NMHI 10-K & 10-Q changes, risk factors and insider trading

We have experienced recurring losses from operations and negative cash flows from operating activities since 2022. For the fiscal years ended December 31, 20232024 and December 31, 20242025 we incurred substantial losses as shown in the financial statement section. Our actual revenue for the year ended December 31, 20232024 and 20242025 was approximately $8.9 $9.3 million and $9.3$[●] million, respectively. Such volume and relatively low gross profit margins are not enough to support high administrative costs relating to our going public and expenses as a public company. We have raised equity capital twice in 2024 but utilized most proceeds towards repayment of debt incurred in the going-public merger, higher corporate costs and paying interest and principal on short-term loans. We also raised money in 2025 by issuing convertible debt and convertible Preferred Equity. Due to the negative cash flow, our financial position is under pressure, and may potentially continue to have, an ongoing need to raise additional cash from outside sources to fund our expansion plan and related operations. Successful transition to attaining profitable operations is dependent upon achieving a level of revenues adequate to support our cost structure. In connection with our assessment of going concern considerations in accordance with Financial Accounting Standard Board’s Accounting Standards Update (“ASU”) 2014-15, “Disclosures of of Uncertainties about an Entity’s Ability to Continue as a Going Concern,” management has determined that these conditions raise substantial doubt about our ability to continue as a going concern within one year after the date that these consolidated financial financial statements are issued. If we are unable to realize our assets within the normal operating cycle of a twelve (12) month period, we may have to consider supplementing our available sources of funds through the following sources:

We source 100% of our products from suppliers. Our top suppliers include entities in Europe, Asia and North America. We may establish aan additional manufacturing facility in North America in the future. Accordingly, we are subject to risks associated with operating in foreign countries, including:

We launched our CEA products sales business in 2019 and have since seen rapid growth. We expect we will continue to grow as we seek to expand our indoor grower customer base and explore new market opportunities. However, due to our limited operating history, our historical growth rate may not be indicative of our future performance. The CEA industry in North America is rapidly evolving due to the constant development of technology and the variety of consumer demand. Our future performance may be more susceptible to certain risks than a company with a longer operating history. Many of the factors discussed below could adversely affect our business and prospects and future performance, including:

During the fiscal years 20242025 and 2023,2024, we derived a significant percentage of our total revenue from a few customers. Our five largest customers in the fiscal years 20242025 and 20232024 accounted for 51.13%56.30% and 51.13% 45.64% of our total revenue, respectively. IluminarElevated LightingEquipment Supply had been our top customer during fiscal year 2024,2025, accounting for 32.22% and 12.27% of our revenue during the fiscal years 2025 and Elevated2024, Equipment respectively. Iluminar Lighting supply had been our top customer during fiscal year 2023,2024, accounting for 17.21%4.24% and 13.11%17.21% of our revenue,revenue during the fiscal years 2025 and 2024, respectively.

Although we do have recurring customers among our top customers, typically we do not enter into long termlong-term contracts with our customers and all the orders are placed on an as-needed base. Any failure in keeping the recurring customers or developing new customers may have a material adverse impact on our results of operations.

We occupy our warehouseswarehouse and officers under long-term long-term leases, and we may be unable to renew our leases at the end of their terms.

Our warehouseswarehouse and corporate offices are leased for periods ranging from three to five years, with options to renew for specified periods of time. We believe that our future leases will likely also be long-term and have similar renewal options. If we close or stop fully utilizing a warehouse, we will most likely remain obligated to perform under the applicable lease, which would include, among other things, making the base rent payments, and paying insurance, taxes and other expenses on the leased property for the remainder of the lease term. As of December 31, 2024,2025, our future minimum aggregate rental commitments warehouse leases leases is approximately $0.5 million. Our inability to terminate a lease when we stop fully utilizing a warehouse or exit a market can have a significant adverse impact on our financial condition, operating results and cash flows.

