FiEE flags going-concern doubt despite $3.58M profit
Sentiment and the balance of points
Rhea-AI Sentiment reads the wording of the document, how positive or negative its language is on a 1 to 5 scale. The balance of points shown with the takes weighs what the document actually discloses, so the two can disagree, for example when a trial that missed its main goal is described in upbeat language.
FiEE, Inc. reported third-quarter 2026 revenue of $2,620,524, versus $1,939,542 a year earlier, and nine-month revenue of $9,567,853, versus $1,984,660. Nine-month net income was $3,578,371, compared with a $1,266,575 net loss in 2025. Nine-month gross margin was 76.3%, down from 83.0%, which the company attributed primarily to higher amortization costs in cost of revenue.
Operations used $13,372 in operating cash during the first nine months; cash increased by $2,141,961 to $5,226,422 as of September 30, 2026. Management said prior losses, limited profitability history and negative operating cash flow raise substantial doubt about FiEE’s ability to continue as a going concern for one year after the financial statements were issued, despite net income and positive working capital. FiEE completed a 51% acquisition of Yinlian Culture and consolidated its music-services VIE. By quarter-end it had advanced approximately RMB 7.6 million (approximately $1.1 million) under a separate convertible loan. The company also had an at-the-market sales agreement for up to an estimated $6,272,809 of common stock; it sold no shares under the agreement during the nine months.
How this balance works
Rhea-AI gives every point it takes from this document a weight. Minor counts 1, Moderate 3 and Major 9, so one Major point outweighs several Minor ones. The bar adds up the weights on each side, and when neither side holds more than 65% of the total the balance reads Mixed.
It reads the document as published, with the same rules for every company, and it does not look at what the market expected or at how the stock traded, so a point can be objectively good on a day the stock falls.
Rhea-AI Sentiment measures something else, the tone of the wording.
Positive
- Moderate pointNine-month revenue rose 382.1% to $9,567,853.
- Moderate pointNine-month net income was $3,578,371, versus a $1,266,575 loss.
Negative
- Major pointManagement cited going-concern doubt for one year after issuance.
- Moderate pointNine-month gross margin fell to 76.3% from 83.0%.
- Moderate pointOperating cash flow was negative $13,372, versus $2,478,829 provided.
Filing Explained
On September thirtieth, FiEE had eight million five hundred twenty-eight thousand five hundred ninety-eight common shares; conversions and warrants could add more.
Form 10-Q is the unaudited quarterly report; FiEE reported 8,528,598 common shares outstanding at
The report records a completed March sale of 394,476 common shares and a May issuance of 200,000 vested director shares; issuing shares expands the share base and dilutes existing holders’ percentage ownership absent offsetting changes.
Separately, 2,305,357 Series A preferred shares remained outstanding, each convertible at the holder’s option into 1.4 common shares, with full-ratchet protection in subsequent offerings. A warrant to purchase up to 2,800,000 common shares at $1.00 per share, subject to adjustment, also remained outstanding; these are potential issuances, not shares already issued.
After quarter-end, FiEE reported settling approximately
Key Figures
Key Terms
substantial doubt financial
variable interest entity financial
at the market financial
contract liability financial
two-class method financial
FAQ
AI-generated questions and answers. How Rhea-AI works. Not financial advice.
How much revenue did FIEE report for the first nine months of 2026?
What are the terms of FIEE’s convertible loan to Yinlian Culture?
What does FIEE’s at-the-market agreement allow?
AI-generated analysis. How Rhea-AI works. Not financial advice.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
For the quarterly period ended
For the transition period from ________ to ________
Commission File Number
(Exact Name of Registrant as Specified in its Charter)
| (State or Other Jurisdiction of Incorporation or Organization) |
(I.R.S. Employer Identification No.) | |
|
|
||
| (Address of Principal Executive Offices) | (Zip Code) |
Registrant’s Telephone Number, Including Area Code:
(Former Name or Former Address, if Changed Since Last Report)
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
| The |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer | ☐ | Accelerated filer | ☐ |
| ☒ | Smaller Reporting Company | | |
| Emerging growth company | |
||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes ☐
As of November 13, 2026, the registrant had
FIEE, INC. AND SUBSIDIARIES
INDEX
| Page | |||
| Part I - Financial Information | |||
| ITEM 1. | FINANCIAL STATEMENTS | 1 | |
| Condensed Consolidated Balance Sheets (unaudited) as of September 30, 2026 and December 31, 2025 | 1 | ||
| Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) (unaudited) for the three and nine months ended September 30, 2026 and 2025 | 2 | ||
| Condensed Consolidated Statements of Stockholders’ Equity (Deficit) (unaudited) for the three and nine months ended September 30, 2026 and 2025 | 3 | ||
| Condensed Consolidated Statements of Cash Flows (unaudited) for the nine months ended September 30, 2026 and 2025 | 5 | ||
| Notes to Condensed Consolidated Financial Statements (unaudited) | 6 | ||
| ITEM 2. | MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS | 24 | |
| ITEM 3. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK | 34 | |
| ITEM 4. | CONTROLS AND PROCEDURES | 34 | |
| Part II - Other Information | |||
| ITEM 1. | LEGAL PROCEEDINGS | 36 | |
| ITEM 1A. | RISK FACTORS | 36 | |
| ITEM 2. | UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS | 36 | |
| ITEM 3. | DEFAULTS UPON SENIOR SECURITIES | 36 | |
| ITEM 4. | MINE SAFETY DISCLOSURES | 36 | |
| ITEM 5. | OTHER INFORMATION | 36 | |
| ITEM 6. | EXHIBITS | 37 | |
| SIGNATURES | 38 | ||
i
PART I - FINANCIAL INFORMATION
| ITEM 1. | FINANCIAL STATEMENTS |
FIEE, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(Unaudited)
| September 30, 2026 |
December 31, 2025 |
|||||||
| ASSETS | ||||||||
| Current assets | ||||||||
| Cash | $ | $ | ||||||
| Accounts receivable | ||||||||
| Other receivables, net | ||||||||
| Prepaid expenses and other current assets | ||||||||
| Total current assets | ||||||||
| Property, equipment and software, net | ||||||||
| Intangible assets, net | ||||||||
| Operating lease right-of-use assets, net | - | |||||||
| Goodwill | - | |||||||
| Deferred tax assets, net | - | |||||||
| Other assets | ||||||||
| Total assets | $ | $ | ||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| Current liabilities | ||||||||
| Accounts payable | $ | $ | ||||||
| Contract liabilities | ||||||||
| Accrued expenses and other current liabilities | ||||||||
| Income tax payable | ||||||||
| Current maturities of operating lease liabilities | - | |||||||
| Total current liabilities | ||||||||
| Total liabilities | ||||||||
| Commitments and Contingencies (Note 7) | ||||||||
| Stockholders’ equity | ||||||||
| Preferred Stock, authorized: |
||||||||
| Common Stock, authorized: |
||||||||
| Additional paid-in capital | ||||||||
| Accumulated deficit | ( |
) | ( |
) | ||||
| Accumulated other comprehensive loss | ( |
) | ( |
) | ||||
| Total stockholders’ equity attributable to parent | ||||||||
| Noncontrolling interests | ( |
) | - | |||||
| Total stockholders’ equity | ||||||||
| Total liabilities and stockholders’ equity | $ | $ | ||||||
See accompanying notes to the unaudited condensed consolidated financial statements.
1
FIEE, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)
(Unaudited)
| Three Months Ended September 30, |
Nine Months Ended September 30, |
|||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Revenues | $ | $ | $ | $ | ||||||||||||
| Cost of revenues | ||||||||||||||||
| Gross profit | ||||||||||||||||
| Operating expenses: | ||||||||||||||||
| Selling and marketing | ||||||||||||||||
| General and administrative | ||||||||||||||||
| Research and development | - | |||||||||||||||
| Total operating expenses | ||||||||||||||||
| Operating income (loss) | ( |
) | ( |
) | ||||||||||||
| Other income (expense): | ||||||||||||||||
| Interest income (expense), net | ( |
) | ( |
) | ||||||||||||
| Foreign currency exchange income (loss) | ( |
) | ( |
) | ( |
) | ||||||||||
| Other, net | - | - | ||||||||||||||
| Total other income (expense) | ( |
) | ( |
) | ( |
) | ||||||||||
| Income (loss) before income taxes | ( |
) | ( |
) | ||||||||||||
| Income tax expense (benefit) | ( |
) | ||||||||||||||
| Net income (loss) | $ | $ | ( |
) | $ | $ | ( |
) | ||||||||
| Attributable to noncontrolling interests | ( |
) | - | ( |
) | - | ||||||||||
| Net income (loss) attributable to owners of parent | $ | $ | ( |
) | $ | $ | ( |
) | ||||||||
| Allocation to participating preferred stock | ( |
) | - | ( |
) | - | ||||||||||
| Net income (loss) attributable to common stockholders | $ | $ | ( |
) | $ | $ | ( |
) | ||||||||
| Basic earnings (loss) per common share | $ | $ | ( |
) | $ | $ | ( |
) | ||||||||
| Diluted earnings (loss) per common share | $ | $ | ( |
) | $ | $ | ( |
) | ||||||||
| Weighted-average number of common shares outstanding: | ||||||||||||||||
| Basic | ||||||||||||||||
| Diluted | ||||||||||||||||
| Net income (loss) | $ | $ | ( |
) | $ | $ | ( |
) | ||||||||
| Other comprehensive income (loss), net of tax: | ||||||||||||||||
| Foreign currency translation adjustment | ||||||||||||||||
| Total comprehensive income (loss) | $ | $ | ( |
) | $ | $ | ( |
) | ||||||||
See accompanying notes to unaudited condensed consolidated financial statements.
