Quarterly Report for Quarter Ending June 30, 2026 (Form 10-Q)

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Forward-Looking Statements

The following discussion of our financial condition and results of operations should be read in conjunction with the unaudited condensed consolidated financial statements and the notes thereto included elsewhere in this Quarterly Report on Form 10-Q and with our audited consolidated financial statements included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025. This discussion contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the "Securities Act"), Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the Private Securities Litigation Reform Act of 1995, and involves numerous risks and uncertainties. Forward-looking statements may include, among others, statements relating to our ability to predict revenue and reduce costs related to our products or service offerings, our ability to forecast product and services sales volumes, the sufficiency of our capital resources and the availability of debt and equity financing, the continuing impact of uncertain global economic conditions on the demand for our products and services, our ability to maintain and scale adequate and secure software platform infrastructure, the impact of competition on demand for our products and services, our competitive position, our future financial position and results of operations, and our ability to grow in new and existing markets. Forward-looking statements can be identified by the fact that they do not relate strictly to historical or current facts and generally contain words such as "believes," "expects," "may," "will," "should," "seeks," "intends," "plans," "strives," "goal," "estimates," "forecasts," "projects" or "anticipates" and the negative of these terms or similar expressions. Our forward-looking statements are subject to risks and uncertainties, which may cause actual results to differ materially from those projected or implied by the forward-looking statement, due to reasons including, but not limited to, competition; the effectiveness of our strategies; general economic conditions, including any impact from inflation; current geopolitical conditions including conflicts in the Middle East, the ongoing Russia-Ukraine War and geopolitical tensions between China and Taiwan; our ability to successfully implement our business strategy; the success of our initiatives to increase sales; changes in commodity, energy, labor and other costs; our ability to attract and retain management and employees; price and availability of commodities; consumer confidence and spending patterns; and weather conditions. Forward-looking statements are based on current expectations and assumptions and currently available data and are neither predictions nor guarantees of future events or performance. You should not place undue reliance on forward-looking statements, which speak only as of the date hereof. See "Risk Factors" and "Special Note Regarding Forward-Looking Statements" included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025, for a discussion of factors that could cause our actual results to differ from those expressed or implied by forward-looking statements. We undertake no obligation to publicly update or revise any forward-looking statement as a result of new information, future events or otherwise, except as otherwise required by law.

Overview

We historically delivered comprehensive WiFi/SaaS platform to make everyone's connected home safe and supportive for life and work. We continue to grow and expand our operations as a digital service provider focused on integrating AI and data analytics into content creation and brand management. In addition to our SaaS solutions, we offer customized software development services, digital authentication services, and music services.

As part of our ongoing strategic initiatives, we have integrated blockchain technology into our digital authentication services through the acquisition of HGK, enhancing the security, transparency, and efficiency of our services and systems. Through our acquisition of Yinlian Culture and its VIE, Maltose Culture, we have further expanded into the AI music business, combining music content creation and distribution with AI capabilities to build an advanced AI music ecosystem.

We also provide digital authentication services that combine advanced imaging technology, AI-driven analysis, and expert validation to deliver reliable verification and certification, supporting clients in meeting relevant compliance and risk management requirements.

In line with our growth strategy, we are also targeting potential acquisitions in key sectors such as AI, hardware, and the Internet of Things (IoT). The acquisitions completed in 2025 and 2026 have enabled us to strengthen our technological capabilities and expand our market presence.

Additionally, we have expanded into the MCN business, offering content production and account management services across key platforms, serving as a bridge between content creators and the global market, and facilitating valuable connections in this rapidly evolving digital space. In the future, we plan to further expand our service offerings to include brokerage services to assist clients with promotional activities and enhance their international market influence.

These strategic initiatives reflect our commitment to innovation and expansion, positioning us for long-term growth and success in emerging industries.

Key Factors Affecting Our Performance

Generally, our gross margin depends on a number of factors, including the type of service and customer category. Digital content services tend to have higher gross margins but require ongoing investments; software development services have gross margins that vary based on project complexity; and digital authentication services, which leverage AI and blockchain technologies, have high gross margin potential.

