7. Revenue

Revenue is recognized upon shipment of products based upon contractually stated pricing at standard payment terms within 30 to 60 days. The revenue generated by product sales is recognized at a point in time.

The Company generated revenue from sales of VELDONA Pet supplements in the Taiwan market through online platforms that were recognized after the expiration of right of return which was offered for a limited time. Revenue from sales through off-line distribution channels was recognized based on the amount of consideration that we expected to receive, reduced by estimates for return allowances, promotional discounts, and fees.

$350,000 of contract liabilities was recorded for the cash received in advance from customers as of March 31, 2026 and December 31, 2025.

The Company recognized nil revenue from sales of AI Nose programs that was included in the contract liability balance at the beginning of first quarter 2026, compared with $106,329 recognized in the same period at the beginning of first quarter 2025, offset by exchange rate fluctuation.

Return Allowances

Return allowances, which reduce revenue and cost of sales, are estimated using historical experience. Liabilities for return allowances are included in “Accrued expenses and others current liabilities”.

Variable Consideration

We record revenue from customers in an amount that reflects the transaction price we expect to be entitled to after transferring control of those goods. From time to time, we offer product sales promotions such as discounts. Variable consideration is estimated at contract inception only to the extent that it is probable that a significant reversal of revenue will not occur.