2
FIEE, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Stockholders’ Equity (Deficit)
(Unaudited)
For the three and nine months ended September 30, 2026
| Preferred Stock | Common Stock | Additional Paid-in |
Accumulated | Accumulated Other Comprehensive |
Noncontrolling | |||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Shares | Amount | Shares | Amount | Capital | Deficit | Loss | Interests | Total | ||||||||||||||||||||||||||||
| Balance at December 31, 2025 | $ | $ | $ | $ | ( |
) | $ | ( |
) | $ | - | $ | ||||||||||||||||||||||||
| Net income | - | - | - | - | - | - | - | |||||||||||||||||||||||||||||
| Foreign currency translation | - | - | - | - | - | - | ( |
) | - | ( |
) | |||||||||||||||||||||||||
| Stock-based compensation | - | - | - | - | - | - | - | |||||||||||||||||||||||||||||
| Common stock issuance, net of issuance cost | - | - | - | - | - | |||||||||||||||||||||||||||||||
| Balance at March 31, 2026 | $ | $ | $ | $ | ( |
) | $ | ( |
) | $ | - | $ | ||||||||||||||||||||||||
| Net income | - | - | - | - | - | - | ( |
) | ||||||||||||||||||||||||||||
| Acquisition of subsidiaries | - | - | - | - | - | - | - | ( |
) | ( |
) | |||||||||||||||||||||||||
| Foreign currency translation | - | - | - | - | - | - | - | |||||||||||||||||||||||||||||
| Issuance of vested shares | - | - | ( |
) | - | - | - | - | ||||||||||||||||||||||||||||
| Stock-based compensation | - | - | - | - | - | - | - | |||||||||||||||||||||||||||||
| Balance at June 30, 2026 | $ | $ | $ | $ | ( |
) | $ | ( |
) | $ | ( |
) | $ | |||||||||||||||||||||||
| Net income | - | - | - | - | - | - | ( |
) | ||||||||||||||||||||||||||||
| Foreign currency translation | - | - | - | - | - | - | - | |||||||||||||||||||||||||||||
| Stock-based compensation | - | - | - | - | - | - | - | |||||||||||||||||||||||||||||
| Balance at September 30, 2026 | $ | $ | $ | $ | ( |
) | $ | ( |
) | $ | ( |
) | $ | |||||||||||||||||||||||
See accompanying notes to unaudited condensed consolidated financial statements.
3
FIEE, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Stockholders’ Equity (Deficit)
(Unaudited)
For the three and nine months ended September 30, 2025
| Preferred Stock | Common Stock | Additional Paid-in |
Accumulated | Accumulated Other Comprehensive |
||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Shares | Amount | Shares | Amount | Capital | Deficit | Income | Total | |||||||||||||||||||||||||
| Balance at December 31, 2024 | $ | $ | $ | $ | ( |
) | $ | $ | ( |
) | ||||||||||||||||||||||
| Net loss | - | - | - | - | - | ( |
) | - | ( |
) | ||||||||||||||||||||||
| Balance at March 31, 2025 | $ | $ | $ | $ | ( |
) | $ | $ | ( |
) | ||||||||||||||||||||||
| Net loss | - | - | - | - | - | ( |
) | - | ( |
) | ||||||||||||||||||||||
| Foreign currency translation | - | - | - | - | - | - | ||||||||||||||||||||||||||
| Common Stock Issuance | - | - | - | - | ||||||||||||||||||||||||||||
| Balance at June 30, 2025 | $ | $ | $ | $ | ( |
) | $ | $ | ||||||||||||||||||||||||
| Net loss | - | - | - | - | - | ( |
) | - | ( |
) | ||||||||||||||||||||||
| Foreign currency translation | - | - | - | - | - | - | ||||||||||||||||||||||||||
| Issuance of warrants for service | - | - | - | - | - | - | ||||||||||||||||||||||||||
| Stock-based compensation | - | - | - | - | - | - | ||||||||||||||||||||||||||
| Common Stock Issuance | - | - | - | - | ||||||||||||||||||||||||||||
| Balance at September 30, 2025 | $ | $ | $ | $ | ( |
) | $ | $ | ||||||||||||||||||||||||
See accompanying notes to unaudited condensed consolidated financial statements.
4
FIEE, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(Unaudited)
| Nine Months Ended September 30, |
||||||||
| 2026 | 2025 | |||||||
| Cash flows from operating activities: | ||||||||
| Net income (loss) | $ | $ | ( |
) | ||||
| Adjustments to reconcile net income (loss) to net cash (used in) provided by operating activities: | ||||||||
| Depreciation and amortization | ||||||||
| Amortization of right-of-use assets | ||||||||
| Non-cash interest expense | - | |||||||
| Stock-based compensation | ||||||||
| Issuance of warrants for service | - | |||||||
| Deferred taxes | ( |
) | - | |||||
| Allowance for credit losses - other receivables | - | |||||||
| Amortization of deferred financing costs | - | |||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | ( |
) | ( |
) | ||||
| Other receivables | ( |
) | ||||||
| Prepaid expenses and other current assets | ( |
) | ( |
) | ||||
| Other assets | ( |
) | ||||||
| Accounts payable | ||||||||
| Contract liabilities | ( |
) | ||||||
| Income tax payable | ( |
) | - | |||||
| Other payables | - | |||||||
| Accrued expenses and other current liabilities | ||||||||
| Operating lease liabilities | ( |
) | ( |
) | ||||
| Net cash (used in) provided by operating activities | ( |
) | ||||||
| Cash flows from investing activities: | ||||||||
| Cash acquired in acquisition of Yinlian Culture and its consolidated VIE | - | |||||||
| Purchase of property, equipment and software | ( |
) | ( |
) | ||||
| Purchase of intangible assets | - | ( |
) | |||||
| Net cash provided by (used in) investing activities | ( |
) | ||||||
| Cash flows from financing activities: | ||||||||
| Proceeds from the issuance of common stock | ||||||||
| Proceeds from the issuance of convertible note | - | |||||||
| Payment of deferred financing costs | ( |
) | - | |||||
| Net cash provided by financing activities | ||||||||
| Effect of foreign exchange rate changes on cash | ( |
) | ||||||
| Net increase in cash | ||||||||
| Cash - beginning | ||||||||
| Cash - ending | $ | $ | ||||||
| Supplemental disclosures of cash flow information: | ||||||||
| Cash paid during the period for: | ||||||||
| Interest | $ | - | $ | - | ||||
| Income taxes | $ | $ | - | |||||
| Supplemental disclosures of non-cash activities: | ||||||||
| Non-cash common stock issued and to be issued that was recognized in deferred offering costs | $ | - | $ | |||||
| Obtaining right-of-use assets in exchange for operating lease liability | $ | - | $ | |||||
| Purchase of property, equipment, and intangible assets through increase in other payables | $ | - | $ | |||||
| Addition to property, equipment and software through reclassification of prior year prepayment | $ | $ | - | |||||
| Non-cash settlement of accounts receivable through direct customer payments to vendors, applied to prepaid expenses, accounts payable, and other payables. | $ | $ | - | |||||
See accompanying notes to the unaudited condensed consolidated financial statements.
5
FIEE, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
(1) NATURE OF OPERATIONS AND BASIS OF PRESENTATION
FiEE, Inc. (formerly, Minim, Inc.) was founded in 1977 as a networking company and pivoted into delivering intelligent software to protect and improve the WiFi connections we depend on to work, learn, and live. FiEE held the exclusive global license to design, manufacture, and sell consumer networking products under the Motorola brand until 2023. Our cable and WiFi products, with an intelligent operating system and bundled mobile app, were sold in leading retailers and e-commerce channels in the United States (“U.S.”). Our artificial intelligence (“AI”)-driven cloud software platform and applications made network management and security simple for home and business users, as well as the service providers that assisted them - leading to higher customer satisfaction and decreased support burden.
On February 27, 2025, the Company filed with the Secretary of State of the State of Delaware a Certificate of Amendment to its Amended and Restated Certificate of Incorporation to change the name of the Company from Minim, Inc. to FiEE, Inc., effective as of February 27, 2025.
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. We offer a wide range of Software as a Service (“SaaS”) solutions through a cloud-based platform designed to support our clients in developing, managing, and optimizing their digital presence across global platforms, including customized graphics and posts, short videos, and editorial calendars aligned with brand goals. Through our multi-channel network (“MCN”) digital services, we provide key opinion leader (“KOL”) content distribution, traffic promotion, and artist brokerage services. We seek to leverage KOL visibility to drive audience engagement and artwork sales through our art exhibition and auction events.
Additionally, we offer comprehensive software development and maintenance services, delivering custom software solutions from system design and development to deployment and post-launch maintenance.
We also offer phygital art advisory services, which integrate physical artworks with digital technologies (“phygital”), currently focused on digital authentication of fine art. In the third quarter of 2026, we held an open-call competition to select artworks for our global touring exhibitions, laying the groundwork for the Company’s planned launch of curation and auction services.
On November 30, 2025, we completed the acquisition of Houren-Geiju Kabushikikaisha (“HGK”), a Japanese technology company specializing in phygital art advisory services for artworks, leveraging AI and blockchain technology to provide artwork digital authentication, valuation, and curation services for individual and corporate clients. This acquisition introduces AI image recognition and blockchain authentication technologies to the Company’s service portfolio, further bolstering our technological capabilities and optimizing our comprehensive brand management solutions for customers.
During the nine months ended September 30, 2026, the Company incorporated two new wholly owned subsidiaries: FiEE Channel Limited in Hong Kong on March 5, 2026, and FiEE Singapore Pte. Ltd. in Singapore on March 26, 2026. As of September 30, 2026, FiEE Singapore Pte. Ltd. had commenced its phygital art advisory services business, while FiEE Channel Limited had not yet commenced its auction services.
On May 31, 2026, the Company, through its wholly owned subsidiary FiEE (HK) Limited (“FiEE HK”), completed the acquisition of a 51% equity interest and 60% of the voting rights in Guangzhou Yinlian Culture Co., Ltd. (“Yinlian Culture”), a limited liability company formed under the laws of the People’s Republic of China (the “PRC”). Upon closing, Yinlian Culture became a consolidated subsidiary of the Company. Through the variable interest entity (“VIE”) agreements described in Note 5 (the “VIE Agreements”) relating to Guangzhou Maltose Culture Communication Co., Ltd. (“Maltose Culture”), a PRC limited liability company, the Company consolidates Maltose Culture as a VIE rather than through direct equity ownership. Through this acquisition, the Company commenced its music-related business, combining Maltose Culture’s music expertise with its AI capabilities to develop AI music infrastructure. See Note 4, Business Combination, and Note 5, VIE Arrangements, for further details.
