Vertical Data Inc. 10-K

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA 15 VERTICAL DATA, INC. INDEX TO FINANCIAL STATEMENTS INDEX TO AUDITED FINANCIAL STATEMENTS AS OF SEPTEMBER 30, 2025 AND 2024 AND FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2025 AND THE PERIOD FROM MAY 3, 2024 (DATE OF INCEPTION) TO SEPTEMBER 30, 2024 Financial Statements PAGE Report of Independent Registered Public Accounting Firm F-2 Balance Sheets as of September 30, 2025 and 2024 F-3 Statement of Operations for the fiscal year ended September 30, 2025 and from May 3, 2024 (inception) to September 30, 2024 F-4 Statement of Changes in Shareholder’s Deficit for the fiscal year ended September 30, 2025 and from May 3, 2024 (inception) to September 30, 2024 F-5 Statements of Cash Flows for the fiscal year ended September 30, 2025 and the period from May 3, 2024 (inception) to September 30, 2024 F-6 Notes to Financial Statements F-7 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM 200 Spectrum Center Drive, Suite 1 300 Irvine, CA 92618 (714) 234-5980 www.bcrgcpas.com To the shareholders and the board of directors of Vertical Data Inc. Opinion on the Consolidated Financial Statements Opinion on the Financial Statements We have audited the accompanying balance sheet of Vertical Data Inc. (the “Company”) as of September 30, 2025 and 2024, the related statement of operations, stockholders’ equity (deficit), and cash flows for the period May 3, 2024 (date of formation) to September 30, 2025 and 2024, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of September 30, 2025 and 2024, and the results of its operations and its cash flows for the year ended September 30, 2025, in conformity with accounting principles generally accepted in the United States. Basis for Opinion These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audit. 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 audit 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 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 audit, 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 audit included performing procedures to assess the risks of material misstatement of the 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 financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion. Critical Audit Matters The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing separate opinions on the critical audit matter or on the accounts or disclosures to which it relates. The Company did not have any critical audit matters /s/ BCRG Group BCRG Group (PCAOB ID 7158 ) We have served as the Company’s auditor since 2024. Irvine, CA December 29, 2025 F- 2 VERTICAL DATA INC. BALANCE SHEETS 2025 2024 As of September 30, 2025 2024 ASSETS Current assets: Cash $ 372,718 $ 427,722 Other current assets - 664,000 Prepaid expenses 144,994 29,989 Total current assets 517,712 1,121,711 Property and equipment, net 1,457 1,329 Total assets 519,169 1,123,040 LIABILITIES AND EQUITY Current liabilities: Accrued liabilities $ 252,058 $ 143,115 Other Current Liabilities - 224,000 Total current liabilities 252,058 367,115 Total liabilities 252,058 367,115 Equity: Common stock, $ 0.0001 par value, 100,000,000 shares authorized; 41,193,052 and 38,397,052 shares issued and outstanding at September 30, 2025 and September 30, 2024, respectively. 4,119 3,839 Additional paid in capital 4,433,669 1,102,685 Accumulated deficit ( 4,170,677 ) ( 350,599 ) Total equity (deficit) 267,111 755,925 Total liabilities and equity $ 519,169 $ 1,123,040 The accompanying notes are an integral part of these financial statements. F- 3 VERTICAL DATA INC. STATEMENTS OF OPERATIONS 2025 2024 (1) Fiscal Period Ended September 30, 2025 2024 (1) Revenue $ 3,666,000 $ 6,866,558 Cost of revenue 3,598,000 6,542,000 Gross profit $ 68,000 $ 324,558 Operating expenses: General and administrative 3,888,078 675,157 Total operating expenses 3,888,078 675,157 Loss from operations ( 3,820,078 ) ( 350,599 ) Net (loss) income $ ( 3,820,078 ) $ ( 350,599 ) Earnings (loss) per common share: Basic and diluted $ ( 0.09 ) $ ( 0.02 ) Weighted average common shares outstanding: Basic and diluted 40,585,260 23,294,212 (1) The Company was incepted May 3, 2024 and therefore the prior period information may not be comparable The accompanying notes are an integral part of these financial statements. F- 4 VERTICAL DATA INC. STATEMENT OF SHAREHOLDERS’ EQUITY # of Shares Amount APIC Accumulated Deficit Total Common Stock # of Shares Amount APIC Accumulated Deficit Total Inception as of May 3, 2024 - $ - $ - $ - $ - Issuance of founders shares 36,503,000 3,650 ( 3,064 ) ( 45,143 ) ( 44,557 ) June 30, 2024 36,503,000 $ 3,650 $ ( 3,064 ) $ ( 45,143 ) $ ( 44,557 ) Issuance of common stock 1,894,052 189 946,777 - 946,966 Stock-based compensation - - 158,972 - 158,972 Net loss - - - ( 305,456 ) ( 305,456 ) September 30, 2024 38,397,052 $ 3,839 $ 1,102,685 $ ( 350,599 ) $ 755,925 September 30, 2024 38,397,052 3,839 1,102,685 ( 350,599 ) 755,925 Issuance of common stock 2,186,000 219 1,093,181 - 1,093,400 Stock-based