Adverse changes or developments affecting our distributing centerscenter could impair our ability to deliver our products across the North American market. Any shutdown or period of reduced production, which may be caused by regulatory noncompliance or other issues, as well as other factors beyond our control, such as severe weather conditions, natural disaster, fire, power interruption, work stoppage, disease outbreaks or pandemics, equipment failure or delay in supply delivery, would significantly disrupt our ability to deliver our products, meet our contractual obligations, and operate our business in a timely manner.

Our top suppliers are located in regions susceptible to natural and man-made disasters, such as the United States, the Netherlands, PolandStates and southern China, which have experienced either severe flooding, earthquakes, wildfires, extreme weather conditions or power loss. If there is a major earthquake or any other disaster in a region where one of our top suppliers is located, the ability of the supplier to respond to our request of products could be severely and negatively influenced. Additionally, the disasters could adversely impact the transportation condition in the region, and our ability to transport products from the supplier to our warehouses in the U.S. could be compromised, which could result in our customers experiencing a significant delay in receiving their CEA products and a decrease in our service levels for a period of time. Any such business interruption could materially and adversely affect our business, financial condition, and results of operations.

In the course of our business, we are, and in the future may be, a party to arbitration proceedings, legal proceedings, investigations and other claims or disputes, which have related and may relate to subjects including commercial transactions, intellectual property, securities, employee relations or compliance with applicable laws and regulations. As discussed below, we are engaged in a lawsuit relating to Megaphoton Supply Agreement.

On April 24, 2023, we entered into a strategic cooperation agreement with Sinoinnovo Technology (Guangdong) Co., Ltd. (“Sinoinnovo”), a company incorporated under the laws of China, pursuant to which Nature’s MircleMiracle will source from Sinoinnovo its grow light systems for distribution in the U.S. and Europe. Both companies will also cooperate jointly to set up advanced manufacturing capabilities in China and the U.S.

For the years ended December 31, 20242025 and 2023,2024, we had 12870 and 142128 customers, customers, respectively. Average revenue per customer for the years ended December 31, 20242025 and 20232024 were approximately $78,000$24,891 and $63,000, $78,000, respectively. Our revenue from top 5 customers for the year ended December 31, 20242025 was approximately $4.7 million$981,036 compared to approximately $4.1 million$4,735,824 for the year ended December 31, 2023, 2024, representing ana increasedecrease of 16%.79.3%. The higherlower average sale and increaseddecreased revenue from top 5 customer are reflective the impact of higherlimited industryinventory demand.availability.

Costs of revenue for the year ended December 31, 20242025 increaseddecreased 22.1% 81.8% to $12,066,778$2,193,398 as compared to $9,881,622$12,066,778 for the year ended December 31, 2023.2024. Cost of revenue increaseddecreased primarily due to the increase decrease in revenue, which was in turn primarily driven by higherlower sales volume of our products due to higherlimited customerinventory demand. Theavailability. increase wasWe also drivenhave written byoff a$544,469 rise inof inventory impairment, which increased to $2,315,209 for the year ended December 31, 2024,2025 from $1,269,469 inas the priorexisting year,inventory primarilywas due to slow-moving and obsolete inventory.obsolete.

Gross loss was $2,805,195$451,038 for the year ended December 31, 20242025 and $948,871 for the years ended December 31, 2023, respectively. The gross margin$2,805,195 for the year ended December 31, 20242024, decreaserespectively. The gross loss for the year ended December 31, 2025 decreased to (30.325.9)% from (10.630.3)% for the year ended December 31, 2023.2024. The decrease occurredin mainlygross loss was primarily due to theless inventory impairmentwrite off in 2025 of $2,315,209 resultedapproximately from$0.5 themillion slow-movingcompared andto obsoleteapproximately inventory$2.3 ofmillion Visiontechin and Hydroman.2024.