Our future growth is largely dependent on our ability to acquire new customers, which is crucial for expanding our SaaS - MCN digital services, software services, digital authentication services, and music services. This will rely on the effectiveness of our marketing and sales efforts to reach teams and organizations across diverse industries. The success of our growth strategy, as well as our future prospects, hinges on our ability to attract and retain new customers. While we see a substantial market opportunity in the MCN business, continued investment in sales and marketing, research and development, and customer support will be essential to further grow our international customer base.

In order to sustain and expand our existing customer base, we prioritize ensuring that our customers continue to derive value from our services. By building long-term, meaningful relationships, we aim to help customers leverage our services to establish stronger connections in the global marketplace. As they increasingly recognize the value we provide, we expect them to expand their usage and upgrade their service plans, driving revenue growth within our current customer base. This approach underpins our strategy to enhance both customer retention and revenue growth over time.

Results of Operations

The following table sets forth certain financial data derived from our condensed consolidated statements of operations for the three and six months ended June 30, 2026 and 2025, presented in absolute dollars, with dollars and percentage change period over period:

		Three Months Ended																Six Months Ended
		June 30, 2026				June 30, 2025				$ Change				% Change				June 30, 2026				June 30, 2025				$ Change				% Change
Revenues		$	4,825,340			$	44,993			$	4,780,347				10,624.6	%		$	6,947,329			$	45,118			$	6,902,211				15,298.1	%
Cost of revenues			951,806				43,930				907,876				2,066.6	%			1,579,551				44,680				1,534,871				3,435.3	%
Gross profit			3,873,534				1,063				3,872,471				364,296.4	%			5,367,778				438				5,367,340				1,225,420.1	%
Operating expenses:
Selling and marketing			252,314				16,811				235,503				1,400.9	%			286,653				16,811				269,842				1,605.2	%
General and administrative			938,162				603,744				334,418				55.4	%			1,935,035				944,240				990,795				104.9	%
Research and development			39,226				17,419				21,807				125.2	%			75,813				47,419				28,394				59.9	%
Total operating expenses			1,229,702				637,974				591,728				92.8	%			2,297,501				1,008,470				1,289,031				127.8	%
Operating income (loss)			2,643,832				(636,911	)			3,280,743				(515.1	)%			3,070,277				(1,008,032	)			4,078,309				(404.6	)%
Total other income (expense)			(6,221	)			(2,769	)			(3,452	)			124.7	%			55,679				(5,558	)			61,237				(1,101.8	)%
Income (loss) before income taxes			2,637,611				(639,680	)			3,277,291				(512.3	)%			3,125,956				(1,013,590	)			4,139,546				(408.4	)%
Income tax expense			526,897				-				526,897				N/A				663,726				-				663,726				N/A
Net income (loss)		$	2,110,714			$	(639,680	)		$	2,750,394				(430.0	)%		$	2,462,230			$	(1,013,590	)		$	3,475,820				(342.9	)%
Attributable to owners of parent			2,111,196				(639,680	)		$	2,750,876				(430.0	)%		$	2,462,712			$	(1,013,590	)		$	3,476,302				(343.0	)%
Attributable to noncontrolling interests			(482	)			-				(482	)			N/A				(482	)			-				(482	)			N/A

Comparison of the three and six months ended June 30, 2026 to the three and six months ended June 30, 2025

The following table sets forth our revenues by product and the changes in revenues for the three and six months ended June 30, 2026, as compared to the three and six months ended June 30, 2025:

		Three Months Ended																Six Months Ended
		June 30, 2026				June 30, 2025				$ Change				% Change				June 30, 2026				June 30, 2025				$ Change				% Change
SaaS - MCN digital services		$	1,534,955			$	44,993			$	1,489,962				3,311.5	%		$	2,628,291			$	45,118			$	2,583,173				5,725.4	%
Software services			1,108,140				-				1,108,140				N/A				1,698,099				-				1,698,099				N/A
Digital authentication services			2,170,956				-				2,170,956				N/A				2,609,650				-				2,609,650				N/A
Others			11,289				-				11,289				N/A				11,289				-				11,289				N/A
Total		$	4,825,340			$	44,993			$	4,780,347				10,624.6	%		$	6,947,329			$	45,118			$	6,902,211				15,298.1	%