6
Unless the context otherwise requires, references to “FiEE,” the “Company,” “we,” “our” and “us” refer to FiEE, Inc. and its consolidated subsidiaries and VIE, collectively. References to FiEE, Inc. as the parent refer only to the Delaware registrant. The following table lists the Company’s subsidiaries and consolidated VIE:
| Schedule of the Company’s subsidiaries and consolidated | |||||||
| Entity Name | Place of Incorporation | FiEE’s Ownership |
Principal Activities | ||||
| FiEE (HK) Limited | % | ||||||
| Houren-Geiju Kabushikikaisha | % | ||||||
| MTRLC LLC | % | ||||||
| Minim Asia Private Limited | % | ||||||
| FiEE Channel Limited | % | ||||||
| FiEE Singapore Pte. Ltd. | % | ||||||
| Guangzhou Yinlian Culture Co., Ltd. | % | ||||||
| Guangzhou Maltose Culture Communication Co., Ltd. | Consolidated through contractual VIE arrangements; no equity ownership |
Basis of Presentation
The accompanying unaudited condensed consolidated financial statements of the Company have been prepared in accordance with the requirements of the U.S. Securities and Exchange Commission (“SEC”) for interim reporting. As permitted under those rules, certain footnotes or other financial information that are normally required by accounting principles generally accepted in the U.S. (“U.S. GAAP”) can be condensed or omitted. In the opinion of management, the financial statements include all normal and recurring adjustments that are considered necessary for the fair presentation of the Company’s financial position and operating results. All intercompany balances and transactions have been eliminated in consolidation. The information included in this Quarterly Report on Form 10-Q should be read in conjunction with the audited consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025.
The results of the Company’s operations can vary during each quarter of the year. Therefore, the results and trends in these interim financial statements may not be the same as those for the full year or any future periods.
Principles of Consolidation
The condensed consolidated financial statements include the accounts and operations of the Company, its subsidiaries and its consolidated VIE, where applicable. All intercompany accounts and transactions have been eliminated upon consolidation.
Use of Estimates
The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make judgments, 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 revenue and expense during the reporting period. These judgments, estimates and assumptions made by the Company include, but are not limited to revenue recognition, expected credit losses, contract liabilities, valuation allowance for deferred tax assets, fair value of acquired assets, valuation of warrants and stock-based compensation. The Company evaluates its estimates and assumptions on an ongoing basis using historical experience and other factors and adjusts those estimates and assumptions when facts and circumstances dictate. Actual results may differ from those estimates under different assumptions or conditions and the differences may be material.
7
Liquidity
The Company’s operations have historically been primarily financed through the issuance of its common stock, $0.01 par value per share (the “Common Stock”), and preferred stock, $0.001 par value per share (the “Preferred Stock”). Since inception, the Company has incurred significant losses and negative cash flows from operations. The Company began generating operating profit in the fourth quarter of 2025 and has continued to do so thereafter. During the nine months ended September 30, 2026, the Company reported net income of $3.6
The Company’s condensed consolidated financial statements as of September 30, 2026 do not include any adjustments to the carrying amounts or classification of assets, liabilities, and reported expenses that may be necessary should the Company be unable to continue as a going concern. If the Company is unable to raise additional capital, it may be forced to liquidate its assets at amounts less than their carrying values, and investors could lose all or a portion of their investment.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The Company’s significant accounting policies are disclosed in its Annual Report on Form 10-K for the year ended December 31, 2025. There were no material changes to the Company’s significant accounting policies during the nine months ended September 30, 2026, except for the following updates resulting from transactions that occurred during the period.
Functional Currency
The functional currency of FiEE (HK) Limited and FiEE Channel Limited is the Hong Kong dollar (“HKD”). The functional currency of HGK is the Japanese yen (“JPY”). The functional currency of FiEE Singapore Pte. Ltd. is the U.S. dollar (“USD”). The functional currency of Yinlian Culture and Maltose Culture is the Chinese renminbi (“RMB”). Foreign currency transactions are translated into the respective functional currencies using exchange rates at the transaction dates, while monetary assets and liabilities denominated in foreign currencies are remeasured at period-end rates. The functional currency of all other entities of the Company is USD, which is also the reporting currency.
Assets and liabilities of entities whose functional currency differs from USD are translated into USD at period-end exchange rates. Equity accounts other than earnings generated in the current period are translated at the appropriate historical rates. Results of operations and cash flows of those entities are translated into USD at the average exchange rates during the reporting period. Resulting translation adjustments are reported in accumulated other comprehensive income or loss as a separate component of stockholders’ equity.
Property, Equipment and Software
Property, equipment and software primarily consist of equipment, vehicles, land, buildings and internal-use software customized by a vendor, which are stated at cost. Assets other than land are depreciated or amortized on a straight-line basis over their estimated useful lives. Land is not depreciated. Maintenance and repairs are charged to expense as incurred. Significant improvements that substantially enhance an asset’s useful life are capitalized and depreciated. When assets are retired or disposed of, their cost and related accumulated depreciation are removed from the balance sheet, and any resulting gain or loss is reflected in the Company’s statements of operations in the period realized. Costs incurred to develop internal-use software are capitalized only during the application development stage.
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| Schedule of property, equipment and software useful life | ||
| Category | Estimated useful life | |
| Internal use software | ||
| Equipment | ||
| Vehicles | ||
| Building | ||
| Land | Indefinite |
Noncontrolling interests
The Company presents noncontrolling interests as a component of equity on its condensed consolidated balance sheets and reports the portion of its earnings or loss for noncontrolling interests as net earnings or loss attributable to noncontrolling interests in the condensed consolidated statements of operations.
Noncontrolling interests represent interests in the net assets of the Company’s consolidated subsidiary and VIE that are not attributable, directly or indirectly, to the Company. Noncontrolling interests are adjusted, as applicable, for their respective shares of net income or loss, other comprehensive income or loss, and distributions.
Income Taxes
Entities incorporated in Hong Kong are subject to Hong Kong Profits Tax at a rate of
Entities incorporated in Japan are subject to Japanese corporate income tax at an effective rate of approximately
Entities incorporated in Singapore are subject to Singapore corporate income tax at a flat rate of
Entities incorporated in the United States are generally subject to U.S. federal corporate income tax at a statutory rate of
Entities incorporated in the PRC are subject to PRC corporate income tax at a flat rate of 25% on chargeable income. Dividends paid by a PRC subsidiary to its non-PRC direct holding company are generally subject to PRC withholding income tax at a rate of 10%, unless reduced under an applicable tax treaty (for example, the Mainland-Hong Kong arrangement may reduce the rate to 5% if the Hong Kong recipient qualifies as a beneficial owner and meets the relevant shareholding threshold). Dividends paid by a PRC subsidiary to another PRC resident enterprise are generally not subject to withholding tax.
Segment reporting
The Company operates as a single operating segment. The Company’s chief operating decision maker (“CODM”), its Chief Executive Officer, reviews financial information on an aggregate basis to allocate resources and evaluate financial performance. The measure of segment profit or loss reviewed by the CODM is operating income. The Company’s primary operations were historically in the U.S. and, during the year ended December 31, 2025, primarily in Hong Kong. Beginning in March 2026, following the incorporation of its subsidiary in Singapore, the Company has derived substantially all of its revenues from Hong Kong and Singapore. As of September 30, 2026, the Company’s long-lived assets are mainly located in the U.S., Hong Kong, Japan and the PRC.
For the three and nine months ended September 30, 2026 and 2025, significant segment expenses that are regularly provided to the CODM and included in this measure consist of cost of revenues, selling, general, administrative, research and development expenses. These expenses are consistent with the amounts presented in the consolidated statements of operations. There are no other segment items as there are no significant assets or operations not regularly reviewed by the CODM.
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Recently Issued Accounting Standards
There have been no other new accounting pronouncements that have significance, or potential significance, to the Company’s financial position, results of operations and cash flows.
(3) REVENUE AND OTHER CONTRACTS WITH CUSTOMERS
The Company adopted ASC 606, Revenue from Contracts with Customers, which requires a five-step model to recognize revenue from customer contracts. The five-step model requires entities to exercise judgment when considering the terms of contracts, including: (1) identifying the contracts or agreements with a customer; (2) identifying the performance obligations in the contract or agreement; (3) determining the transaction price; (4) allocating the transaction price to the separate performance obligations; and (5) recognizing revenue as each performance obligation is satisfied. The Company applies the five-step model to contracts only when it is probable that the Company will collect the consideration to which it is entitled in exchange for the services it transfers to its clients.
Revenues from SaaS service- MCN Digital Service
Since March 2025, the Company has expanded SaaS operations as a digital service provider, delivering full-cycle services to brand clients through legally binding agreements. The Company offers full-service account management, content production and targeted promotion to grow followers across key platforms. Service packages are customizable via the SaaS portal. Customers may purchase value-added services with or after their purchase of a basic package. The Company’s services comprise two distinct performance obligations: (1) the basic service, which represents a single performance obligation because the promises for account setup, SaaS platform access, account management, and basic digital content creation and publishing are highly interdependent and bundled together; and (2) the value-added services, which represent a performance obligation for additional digital content created and customized to meet the customer’s specific requests. Each performance obligation has a standalone transaction price. The Company recognizes revenues from basic services ratably over the contract term beginning on the commencement date of each contract. Revenues from value-added services are recognized at a point in time when customers approve or accept the services or the system automatically approves them, whichever is later. The Company offers MCN digital services under two payment structures: (i) prepaid arrangements, under which customers are required to make an upfront payment that is non-refundable upon execution of the contract and is recorded as a contract liability until recognized as revenue; and (ii) post-paid arrangements, under which customers are granted payment terms of 90 days from the contract signing date. The 90-day credit period is offered to customers who satisfy the Company’s internal credit assessment criteria, which consider factors such as the customer’s credit profile, contract size and historical relationship. For post-paid arrangements, the Company records accounts receivable when the services are performed and the Company has an unconditional right to consideration. Customers retain the right to terminate the contract prior to its expiration date, subject to early termination fees, including information transfer fees and fan development fees. The Company regularly monitors the collectability of receivables arising from post-paid arrangements.
Revenues from Software Service
The Company enters into bundled arrangements that typically include the sale of on-premise software licenses, standard or customized modules, and maintenance and support (“M&S”) services. These arrangements are evaluated to determine whether the promises represent distinct performance obligations. The standard or customized modules are highly interdependent and interrelated with the software license and are therefore combined with the license as a single performance obligation, while the M&S services are capable of being distinct and are accounted for as a separate performance obligation. The M&S services are provided without a separately stated charge for a specified contract period, typically encompassing the first year of service following software delivery.