Operating expenses for the year ended December 31, 20242025 increaseddecreased 48.2%11.2% to $7,542,689$6,701,283 as compared to $5,089,549$7,542,689 for the year ended December 31, 2023.2024. The increasedecrease was mainly due to following reasons:

Provision for credit losses for the year ended December 31, 20242025 decreased 55.0%increased 345.0% to $408,569$1,818,151 as compared to $907,021$408,569 for the year ended December 31, 2023.2024. The decreaseincrease was mainlyprimarily due becauseto wehigher strengthened our credit risk management practices, including more rigorous customerestimated credit evaluationsrisk associated with outstanding receivables during the period and improvedthe full write-off of the balance due from Iluminar, a related party, as collection efforts,was whichdetermined resultedto inbe fewer delinquent accounts and reduced the need for additional reserves.doubtful.

Other expenses primarily consist of net interest expense andexpense, other finance expense related to our loans.loans and net rental income. Other expenses for the year ended December 31, 20242025 was $3,300,356 $4,832,733 as compared to other expense of $1,081,393$3,300,356 for the year ended December 31, 2023.2024. The increase was mainly due to the interestincrease expensesin increasedloss byon $1,454,409impairment of investment of 1,000,000 due to full write-off of cost method investment of Iluminar, a related party, as recoverability of the investment appears doubtful; the increase of rental expense of $711,665 due to maintenance and repairs; the increase in debt issuance cost of $690,412 due to costs incurred in connection with the issuance of new debt during the period, offset by the decrease in non-cash finance expense increasedof by$800,000; $1,000,000.the decrease in gain on loan extinguishment of $75,600.

Income Tax BenefitExpense

Our income tax benefitexpense was amounted to $5,100$1,700 and $218,358$5,100 for the years ended December 31, 20242025 and 2023,2024, respectively.

The effective tax rate for the years ended December 31, 31,2025 and 2024 and 2023 were (0.04)%0.0% and (3.07)%, respectively.0.0%. The effective tax rate differs from the federal and state statutory tax rate of 21.0% primarily due to the valuation allowance on the deferred tax assets from our operating losses.

In assessing liquidity, we monitor and analyze cash on-hand and operating expenditure commitments. Our liquidity needs are to meet working capital requirements and operating expense obligations. To date, we financed our operations primarily through debt financing from financial institution and related parties. As of December 31, 2024,2025, we had $420,131$97,694 in cash which primarily consists of bank deposits, which are unrestricted as to withdrawal and use. Our working capital deficit was approximately $14.6 million$22,299,535 as of December 31, 2024.2025.

We have experienced recurring losses from operations and negative cash flows from operating activities since 2022. For the fiscalyears years ended December 31, 20232025 and December 31, 20242024, we incurred substantial losses as shown in the financial statement section. Our actual revenue for the yearyears ended December 31, 20232025 and 2024 was approximately $8.9$1.7 million and $9.3 million, respectively. Such volume and relatively low gross profit margins are not enough to support high administrative costs relating to our going public and expenses as a public company. We have raised equity capital twice in 2024 but utilized most proceeds towards repayment of debt incurred in the going-public merger, higher corporate costs and paying interest and principal on short-term loans. Due to the the negative cash flow, our financial position is under pressure, and may potentially continue to have, an ongoing need to raise additional additional cash from outside sources to fund our expansion plan and related operations. Successful transition to attaining profitable operations is dependent upon achieving a level of revenues adequate to support our cost structure. In connection with our assessment of going concern considerations in accordance with Financial Accounting Standard Board’s Accounting Standards Update (“ASU”) 2014-15, “Disclosures of Uncertainties about an Entity’s Ability to Continue as a Going Concern,” management has determined that these conditions raise substantial doubt about our ability to continue as a going concern within one year after the date that these consolidated financial statements are issued. If we are unable to realize our assets within the normal operating cycle of a twelve (12) month period, we may have to consider supplementing our available sources of funds through the following sources:

Net cash used in operating activities was $5,934,771approximately $6.0 million for the year ended December 31, 2024, which was mainly due to our net loss of $13,653,340approximately $13.7 million with non cash expenses of $1,000,000,$1.0 million, stock compensation expenses of $1,413,458,$1.4 million, inventory impairment loss of $2,315,209,approximately $2.3 million, and other non cash item, including depreciation expense, provision for credit losses, amortization of operating right-of-use asset, amortization of debt issuance cost, and loss on loan extinguishment of $1,073,935.approximately $1.1 million. Our cash outflow is also increased from increase in accounts receivable of $1,672,144approximately $1.7 million due to increased revenue. Our cash outflow is offset by cash inflow of $2,609,342approximately $2.6 million due to increase from accounts payable as we increased our purchase from vendors and $952,291 approximately $1.0 million decreased in inventory as we used more on hand inventory.

