convertible into 138,889 shares of the Company’s common stock at the holder’s option , has preferential liquidation rights and the preferred stock shall vote together with the common stock as a single class on all matters to which shareholders of the Company are entitled to vote at the rate of ten votes per share of preferred stock. Common Stock During the year ended June 30, 2025: On April 24, 2025, the Company issued: (i) 35,970,383 shares of Common Stock, at an offering price of $ 2.28 per share, and (ii) pre-funded warrants (the “Pre-Funded Warrants”) to purchase 7,889,266 shares of Common Stock (the “Pre-Funded Warrant Shares”) at an offering price of $ 2.279 per Pre-Funded Warrant. Each of the Pre-Funded Warrants is exercisable for one share of Common Stock at the exercise price of $ 0.001 per Pre-Funded Warrant Share, are immediately exercisable, and may be exercised at any time until all of the Pre-Funded Warrants are exercised in full. At the time of this report, all of the Pre-funded warrants have been exercised and issued to the investors. The Company issued 742,896 shares of common stock in return for termination of a Promissory Note with a principal balance owed of $ 1,750,000 as per below: · In June of 2025, the Company issued 116,668 shares of common stock as repayment of $ 400,000 of the Company’s debt. The shares were valued at $ 400,000 or $ 3.43 per share. · In April of 2025, the Company issued 241,228 shares of common stock as repayment of $ 550,000 of the Company’s debt. The shares were valued at $ 550,000 or $ 2.28 per share. · In February of 2025, the Company issued 125,000 shares of common stock to two different investors for the repayment of $ 250,000 of outstanding debt. The average share price for the repayment of debt was approximately $ 2.00 per common share issued. · In January of 2025, the Company issued 260,000 shares of common stock to two different investors for the repayment of $ 550,000 of outstanding debt. The weight average share price for the repayment of debt was approximately $ 2.12 per common share issued. The Company issued 102,583 shares of common stock upon vesting for restricted stock units to certain employees in connection with the Company’s 2019 Equity Incentive Plan. The Company issued 7,278 for the cashless exercise of options in connection with the Company’s 2019 Equity Incentive Plan. The Company issued 382,425 shares from the exercise of warrants. The Company issued 19,577 shares in exchange for services from consultants. During the year ended June 30, 2024: In September of 2023, the Company issued 4,505 shares of common stock for the purchase of the remaining 45% of Cygnet Online, LLC. The shares were valued at $ 162,727 or $ 36.12 per common share. These shares were held due to a dispute with the seller. On January 18, 2024, the Company issued 25,081 shares of common stock as repayment of $ 500,000 of the Company’s long-term debt. The shares were valued at $ 500,000 or $ 19.94 per common share. On March 18, 2024, the Company issued 5,000 shares of common stock as an incentive-restricted stock grant to certain employees. The shares were valued at $ 85,000 or $ 17 per common share. The Company effectuated a reverse stock split, at a rate of 20 to 1 , effective at 12:01 am ET, October 3, 2024. The total issued and outstanding shares of the Company’s common stock, post reverse stock split was 1,040,886 . The Depository Trust Company (“DTC”) has requested an additional 202,183 shares of the Company’s common stock to round up, pursuant to the terms of the reverse stock split, the holdings of DTC’s beneficial holders. These shares were issued on October 23, 2024 and on October 30, 2024 we were notified that the shares were returned to the Company’s transfer agent. Although the Company did receive the common stock back after issuance, the potential dilution remains a risk, and is the subject of a complaint filed by the Company in the United States District Court for the District of Nevada with the purpose of eliminating any said risk. The Reverse Stock Split did not modify the relative rights or preferences of the Common Stock. F-24 Table of Contents Note 13. Stock Based Compensation The Company has established a Company an incentive plan, 2019 Equity Incentive Plan (the “2019 Plan”). The plan grants incentives to select persons who can make, are making and continue to make substantial contributions to the growth and success of the Company, to attract and retain the employment and services of such persons and to encourage and reward such contributions by providing these individuals with an opportunity to acquire or increase stock ownership in the Company through either the grant of options or restructured stock. The 2019 Plan is administered by the Compensation Committee or such other committee as is appointed by the Board of Directors pursuant to the 2019 Plan (the “Committee”). The Committee has full authority to administer and interpret the provisions of the 2019 Plan including, but not limited to, the authority to make all determinations with regard to the terms and conditions of an award made under the 2019 Plan. On February 8, 2021, the Shareholders consented, and the Board of Directors approved, the amendment of the 2019 Plan to increase the maximum number of Shares that may be issued thereunder by 138,889 Shares to 277,778 Shares. On May 24, 2022, the Shareholders consented, and the Board of Directors approved the amendment of the 2019 Plan to increase the maximum number of Shares that may be issued thereunder by 222,222 Shares to 500,000 Shares. On September 18, 2024, the Company filed a Certificate of Change with the Nevada Secretary of State to effect a reverse stock split of its common stock at a rate of 1-for-20 (the “Reverse Stock Split”), which became effective as of October 3, 2024 (the “Effective Date”). The Reverse Stock Split was approved by the Board of Directors in accordance with Nevada law. Concurrently, the Company’s shareholders consented to, and the Board of Directors approved, an amendment of the 2019 Plan to increase the maximum number of Shares that may be issued thereunder to 500,000 Shares, as adjusted for the 1 for 20 reverse stock split. Additionally, subsequent to a vote that was approved by shareholders, the 2019 Plan was amended to increase the number of shares issuable pursuant to awards granted under the 2019 Plan from 500,000 shares to 10,000,000 shares . The Board of Directors of the Company may from time to time, in its discretion grant to directors, officers, consultants and employees of the Company, non-transferable options to purchase common shares. The options are exercisable for a period of up to 10 years from the date of the grant. The following table reflects the activity of stock options for the years ended June 30, 2025 and 2024: A summary of stock option activity is as follows: Weighted Average Average Remaining Aggregated Options Exercise Contractual Intrinsic Outstanding Price Life (Years) Value Outstanding at June 30, 2023 241,964 $ 66.20 6.23 $ 1,342,280 Granted 23,900 26.59 - - Forfeited or Cancelled ( 65,150 ) 79.56 - - Outstanding at June 30, 2024 200,714 $ 57.40 5.83 $ 0 .00 Granted 620,000 2.36 - - Forfeited or Cancelled ( 192,083 ) 55.13 - - Exercised ( 7,278 ) 3.46 - - Outstanding at June 30, 2025 621,353 $ 3.39 5.66 $ 374,500 Options exercisable at June 30, 2025 (vested) 600,311 3.42 5.52 374,500 Options exercisable at June 30, 2024 (vested) 196,972 58.20 5.85 0 .00 The average fair value of stock options granted was estimated to be $ 2.36 per share for the period ended June 30, 2025, and the closing stock price on June 30, 2025, was $ 2.98 per common share. F-25 Table of Contents The average fair value of stock options granted was estimated to be $ 3.40 per share for the period ended June 30, 2024, and the closing stock price on June 30, 2024, was $ 7.20 per common share. Stock-based compensation expense attributable to stock options was approximately $ 1,409,916 and $ 957,095 for the years ended June 30, 2025 and 2024, respectively. As of June 30, 2025, there was approximately $ 59,000 unrecognized compensation expense related to unvested stock options outstanding, and the weighted average vesting period for those options was approximately 0.28 years. The value of each grant is estimated at the grant date using the Black-Scholes option model with the following assumptions for options granted during the years ended June 30, 2025 and 2024: June 30, 2025 June 30, 2024 Dividend rate - - Risk free interest rate 3.95 %- 4.61 % 3.95 %- 4.53 % Expected term 5 - 10 5 Expected volatility 146 %- 151 % 58 %- 107 % Grant date stock price $ 2.28 - 3.46 $ 0.53 – 1.47 The basis for the above assumptions are as follows: the dividend rate is based upon the Company’s history of dividends; the risk-free interest rate for periods within the expected term of the option is based on the U.S. Treasury yield curve in effect at the time of grant; the expected term was calculated based on the Company’s historical pattern of options granted and the period of time they are expected to be outstanding; and expected volatility was calculated based upon historical trends in the Company’s stock prices. Forfeitures are estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. Based on historical experience of forfeitures, the Company estimated forfeitures at 0 % for each of the years ended June 30, 2025 and 2024, respectively. In the year ended June 30, 2025, in light of the 1-20 reverse split, certain grants were cancelled and re-issued. The estimate of forfeitures relating to terminations is still 0%. There were 9,027,903 shares available for issuance as of June 30, 2025, under the 2019 Plan as amended. The Plan contains an “evergreen” provision pursuant to which shares authorized for issuance may be automatically replenished. Restricted Stock Units Stock-based compensation from RSUs was approximately $ 696,946 for the year ended June 30, 2025 and $ 212,748 for the year ended June 30, 2024. Pursuant to the 2019 Plan, restricted stock units may be granted. As of June 30, 2025, there was approximately $ 363,000 of unrecognized compensation expense related to 188,584 restricted stock units. The weighted-average term remaining on the unvested shares was approximately 0.48 years. Shares Weighted-Average Grant Date Fair Value Outstanding as of June 30, 2023 - - Granted 12,500 $ 12.69 Cancelled or Forfeited - - Vested ( 5,000 ) $ 17.00 Outstanding as of June 30, 2024 7,500 9.82 Granted 447,000 2.86 Cancelled or Forfeited ( 130,000 ) 3.37 Issued ( 102,583 ) 3.53 Outstanding as of June 30, 2025 221,917 $ 2.48 F-26 Table of Contents At June 30, 2025, there were approximately 33,333 vested RSUs that are included in the 221,917 RSU’s outstanding above as they are not included in the Company’s issued and outstanding common stock. The components of the stock compensation are as follows: 2025 2024 Stock option amortization $ 1,409,916 $ 957,095 Restricted stock units amortization 696,946 212,748 Total stock based compensation $ 2,106,862 $ 1,169,843 14. Income Taxes The components of the provision for income taxes are as follows: 2025 2024 Current tax provision $ 13,558 $ 12,700 Deferred tax provision ( 13,558 ) ( 344,801 ) Provision for income taxes (benefit) $ - $ ( 332,101 ) The differences between income taxes calculated at the statutory US federal income tax rate and the Company’s provision for income taxes are as follows: 2025 2024 Income tax provision at statutory federal and state tax rate 21 % 21 % State taxes, net of federal benefit 4.80 % 0.27 % Nondeductible expense ( 0.03 )% ( 0.05 )% Tax return to provision 0.00 % 0.00 % State tax rate change 0.25 % 0.07 % Other, net 3.81 % 5.53 % Valuation allowance 29.83 % ( 25.43 )% Provision for income taxes 0.00 % 1.38 % F-27 Table of Contents The net deferred income tax asset balance related to the following: 2025 2024 Net operating losses carry forward $ 9,601,876 $ 4,405,549 Right of use assets ( 28,366 ) 98,987 Inventory write off 161,146 981,758 Impairment loss ( 27,512 ) 3,159,477 Intangible assets 2,795,409 1,034,959 Stock options 2,770,725 2,323,784 Capital loss 271,334 - Fixed assets 306,804 - Allowance for doubtful accounts 172,844 16,797 Accrued compensation 13,784 27,540 Deferred revenue 3,572 - Other, net 7 7 Valuation allowances ( 10,092,765 ) ( 6,100,000 ) Deferred tax asset $ 5,948,858 $ 5,948,858 There were approximately $ 59,994,500 and $ 44,916,500 of losses available to reduce federal taxable income in future years and can be carried forward indefinitely as of June 30, 2025 and June 30, 2024, respectively. Future realization of the tax benefits of existing temporary differences and net operating loss carryforwards ultimately depends on the existence of sufficient taxable income within the carryforward period. As of