The transaction price is allocated to each performance obligation based on relative standalone selling prices (“SSPs”). The SSPs for the combined software license and customized or standard modules and for M&S services are determined using the adjusted market assessment approach, which considers market conditions, competitive pricing, the Company’s market position, expected profit margins and cost structure. For customized arrangements only, contracts include retention fees that represent variable consideration, as their payment is contingent upon no major defects being identified within a specified period. These retention fees are excluded from the initial transaction price. The related revenue is recognized only when it is probable that a significant reversal will not occur. Contracts for software licensing and M&S services generally include a renewal option for M&S services; however, the renewal option to acquire additional services is neither offered free of charge nor at a discount and accordingly does not represent a material right.
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The Company provides assurance-type warranties to ensure that the delivered software complies with agreed-upon specifications. These warranties do not constitute a separate performance obligation as they cannot be purchased separately and do not provide a service beyond remedying defects to bring the software to the specified standard.
The Company’s contracts typically specify a payment schedule whereby payments from the customer are linked to the signing of the contract and the achievement of specific milestones for customized arrangements, while for standard arrangements, customers are granted payment terms with an initial payment due within three months after acceptance and a final payment due within nine months after acceptance. Contracts are generally fixed price, and the Company has elected the practical expedient not to adjust the promised consideration for the effects of a significant financing component when the period between transfer of goods or services and customer payment is one year or less.
For contracts with customized modules, revenue from the combined software license and customized modules is recognized over time as the Company fulfills its performance obligations by developing and enhancing the software assets throughout the project period. The Company recognizes revenue using the output method based on the value of the services transferred to date relative to the total performance obligation promised. For contracts with standard modules, revenue from the combined software license and standard modules is recognized at a point in time upon final delivery and customer acceptance. Revenue from maintenance and support services for both types is recognized over time on a straight-line basis over the M&S contract period. This recognition pattern reflects the continuous transfer of services to the customer, who simultaneously receives and consumes the benefits of these services throughout the service period.
Revenues from Phygital Art Advisory Services
The Company currently generates revenue from its phygital art advisory services business line through digital authentication services for artworks, leveraging AI and blockchain technology. Services include microstructure analysis, AI image comparison, authenticity determination, blockchain registration, and issuance of digital authentication reports. Service packages are offered in standard and expedited editions, with fees calculated based on the dimensions of the artwork. These digital authentication services comprise a single performance obligation, as the promised services are highly interdependent and integrated to deliver a conclusive authentication outcome. The transaction price is fixed at contract inception. Revenue is recognized at a point in time upon delivery of the final digital authentication report and blockchain certificate to the client, when the client obtains control of the completed authentication package. The Company offers these services under two payment structures: (i) prepaid arrangements, where customers are required to make an upfront payment for the services, which is non-refundable upon execution of the contract and is recorded as a contract liability until recognized as revenue; and (ii) post-paid arrangements, where customers are granted payment terms of 90 days from the date on which the applicable service contract is signed. The Company extends post-service payment terms only to clients that satisfy its credit assessment criteria, which are evaluated on a client-by-client basis and include: (i) the client’s payment history with the Company, where available, including timely payments under the prepaid model; (ii) the client’s professional reputation and financial standing, as evidenced by membership in a rigorous professional association; and (iii) a review of publicly available litigation and legal dispute records, where feasible, to identify any history of defaults, judgments, or unresolved claims indicating heightened credit risk. For post-paid arrangements, the Company records accounts receivable when the services are performed and the Company has an unconditional right to consideration.
Revenues from others
Through the acquisition of Yinlian Culture and the Company’s VIE, Maltose Culture, in May 2026, the Company commenced its music services business. As the acquisition was completed on May 31, 2026, the Company recorded three months and four months of revenue from music services during the three and nine months ended September 30, 2026, respectively, and the amount was immaterial to the condensed consolidated financial statements.
Remaining Performance Obligations
The remaining performance obligations represent the transaction price allocated to performance obligations that are unsatisfied or partially unsatisfied as of the end of the reporting period. Unsatisfied and partially unsatisfied performance obligations consist of contract liabilities and non-cancellable backlog. Non-cancellable backlog includes service orders for which customer purchase orders have been accepted, that are scheduled or in the process of being scheduled for delivery or performance, and that are not yet invoiced.
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As of September 30, 2026 and December 31, 2025, the remaining performance obligations related to MCN digital services purchased and paid for in advance by customers for basic and value-added packages amounted to $
The remaining performance obligations for software services as of September 30, 2026 and December 31, 2025, were $
As of September 30, 2026 and December 31, 2025, there were no remaining performance obligations related to phygital art advisory services.
Contract Costs
The Company recognizes the incremental costs of obtaining a contract with a customer if the Company expects the benefit of those costs to extend beyond one year. The Company has determined that certain sales commissions meet the requirements for capitalization and amortizes those costs consistently with the pattern of transfer of the goods and services under the contract. Total capitalized costs to obtain contracts were immaterial during the periods presented and, where applicable, are included in other current and long-term assets on the Company’s condensed consolidated balance sheets.
The Company applies a practical expedient to expense costs as incurred for costs to obtain a contract when the amortization period is one year or less.
Contract Balances
The Company records accounts receivable when it has an unconditional right to consideration. Accounts receivable balances were $
Disaggregation of Revenue
The following table sets forth our revenues by product:
| Schedule of revenues | ||||||||||||||||
| Three Months Ended September 30, |
Nine Months Ended September 30, |
|||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| SaaS – MCN digital services | $ | $ | $ | $ | ||||||||||||
| Software services | ||||||||||||||||
| Phygital art advisory services – Digital authentication | - | - | ||||||||||||||
| Others | - | - | ||||||||||||||
| $ | $ | $ | $ | |||||||||||||
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The following table sets forth our revenues by the timing of revenue recognition:
| Schedule of revenue recognized | ||||||||||||||||
| Three Months Ended September 30, |
Nine Months Ended September 30, |
|||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Recognized at a point in time | $ | $ | $ | $ | ||||||||||||
| Recognized over time | ||||||||||||||||
| $ | $ | $ | $ | |||||||||||||
(4) BUSINESS COMBINATION
On March 23, 2026, FiEE HK entered into an Investment Agreement with Yinlian Culture, Maltose Culture, Guangzhou Qingniao Culture Co., Ltd., Shenzhen Yaojin Creative Media Co., Ltd., Cai Yuanyao, Zhang Dingcheng, and Zhang Rong (the “Investment Agreement”), pursuant to which FiEE HK agreed to acquire a 51% equity interest (and 60% of the voting rights) in Yinlian Culture for an aggregate purchase price of $51,000. Yinlian Culture was incorporated on February 11, 2026 to facilitate the investment in Maltose Culture. In connection with the signing of the Investment Agreement, a Shareholder Agreement was also entered into on March 23, 2026 (the “Shareholder Agreement”), governing the rights and obligations of the shareholders of Yinlian Culture, including, but not limited to, board composition and governance, voting rights, dividend rights and distribution thresholds, liquidation preference, and transfer restrictions. The acquisition closed on May 31, 2026. Through the VIE Agreements between Yinlian Culture and Maltose Culture, the Company obtained control over Maltose Culture, which is consolidated as a VIE of the Company.
The Investment Agreement, the Shareholder Agreement, and the VIE Agreements were entered into in contemplation of one another and were essentially a single transaction designed to achieve an overall commercial effect. Accordingly, these agreements have been combined and accounted for as a single transaction for financial reporting purposes.
The Company evaluated the transaction in accordance with the guidance in ASC 805 and determined that the acquired set met the definition of a business. The acquired set includes both inputs and a substantive process that together significantly contribute to the ability to create outputs, including two key employees forming an organized workforce and the ability to continue revenue-generating operations without significant disruption. Accordingly, the transaction was accounted for as a business combination.
The aggregate purchase price for the
On May 31, 2026, FiEE HK and Yinlian Culture entered into a Supplemental Agreement to the Investment Agreement (the “Supplemental Agreement”), previously filed as Exhibit 10.1 to the Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2026. Under the Supplemental Agreement, (i) FiEE HK waived, solely as a condition precedent to the first closing, the requirement that Yinlian Culture open a foreign exchange capital account capable of receiving the capital increase payment, provided that Yinlian Culture remains obligated to open such account following the first closing; (ii) the parties agreed that the first closing under the Investment Agreement occurs on the date the conditions precedent to the first closing are satisfied or waived, rather than within five business days thereafter, and that the signing date of the Supplemental Agreement is deemed the First Closing Date; and (iii) the parties agreed that FiEE HK’s payment of the RMB 354,807 (approximately $51,000) investment amount is due within seven business days from the date Yinlian Culture opens its foreign exchange capital account, rather than within seven business days following the first closing as originally provided.
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Fair Value of Identifiable Assets Acquired and Liabilities Assumed
The purchase consideration was allocated to the identifiable assets acquired and liabilities assumed based on their estimated acquisition-date fair values. The noncontrolling interests were also measured at their acquisition-date fair values and consist of (i) the 49% equity interest in Yinlian Culture not acquired by the Company and (ii) the interest in Maltose Culture’s acquisition-date net assets attributable to its registered equity shareholders. The allocation is as follows:
| Schedule of fair value of identifiable assets acquired and liabilities assumed | ||||
| Total investment consideration | $ | |||
| Cash | $ | |||
| Accounts receivable | ||||
| Prepaid expenses and other current assets | ||||
| Equipment | ||||
| Stock-subscription receivable | ||||
| Contract liabilities | ( |
) | ||
| Convertible note payable | ( |
) | ||
| Accrued expenses and other current liabilities | ( |
) | ||
| Total identifiable net assets acquired | $ | ( |
) | |
| Less: Noncontrolling interests | ( |
) | ||
| Net identifiable assets acquired attributable to the Company | ||||
| Goodwill | $ |
The fair value of the identifiable net assets was determined using an asset approach, which estimates fair value based on the replacement cost or reproduction cost of the assets, adjusted for physical deterioration, functional obsolescence, and economic obsolescence. The fair values of financial assets and liabilities, including cash and cash equivalents, other current assets, and accrued liabilities, approximated their respective carrying amounts at the acquisition date due to their short-term nature.