Revenues

Our revenues increased by $4.8 million and $6.9 million for the three and six months ended June 30, 2026, compared to the three and six months ended June 30, 2025. The increase in revenues primarily reflects the Company's strategic transition from legacy hardware operations to SaaS solutions, with a new business model focusing on integrating AI and big data into content creation and brand management, and the successful expansion into multiple new business lines, including SaaS - MCN digital services, software services, digital authentication services, and other services, most of which experienced rapid growth following their launch. Notably, during March 2025, we successfully secured our first customer orders and generated initial sales, marking a critical milestone in the strategic pivot. Our target clients are individuals or entities seeking to grow their online presence as influencers or content creators, enterprises requiring customized software solutions, art owners and institutions in need of authentication services, and participants in the music industry.

For our SaaS - MCN digital services, as of June 30, 2026, we onboarded 939 customers, representing total service fees of $9.2 million, of which $7.9 million has been recognized as revenue cumulatively. During the six months ended June 30, 2026, we added 138 new customers and recognized $2.6 million in revenue from this business.

Building on this momentum, we introduced customized software services in July 2025. As of June 30, 2026, we secured contracts totaling $2.9 million for software services, $1.7 million of which was recognized as revenue in the six months ended June 30, 2026 in accordance with the relevant revenue recognition models (over time or at a point in time, as applicable). During the six months ended June 30, 2026, we added 18 new customers, bringing the total number of customers for these services to 31 as of June 30, 2026.

Through the acquisition of HGK in November 2025, we added the ability to provide digital authentication services. As of June 30, 2026, this business had generated cumulative revenue of $2.9 million, including $2.6 million recognized in the six months ended June 30, 2026, serving five corporate clients and 459 individual clients in total, with related accounts receivable amounting to $2.0 million. This business leverages AI and blockchain technology to provide authentication, certification, and display services for artworks, further diversifying our revenue streams.

Cost of Revenue and Gross Margin

Cost of revenue for the three and six months ended June 30, 2026 consisted primarily of direct labor costs; amortization of certain acquired intangible assets and software development costs; outsourced authentication service costs; and other costs attributable to the provision of service offerings.

Cost of revenue for the three and six months ended June 30, 2025 consisted primarily of the cost of direct labor and cloud service costs.

The increase in gross profit was attributable to higher revenue in the three and six months ended June 30, 2026. Our gross margin can be affected by a number of factors, primarily including changes in average selling price and foreign exchange rates, as well as fluctuations in our cost of revenue due to changes in labor costs, outsourced authentication service costs and cloud service costs.

The following table presents revenues and gross margin, for the periods indicated:

		Three Months Ended																Six Months Ended
		June 30, 2026				June 30, 2025				$ Change				% Change				June 30, 2026				June 30, 2025				$ Change				% Change
Revenues		$	4,825,340			$	44,993			$	4,780,347				10,624.6	%		$	6,947,329			$	45,118			$	6,902,211				15,298.1	%
Cost of revenue			951,806				43,930				907,876				2,066.6	%			1,579,551				44,680				1,534,871				3,435.3	%
Gross margin			80.3	%			2.4	%											77.3	%			1.0	%

Gross margin increased significantly in the three and six months ended June 30, 2026, compared to the three and six months ended in the prior fiscal year period. In the three and six months ended June 30, 2025, the Company had just launched its SaaS- MCN digital services in March 2025 and had not yet introduced customized software services, digital authentication services or others, resulting in minimal revenue and low gross profit.

Following the full-year development of our MCN digital services, the introduction of customized software services in July 2025, and the acquisition of HGK in November 2025 adding digital authentication services beginning in December 2025, the Company has transitioned to a higher-margin business model. The improvement in gross margin was primarily driven by our MCN digital services, which leverage AI and data analytics to reduce reliance on manual labor, resulting in higher margins compared to traditional service models.