compensation - - 464,118 - 464,118 Net loss - - - ( 837,458 ) ( 837,458 ) December 31, 2024 40,583,052 4,058 2,659,984 ( 1,188,057 ) 1,475,985 Issuance of common stock 610,000 61 304,939 - 305,000 Stock-based compensation - - 980,614 - 980,614 Net loss - - - ( 1,404,996 ) ( 1,404,996 ) March 31, 2025 41,193,052 4,119 3,945,537 ( 2,593,053 ) 1,356,603 Stock-based compensation - - 343,643 - 343,643 Net loss - - - ( 798,085 ) ( 798,085 ) June 30, 2025 41,193,052 4,119 4,289,180 ( 3,391,138 ) 902,161 Balance 41,193,052 4,119 4,289,180 ( 3,391,138 ) 902,161 Stock-based compensation - - 144,489 - 144,489 Net loss - - - ( 779,539 ) ( 779,539 ) September 30, 2025 41,193,052 4,119 4,433,669 ( 4,170,677 ) 267,111 Balance 41,193,052 4,119 4,433,669 ( 4,170,677 ) 267,111 The accompanying notes are an integral part of these financial statements. F- 5 VERTICAL DATA INC. STATEMENTS OF CASH FLOWS 2025 2024 (1) Fiscal Period Ended September 30, 2025 2024 (1) Cash flows from operating activities: Net (loss) income ( 3,820,078 ) ( 350,599 ) Adjustments to reconcile net (loss) income to net cash used in operating activities Stock-based compensation 1,932,864 158,972 Depreciation expense 331 23 Changes in operating assets and liabilities: Prepaid expenses ( 115,005 ) ( 29,989 ) Other current assets 664,000 ( 664,000 ) Accrued liabilities 108,943 143,115 Other current liabilities ( 224,000 ) 224,000 Net cash from (used) in operating activities ( 1,452,945 ) ( 518,478 ) Cash flows from investing activities: Purchase of property and equipment ( 459 ) ( 1,352 ) Net cash used in investing activities ( 459 ) ( 1,352 ) Cash flows from financing activities: Sale of common stock, net of fees and costs 1,398,400 946,966 Cash received from issuance of founder shares - 586 Net cash provided by financing activities 1,398,400 947,552 Net change in cash and cash equivalents ( 55,004 ) 427,722 Cash and cash equivalents, beginning of period 427,722 - Cash and cash equivalents, end of period 372,718 427,722 Supplemental disclosures of cash flow information: Cash paid for interest - - Cash paid for taxes - - (1) The Company was incepted May 3, 2024 and therefore the prior period information may not be comparable The accompanying notes are an integral part of these financial statements. F- 6 VERTICAL DATA INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. NATURE OF OPERATIONS Vertical Data Inc. (the “Company”) was incorporated in Nevada on May 3, 2024 and has a fiscal year-end of September 30. The Company’s current service to its customers is comprised of the sale of artificial intelligence related hardware. The Company plans to expand its service offerings in the future to include technology consulting, design and engineering, project management, systems integration, system installation and facilities management. The Company’s corporate office, which is rented on a month-to-month basis, is located in Las Vegas, Nevada. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND NEW ACCOUNTING STANDARDS Basis of Presentation The accompanying financial statements have been prepared using the accrual basis of accounting in accordance with generally accepted accounting principles (“GAAP”) promulgated in the United States of America. The financial statements include Vertical Data Inc. as of September 30, 2025 and 2024 and for the fiscal year ended September 30, 2025 and the prior fiscal period beginning May 3, 2024 (date of formation) through September 30, 2024. Use of Estimates The preparation of financial statements in conformity with U.S. GAAP requires the Company’s management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statement and the reported amounts of revenues and expenses during the reporting period. Making estimates requires management to exercise significant judgment. It is at least reasonably possible that the estimate of the effect of a condition, situation or set of circumstances that existed at the date of the financial statements, which management considered in formulating its estimate, could change in the near term due to one or more future confirming events. The Company bases its estimates on historical experience and on various assumptions that are believed to be reasonable, the results of which form the basis for the amounts recorded in the consolidated financial statements. Going Concern Pursuant to the guidance in ASC 205-40, Going Concern , for each annual and interim reporting period an entity’s management must evaluate whether there are conditions and events, considered in the aggregate, that raise substantial doubt about an entity’s ability to continue as a going concern within one year after the date that the financial statements are issued. To that extent, the Company incurred a net loss of approximately $ 3.8 million during the year ended September 30, 2025 and had cash of approximately $ 0.4 million as of its fiscal year end. As such, the Company has concluded that there is substantial doubt about its ability to continue as a going concern within one year after the date that the financial statements