Convertible Note
Under the same Investment Agreement, FiEE HK also agreed to provide, or cause an entity designated by FiEE HK to provide, a zero-interest convertible loan to Yinlian Culture in the principal amount of up to RMB 20,000,000 (approximately $
(5) VIE ARRANGEMENTS
VIE Agreements
Maltose Culture is an AI-empowered music ecosystem that integrates content creation, intelligent platform distribution, and next-generation home entertainment. At or immediately prior to the closing of the Equity Investment, Maltose Culture was owned
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In order to establish effective control over, and the right to receive the economic benefits of, Maltose Culture, pursuant to the requirements of PRC law, Yinlian Culture entered into the following agreements with Maltose Culture, Yang Kai, and Zhang Dingcheng. The VIE Agreements were effective on March 23, 2026, and the related business registration changes were completed on March 26, 2026.
Exclusive Purchase Option Agreement
Pursuant to the Exclusive Purchase Option Agreement, dated as of March 23, 2026, in connection with the signing of the Investment Agreement, each of Yang Kai and Zhang Dingcheng granted to Yinlian Culture an exclusive and irrevocable option to acquire 100% of the equity interests of Maltose Culture at the lowest price permitted by applicable PRC law, together with the right to acquire all of the assets of Maltose Culture. The option may be exercised by Yinlian Culture at any time, subject to applicable PRC regulatory requirements and approvals.
Irrevocable Proxy Agreement
Pursuant to the Irrevocable Proxy Agreement, dated as of March 23, 2026, in connection with the signing of the Investment Agreement, each of Yang Kai and Zhang Dingcheng irrevocably appointed Yinlian Culture as their exclusive proxy to exercise all shareholder voting rights with respect to their respective equity interests in Maltose Culture, including without limitation all voting rights, the right to appoint directors and senior management, and the right to transfer, pledge, or otherwise dispose of their equity interests. The proxy is irrevocable and remains effective for the entire operating term of Maltose Culture, unless earlier terminated by Yinlian Culture.
Business Cooperation Agreement
Pursuant to the Business Cooperation Agreement, dated as of March 23, 2026, in connection with the signing of the Investment Agreement, Yinlian Culture agreed to provide exclusive consulting and technical services to Maltose Culture and to license certain intellectual property to Maltose Culture on a non-exclusive, non-transferable basis, in exchange for service fees payable by Maltose Culture to Yinlian Culture. The service fees under the agreement are structured to equal substantially all of the net income of Maltose Culture, thereby transferring the economic benefits of Maltose Culture to Yinlian Culture.
Equity Pledge Agreement
Pursuant to the Equity Pledge Agreement, dated as of March 23, 2026, in connection with the signing of the Investment Agreement, each of Yang Kai and Zhang Dingcheng pledged all of their respective equity interests in Maltose Culture to Yinlian Culture as security for the performance of all of their obligations and Maltose Culture’s obligations under the VIE Agreements.
Spousal Consent
In connection with the signing of the Investment Agreement, Cao Yu executed a Spousal Consent, dated as of March 23, 2026, acknowledging and consenting to Yang Kai’s entry into and performance of the VIE Agreements, and confirming that she has no claim to the equity interests of Maltose Culture held by Yang Kai.
Based on the terms of the VIE Agreements, the Company has determined that it is the primary beneficiary of Maltose Culture for the following reasons: (i) through the Irrevocable Proxy Agreement, Yinlian Culture has the power to direct the voting and operational activities of Maltose Culture, including the appointment of directors and senior management; (ii) through the Exclusive Purchase Option Agreement, Yinlian Culture has the right to acquire 100% of the equity interests of Maltose Culture at any time; (iii) through the Business Cooperation Agreement, Yinlian Culture provides consulting and technical services that are essential to Maltose Culture’s operations; and (iv) through the Equity Pledge Agreement, Yinlian Culture has security interest over the equity interests of Maltose Culture. Accordingly, the Company has both the power to direct the activities that most significantly impact Maltose Culture’s economic performance and the obligation to absorb losses or the right to receive benefits that could be significant to Maltose Culture. Therefore, the Company is the primary beneficiary of Maltose Culture and consolidates Maltose Culture as a VIE.
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Financial Position and Results of Operations of the Consolidated VIE
The Company’s condensed consolidated financial statements include the assets, liabilities and results of operations of the VIE for which the Company is the primary beneficiary. The noncontrolling interest holder’s interest is reflected in “Net income (loss) attributable to noncontrolling interests” in the condensed consolidated statements of operations and “Noncontrolling interests” in the condensed consolidated balance sheets. See Note 4 – Business Combination for details of noncontrolling interests.
The creditors of the consolidated VIE do not have recourse to the Company other than to the assets of the consolidated VIE. The following table summarizes the carrying amounts of the Company’s VIE assets and liabilities, revenue and net loss, after elimination of any intercompany transactions and balances, included in the Company’s condensed consolidated balance sheets at September 30, 2026:
| Schedule of variable interest entities | ||||
| September 30, 2026 |
||||
| Assets | ||||
| Cash | $ | |||
| Accounts receivable | ||||
| Prepaid expenses | ||||
| Other receivables | ||||
| Total Current Assets | ||||
| Equipment, net | ||||
| Total Assets | $ | |||
| Liabilities | ||||
| Accrued expenses and other current liabilities | ||||
| Total Liabilities | $ | |||
| From the date of initial consolidation through September 30, 2026 |
||||
| Revenue | $ | |||
| Net Loss | $ | |||
(6) BALANCE SHEET COMPONENTS
Property, equipment and software, net
Property, equipment and software, net consists of the following:
| Schedule of equipment | ||||||||
| As of September 30, 2026 |
As of December 31, 2025 |
|||||||
| Internal use software | $ | $ | ||||||
| Equipment | ||||||||
| Vehicles | ||||||||
| Building | - | |||||||
| Land | - | |||||||
| Total property, equipment and software | ||||||||
| Accumulated depreciation and amortization | ( |
) | ( |
) | ||||
| Total property, equipment and software, net | $ | $ | ||||||
For the three months ended September 30, 2026 and 2025, depreciation and amortization was $
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Intangible assets, net
As part of the asset acquisitions completed on June 30, 2025 and November 30, 2025, the amounts allocated to the intangible assets acquired were approximately $
Intangible assets consisted of the following at September 30, 2026 and December 31, 2025:
| Schedule of intangible assets | ||||||||||||||||||||||||
| As of September 30, 2026 | As of December 31, 2025 | |||||||||||||||||||||||
| Gross Carrying Amount |
Accumulated Amortization |
Net | Gross Carrying Amount |
Accumulated Amortization |
Net | |||||||||||||||||||
| Acquired group of proprietary software | $ | $ | ( |
) | $ | $ | $ | ( |
) | $ | ||||||||||||||
| $ | $ | ( |
) | $ | $ | $ | ( |
) | $ | |||||||||||||||
Amortization expense was $
Estimated amortization expenses for the future years are as follows:
| Schedule of Amortization | ||||
| Years ending December 31, | Amortization | |||
| 2026 | $ | |||
| 2027 | ||||
| 2028 | ||||
| Total | $ | |||
Other receivables, net
Other receivables as of September 30, 2026 consisted of security deposits for artworks of $
Other receivables as of December 31, 2025 primarily consisted of $
Prepaid and other current assets
Prepaid and other current assets consist of the following:
| Schedule of inventories | ||||||||
| September 30, 2026 |
December 31, 2025 |
|||||||
| Insurance fees - current | $ | $ | ||||||
| Cloud hosting fee | ||||||||
| Prepayment for property purchase | - | |||||||
| Nasdaq annual listing fee | - | |||||||
| Prepaid music costs and vendor deposit | - | |||||||
| Prepaid taxes | - | |||||||
| Other | ||||||||
| Total prepaid and other current assets | $ | $ | ||||||
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Other assets
Other assets consist of the following:
| Schedule of other assets | ||||||||
| September 30, 2026 |
December 31, 2025 |
|||||||
| Insurance fees - noncurrent | $ | $ | ||||||
| Deposits | ||||||||
| Deferred offering costs | ||||||||
| Total other assets | $ | $ | ||||||
Accrued expenses and other current liabilities
Accrued expenses and other current liabilities consist of the following:
| Schedule of accrued expenses | ||||||||
| September 30, 2026 |
December 31, 2025 |
|||||||
| Payroll & related benefits | $ | $ | ||||||
| Professional fees | ||||||||
| Sales allowances | - | |||||||
| Sales and use tax | ||||||||
| Other payable to Yixuntong | - | |||||||
| Project investment from partners | - | |||||||
| Other | ||||||||
| Total accrued expenses and other current liabilities | $ | $ | ||||||
(7) COMMITMENTS AND CONTINGENCIES
(a) Commitments
Except as disclosed elsewhere in the accompanying notes, the Company had no other material commitments as of September 30, 2026.
(b) Contingencies
Contingencies on potential lawsuits
The Company reviews the status of its legal proceedings and records a provision for a liability when it is considered probable that a liability has been incurred and the amount of the loss can be reasonably estimated. This review is updated periodically as additional information becomes available. If both criteria are not met, the Company reassesses whether there is at least a reasonable possibility that a loss, or additional losses, may be incurred. If there is a reasonable possibility that a loss may be incurred, the Company discloses the estimate of the amount of the loss or range of losses, or that the amount is not material, or that an estimate of the loss cannot be made. At September 30, 2026, the Company is not currently a party to any legal proceedings that, if determined adversely to the Company, in management’s opinion, are currently expected to individually or in the aggregate have a material adverse effect on the Company’s business, operating results or financial condition taken as a whole. The Company expenses its legal fees as incurred.
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In the ordinary course of its business, the Company is subject to lawsuits, arbitrations, claims, and other legal proceedings in connection with its business. Some of the legal actions include claims for substantial or unspecified compensatory and/or punitive damages. A substantial adverse judgment or other unfavorable resolution of these matters could have a material adverse effect on the Company’s financial condition, results of operations, and cash flows. Management believes that the Company has adequate legal defenses with respect to the legal proceedings to which it is a defendant or respondent, and that the outcome of these pending proceedings is not likely to have a material adverse effect on the financial condition, results of operations, or cash flows of the Company. However, the Company is unable to predict the outcome of these matters.
Uncertainty on the business operations
For the three and nine months ended September 30, 2026, the Company’s operations depended in part on the continued service of its senior management, whose relationships with artists support the expansion and development of the Company’s primary customer base. The loss of key management or technical personnel could adversely affect the Company’s ability to maintain these relationships and develop its technology-driven services.
