Annual Report for Fiscal Year Ending 12-31, 2025 (Form 10-K)

Management's Discussion and Analysis of Financial Condition and Results of Operation

The following discussion of our financial condition and results of operations should be read in conjunction with our financial statements and the related notes, and other financial information included in this Form 10-K.

Our Management's Discussion and Analysis contains not only statements that are historical facts, but also statements that are forward-looking. Forward-looking statements are, by their very nature, uncertain and risky. These risks and uncertainties include international, national, and local general economic and market conditions; our ability to sustain, manage, or forecast growth; our ability to successfully make and integrate acquisitions; new product development and introduction; existing government regulations and changes in, or the failure to comply with, government regulations; adverse publicity; competition; the loss of significant customers or suppliers; fluctuations and difficulty in forecasting operating results; change in business strategy or development plans; business disruptions; the ability to attract and retain qualified personnel; the ability to protect technology; the risk of foreign currency exchange rate; and other risks that might be detailed from time to time in our filings with the Securities and Exchange Commission.

Although the forward-looking statements in this Report reflect the good faith judgment of our management, such statements can only be based on facts and factors currently known by them. Consequently, and because forward-looking statements are inherently subject to risks and uncertainties, the actual results and outcomes may differ materially from the results and outcomes discussed in the forward-looking statements. You are urged to carefully review and consider the various disclosures made by us in this report as we attempt to advise interested parties of the risks and factors that may affect our business, financial condition, and results of operations and prospects.

9

Results of Operations

The following table summarizes our consolidated results of operations for the fiscal years ended December 31, 2025 and 2024.

		Year Ended December 31, 2025				Year Ended December 31, 2024
Revenues		$	18,790,946			$	16,206,752
Cost of revenues		$	8,445,848			$	7,102,600
Gross profit		$	10,345,098			$	9,104,152
Gross margin			55.1	%			56.2	%
Total operating expenses		$	10,531,906			$	8,807,883
Income (loss) from operations		$	(186,808	)		$	296,269
Interest expense		$	(164,767	)		$	(97,703	)
Other income		$	354,340			$	12,546
Net income		$	2,765			$	211,112
Basic and diluted earnings per share		$	0.00			$	0.00
Weighted avg. shares outstanding			87,964,090				87,964,090

Revenues

Revenues increased by $2,584,194, or approximately 15.9%, from $16,206,752 for the year ended December 31, 2024, to $18,790,946 for the year ended December 31, 2025. This growth reflects increased demand across our core service lines, including electronic equipment recycling, IT asset disposition, data destruction, and data center decommissioning. Management believes the growth in revenue was driven in part by expanding enterprise customer relationships, including projects related to the retirement of computing infrastructure associated with artificial intelligence and high-performance computing environments, as enterprises upgrade legacy data center infrastructure to support AI-optimized hardware workloads.

Revenue concentration risk remains present. For the year ended December 31, 2025, our top three customers accounted for approximately 15%, 13%, and 12% of total revenues, respectively, compared to 20%, 13%, and 11% for the same customers in 2024. The decrease in concentration among our largest customer reflects continued diversification of our customer base. No other individual customer accounted for 10% or more of revenues in 2025.

Cost of Revenues and Gross Profit

Cost of revenues increased by $1,343,248, or approximately 18.9%, from $7,102,600 in 2024 to $8,445,848 in 2025. The increase in cost of revenues was driven by the higher volume of materials processed and services performed, consistent with overall revenue growth. Cost of revenues as a percentage of revenues increased modestly, resulting in a slight compression in gross margin from 56.2% in 2024 to 55.1% in 2025. Management attributes this compression primarily to changes in service and materials mix, increased logistics and transportation costs, and incremental costs associated with new customer onboarding and data center decommissioning projects. Despite this modest compression, gross margin remained at a healthy level reflective of our service-intensive, technology-assisted processing model.

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Operating Expenses

The following table sets forth our operating expenses for the years ended December 31, 2025 and 2024.