Net cash provided by financing activities was $6,173,048approximately $4.5 million for the year ended December 31, 2024.2025. The increase in net cash provided was primarily a result of proceeds from capital contribution in advance of approximately $1.4 million, net proceeds from exercise of warrants of approximately $0.9 million, net proceeds from short-term loan from third parties of $4,915,984,approximately shares$2.0 andmillion, warrantsnet issuedproceeds through public offerings of $3,308,953, andfrom convertible notes borrowing of $1,197,500,approximately $2.3 million offset offset by payments of deferred offering costs of 266,925, repayments on long term loans of $269,119, repayments on short-term loan from third parties of $2,850,239approximately and$1.2 million, repayments on convertible notes of 272,920.approximately $0.8 million, repayments on short-term loan from related parties of approximately $0.2 million.

Net cash provided by financing activities was approximately $1,527,817$6.2 million for the year ended December 31, 2023.2024. The main reason for the increase in net cash provided was primarily a result of net proceeds from long-termshort-term loan borrowing from third parties of $3,338,546,approximately short-term$5.0 loanmillion, shares and warrants issued through public offerings of approximately $3.3 million, and convertible notes borrowing from third parties of $608,312,approximately and$1.2 short-term loan borrowing from related parties of $773,255,million, offset by payments of deferred offering costs of $438,932,approximately $0.3 million, repayments on long term loans which are mainly our car and mortgage loan of $167,830,approximately $0.3 million, repayments on short-term loan from third parties of $1,858,591,approximately $2.9 million and repayments on shortconvertible term loans from related partiesnotes of $700,000.approximately We$0.3 also obtained $197 from Merger with Lakeshore.million.

Transaction prices are mostly fixed. In some contracts, when determining the transaction price, we adjustsadjust consideration for the effects of the time value of money if the timing of payments provides provides us with a significant benefit of financing. We does not assess whether a contract has a significant financing component if the expectation at contract inception is such that the period between payment by the customers and the transfer of the promised goods or services to the licensees will be one year or less. We had one contract with customer with installment payment terms of up to 16 months. The difference between the contract price and our cash selling price of the same products are recognized as interest income over the term of the payments. Interest income amounted to $0 and $78,385 for the year ended December 31, 2024 and 2023, respectively. This contract was terminated on July 12, 2023. For customers that entered into rebate programs with utility companies, transaction price may depend on level of energy saving the products achieved. We estimated the amount of consideration using either the expected value of the most likely amount depending on which method we expects to better predict the amount of consideration to which it will receive with a constraint applied such that a significant reversal of revenue is not probable.

We transfer the risk of loss or damage upon shipment, therefore, revenue from product sales is recognized at a point in time when control of product transfer to customer and we hashave no further obligation to provide services related to such product evidenced by customer signing acceptances upon receipt of goods. Return allowances, which reduce product revenue by our best estimate of expected product returns, are estimated using historical experience.

The following Management’s Discussion and Analysis should be read in conjunction with our unaudited condensed financial statements and the related notes thereto included elsewhere in this Quarterly Report on Form 10-Q and the audited financial statements and the other information set forth in the Annual Report on Form 10-K for the fiscal year ended December 31, 2024 filed with Securities and Exchange Commission (the “SEC”) on April 16, 2025.herein. The Management’s Discussion and Analysis (“MD&A”) contains forward-looking statements that involve risks risks and uncertainties, such as statements of our plans, objectives, expectations and intentions. Any statements that are not statements of historical fact are forward-looking statements. When used, the words “believe,” “plan,” “intend,” “anticipate,” “target,” “estimate,” “expect,” and the like, and/or future-tense or conditional constructions (“will,” “may,” “could,” “should,” etc.), or similar expressions, identify certain of these forward-looking statements. These forward-looking statements are subject to risks and uncertainties that could cause actual results or events to differ materially from those expressed or implied by the forward-looking statements in this form. Our actual results and the timing of events could differ materially from those anticipated in these forward-looking statements as a result of several factors.