(8) SIGNIFICANT CUSTOMERS AND DEPENDENCY ON KEY SUPPLIERS
During the three and nine months ended September 30, 2026, the Company had one customer that individually accounted for approximately
During the three and nine months ended September 30, 2025, no supplier accounted for
(9) CONVERTIBLE NOTE PAYABLE TO RELATED PARTY
The Company entered into an unsecured promissory note (the “Convertible Note”) effective February 18, 2025, with David Lazar, a stockholder holding more than 10% of the Company’s outstanding shares and a former officer and director. Under the terms of the Convertible Note, the Company agreed to pay Mr. Lazar a principal amount of $
The Convertible Note payable to the related party was accounted for as a single liability in accordance with Accounting Standards Update (“ASU”) 2020-06, Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity.
On October 27, 2025, at the Company’s 2025 Annual Meeting of Stockholders, stockholders approved the conversion of the Convertible Note. Pursuant to the terms of the Convertible Note, it automatically converted into
(10) RELATED PARTY TRANSACTIONS
The Company had related party transactions during the three and nine months ended September 30, 2026 and 2025.
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| ● | VIE arrangement with a related party. See Note 5 for details. |
| ● | Convertible note issued to a related party. See Note 9 for details. |
| ● | Equity transactions with stockholders. See Note 12 for details. |
(11) EARNINGS (LOSS) PER SHARE
The Company’s Series A Convertible Preferred Stock, $0.001 par value per share (“Series A Preferred Stock”), is considered a participating security because it has the right to participate in dividends with common stockholders on an as-converted basis. Accordingly, the Company applies the two-class method to compute basic and diluted earnings (loss) per share. Under the two-class method, net income is allocated between common stockholders and participating securities based on their respective rights to receive dividends as if all earnings for the period had been distributed. Net losses are not allocated to the Series A Preferred Stock, as holders do not have a contractual obligation to share in losses.
Diluted earnings (loss) per share reflects the potential dilution that could occur if securities or other contracts to issue Common Stock were exercised or converted into Common Stock. Potentially dilutive securities include convertible Preferred Stock, warrants, and restricted stock units. Warrants are included in diluted EPS using the treasury stock method. For convertible Preferred Stock that is a participating security, diluted EPS is calculated using the more dilutive of the two-class method or the if-converted method in accordance with ASC 260. Under the two-class method, the numerator used in diluted EPS is consistent with that used in basic EPS. Potential common shares are included only to the extent they are dilutive, and anti-dilutive securities are excluded.
Earnings (loss) per share for the three and nine months ended September 30, 2026 and 2025, respectively, were as follows:
| Schedule of net income (loss) per share | ||||||||||||||||
| Three Months Ended | Nine Months Ended | |||||||||||||||
| September 30, 2026 |
September 30, 2025 |
September 30, 2026 |
September 30, 2025 |
|||||||||||||
| Basic earnings (loss) per common share: | ||||||||||||||||
| Net income (loss) attributable to owners of parent | $ | $ | ( |
) | $ | $ | ( |
) | ||||||||
| Less: Preferred stock dividend declared | - | - | - | - | ||||||||||||
| Income (loss) available for distribution | ( |
) | ( |
) | ||||||||||||
| Less: Income allocated to participating securities | ( |
) | - | ( |
) | - | ||||||||||
| Net income (loss) attributable to common stockholders | $ | $ | ( |
) | $ | $ | ( |
) | ||||||||
| Weighted average basic shares outstanding | ||||||||||||||||
| Basic earnings (loss) per common share | $ | $ | ( |
) | $ | $ | ( |
) | ||||||||
| Diluted earnings (loss) per common share: | ||||||||||||||||
| Weighted average basic shares outstanding | ||||||||||||||||
| Dilutive effect related to warrants | - | - | ||||||||||||||
| Weighted average diluted shares outstanding | ||||||||||||||||
| Diluted earnings (loss) per common share | $ | $ | ( |
) | $ | $ | ( |
) | ||||||||
Diluted earnings (loss) per common share for the three and nine months ended September 30, 2026 and 2025 excludes the effects of
20
(12) EQUITY
Preferred Stock and Warrants
On February 18, 2025, the
As of September 30, 2026 and December 31, 2025, the Company had
Securities Purchase Agreements
On May 9, 2025, the Company entered into, and simultaneously closed the transactions under, certain securities purchase agreements with Cao Yu and Hu Bin, pursuant to which the Company sold an aggregate of 2,439,025 shares of Common Stock -
On January 30, 2026, the Company entered into a securities purchase agreement (the “2026 Purchase Agreement”) with certain purchasers named therein (the “2026 Purchasers”), pursuant to which the Company agreed to sell and issue to the 2026 Purchasers, at the closing of the private placement (the “Closing”) in March 2026, an aggregate of
Helena Purchase Agreement
On May 9, 2025, the Company entered into a Purchase Agreement (the “Helena Purchase Agreement”) with Helena Global Investment Opportunities I Ltd. (“Helena”) whereby the Company shall have the right to issue and sell to Helena, from time to time, and Helena shall purchase from the Company, up to $15,000,000 of Common Stock, during the period commencing on May 9, 2025 and ending on the first day of the month immediately following the 36-month anniversary of May 9, 2025.
The closing of each Advance (as defined in the Helena Purchase Agreement) and each sale and purchase of Common Stock related to each Advance shall take place on the applicable Settlement Date (as defined in the Helena Purchase Agreement), at a Purchase Price (as defined in the Helena Purchase Agreement) based on 95% of the lowest VWAP for the Common Stock, in respect of any Advance, during the three (3) trading days commencing on the date of Helena’s receipt of the shares of Common Stock relating to such Advance.
21
In consideration for Helena’s execution and delivery of the Helena Purchase Agreement, the
July 2025 Warrant
On July 2, 2025, the Company issued a warrant to purchase
In accordance with the accounting requirements of ASC 718, “Compensation - Stock Compensation,” the Company measured this equity instrument at fair value and recognized the compensation cost immediately on the grant date. Using the Black-Scholes option pricing model, with key inputs including a fair value of the underlying Common Stock of $
On November 12, 2025, Lazar exercised the warrant through a cashless exercise mechanism. Pursuant to the cashless exercise,
ATM Sales Agreement
In June 2026, the
Stock-Based Compensation
Director Equity Fees
On April 29, 2025, the Company entered into director agreements with two independent directors, pursuant to which each director is entitled to receive 100,000 shares of Common Stock, provided they remain a director for one year from the effective date of the director agreements. The grant date for these equity awards was April 29, 2025, with a one-year service period ending on April 29, 2026.
Compensation expense is recognized on a straight-line basis over the service period. For the nine months ended September 30, 2026, the Company recognized $
22
On May 5, 2026, upon the completion of the requisite service period, the Company issued an aggregate of
The following table summarizes the stock-based compensation expense for the director equity fees by line item in the consolidated statements of operations and comprehensive income (loss):
| Schedule of stock-based compensation expense | ||||||||||||||||
| Three Months Ended September 30, |
Nine Months Ended September 30, |
|||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| General and administrative | $ | - | $ | $ | $ | |||||||||||
2025 Equity Incentive Plan
On October 27, 2025, the Company’s stockholders approved the 2025 Equity Incentive Plan (the “2025 Plan”), which authorized
On May 12, 2026 (the “Grant Date”), the Company granted an aggregate of
The following table summarizes the stock-based compensation expense for the 2025 Plan by line item in the consolidated statements of operations and comprehensive income (loss):
| Schedule of stock-based compensation expense | ||||||||||||||||
| Three Months Ended September 30, |
Nine Months Ended September 30, |
|||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Selling and marketing | $ | $ | - | $ | $ | - | ||||||||||
| General and administrative | - | - | ||||||||||||||
| Total stock-based compensation expense | $ | $ | - | $ | $ | - | ||||||||||
As of September 30, 2026, there was approximately $
(13) SUBSEQUENT EVENTS
The Company has evaluated subsequent events from September 30, 2026 through November 13, 2026, the date that the unaudited condensed consolidated financial statements were issued, and has determined that there are no additional events requiring recognition or disclosure in the financial statements.
23
| ITEM 2. | 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 a comprehensive WiFi/SaaS platform to make connected homes 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, phygital art advisory services and music services.
As part of our ongoing strategic initiatives, we have integrated AI and blockchain technology into our phygital art advisory 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.
Our phygital art advisory services integrate fine art digital authentication, valuation, curation, auctions, and blockchain-based provenance, supported by advanced imaging and AI-driven analysis. By combining these capabilities with our MCN digital services, we leverage KOL visibility to drive audience engagement and artwork sales.
24
Following quarter-end, in October 2026, we hosted an international art exhibition and an auction. The event connected artwork resources, KOL networks and collector demand through physical exhibitions and digital platforms, including content promotion, audience engagement, online auction participation and transaction completion.
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 phygital art advisory 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, phygital art advisory 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.