June 30, 2025 and 2024, the Company performed an evaluation to determine whether a valuation allowance was needed. The Company considered all available evidence, both positive and negative, which included the results of operations for the current and preceding years. The Company also considered whether there was any currently available information about future years. The Company determined that it is more likely than not that the Company will have future taxable income. During the years ended June 30, 2025 and June 30, 2024 the federal net operating loss increased significantly and management recorded a valuation reserve of $ 10,092,765 and $ 6,100,000 , respectively. We file federal and state income tax returns in jurisdictions with varying statutes of limitations. Income tax returns generally remain subject to examination by federal and most state tax authorities. We are not currently under examination in any federal or state jurisdiction. Note 15. Risks and Uncertainties There is substantial uncertainty and different interpretations among federal, state and local regulatory agencies, legislators, academics and businesses as to the scope of operation of Farm Bill-compliant hemp programs relative to the emerging regulation of cannabinoids. These different opinions include, but are not limited to, the regulation of cannabinoids by the U.S. Drug Enforcement Administration, or DEA, and/or the FDA and the extent to which manufacturers of products containing Farm Bill-compliant cultivators and processors may engage in interstate commerce. The uncertainties cannot be resolved without further federal, and perhaps even state-level, legislation, regulation or a definitive judicial interpretation of existing legislation and rules. If these uncertainties continue, they may have an adverse effect upon the introduction of our products in different markets. F-28 Table of Contents Note 16. Discontinued Operations – Sale of Interactive Offers On August 31, 2023, the Company sold Interactive Offers, LLC (“Interactive”) to Amplifyir Inc. (the “Buyer”). The purchase price was $ 1,250,000 with a provision to adjust the final purchase price based on the business being transferred to Amplifyer Inc. with a net zero working capital. In addition, the Buyer is obligated to pay the Company two-and-one-half percent (2.5%) of certain advertising revenues of Interactive for a two-year period post-closing . Accordingly, the results of the business were classified as discontinued operations in our statements of operations and excluded from both continuing operations for all periods presented. Summary of discontinued operations: Years ended June 30, 2025 2024 Discontinued Operations Revenue $ - $ 158,147 Cost of sales $ - $ 11,982 Sales, general and administrative expenses $ - $ 333,168 Depreciation and amortization $ - $ - Loss from discontinued operations $ - $ ( 187,003 ) Accounts receivable net of allowance for doubtful accounts $ - $ - Fixed assets, net of accumulated depreciation $ - $ - Total assets $ - $ - Total liabilities $ - $ - Note 17. Discontinued Operations – Sale of VitaMedica On June 13, 2024, the Company sold VitaMedica, Inc. to three investors and had an effective day of June 1, 2024. One of the minority interest investors is Allan Marshall, the Company’s Chief Executive Officer. The purchase price for the stock was $ 6,000,000 , subject to certain customary post-closing adjustments. In addition, the Buyers are obligated to pay the Company for services provided according to the Transition Services Agreement. Accordingly, the results of the business were classified as discontinued operations in our statements of operations and excluded from both continuing operations and segment results for all periods presented. Summary of discontinued operations: Years ended June 30, 2025 2024 Discontinued Operations Revenue $ - $ 8,707,268 Cost of sales $ - $ 2,051,854 Sales, general and administrative expenses $ - $ 6,076,257 Depreciation and amortization $ - $ 425,263 Other expenses $ - $ ( 59,742 ) Income (loss) from discontinued operations $ - $ 213,636 Accounts receivable net of allowance for doubtful accounts $ - $ - Fixed assets, net of accumulated depreciation $ - $ - Total assets $ - $ - Total liabilities $ - $ - F-29 Table of Contents Fair