Operating Expense		Year Ended December 31, 2025				Year Ended December 31, 2024
General and administrative		$	2,460,062			$	2,072,830
Payroll expenses		$	5,490,171			$	4,780,729
Professional fees		$	535,558			$	206,705
Advertising and marketing		$	153,324			$	103,373
Rent and lease		$	1,807,635			$	1,539,868
Depreciation and amortization		$	85,156			$	104,378
Total operating expenses		$	10,531,906			$	8,807,883

Total operating expenses increased by $1,724,023, or approximately 19.6%, from $8,807,883 in 2024 to $10,531,906 in 2025. The increase outpaced revenue growth, resulting in a swing from operating income of $296,269 in 2024 to an operating loss of $(186,808) in 2025. The primary drivers of the increase in operating expenses were as follows:

Payroll Expenses. Payroll expenses increased by $709,442, or approximately 14.8%, from $4,780,729 in 2024 to $5,490,171 in 2025. The increase reflects continued headcount investment to support revenue growth, expanded service capabilities, and operational infrastructure needs associated with the METech business combination.

General and Administrative. General and administrative expenses increased by $387,232, or approximately 18.7%, from $2,072,830 in 2024 to $2,460,062 in 2025. The increase reflects higher operating costs associated with the growth of the business and incremental administrative costs associated with becoming a reporting public company following the April 2025 business combination.

Professional Fees. Professional fees increased by $328,853, or approximately 159.1%, from $206,705 in 2024 to $535,558 in 2025. The significant increase is attributable primarily to legal, accounting, audit, and advisory fees incurred in connection with the reverse acquisition transaction completed in April 2025, public company compliance costs, and ongoing SEC reporting requirements.

Rent and Lease Expense. Rent and lease expense increased by $267,767, or approximately 17.4%, from $1,539,868 in 2024 to $1,807,635 in 2025, consistent with expansion of our facility footprint and inflationary adjustments in facility lease costs across our operational locations. As of December 31, 2025, the Company had total future minimum lease obligations of $2,727,953 with a present value of $2,330,987, using a weighted average discount rate of 4.4% and a weighted average remaining term of approximately 39 months.

Depreciation and Amortization. Depreciation and amortization decreased by $19,222, or approximately 18.4%, from $104,378 in 2024 to $85,156 in 2025, reflecting the continued reduction in net book value of our existing asset base, partially offset by additions of property and equipment.

11

Other Income and Expense

Total other income (expense) resulted in net other income of $189,573 for the year ended December 31, 2025, compared to net other expense of $(85,157) in 2024, a positive variance of $274,730. The improvement was attributable to the following:

Employee Retention Credit. During the year ended December 31, 2025, the Company received an Employee Retention Credit ("ERC") totaling $346,000, which is reflected in other income. This represents a significant non-recurring item that contributed materially to other income in the current year. No comparable amount was received in 2024.

Interest Expense. Interest expense increased by $67,064, or approximately 68.6%, from $97,703 in 2024 to $164,767 in 2025. The increase reflects higher outstanding debt balances during 2025, including new notes payable issued in 2025, some of which carry elevated interest rates (see Note 5 to the consolidated financial statements). Cash paid for interest was $198,038 in 2025 compared to $143,841 in 2024.

Net Income

Net income for the year ended December 31, 2025, was $2,765, compared to net income of $211,112 for the year ended December 31, 2024. The significant decrease in net income is primarily attributable to the increase in operating expenses, particularly payroll, professional fees, and general and administrative costs, which exceeded the growth in gross profit. Net income in 2025 was supported materially by the $346,000 Employee Retention Credit received during the year; absent this non-recurring item, the Company would have recorded a net loss. Basic and diluted earnings per share were $0.00 in both 2025 and 2024, based on weighted average shares outstanding of 87,964,090 in each period.

Liquidity and Capital Resources

"Liquidity" refers to our ability to generate adequate amounts of cash to meet our needs for cash. We believe we will have adequate liquidity to maintain current operations during 2026, but we may choose to locate additional sources of cash to facilitate growth and expansion. "Capital resources" refers to assets we use in our business to produce goods or deliver services, such as machinery, buildings, tools, and technology. Capital resources have a long-term, multi-use lifespan. These assets enhance our production efficiency, increase profitability, and are crucial for generating income and sustainable growth.

As of December 31, 2025, the Company had cash of $276,855 compared to $470,273 as of December 31, 2024. The Company's principal sources of liquidity have consisted of cash generated from operations and proceeds from debt financing. The following table summarizes our cash flows for the years ended December 31, 2025 and 2024.