We are a growing agriculture technology company providing products to indoor growers in a CEA (Controlled Environment Agriculture) setting in North America. Our main products are commercial grade LED lights and related equipment designed for indoor growers. For over 10 years, the Company has utilized manufacturing relationships in China to provide quality and cost-efficient products in this space. In the 4th quarter 2024, we renamed a subsidiary to Hydroman Electric Inc. for the purpose of entering electric vehicle (“EV”) market as we aim to distribute EV medium sized trucks to customers in Latin America and also develop indoor growing systems within these EV trucks. In 2024, the Company also started investments in Future Tech Inc., a Bitcoin mining and data center business. In 2025, the Company made announcements to enter the field of Digital Treasury Management with an emphasis on XRP as a base cryptocurrency and its applications on tokenization of real-world assets.

We operate mainly through twothree subsidiaries in California, VisiontechVisiontech, Hydroman and Hydroman.Zak Properties LLC. Visiontech is known for the brand “eFinity” and provides high-efficiency and high-quality grow lights, grow media, fixtures and other related equipment; Hydroman supplies commercial greenhouse developers and owners with professional lighting technology and equipment. On November 11, 2024, Hydroman, Inc. changed its name to Hydroman Electric Corporation and will focus on business of electric vehicles distribution. Zak Proprties LLC owns the building in Toledo Ohio.

On September 18, 2025, the Company entered into a Membership Interest Purchase Agreement (the “Purchase Agreement”) with Big Lake Capital LLC (“Big Lake”), pursuant to which, the Company agreed to purchase from Big Lake all of the membership interests of Zak Properties, LLC, an Ohio limited liability company (“Zak Properties”), which in turn owns certain real property located in the State of Ohio, commonly known as 405 Madison Madison Ave. with equity and debt financing. The Company’s Chief Executive Officer and Chairman, Tie (James) Li, is the sole member of Zak Properties prior to the sale. As such we recorded the acquisition of the property at cost. Nature’s Miracle issued 5,000 Series Series B and 9,500 Series C Preferred Shares to Big LakeLake, assumed 2.6 million in loans and also signed a new note of $3 million.

For the Three Months ended SeptemberMarch 31, 30, 20252026 and 20242025

Revenue for the three months ended SeptemberMarch 30,31, 2025 2026 decreased by 97.6% 96.2% to $72,377$41,605 as compared to $3,052,727$1,106,819, for the three months ended SeptemberMarch 30,31, 2024.2025. Revenue declined due to cash constraints that that restricted inventory purchases; as we were mainly selling our inventory on hand. The Company is seeking additional financing in fourthsecond quarter to replenish inventory, and management expects the revenue situation to improve once inventory levels are restored.

For the three months ended SeptemberMarch 30,31, 20252026 and 2024, 2025, we had 246 and 59 47 customers, respectively. Average revenue per customer for the three months ended SeptemberMarch 30,31, 2026 and 2025 were $6,934 and 2024$23,549, were $3,016 and $51,741, respectively. Our revenue from top 5 customers for the three months ended SeptemberMarch 30,31, 20252026 was $62,179$41,330 compared to $2,303,692 $831,086 for the three months ended SeptemberMarch 30,31, 2024,2025, representing a decrease of 97.3%.95.0%. The lower average sale and decreased revenue from top 5 customer are reflective the impact of limited inventory availability.