Forecasting gross margin percentages is difficult, and there are several risks related to our ability to maintain or improve our current gross margin levels. Our cost of revenue, as a percentage of revenue, can vary significantly based upon factors such as uncertainties surrounding revenue, including future pricing and/or potential discounts as a result of the economy, competition, and the timing of sales.

Selling and Marketing

Selling and marketing expenses consist primarily of business promotion and corporate publicity expenses. The following table presents selling and marketing expenses for the periods indicated:

		Three Months Ended																Six Months Ended
		June 30, 2026				June 30, 2025				$ Change				% Change				June 30, 2026				June 30, 2025				$ Change				% Change
Selling and marketing		$	252,314			$	16,811			$	235,503				1,400.9	%		$	286,653			$	16,811			$	269,842				1,605.2	%

Selling and marketing expenses increased by $236 thousand and $270 thousand in the three and six months ended June 30, 2026, as compared to the three and six months ended June 30, 2025, primarily due to the Company's business transformation and stock-based compensation expenses in connection with equity awards granted in May 2026 under the 2025 Equity Incentive Plan. For the six months ended June 30, 2026, selling and marketing expenses primarily reflected costs related to the expansion of our four core business lines- SaaS- MCN digital services, software services, digital authentication services, and other services - as well as corporate branding initiatives.

For the remainder of the fiscal year 2026, we expect our selling and marketing expenses to fluctuate depending on sales levels achieved as certain expenses, such as commissions, are determined based upon revenue Forecasting selling and marketing expenses is highly dependent on expected revenue levels and could vary significantly depending on actual revenue achieved in any given quarter. Marketing expenses may also fluctuate depending upon the timing, extent and nature of marketing programs.

General and Administrative

General and administrative expenses consist of salaries and related expenses for executives, finance and accounting, human resources, information technology ("IT"), professional fees, facility allocations, and other general corporate expenses. The following table presents general and administrative expenses, for the periods indicated:

		Three Months Ended																Six Months Ended
		June 30, 2026				June 30, 2025				$ Change				% Change				June 30, 2026				June 30, 2025				$ Change				% Change
General and administrative		$	938,162			$	603,744			$	334,418				55.4	%		$	1,935,035			$	944,240			$	990,795				104.9	%

General and administrative expenses increased by $334 thousand and $991 thousand in the three and six months ended June 30, 2026, as compared to the three and six months ended June 30, 2025. The increase was primarily attributable to certain non-recurring professional service fees incurred during the six months ended June 30, 2026, including legal and advisory fees related to strategic initiatives and stock-based compensation expenses in connection with equity awards granted in May 2026 under the 2025 Equity Incentive Plan.

Future general and administrative expense increases or decreases in absolute dollars are difficult to predict due to the lack of visibility of certain costs, including legal costs associated with defending claims against us, and other factors.

Research and Development

Research and development expenses consist primarily of personnel expenses, payments to suppliers for design services, safety and regulatory testing, product certification expenditures to qualify our products for sale into specific markets, prototypes, IT, and other consulting fees. Research and development expenses are recognized as they are incurred. Our research and development organization is focused on enhancing our ability to introduce innovative and easy-to-use products and services. The following table presents research and development expenses for the periods indicated:

		Three Months Ended																Six Months Ended
		June 30, 2026				June 30, 2025				$ Change				% Change				June 30, 2026				June 30, 2025				$ Change				% Change
Research and development		$	39,226			$	17,419			$	21,807				125.2	%		$	75,813			$	47,419			$	28,394				59.9	%

Research and development expenses increased by $22 thousand and $28 thousand in the three and six months ended June 30, 2026, as compared to the three and six months ended June 30, 2025. The increase primarily reflects ongoing enhancements and optimizations to our system during the six months ended June 30, 2026.

Research and development expenses may fluctuate depending on the timing and number of development activities and could vary significantly as a percentage of revenues, depending on actual revenues achieved in any given year.