		Year Ended December 31, 2025				Year Ended December 31, 2024
Net cash provided by operating activities		$	79,517			$	458,921
Net cash used in investing activities		$	(2,729	)		$	(106,291	)
Net cash used in financing activities		$	(270,206	)		$	(38,722	)
Net decrease in cash		$	(193,418	)		$	313,908
Cash - beginning of year		$	470,273			$	156,365
Cash - end of year		$	276,855			$	470,273

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Operating Activities

Cash provided by operating activities was $79,517 for the year ended December 31, 2025, compared to $458,921 in 2024, a decrease of $379,404. Despite net income of only $2,765, cash from operations was positive due to non-cash add-backs of $234,837 in bad debt expense and $85,156 in depreciation. However, significant working capital headwinds offset these items: accounts receivable increased by $707,203 (reflecting business growth and timing of collections), and accounts payable declined by $584,364. These outflows were substantially offset by a $1,107,042 increase in accrued expenses, reflecting the timing of vendor payments. Financed insurance policy payments of $196,375 also reduced operating cash flows during the year.

Investing Activities

Cash used in investing activities was $2,729 in 2025 compared to $106,291 in 2024. Capital expenditures were minimal in 2025, reflecting a deliberate reduction in new equipment purchases. The Company financed $193,252 of property and equipment through non-cash financing arrangements in 2025, compared to $61,880 in 2024. Additionally, the Company recognized $754,886 of new right-of-use assets and corresponding lease liabilities during 2025 in connection with new and renewed operating lease agreements.

Financing Activities

Cash used in financing activities was $270,206 in 2025, compared to $38,722 in 2024. During 2025, the Company received proceeds from notes payable of $200,000. Repayments of notes payable totaled $470,206 during 2025, compared to $38,722 in 2024. The higher repayment activity reflects payoff and reduction of certain legacy notes and financed insurance balances. Additionally, during the year ended December 31, 2025, accounts payable to a related party totaling $500,000 were settled through the issuance of a note payable, representing a significant non-cash financing activity.

Debt

As of December 31, 2025, the Company had total notes payable of $2,051,993, of which approximately $1,093,031 was classified as current and $958,962 as long-term. This compares to total notes payable of $1,591,815 as of December 31, 2024, of which $1,063,218 was current and $528,597 was long-term. Interest rates on outstanding notes range from approximately 2.07% to 29.93%, reflecting a mix of equipment financing, SBA loans, and other borrowings. The Company also has outstanding loans from Jian Li, an officer, totaling $228,933 at both December 31, 2025 and 2024; these loans bear no stated interest rate and are due on demand.

The current classification of notes payable is important to understand in context. As disclosed in Note 5 to the consolidated financial statements, notes payable without a stated maturity date are classified as current in accordance with GAAP. Approximately $1,225,704 of the $1,617,418 reflected in the 2026 column of the future maturities table below consists of notes with no stated maturity date, the substantial majority of which are owed to the Company's two largest related-party shareholders - First American Management Group Corp. (~$519,000) and First America Metal Corp. (per Note 8) - and have been outstanding since 2019 through 2022 with no history of demand for repayment. Accordingly, the current classification of this debt reflects a GAAP presentation requirement rather than an expectation of near-term cash outflow. Notes with actual stated maturity dates falling in 2026 total approximately $78,512.

13

Future debt maturities as of December 31, 2025, are as follows (excluding officer loans):

Year Ending December 31,		Principal Amount
2026 (including $1,225,704 of notes with no stated maturity date)		$	1,617,418
2027		$	98,950
2028		$	87,797
2029		$	42,928
2030		$	16,500
Thereafter		$	417,333
Total		$	2,280,926

The Company has not defaulted on any of its outstanding notes payable.

Related Party Transactions

The Company has entered into significant transactions with related parties, the most significant of which are summarized below. For additional detail, see Note 8 to the consolidated financial statements.

First American Management Group Corp (FAMGC). FAMGC is the Company's largest shareholder and is also a noteholder. At December 31, 2025, outstanding notes payable to FAMGC totaled $519,000, compared to $556,000 at December 31, 2024.

First America Metal Corp (FAMC). FAMC is the Company's second largest shareholder and also serves as both a significant customer and primary vendor. FAMC represented approximately 15% of revenues in 2025 and 51% of accounts payable as of December 31, 2025. At December 31, 2025, outstanding notes payable to FAMC totaled $707,000 (2024: $157,000), accounts payable to FAMC totaled $1,159,571 (2024: $2,302,980), and accounts receivable from FAMC totaled $318,273 (2024: $466,449). The substantial reduction in accounts payable to FAMC from $2,302,980 to $1,159,571 reflects partial settlement of amounts owed, including the $500,000 non-cash conversion of accounts payable to a note payable during 2025.