Costs of revenue for the three months ended SeptemberMarch 30,31, 20252026 decreased 97.5%95.8% to $71,951$38,685 as compared to $2,824,614$931,519 for the three months ended SeptemberMarch 30,31, 2024.2025. Cost of revenue decreased primarily primarily due to the decrease in revenue, which was in turn primarily driven by lower sales volume of our products due to limited inventory availability.

Gross profit was $426$2,920 for the three months ended SeptemberMarch 30,31, 20252026, andcompared $228,113to $175,300 for the three months ended SeptemberMarch 30,31, 2024,2025. respectively. The grossGross margin decreased to 7.0% for the three months ended SeptemberMarch 30,31, 20252026 decrease to 0.6% from 7.5%15.8% for the three months ended SeptemberMarch 30,31, 2024.2025. The decrease in gross profit was primarily attributable to the significant decline in revenue during the period. The decrease in gross margin was primarily drivendue byto the salelimited ofworking existing inventory,capital, which carriedrestricted lowerthe margins.Company’s ability to purchase higher-margin products.

Operating expenses for the three months ended SeptemberMarch 30,31, 20252026 decreased 40.1%18.4% to $1,331,949$1,090,784 as compared to $2,223,550$1,336,394 for the three months ended SeptemberMarch 30,31, 2024.2025. The decrease was mainly due to following reasons:

Selling, general and administrative expenses for the three months ended SeptemberMarch 30,31, 20252026 decreased 44.9%17.0% to $1,205,125$1,089,802 as compared to $2,186,953$1,313,111 for the three months ended SeptemberMarch 30,31, 2024.2025. The decrease was mainly due to decreased Company’s stock compensation expenses of $763,929 as a result of completion of vesting periods of certain employees; decrease in professional fees of $93,082,$148,018, mainly related to lower spending on public relations and SEC filing activities; and a decrease in payroll expenses of $216,283$146,760 resulting from a reduced headcount.headcount, which offset by increase in depreciation expenses of $106,180, resulting from increased building improvement from acquisition of Zak Properties.

Provision for credit losses for the three months ended SeptemberMarch 30,31, 20252026 increaseddecreased 246.5%95.8% to $126,824$982 as compared to $36,597$23,283 for the three months ended SeptemberMarch 30,31, 2024.2025. The increase decrease was primarily due to higherthe estimatedfull allowance of long-aged accounts receivable previously deemed uncollectible, resulting in lower incremental credit risk associated with outstanding receivablesloss provisions during the current period.

Other ExpensesIncome (Expense)

Other expensesincome (Expense) primarily consist of net interest interest expense, othergain financeon expenseloan relatedextinguishment, gain on debt settlement and change in fair value of commitment shares to ourbe loans and net rental income.issued. Other expenses Income for the three months ended SeptemberMarch 30,31, 2025 2026 was $839,266$3,933,138 as compared to other expense of $754,899$857,017 for the three months ended SeptemberMarch 31, 30,2025, 2024.representing an increase of $4,790,155, or 558.9%. The increase was mainly due to the increase in nongain cashon financedebt expensesettlement of $5,070,520; the increase in change in fair value of $200,000,commitment shares to be issued of $168,048, offset by the increase in other expense of $524,716, the decrease in interestgain expenseson loan extinguishment of $179,329.$40,000.

Non-cashGain financeon expenseloan extinguishment for the three months ended of SeptemberMarch 30, 202531, 2026 and 20242025 were $200,000$0 and $0,$40,000, respectively. ThisThe increasedecrease is primarilywas due to the expensingextinguishment of commitmenta sharesshort-term toloan, which bewas issuedpaid under the Amended Equity Financing Agreementoff with GHSa Investmentsnew datedloan, Julyand 25,the cancellation of a convertible note in 2025.

OtherChange incomein fair value of commitment shares to be issued for the three months ended of SeptemberMarch 30,31, 2026 and 2025 waswere $90 $168,048 and other$0, expenserespectively Other expenses for the three months ended March 31, 2026 and 2025 were $524,716 and $0, respectively, primarily consisting of Septemberrental 30,expense 2024from wasZak $1,300, respectively.Properties.