are issued. To mitigate the condition, management plans to increase liquidity through the future sale of equity. However, as of the time of the filing we do not have any financing plans that are probable of occurring. Segment Reporting The Company currently operates in a single operating segment. Operating segments are reported in a manner consistent with the internal reporting provided to the Company’s chief operating decision maker (“the CODM”). The Company’s CODM, which is its Chief Executive Officer, views the Company’s operations and manages its business as a single operating segment, which is the sale of IT hardware. Cash and Cash Equivalents The Company considers all short-term investments with an original maturity of three months or less when purchased to be cash or cash equivalents. Cost of Revenue The Company’s cost of revenue is comprised of the cost of purchased IT equipment from our suppliers. Sales and Marketing The Company’s sales and marketing expenses primarily consist of costs incurred related to sales commissions and our various marketing endeavors. The Company incurred $ 31,922 and $ 6,722 of sales and marketing expenses for the fiscal year ended September 30, 2025 and the period of May 3, 2024 (date of formation) to September 30, 2024. Sales and marketing expense is included in general and administrative expense in our statement of operations. F- 7 Income Taxes The Company follows the asset and liability method of accounting for income taxes under ASC 740, “Income Taxes.” Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that included the enactment date. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized. As of September 30, 2025, the Company had deferred tax assets related to certain net operating losses. A valuation allowance was established against these deferred tax assets at their full amount. Refer to note 10 for additional information. ASC 740 prescribes a recognition threshold and a measurement attribute for the financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more likely than not to be sustained upon examination by taxing authorities. The Company is currently not aware of any issues under review that could result in significant payments, accruals or material deviation from its position. The Company is subject to income tax examinations by major taxing authorities since inception. Concentration of Credit Risk Financial instruments that potentially subject the Company to concentrations of credit risk consist of a cash account in a financial institution, which, at times, may exceed the Federal Depository Insurance Coverage of $ 250,000 . As of September 30, 2025, the Company has not experienced losses on this account and management believes the Company is not exposed to significant risks on such account. F- 8 Net Loss Per Share Net loss per share is computed by dividing net loss by the weighted average number of common shares outstanding during the reporting period. Diluted earnings per share is computed similar to basic earnings per share, except the denominator is increased to include the number of additional common shares that would have been outstanding if the dilutive potential common shares had been issued. Stock-Based Compensation The Company accounts for its stock-based compensation awards in accordance with ASC Topic 718, Compensation—Stock Compensation (“ASC 718”). ASC 718 requires all stock-based payments, including grants of employee stock options, to be recognized in the statements of operations by measuring the fair value of the award on the date of grant and recognizing this fair value as stock-based compensation over the requisite service period, generally the vesting period. The Company determines the fair value of its underlying shares in accordance with the practical expedient for nonpublic entities provided in ASC 718-10-30. The Company estimates the grant date fair value of stock option awards using the Black-Scholes option-pricing model. The use of the Black-Scholes option-pricing model requires management to make assumptions with respect to the fair value of our underlying shares, the expected term of the option, the expected volatility of our Common Stock, the risk-free interest rates and expected dividend yield of our Common Stock. Recognition of Revenue from Contracts with Customers The Company recognizes revenue from its contracts with customers in accordance with the core principle outlined in ASC 606 Revenue from Contracts with Customers . Specifically, the Company recognizes revenue “to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which we expect to be entitled in exchange for those goods or services”. To that extent, the Company recognizes revenue in accordance with the ASC Topic by applying the following five steps: ● Step 1-Identify the contract(s) with a customer ● Step 2-Identify the performance obligations in the contract ● Step 3-Determing the transaction price ● Step 4-Allocate the transaction price to the performance obligations in the contract ● Step 5-Recognize revenue when (or as) the Company