25
Results of Operations
The following table sets forth certain financial data derived from our condensed consolidated statements of operations for the three and nine months ended September 30, 2026 and 2025, presented in absolute dollars, with dollars and percentage change period over period:
| Three Months Ended | Nine Months Ended | |||||||||||||||||||||||||||||||
| September 30, 2026 |
September 30, 2025 |
$ Change |
% Change |
September 30, 2026 |
September 30, 2025 |
$ Change |
% Change |
|||||||||||||||||||||||||
| Revenues | $ | 2,620,524 | $ | 1,939,542 | $ | 680,982 | 35.1 | % | $ | 9,567,853 | $ | 1,984,660 | $ | 7,583,193 | 382.1 | % | ||||||||||||||||
| Cost of revenues | 692,543 | 291,739 | 400,804 | 137.4 | % | 2,272,094 | 336,419 | 1,935,675 | 575.4 | % | ||||||||||||||||||||||
| Gross profit | 1,927,981 | 1,647,803 | 280,178 | 17.0 | % | 7,295,759 | 1,648,241 | 5,647,518 | 342.6 | % | ||||||||||||||||||||||
| Operating expenses: | ||||||||||||||||||||||||||||||||
| Selling and marketing | 171,113 | 32,349 | 138,764 | 429 | % | 457,766 | 49,160 | 408,606 | 831.2 | % | ||||||||||||||||||||||
| General and administrative | 960,441 | 1,716,060 | (755,619 | ) | (44 | )% | 2,895,476 | 2,660,300 | 235,176 | 8.8 | % | |||||||||||||||||||||
| Research and development | 43,962 | - | 43,962 | N/A | 119,775 | 47,419 | 72,356 | 152.6 | % | |||||||||||||||||||||||
| Total operating expenses | 1,175,516 | 1,748,409 | (572,893 | ) | (32.8 | )% | 3,473,017 | 2,756,879 | 716,138 | 26 | % | |||||||||||||||||||||
| Operating income (loss) | 752,465 | (100,606 | ) | 853,071 | (847.9 | )% | 3,822,742 | (1,108,638 | ) | 4,931,380 | (444.8 | )% | ||||||||||||||||||||
| Total other income (expense) | (1,837 | ) | (12,194 | ) | 10,357 | (84.9 | )% | 53,842 | (17,752 | ) | 71,594 | (403.3 | )% | |||||||||||||||||||
| Income (loss) before income taxes | 750,628 | (112,800 | ) | 863,428 | (765.5 | )% | 3,876,584 | (1,126,390 | ) | 5,002,974 | (444.2 | )% | ||||||||||||||||||||
| Income tax expense (benefit) | (365,513 | ) | 140,185 | (505,698 | ) | (360.7 | )% | 298,213 | 140,185 | 158,028 | 112.7 | % | ||||||||||||||||||||
| Net income (loss) | $ | 1,116,141 | $ | (252,985 | ) | $ | 1,369,126 | (541.2 | )% | $ | 3,578,371 | $ | (1,266,575 | ) | $ | 4,844,946 | (382.5 | )% | ||||||||||||||
| Attributable to noncontrolling interests | (4,875 | ) | - | (4,875 | ) | N/A | (5,357 | ) | - | (5,357 | ) | N/A | ||||||||||||||||||||
| Attributable to owners of parent | $ | 1,121,016 | $ | (252,985 | ) | $ | 1,374,001 | (543.1 | )% | $ | 3,583,728 | $ | (1,266,575 | ) | $ | 4,850,303 | (382.9 | )% | ||||||||||||||
26
Comparison of the three and nine months ended September 30, 2026 to the three and nine months ended September 30, 2025
The following table sets forth our revenues by product and the changes in revenues for the three and nine months ended September 30, 2026, as compared to the three and nine months ended September 30, 2025:
| Three Months Ended | Nine Months Ended | |||||||||||||||||||||||||||||||
| September 30, 2026 |
September 30, 2025 |
$ Change |
% Change |
September 30, 2026 |
September 30, 2025 |
$ Change |
% Change |
|||||||||||||||||||||||||
| SaaS – MCN digital services | $ | 1,046,483 | $ | 1,752,196 | $ | (705,713 | ) | (40.3 | )% | $ | 3,674,774 | $ | 1,797,314 | $ | 1,877,460 | 104.5 | % | |||||||||||||||
| Software services | 607,374 | 187,346 | 420,028 | 224.2 | % | 2,305,473 | 187,346 | 2,118,127 | 1,130.6 | % | ||||||||||||||||||||||
| Phygital art advisory services | 934,212 | - | 934,212 | N/A | 3,543,862 | - | 3,543,862 | N/A | ||||||||||||||||||||||||
| Others | 32,455 | - | 32,455 | N/A | 43,744 | - | 43,744 | N/A | ||||||||||||||||||||||||
| Total | $ | 2,620,524 | $ | 1,939,542 | $ | 680,982 | 35.1 | % | $ | 9,567,853 | $ | 1,984,660 | $ | 7,583,193 | 382.1 | % | ||||||||||||||||
Revenues
Our revenues increased by $0.7 million and $7.6 million for the three and nine months ended September 30, 2026, compared to the three and nine months ended September 30, 2025, respectively. 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, phygital art advisory services (currently, 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 phygital art advisory services, and participants in the music industry.
For our SaaS - MCN digital services, as of September 30, 2026, we onboarded 939 customers, representing total service fees of $9.2 million, of which $9.0 million has been recognized as revenue cumulatively. During the nine months ended September 30, 2026, we recognized $3.7 million in revenue from this business.
We introduced customized software services in July 2025. As of September 30, 2026, we had secured contracts totaling $4.1 million for software services. We recognized $2.3 million of software-services revenue during the nine months ended September 30, 2026 under the applicable over-time or point-in-time revenue recognition model. The number of software-services customers increased by one from June 30, 2026, bringing the total to 32 as of September 30, 2026.
Through the acquisition of HGK in November 2025, we added the ability to provide phygital art advisory services. As of September 30, 2026, this business had generated cumulative revenue of $3.9 million, including $3.5 million recognized in the nine months ended September 30, 2026, serving five corporate clients and 601 individual clients in total, with related accounts receivable amounting to $2.2 million. This business leverages AI and blockchain technology to provide digital authentication.
We expect to commence new revenue streams beginning in the fourth quarter of 2026, including art curation, auction services, and MCN brokerage services. These services are expected to generate revenue in Q4 2026. Accordingly, no assurance can be given that these new revenue streams will materialize as expected, and any revenue contribution in the fourth quarter of 2026 may be limited and may not be indicative of future periods.
27
Cost of Revenue and Gross Margin
Cost of revenue for the three and nine months ended September 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 nine months ended September 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 nine months ended September 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 | Nine Months Ended | |||||||||||||||||||||||||||||||
| September 30, 2026 |
September 30, 2025 |
$ Change |
% Change |
September 30, 2026 |
September 30, 2025 |
$ Change |
% Change |
|||||||||||||||||||||||||
| Revenues | $ | 2,620,524 | $ | 1,939,542 | $ | 680,982 | 35.1 | % | $ | 9,567,853 | $ | 1,984,660 | $ | 7,583,193 | 382.1 | % | ||||||||||||||||
| Cost of revenue | 692,543 | 291,739 | 400,804 | 137.4 | % | 2,272,094 | 336,419 | 1,935,675 | 575.4 | % | ||||||||||||||||||||||
| Gross margin | 73.6 | % | 85 | % | 76.3 | % | 83 | % | ||||||||||||||||||||||||
Gross margin decreased to 73.6% and 76.3% for the three and nine months ended September 30, 2026, from 85.0% and 83.0% for the three and nine months ended September 30, 2025, respectively. The decrease primarily reflected higher amortization costs included in cost of revenues. The Company launched its SaaS-MCN digital services in March 2025 and introduced software services in July 2025, before adding phygital art advisory services following the November 2025 acquisition of HGK. These changes in service mix and the related cost structure affect period-to-period comparability.
The expansion of our MCN digital services, software services and phygital art advisory services has changed our revenue mix and cost structure. Although MCN digital services use AI and data analytics to reduce reliance on manual labor, consolidated gross margins decreased in the three and nine months ended September 30, 2026, compared with the three and nine months ended September 30, 2025, respectively.
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 | Nine Months Ended | |||||||||||||||||||||||||||||||
| September 30, 2026 |
September 30, 2025 |
$ Change |
% Change |
September 30, 2026 |
September 30, 2025 |
$ Change |
% Change |
|||||||||||||||||||||||||
| Selling and marketing | $ | 171,113 | $ | 32,349 | $ | 138,764 | 429.0 | % | $ | 457,766 | $ | 49,160 | $ | 408,606 | 831.2 | % | ||||||||||||||||
28
Selling and marketing expenses increased by $139 thousand and $409 thousand in the three and nine months ended September 30, 2026, as compared to the three and nine months ended September 30, 2025, respectively, 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 Plan. For the nine months ended September 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, phygital art advisory services, and other services – as well as corporate branding initiatives.
For the remainder of fiscal 2026, we expect selling and marketing expenses to fluctuate with sales levels because certain expenses, such as commissions, are determined based on revenue. Forecasting selling and marketing expenses is highly dependent on expected revenue levels, and actual expenses could vary significantly with actual revenue achieved in any given quarter. Marketing expenses may also fluctuate depending on 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 | Nine Months Ended | |||||||||||||||||||||||||||||||
| September 30, 2026 |
September 30, 2025 |
$ Change |
% Change |
September 30, 2026 |
September 30, 2025 |
$ Change |
% Change |
|||||||||||||||||||||||||
| General and administrative | $ | 960,441 | $ | 1,716,060 | $ | (755,619 | ) | (44.0 | )% | $ | 2,895,476 | $ | 2,660,300 | $ | 235,176 | 8.8 | % | |||||||||||||||
General and administrative expenses decreased by $756 thousand for the three months ended September 30, 2026 compared with the three months ended September 30, 2025 and increased by $235 thousand for the nine months ended September 30, 2026 compared with the nine months ended September 30, 2025, respectively. The quarterly decrease primarily reflected the absence of the prior-year warrant compensation expense. The nine-month increase primarily reflected higher share-based compensation expense, legal and audit fees, and other fees.
Future general and administrative expense increases or decreases in absolute dollars are difficult to predict because certain costs are hard to forecast.
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 | Nine Months Ended | |||||||||||||||||||||||||||||||
| September 30, 2026 |
September 30, 2025 |
$ Change |
% Change |
September 30, 2026 |
September 30, 2025 |
$ Change |
% Change |
|||||||||||||||||||||||||
| Research and development | $ | 43,962 | $ | - | $ | 43,962 | N/A | $ | 119,775 | $ | 47,419 | $ | 72,356 | 152.6 | % | |||||||||||||||||
29
Research and development expenses increased by $44 thousand and $72 thousand in the three and nine months ended September 30, 2026, as compared to the three and nine months ended September 30, 2025, respectively. The increase primarily reflects ongoing enhancements and optimizations to our system during the respective periods.
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) Benefit
| Three Months Ended | Nine Months Ended | |||||||||||||||||||||||||||||||
| September 30, 2026 |
September 30, 2025 |
$ Change |
% Change |
September 30, 2026 |
September 30, 2025 |
$ Change |
% Change |
|||||||||||||||||||||||||
| Income tax expense (benefit) | $ | (365,513 | ) | $ | 140,185 | $ | (505,698 | ) | (360.7 | )% | $ | 298,213 | $ | 140,185 | $ | 158,028 | 112.7 | % | ||||||||||||||
The Company recorded an income tax benefit of $365,513 and income tax expense of $298,213 for the three and nine months ended September 30, 2026, respectively, compared with income tax expense of $140,185 for the three and nine months ended September 30, 2025, respectively. The benefit primarily reflected a reversal of previously accrued income taxes due to an adjustment to the Company’s intercompany charging strategy.