value of consideration the Company was paid: Cash $ 2,100,000 Reduction of liabilities 1,900,000 Note payable 1,000,000 Working capital payment 1,000,000 $ 6,000,000 Recognized amounts of identifiable assets, liabilities and intangible assets transferred: Cash $ 37,267 Accounts receivable 416,374 Inventory 1,747,150 Prepaid expenses 518,280 Fixed assets 111,305 Other assets 184,800 Liabilities ( 512,926 ) Total identifiable assets 2,502,250 Total goodwill and intangible assets 1,549,212 Total assets transferred 4,051,462 Purchase price $ 6,000,000 Gain on sale of VitaMedica $ 1,948,538 Note 18. Discontinued Operations – Sale of E-Core On August 1, 2024, the Company closed a sale transaction in which, effective as of June 30, 2024, it sold 100 % of the outstanding stock of its wholly owned subsidiary E-Core Technology, Inc., a Florida corporation (d/b/a New England Technology, Inc.) (“E-core”), to E-Core Holdings, LLC, a Florida limited liability company (the “Buyer”) pursuant to the terms of an Agreement to Unwind Securities Purchase Agreement dated July 31, 2024 (the “Agreement”). The principals of the Buyer are the three individuals from whom the Company acquired E-core in October 2022. The purchase price in the transaction was $ 2,000,000 paid by the Buyer to the Company at closing. In addition, in connection with the closing of the transaction (i) the Company was released as a guarantor from E-core’s commercial loan facility, and (ii) all subordinated promissory notes issued by the Company in connection with the Company’s initial acquisition of E-core were cancelled and any outstanding principal and interest thereunder was deemed paid in full. The Agreement contains standard representations and warranties, conditions to closing, and covenants, for a transaction of this nature. Summary of discontinued operations: Years ended June 30, 2025 2024 Discontinued Operations Revenue $ - $ 51,670,755 Cost of sales $ - $ 44,529,158 Sales, general and administrative expenses $ - $ 4,213,143 Depreciation and amortization $ - $ 1,615,500 Other expenses $ - $ 247,379 Income from discontinued operations $ - $ 1,065,575 Accounts receivable net of allowance for doubtful accounts $ - $ - Fixed assets, net of accumulated depreciation $ - $ - Total assets $ - $ - Total liabilities $ - $ - F-30 Table of Contents Fair value of consideration the Company was paid: Acquisition payable, paid August 5, 2024 $ 2,000,000 Assumption of debt and accrued interest 10,636,309 $ 12,636,309 Recognized amounts of identifiable assets, liabilities and intangible assets transferred: Cash $ 51,976 Accounts receivable 5,301,212 Inventory 1,870,687 Prepaid expenses 56,476 Fixed assets - Liabilities ( 3,428,549 ) Total identifiable assets 3,851,802 Total goodwill and intangible assets 10,521,833 Total assets transferred 14,373,635 Purchase price $ 12,636,309 Loss on sale of E-core $ 1,737,326 Note 19. Subsequent Events On July 11, 2025 the Company closed on a private placement offering to sell 12,457,186 shares of the Company’s common stock at an offering price of $ 4.00 per share. The Company received approximately $ 37,077,000 , net of broker fees, the fees on the convertible debt offering completed on July 16, 2025, legal fees, filing fees and other expenses incurred for the private placement. On July 16, 2025, the Company closed on a private placement offering a secured convertible note in exchange for locked and liquid Solana with an original principal amount of $ 151,169,169 . The note matures on the second anniversary of the closing and bears interest at a rate of 2 % per annum and may not be prepaid by the Company. The principal of the note can be converted at any time by the holders into the Company’s common stock at a conversion price of $ 4.25 per share. The notes are secured by a first priority lien on the digital assets exchanged for the secured convertible note. If any of the principal remains at the end of the two year term, the Company would repay the note on a pro-rata basis for the remaining principal to the digital assets exchanged for the secured convertible note. The agreements contain other customary terms, conditions and covenants for similar agreements. F-31 Table of Contents Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure None.