satisfies a performance obligation The Company’s contracts with its customers currently only contain a single performance obligation comprised solely of the sale of IT equipment. To that extent, the Company does not provide any installation or customization services at this time that might be considered a separate performance obligation. Further, as noted above, revenue is recognized at a point in time upon delivery of the equipment to the customer at the agreed upon location. The Company does not currently extend any form of payment terms to its customers and, as such, full payment for the equipment is received from the customer (via wire payment) immediately upon delivery of the equipment. As full payment is received only upon delivery, the Company typically does not have the need to recognize contract assets, contract liabilities or accounts receivable. F- 9 In determining the transaction price, the Company’s contracts with its customers do not include a significant financing component, noncash consideration or consideration payable to the customer. The Company’s contracts do include a refund option whereby the customer has the right to return the equipment to the Company for a full refund within a stated period after purchase. However, the Company noted that equipment returns were highly infrequent and were not material to our results of operations. As such, no refund liability has been recorded. Finally, as it pertains to incremental costs of obtaining a contract, the Company, in accordance with the practical expedient provided in ASC 340-40, has elected to expense when incurred all sales commissions paid to its employees as the amortization period of the asset that the entity would have recognized would be one year or less. Property and Equipment Property and equipment consists primarily of computer equipment, which is depreciated over an estimated three-year life using the straight-line method. Expenditures for repairs and maintenance are expensed as incurred. When assets have been retired or sold, the cost and related accumulated depreciation are removed from the financial statements and any resulting gain or loss is recognized in our results of operations. Commitments and Contingencies The Company accounts for contingencies in accordance with ASC 450-20, Contingencies. Certain conditions may exist as of the date the financial statements are issued, which may result in a loss to the Company, but which will only be resolved when one or more future events occur or fail to occur. The Company assesses such contingent liabilities, and such assessment inherently involves an exercise of judgment. In assessing loss contingencies related to legal proceedings that are pending against the Company or un-asserted claims that may result in such proceedings, the Company evaluates the perceived merits of any legal proceedings or un-asserted claims as well as the perceived merits of the amount of relief sought or expected to be sought therein. If the assessment of a contingency indicates that it is probable that a material loss has been incurred and the amount of the liability can be estimated, then the estimated liability would be accrued in the Company’s financial statements. If the assessment indicates that a potentially material loss contingency is not probable but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent liability, and an estimate of the range of possible losses, if determinable and material, would be disclosed. The Company is not currently involved in any legal proceedings that could require either accrual or disclosure. Subsequent Events For events or transactions that occur after the balance sheet date but before financial statements are issued or are available to be issued the Company considers whether recognition or disclosure in the financial statements may be required based on the guidance in ASC 855 Subsequent Events . To that extent, the Company will recognize in its financial statements the effect of all subsequent events that provide additional evidence about conditions that existed at the date of the balance sheet. Further, the Company does not recognize subsequent events that provide evidence about conditions that did not exist at the date of the balance sheet but arose after the balance sheet date but before financial statements are issued or are available to be issued. However, certain non-recognized subsequent events may still be disclosed in order to keep the financial statements from being misleading. F- 10 Recent Accounting Pronouncements In November 2023, the FASB issued Accounting Standards Update (“ASU”) 2023-07, Segment Reporting—Improvements to Reportable Segment Disclosures (“ASU 2023-07”), which requires incremental disclosures related to a public entity’s reportable segments. Required disclosures include, on an annual and interim basis, significant segment expenses that are regularly provided to the CODM and included within each reported measure of segment profit or loss, an amount for other segment items (which is the difference between segment