The Company recognized deferred tax assets of $27,102 as of September 30, 2026, which arose primarily from the allowance for credit losses on other receivables.
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 $92.0 million. The Company began generating operating profit in the fourth quarter of 2025 and has continued to do so thereafter. During the nine months ended September 30, 2026, the Company reported a net income of $3.6 million. As of September 30, 2026, we had cash of $5.2 million as compared to $3.1 million on December 31, 2025. On September 30, 2026, we had no outstanding borrowings and a positive working capital of $9.0 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 nine months ended September 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.
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Our condensed consolidated financial statements as of September 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 during the 12 months following the date the condensed consolidated financial statements are issued.
Our condensed consolidated financial statements as of September 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 Nine Months Ended September 30, |
||||||||
| 2026 | 2025 | |||||||
| Cash (used in) provided by operating activities | $ | (13,372 | ) | $ | 2,478,829 | |||
| Cash provided by (used in) investing activities | 349,193 | (906,095 | ) | |||||
| Cash provided by financing activities | 1,836,163 | 4,300,000 | ||||||
| Effect of foreign exchange rate changes on cash | (30,023 | ) | 2,476 | |||||
| Net increase in cash | $ | 2,141,961 | $ | 5,875,210 | ||||
Cash Flows from Operating Activities. Cash used for operating activities was $13 thousand for the nine months ended September 30, 2026, compared with net income of $3.6 million. Noncash adjustments included $1.0 million of depreciation and amortization, $767 thousand of stock-based compensation and $150 thousand of amortization of deferred financing costs. Operating-asset and liability changes included a $5.8 million increase in accounts receivable and decreases of $1.4 million in contract liabilities and $352 thousand in income tax payable, partially offset by a $462 thousand decrease in other receivables and increases of $571 thousand in accrued expenses and other current liabilities and $1.0 million in accounts payable. These adjustments are not necessarily cash receipts or payments in the amounts of the related balance changes. The introduction of post-paid arrangements for MCN digital services and phygital art advisory services in the second quarter of 2026 changed the timing of collections relative to service delivery. Customers under those arrangements are granted payment terms of 90 days from the contract signing date. The Company continues to monitor collectability. The cash outflow related to operating activities for the nine months ended September 30, 2026 was primarily due to a security deposit for artworks and slower collection of accounts receivable.
Cash provided by operating activities of $2.5 million during the nine months ended September 30, 2025 reflected our net loss of $1.3 million, adjusted for non-cash expenses, consisting primarily of $1.1 million in issuance of warrants for service, $225 thousand in depreciation and amortization expense and $77 thousand in stock-based compensation. Uses of cash included an increase in other receivables of $431 thousand. Sources of cash included an increase of contract liabilities of $2.5 million.
Cash Flows from Investing Activities. During the nine months ended September 30, 2026, investing activities provided $349 thousand of net cash, consisting of $877 thousand of cash acquired in the acquisition of Yinlian Culture and its consolidated VIE, partially offset by $527 thousand used to purchase property, equipment and software.
During the nine months ended September 30, 2025, cash used in investing activities consisted of $6 thousand in purchase of property and equipment and $900 thousand in purchase of intangible assets.
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Cash Flows from Financing Activities. Cash provided by financing activities during the nine months ended September 30, 2026 consisted of gross proceeds from issuance of Common Stock of $2.0 million, partially offset by payment of deferred financing costs of $164 thousand.
Cash provided by financing activities during the nine months ended September 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.
We do not believe our current cash will be sufficient to fund working capital requirements, capital expenditures and operations during the 12 months following the date the condensed consolidated financial statements are issued. Our ability to continue as a going concern depends 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 substantial doubt exists about the Company’s ability to continue as a going concern. We will continue to monitor costs in relation to sales and adjust our cost structure 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 September 30, 2026, we have U.S. federal net operating loss carryforwards from prior years 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 September 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 period from 2026 through 2028. We plan to allocate (1) $4.0 million in 2026 to develop AI technology for content and build a fan community and membership system, (2) $3.0 million in 2027 to enhance our SaaS system and develop security features for other intellectual property protection technologies, and (3) $3.0 million in 2028 to advance AI media development and expand content creation capabilities. Actual timing and expenditures depend on operational priorities, market conditions and the availability of financing.
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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 September 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 September 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 nine months ended September 30, 2026, the Company’s critical accounting policy remains revenue recognition, and no critical accounting estimates were identified.
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| ITEM 3. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK |
We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information under this Item.
| ITEM 4. | CONTROLS AND PROCEDURES |
Evaluation of Disclosure Controls and Procedures
We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports pursuant to the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer of the Company, as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, as ours are designed to do, and management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.
In connection with the preparation of this Quarterly Report on Form 10-Q, management, including our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, as of September 30, 2026. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were not effective as of September 30, 2026 because of the material weakness in internal control over financial reporting described below.
Material Weakness in Internal Control Over Financial Reporting
A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the annual or interim financial statements will not be prevented or detected on a timely basis. During the year ended December 31, 2025, management identified a material weakness in our internal control over financial reporting that existed due to insufficient accounting staffing during the Company’s restructuring and new business launch, resulting in reduced review capabilities and prior-period errors which have since been corrected. The Company was not able to attract, develop and retain sufficient resources to fulfill internal control responsibilities, resulting in the lack of a sufficient complement of personnel with an appropriate degree of knowledge and experience.
Management has continuously implemented remediation measures to strengthen the Company’s internal control environment, including the implementation of enhanced management review procedures. In the third quarter of 2026, the Company further addressed the staffing shortfall by attracting and retaining personnel with appropriate professional accounting credentials, including staff holding a qualification from the American Institute of Certified Public Accountants (“AICPA”). While the material weakness will not be considered fully remediated until the enhanced controls operate for a sufficient period of time and management has concluded, through testing, that the related controls are effective, management believes these actions have significantly strengthened the control environment.
Plan of Remediation of Material Weakness in Internal Control Over Financial Reporting
To address the material weakness, management has developed and has been actively implementing the following remediation plan:
| ● | Increase Accounting Staffing: We have successfully allocated additional resources to the accounting department, including the hiring of qualified personnel with an AICPA qualification and SEC reporting expertise during the third quarter of 2026. |
| ● | Enhance Review Processes: Management has implemented enhanced review and approval procedures for journal entries and financial reporting, including establishing more rigorous internal controls and implementing a formalized secondary review process by qualified personnel for all significant financial transactions. These enhanced procedures are now in effect and are being consistently applied. |
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| ● | Training and Development: We have provided additional training to key personnel involved in the financial reporting process to enhance their knowledge and capability in identifying and addressing accounting and financial reporting issues. |
| ● | Ongoing Monitoring and Evaluation: Management will continuously monitor and assess the effectiveness of these measures to ensure that the remediation efforts are achieving their intended objectives. This includes ongoing evaluation of the newly implemented staffing enhancements and reinforced review processes. |
We will continue to evaluate and improve our internal control over financial reporting to address this issue and ensure the effectiveness of our financial reporting processes. Although we have taken steps to implement our remediation plan, management believes these actions have significantly strengthened the control environment. However, the material weakness will not be considered fully remediated until the enhanced controls operate for a sufficient period of time and management has concluded, through testing, that the related controls are effective. We will continue to monitor the effectiveness of our remediation plan and refine the remediation plan as appropriate.
Changes in Internal Control Over Financial Reporting
The Company has implemented changes in its internal control over financial reporting, including the addition of qualified accounting personnel and formalization of enhanced review procedures, to address the material weakness described above. Except as described above, there were no changes in the Company’s internal control over financial reporting during the three months ended September 30, 2026 that materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting, as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act.
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PART II - OTHER INFORMATION
| ITEM 1. | LEGAL PROCEEDINGS |
In the course of our business, we are involved in litigation and legal matters from time to time. Such matters are subject to many uncertainties and outcomes are not predictable with assurance. We accrue liabilities for such matters when it is probable that future expenditures will be made and such expenditures can be reasonably estimated. We do not believe that any such matters, individually or in the aggregate, will have a material adverse effect on our business, financial condition, results of operations, or cash flows.
| ITEM 1A. | RISK FACTORS |
There have been no material changes to the risk factors set forth in our Annual Report on Form 10-K for the year ended December 31, 2025, initially filed with the SEC on March 20, 2026 and amended on April 29, 2026, which includes a detailed discussion of our risk factors in Part I, “Item 1A. Risk Factors,” which discussion is hereby incorporated by reference into this Part II, Item 1A. Our Risk Factors could materially affect our business, financial position, or future results of operations. The risks described in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025, are not the only risks we face. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial position, or future results of operations.
| ITEM 2. | UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS |
(A) Unregistered Sales of Equity Securities
None.
(B) Use of Proceeds
Not applicable.
(C) Issuer Purchases of Equity Securities
None.
| ITEM 3. | DEFAULTS UPON SENIOR SECURITIES |
None.
| ITEM 4. | MINE SAFETY DISCLOSURES |
Not applicable.
| ITEM 5. | OTHER INFORMATION |
During the three months ended September 30, 2026, no director or officer of FiEE
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| ITEM 6. | EXHIBITS |
| Exhibit No. | Exhibit Description | |
| 3.1 | Third Amended and Restated Bylaws of FiEE, Inc. (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed on August 14, 2026). | |
| 10.1 | Form of Termination Agreement (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on August 14, 2026). | |
| 10.2 | Form of Indemnification Agreement (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on October 16, 2026). | |
| 31.1 | CEO Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |
| 31.2 | CFO Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |
| 32.1 | CEO Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.† | |
| 32.2 | CFO Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.† | |
| 101.INS | Inline XBRL Instance Document | |
| 101.SCH | Inline XBRL Taxonomy Extension Schema Document | |
| 101.CAL | Inline XBRL Taxonomy Calculation Linkbase Document | |
| 101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document | |
| 101.LAB | Inline XBRL Taxonomy Label Linkbase Document | |
| 101.PRE | Inline XBRL Taxonomy Presentation Linkbase Document | |
| 104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101). |
| † | Furnished herewith. |
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
|
FIEE, INC. (Registrant) | ||
| Date: November 13, 2026 | By: | /s/ Li Wai Chung |
|
Li Wai Chung Chief Executive Officer and President | ||
| Date: November 13, 2026 | By: | /s/ Cao Yu |
|
Cao Yu Chief Financial Officer | ||
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