Income Tax Expense

		Three Months Ended																Six Months Ended
		June 30, 2026				June 30, 2025				$ Change				% Change				June 30, 2026				June 30, 2025				$ Change				% Change
Income tax expense		$	526,897			$	-			$	526,897				N/A			$	663,726			$	-			$	663,726				N/A

Income tax expense was $526,897 and $663,726 for the three and six months ended June 30, 2026, respectively, compared to $0 for the three and six months ended June 30, 2025. The increase in income tax expense was primarily attributable to the profitability of the Company's Hong Kong and Singapore subsidiaries during the six months ended June 30, 2026. In the prior year period, the Company's operations were in the early stage of business transition and had not yet generated significant taxable profits, resulting in no income tax expense for the three and six months ended June 30, 2025.

Liquidity and Capital Resources

The Company's operations have historically been primarily financed through the issuance of Common Stock and Preferred Stock. Since inception, the Company has incurred significant losses and negative cash flows from operations and an accumulated deficit of $93.2 million. The Company began generating operating profit in the fourth quarter of 2025 and has continued to do so thereafter. During the six months ended June 30, 2026, the Company reported a net income of $2.5 million. As of June 30, 2026, we had cash of $5.4 million as compared to $3.1 million on December 31, 2025. On June 30, 2026, we had no outstanding borrowings and a positive working capital of $7.1 million. Our ability to maintain adequate levels of liquidity depends in part on our ability to generate cash from operations and our ability to raise additional funds through equity or debt financing. We are evaluating options related to our liquidity and will continue to monitor our costs in relation to our sales and adjust our cost structure accordingly.

In June 2026, we entered into the Sales Agreement with A.G.P. under which we may offer and sell up to an estimated $6,272,809 of shares of our Common Stock from time to time through an "at the market" offering program under which A.G.P. will act as sales agent. Pursuant to the Sales Agreement, we have agreed to pay A.G.P. a commission of 3.25% of the aggregate gross proceeds from any shares of Common Stock sold by A.G.P. We have no obligation to sell any shares under the Sales Agreement and may at any time suspend solicitation and offers under the Sales Agreement. During the six months ended June 30, 2026, we did not sell any shares of Common Stock pursuant to the Sales Agreement.

Our historical cash outflows have primarily been associated with: (1) cash used for operating activities such as personnel costs, cost of services, general office expenses, professional service fees, and other working capital needs; (2) cash used for research and development and sales and marketing initiatives; (3) capital expenditures related to the acquisition of property, equipment and software; (4) cash used to repay our debt obligations and related interest expense; and (5) cash used for acquisitions. Fluctuations in our working capital due to timing differences of our cash receipts and cash disbursements also impact our cash inflows and outflows.

Our condensed consolidated financial statements as of June 30, 2026 were prepared under the assumption that we will continue as a going concern. The going concern assumption contemplates the realization of assets and satisfaction of liabilities in the normal course of business. However, substantial doubt exists about our ability to continue as a going concern, and we will require additional liquidity to continue operations beyond the next 12 months.

Our condensed consolidated financial statements as of June 30, 2026 do not include any adjustments to the carrying amounts and classification of assets, liabilities, and reported expenses that may be necessary if we were unable to continue as a going concern. If we are unable to continue as a going concern, we may have to liquidate our assets and may receive less than the value at which those assets are carried on our financial statements, and it is likely that investors will lose all or part of their investment.

Cash Flows

The following table presents our cash flows for the periods presented:

		For the Six Months Ended June 30,
		2026				2025
Cash provided by operating activities		$	90,378			$	171,955
Cash provided by investing activities			366,431				-
Cash provided by financing activities			1,917,393				4,300,000
Effect of foreign exchange rate changes on cash			(22,954	)			1,962
Net increase in cash		$	2,351,248			$	4,473,917