revenue less segment expenses and less segment profit or loss) and a description of its composition, the title and position of the CODM, and an explanation of how the CODM uses the reported measure(s) of segment profit or loss in assessing segment performance and deciding how to allocate resources. The standard also permits disclosure of more than one measure of segment profit. ASU 2023-07 is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. The Company adopted the new standard on September 30, 2025. The adoption of the new standard did not have a material impact to our financial statements. In December 2023, the FASB issued ASU 2023-09-Income Taxes (Topic 740)-Improvements to Income Tax Disclosures, which requires entities to provide additional information in the rate reconciliation and additional disclosures about income taxes paid. The guidance should be applied prospectively and is effective for annual periods beginning after December 15, 2024. The Company does not expect the issued standard to have a material impact on its financial statements. In November 2024, the FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40). The amendments in this update require disclosure, in the notes to financial statements, of specified information about certain costs and expenses at each interim and annual reporting period. The amendments are effective for annual periods beginning after December 15, 2026, and reporting periods beginning after December 15, 2027, with early adoption permitted. The Company is currently evaluating the impact of the new ASU to its financial statements. 3. OTHER CURRENT ASSETS Other current assets consisted of the following: SCHEDULE OF OTHER CURRENT ASSETS September 30, 2025 September 30, 2024 Refunds due from suppliers $ - $ 664,000 Total other current assets $ - $ 664,000 4. PREPAID EXPENSES Prepaid expenses consisted of the following: SCHEDULE OF PREPAID EXPENSES September 30, 2025 September 30, 2024 Prepaid legal fees $ - $ 25,000 Prepaid commissions 132,625 4,989 Other 12,369 - Prepaid expenses $ 144,994 $ 29,989 5. PROPERTY AND EQUIPMENT Property and equipment consisted of the following: SCHEDULE OF PROPERTY AND EQUIPMENT Description September 30, 2025 September 30, 2024 Tools, machinery, and equipment $ 1,811 $ 1,352 Less – accumulated depreciation ( 354 ) ( 23 ) Total property and equipment, net $ 1,457 $ 1,329 Total depreciation expense was $ 331 and $ 23 for the fiscal year ended September 30, 2025 and the period May 3, 2024 (date of formation) to September 30, 2024. 6. ACCRUED LIABILITIES Accrued liabilities consisted of the following: SCHEDULE OF ACCRUED LIABILITIES September 30, 2025 September 30, 2024 Wages accrual $ 102,397 $ 99,400 Expenses accrual 131,115 32,385 Payroll tax accrual - 2,400 Credit card accrual 18,546 8,930 Total accrued liabilities $ 252,058 $ 143,115 F- 11 7. OTHER CURRENT LIABILITIES Other current liabilities as of September 30, 2024 consisted entirely of a customer deposit received during the period for which the order was subsequently cancelled. The amount was refunded back to the customer during the year ended September 30, 2025. 8. STOCKHOLDERS’ EQUITY Upon formation, the authorized capital of the Company was 100,000,000 shares consisting of 100,000,000 shares of common stock, par value $ 0.0001 . Ordinary Shares The Company’s common shares do not include any dividend or liquidation preferences, participation rights, call prices or unusual voting rights. Share Cancellation During October of 2025, certain founders and other Company shareholders voluntarily surrendered an aggregate of 31,752,690 shares of Common Stock to the Company for no consideration. Consequently, as of the date of the filing, the Company had 9,440,362 shares of Common Stock outstanding. The cancellation was not given retroactive effect on the balance sheet as, pursuant to SAB Topic 4.C, it was not a stock dividend, stock split or reverse split. 9. SHARE BASED COMPENSATION 2024 Equity Incentive Plan On July 1, 2024, the Company’s board of directors approved the Company’s 2024 Equity Incentive Plan (the “Plan”), which was designed to attract, retain and motivate key employees, officers, consultants, and directors of the Company (collectively, the “Eligible Persons”) to promote the success of the Company’s business. The Plan authorizes the award to Eligible Persons of stock options, restricted stock, restricted stock units, or other stock-based awards granted under the Plan. Under the Plan, the Company reserved 10.4 million shares of its stock for issuance to eligible persons. Stock Options The stock options granted during fiscal year 2025 and 2024 have various vesting schedules, ranging from immediate vests to a three-year period and stock-based compensation expense is recognized on a straight-line basis over the requisite service period as services are performed throughout that vesting period. Stock option activity for the period was as follows: SCHEDULE OF STOCK OPTION ACTIVITY Number of Shares Weighted Average Exercise Price Weighted Average Remaining