Officer Loans. Jian Li, an officer of the Company, has advanced funds to the Company from time to time. These loans bear no stated interest rate and are due on demand. The outstanding balance was $228,933 at both December 31, 2025 and 2024.

These related party relationships represent a significant aspect of the Company's operations and capital structure. The concentration of purchasing activity with a single vendor (FAMC representing 51% of accounts payable) and revenue concentration with related customers presents potential risks that management monitors on an ongoing basis.

14

Critical Accounting Policies and Estimates

The preparation of consolidated financial statements in conformity with generally accepted accounting principles in the United States ("GAAP") requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, and expenses. Actual results could differ materially from those estimates. The following accounting policies are considered most significant to an understanding of the Company's financial condition and results of operations.

Revenue Recognition. The Company recognizes revenue in accordance with ASC 606, Revenue from Contracts with Customers. Revenue is primarily derived from electronic equipment recycling, asset disposition, and data destruction services. Performance obligations for each service type are typically satisfied at a point in time, and revenue is recognized upon satisfaction of the relevant performance obligation.

Accounts Receivable and Allowance for Doubtful Accounts. The Company records an allowance for doubtful accounts based on an analysis of historical collection experience, customer creditworthiness, and current economic trends. During 2025, the Company recorded bad debt expense of $235,000 (2024: $110,000) and maintained an allowance for doubtful accounts of $154,000 at December 31, 2025 (2024: $110,000). Total net accounts receivable were $2,459,493 at December 31, 2025, including $318,273 due from First America Metal Corp., a related party. The increase in bad debt expense reflects higher gross receivable balances and management's assessment of collection risk.

Leases. The Company accounts for leases under ASC 842 using the right-of-use model, recognizing a lease liability and corresponding ROU asset on each lease commencement date. Lease liabilities are measured at the present value of remaining lease payments using the Company's incremental borrowing rate, as the rate implicit in the leases is not readily determinable. The weighted average discount rate applied was 4.4% with a weighted average remaining term of approximately 39 months.

Income Taxes. The Company recognizes deferred tax assets and liabilities under ASC 740 based on temporary and permanent differences between financial reporting and tax bases of assets and liabilities. A full valuation allowance has been recorded against deferred tax assets because management has determined it is more likely than not that such assets will not be realized, given the Company's history of minimal taxable income. As of December 31, 2025, the Company had approximately $8,156,000 in federal net operating loss carryforwards, with a corresponding deferred tax asset of approximately $609,000, fully offset by a valuation allowance. Future utilization of these carryforwards may be subject to annual limitations pursuant to Section 382 of the Internal Revenue Code as a result of ownership changes that may have occurred or may occur in the future.

Goodwill. The Company carries goodwill of $750,000, which is evaluated for impairment at least annually during the fourth quarter. Impairment testing utilizes a discounted cash flow methodology to estimate reporting unit fair value. No impairment was recognized in 2025 or 2024.

15

Inflation and Macroeconomic Conditions

The Company's operations are subject to general macroeconomic and inflationary pressures. During 2025, inflationary conditions continued to affect operating costs, particularly with respect to payroll, logistics, and facility lease costs. Management believes revenue growth has partially offset these cost pressures, though gross margin compression of approximately 110 basis points in 2025 relative to 2024 reflects the net impact of these dynamics. The Company will continue to monitor macroeconomic conditions and adjust its pricing and cost management strategies as appropriate.

Recently Issued Accounting Pronouncements

In December 2023, the FASB issued ASU 2023-09, Income Taxes, which enhances transparency of income tax disclosures. The amendments are effective for fiscal years beginning after December 15, 2024. The Company adopted this guidance in 2025; adoption did not have a material impact on the Company's financial statement disclosures.

In November 2023, the FASB issued ASU 2023-07, Segment Reporting, which improves segment expense disclosures. The Company operates as a single operating segment. The standard was effective for fiscal years beginning after December 15, 2023, and interim periods beginning after December 15, 2024. Adoption did not have a material impact on the Company's financial statement disclosures.

Off-Balance Sheet Arrangements

As of December 31, 2025, the Company had no off-balance sheet arrangements that have or are reasonably likely to have a current or future material effect on its financial condition, revenues, expenses, results of operations, liquidity, capital expenditures, or capital resources.