Cash Flows from Operating Activities. Cash provided by operating activities of $90 thousand during the six months ended June 30, 2026 reflected our net income of $2.5 million, adjusted for non-cash expenses, consisting primarily of $696 thousand in depreciation and amortization expense and $310 thousand in stock-based compensation. Sources of cash were primarily from decreases in other receivables of $1.1 million, increases in accounts payable of $670 thousand, increases in income tax payable of $410 thousand and increases in accrued expenses and other current liabilities of $351 thousand. Uses of cash were primarily from increases in accounts receivable of $5.0 million, decreases in contract liabilities of $1.2 million. The increase in accounts receivable was partially driven by the introduction of post-paid arrangements for MCN digital services and digital authentication services during the second quarter of 2026, under which customers are granted payment terms of 90 days from the contract signing date. Unlike prepaid arrangements that provide upfront cash inflows, post-paid arrangements result in cash collections subsequent to service delivery, which impacted the timing of operating cash flows during the period. The Company continues to monitor the collectability of receivables arising from post-paid arrangements.

Cash provided by operating activities of $172 thousand during the six months ended June 30, 2025 reflected our net loss of $1 million, adjusted for non-cash expenses, consisting primarily of $91 thousand in depreciation and amortization expense. Uses of cash included an increase in other receivables of $520 thousand. Sources of cash included an increase of contract liabilities of $1.5 million.

Cash Flows from Investing Activities. During the six months ended June 30, 2026, cash provided by investing activities consisted of $877 thousand of cash acquired in the business acquisition of Yinlian Culture, and $510 thousand of cash used for the purchase of property.

During the six months ended June 30, 2025, the Company had no cash flows generated or used by investing activities.

Cash Flows from Financing Activities. Cash provided by financing activities during the six months ended June 30, 2026 consisted of gross proceeds from issuance of Common Stock of $2.0 million, partially offset by payment of deferred financing costs of $83 thousand.

Cash provided by financing activities during the six months ended June 30, 2025 consisted of proceeds from the issuance of Common Stock of $4 million and the net proceeds from the issuance of a convertible note of $300 thousand.

Future Liquidity Needs

Our primary short-term needs for capital, which are subject to change, include:

●

upgrades to our IT infrastructure to enhance our capabilities and improve overall productivity;

	●	support of our commercialization efforts related to our current and future products, including expansion of our direct sales force and field support resources; and
	●	the continued advancement of research and development activities.

Our capital expenditures are largely discretionary and within our control. We expect that the level and timing of our service revenues, the associated operating results, and the status of each of our business development and technology enhancement initiatives will significantly impact our cash management decisions.

At June 30, 2026, we do not believe our current cash will be sufficient to fund working capital requirements, capital expenditures and operations during the next 12 months. Our ability to continue as a going concern will depend on our ability to obtain additional equity or debt financing, attain further operating efficiencies, reduce expenditures and increase revenues. Based on these factors, management determined that there is substantial doubt regarding our ability to continue as a going concern. We will continue to monitor our costs in relation to our sales and adjust accordingly.

Our future liquidity and capital requirements will be influenced by numerous factors, including the extent and duration of any future operating losses, the level and timing of future sales and expenditures, the results and scope of ongoing research and product development programs, working capital required to support our sales growth, funds required to service our debt, the receipt of and time required to obtain regulatory clearances and approvals, our sales and marketing programs, our need for infrastructure to support our sales growth, the continuing acceptance of our products in the marketplace, competing technologies and changes in the market and regulatory environment.

Our ability to fund our longer-term cash needs is subject to various risks, many of which are beyond our control. Should we require additional funding, such as additional capital investments, we may need to raise the required additional funds through bank borrowings or public or private sales of debt or equity securities. We cannot guarantee that such funding will be available in needed quantities or on terms favorable to us, if at all.

As of June 30, 2026, we have U.S. federal net operating loss carryforwards of approximately $63.9 million available to reduce future U.S. federal taxable income. A valuation allowance has been established for the full amount of deferred tax assets recognized in our U.S. entity as management has concluded that it is more likely than not that the benefits from such assets will not be realized. As a result, as of June 30, 2026 and December 31, 2025, we recorded a valuation allowance against our net deferred tax assets to the extent that such assets were recognized in our U.S. entity.