Contractual Term Aggregate Intrinsic Value Nonvested at September 30, 2024 4,025,000 $ 0.05 Granted 6,996,677 $ 0.05 Vested ( 3,289,455 ) $ 0.05 Forfeited ( 3,135,000 ) $ 0.05 Nonvested at September 30, 2025 4,597,222 $ 0.05 9.0 $ - Exercisable at September 30, 2025 3,289,455 $ 0.05 9.0 $ - F- 12 The weighted average grant date fair value options granted during each of the two years ended September 30, 2025 was $ 0.49 . The Company utilizes the Black Scholes valuation model to determine the fair value of its granted options. A description of the significant assumptions used to estimate the fair value of share-based compensation awards was as follows: SCHEDULE OF ESTIMATE FAIR VALUE OF SHARE BASED COMPENSATION AWARDS Fiscal Periods Ended September 30, 2025 and 2024 Expected volatility 90 % Risk free interest rate 4.0 % Expected term 10 years Expected dividends - Current price input 0.50 The Company utilized the practical expedient in ASC 718-10-30 to estimate the fair value of its underlying shares. As of September 30, 2025, there was approximately $ 1.8 million of total unrecognized compensation cost related to nonvested share-based compensation arrangements granted. That cost is expected to be recognized over a weighted-average period of 1.0 year. The Company recognized $ 1,932,864 and $ 158,972 of stock-based compensation during its fiscal years ended September 30, 2025 and 2024, respectively. 10. INCOME TAXES The Company accounts for income taxes under ASC 740 - Income Taxes (“ASC 740”), which provides for an asset and liability approach of accounting for income taxes. Under this approach, deferred tax assets and liabilities are recognized based on anticipated future tax consequences, using currently enacted tax laws, attributed to temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts calculated for income tax purposes. The Company did not recognize any current or deferred taxes for its fiscal year ended September 30, 2025. The Company recognizes deferred tax assets to the extent that it believes that these assets are more likely than not to be realized. In making such a determination, the Company considers all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax-planning strategies, and results of recent operations. The Company assessed the need for a valuation allowance against its net deferred tax assets and determined a full valuation allowance is required since the Company has no history of generating taxable income. A reconciliation of the federal income tax rate to the Company’s effective tax rate at September 30, 2025 and 2024 is as follows: SCHEDULE OF RECONCILIATION OF THE FEDERAL INCOME TAX RATE 2025 2024 September 30, 2025 2024 Federal Statutory Rate 21 % 21 % State tax, net of income tax benefit 0 % 0 % Effect of permanent difference - 11 % - 0.1 % Change in valuation allowance - 10 % - 20.9 % Effective income tax rate reconciliation - - F- 13 Further, the components of our deferred tax assets and liabilities, which were fully offset with a valuation allowance, were as follows as of September 30, 2025 and 2024: SCHEDULE OF DEFERRED TAX ASSETS AND LIABILITIES Deferred Tax Assets: 2025 2024 September 30, Deferred Tax Assets: 2025 2024 Operating loss carryforward $ 454,843 $ 38,575 Start-up costs - 1,103 Total Deferred Tax Assets $ 454,843 $ 39,678 Deferred Tax Liabilities: Depreciation $ ( 295 ) $ ( 225 ) Total deferred tax liabilities ( 295 ) ( 225 ) Net deferred tax assets 454,549 39,453 Valuation allowance ( 454,549 ) ( 39,453 ) Total net deferred tax assets $ - $ - The Company’s ability to utilize net operating loss carryforwards will depend on its ability to generate adequate future taxable income. Future utilization of the net operating loss carry forwards is subject to certain limitations under Section 382 of the Internal Revenue Code. As of September 30, 2025, the Company had federal and state net operating loss carryforwards available to offset future taxable income in the amounts of approximately $ 2,160,666 , which does not expire. The Company has evaluated its income tax positions and has determined that it does not have any uncertain tax positions. The Company will recognize interest and penalties related to any uncertain tax positions through its income tax expense. 11. CONCENTERATION OF CUSTOMERS Revenues from two customers of the Company represented $ 3.5 million and $ 0.2 million, or 94 % and 6 %, of the Company’s revenues for its fiscal year ended September 30, 2025. Revenues from two customers of the Company represent $ 5.3 million and $ 1.6 million, or 77 % and 23 %, of the Company’s revenues for its fiscal year ended September 30, 2024. 12. SUBSEQUENT EVENTS Common Stock Cancellations Effective as of October 8, 2025, certain founders and other Company shareholders voluntarily surrendered an aggregate of 31,752,690 shares of Common Stock to the Company for no consideration. Consequently, as of the date of the filing, the Company had 9,440,362 shares of Common Stock outstanding. F- 14 ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE Not applicable