Our income tax expense was amounted to $0 and $0$1,700 for the three months Septemberended 30,March 202531, 2026 and 2024,2025, respectively.

The effective tax rate for the three months ended SeptemberMarch 30,31, 20252026 and 20242025 were 0.0% and 0.0%.(0.1)%. The effective tax rate differs from the federal and state statutory tax rate of 21.0% primarily due to the valuation allowance on the deferred tax assets from our operating losses.

Net Income (Loss)

Net lossIncome for the three months ended September 30,March 202531, 2026 was $2,170,789 $2,845,274 as compared to net loss of $2,750,336$2,019,811 for the three months ended SeptemberMarch 30,31, 2024,2025, representing aan decreaseincrease of $579,547. $4,865,085. The decrease increase was primarily due to decreasea ofgain grosson profit,debt selling, general and administrative expenses.settlement.

In assessing liquidity, we monitor and analyze cash on-hand and operating expenditure commitments. Our liquidity needs are to meet working capital requirements and operating expense obligations. To date, we financed our operations primarily through debt financing from financial institution and related parties. As of March 31, 2026, September 30, 2025, we had $61,450$45,695 in cash which primarily consists of bank deposits, which are unrestricted as to withdrawal and use. Our working capital deficit was approximately $19.0 million$17,685,917 as of SeptemberMarch 30,31, 2025.2026.

We have experienced recurring losses from operations and negative cash flows from operating activities since 2022. ForAlthough the Company reported net income of $2,845,274 for the three months ended SeptemberMarch 30,31, 2026, 2025primarily due to a gain on debt settlement of $5,070,520, the Company continues to incur operating losses and 2024,negative andcash forflows from operating activities. These conditions raise substantial doubt about the nineour monthsability endedto September 30, 2025 and 2024 we incurred substantial lossescontinue as showna ingoing the financial statement section.concern. Our actual revenue for the three months ended SeptemberMarch 30,31, 20252026 and 20242025 was approximately $72,377$42,000 and $3.1 million, respectively. Our actual revenue for the nine months ended September 30, 2025 and 2024 was approximately $1.7 million and $8.7$1.1 million, respectively. Such volume and relatively low gross profit margins are not enough to support high administrative costs relating to our going public and expenses as a public company. We have raised equity capital twice in 2024 but utilized most proceeds towards repayment of debt incurred in the going-public merger, higher corporate costs and paying interest and principal on short-term loans. Due to the negative cash flow, our financial position is under pressure, and may potentially continue to have, an ongoing need to raise additional cash from outside sources to fund our expansion plan and related operations. Successful transition to attaining profitable operations is dependent upon achieving a level of revenues adequate to support our cost structure. In connection with our assessment of going concern considerations in accordance with Financial Accounting Standard Board’s Accounting Standards Update (“ASU”) 2014-15, “Disclosures of Uncertainties about an Entity’s Ability to Continue as a Going Concern,” management has determined that these conditions raise substantial doubt about our ability to continue as a going concern within one year after the date that these unaudited condensed consolidated financial statements are issued. If we are unable to realize our assets within the normal operating cycle of a twelve (12) month period, we may have to consider supplementing our available sources of funds through the following sources:

We have a $20 million equity financing program (“ELOC”) with GHS InvestmentInvestments, LLC and this was declared effective by SEC. The Company can draw on this facility for its working capital needs and others. The Company received $78,752 and others.nil for the three months ended March 31, 2026 and 2025 under this facility, with approximately $19.7 million of credit still available.

Our shareholder also offers support for the Company. Big Lake Capital, LLC, a related party controlled by Tie Li (our Chairman and CEO) entered into a $2 million Convertible Promissory Note on April 11, 2025 with the initial tranche of $600,000. We have borrowed $652,800$170,000 and nil for the ninethree months ended SeptemberMarch 30,31, 2026 and 2025 under this note andnote, maywith borrow up to an additional amount$1,016,400 of $1,347,200credit understill the note.available.