To support our strategic transition to SaaS solutions and the scaling of our AI-driven platform, management anticipates requiring approximately $10 million in total funding over the next three years. We plan to allocate (1) $4.0 million in 2026 to develop AI technology for content, build fan community and membership system, (2) $3.0 million in 2027 to enhance our SaaS system, and develop robust security for other intellectual property protection technologies, and (3) $3.0 million in 2028 to advance AI media development and expand content creation capabilities.

To provide for such liquidity needs over the next three years, on May 9, 2025, we entered into the Helena Purchase Agreement with Helena, whereby we have the right to issue and sell to Helena, from time to time, and Helena shall purchase from us, up to $15,000,000 of the Common Stock. In no event shall the number of shares of Common Stock issuable to Helena cause the aggregate number of shares of Common Stock beneficially owned by Helena and its affiliates as a result of previous issuances and sales of Common Stock to Helena to exceed 9.99% of the then issued and outstanding Common Stock. The purchase price is based on 95% of the lowest VWAP during the three (3) Trading Days following Helena's receipt of the shares.

On May 9, 2025, the Company also entered into, and simultaneously closed the transactions under, a Securities Purchase Agreement with Cao Yu, whereby the Company sold 1,585,366 shares of the Company's Common Stock to Cao Yu, for an aggregate purchase price of $2,600,000.

On May 9, 2025, the Company also entered into, and simultaneously closed the transactions under, a Securities Purchase Agreement with Hu Bin, whereby the Company sold 853,659 shares of Common Stock to Hu Bin, for an aggregate purchase price of $1,400,000.

On January 30, 2026, the Company entered into the 2026 Purchase Agreement with two Purchasers, pursuant to which the Company agreed to sell an aggregate of 394,476 shares of Common Stock (the "Shares") at an offering price of $5.07 per Share. The Company received aggregate gross proceeds of $1,999,993 from the issuance. The sales made pursuant to the 2026 Purchase Agreement are exempt from the registration requirements of the Securities Act, pursuant to the exemption for transactions by an issuer not involving any public offering under Section 4(a)(2) of the Securities Act and Rule 506 of Regulation D of the Securities Act. The Closing occurred on March 31, 2026.

In June 2026, the Company entered into the Sales Agreement with A.G.P. under which the Company may offer and sell up to an estimated $6,272,809 of shares of the Company's Common Stock from time to time through an "at the market" offering program under which A.G.P. will act as sales agent. The Company has no obligation to sell any shares under the Sales Agreement and may at any time suspend solicitation and offers under the Sales Agreement.

Commitments and Contractual Obligations

During the three months ended June 30, 2026, except as otherwise disclosed in this Quarterly Report on Form 10-Q, there were no material changes to our capital commitments and contractual obligations from those disclosed in our Annual Report on Form 10-K for the year ended December 31, 2025.

Off-Balance Sheet Arrangements

We did not have any material off-balance sheet arrangements as of June 30, 2026. See Note 7 to the accompanying condensed consolidated financial statements for additional disclosure.

Recent Accounting Standards

See Note 2 to the accompanying condensed consolidated financial statements for a full description of recent accounting standards, including the expected dates of adoption and estimated effects on the financial condition and results of operations, which are hereby incorporated by reference.

Critical Accounting Policies and Estimates

Our condensed consolidated financial statements are prepared in accordance with U.S. GAAP. These accounting principles require us to make certain estimates and judgments that can affect the reported amounts of assets and liabilities as of the date of the financial statements, as well as the reported amounts of revenue and expenses during the periods presented. Management bases its estimates, assumptions and judgments on historical experience and on various other factors that are believed to be reasonable under the circumstances. To the extent there are material differences between these estimates and actual results, our financial statements may be affected. Our management evaluates its estimates, assumptions and judgments on an ongoing basis.

Our critical accounting policy is revenue recognition, and no critical accounting estimates were identified, as described under "Critical Accounting Policies and Estimates" in "Management's Discussion and Analysis of Financial Condition and Results of Operations" included in our Annual Report on Form 10-K for the year ended December 31, 2025. For the six months ended June 30, 2026, the Company's critical accounting policy remains revenue recognition, and no critical accounting estimates were identified.