BALANCE SHEET COMPONENTS

6 Months Ended

Jun. 30, 2026

(6) BALANCE SHEET COMPONENTS

Property, equipment and software, net

Property, equipment and software, net consists of the following:

Schedule of equipment
	As of June 30, 2026			As of December 31, 2025
Internal use software	$	269,023		$	271,088
Equipment		11,642			8,137
Vehicles		132,832			133,852
Building		144,175			-
Land		413,776			-
Total property, equipment and software		971,448			413,077
Accumulated depreciation and amortization		(110,966	)		(46,638	)
Total property, equipment and software, net	$	860,482		$	366,439

For the three months ended June 30, 2026 and 2025, depreciation and amortization was $35 thousand and $22 thousand, respectively. Depreciation and amortization expense was $64 thousand and $72 thousand for the six months ended June 30, 2026 and 2025, respectively.

Intangible assets

As part of the asset acquisitions completed on June 30, 2025 and November 30, 2025, the amount allocated to the intangible assets acquired was approximately $1.3 million and $2.5 million, respectively, primarily consisting of acquired proprietary software, which represent a group of copyrights, associated patents and software source codes that are expected to provide future economic benefits to the Company. The allocation of the purchase price was performed on a relative fair value basis in accordance with ASC 805-50. The acquired group of proprietary software is being amortized over three 3 years, its estimated useful life.

Intangible assets consisted of the following at June 30, 2026 and December 31, 2025:

Schedule of intangible assets
	As of June 30, 2026							As of December 31, 2025
	Gross Carrying Amount		Accumulated Amortization			Net		Gross Carrying Amount		Accumulated Amortization			Net
Acquired group of proprietary software	$	3,801,871	$	(913,128	)	$	2,888,743	$	3,811,598	$	(281,763	)	$	3,529,835
	$	3,801,871	$	(913,128	)	$	2,888,743	$	3,811,598	$	(281,763	)	$	3,529,835

Amortization expense was $316 thousand and $0 thousand in the three months ended June 30, 2026 and 2025, respectively. Amortization expense was $631 thousand and $0 thousand in the six months ended June 30, 2026 and 2025, respectively.

Estimated amortization expenses for the future years are as follows:

Schedule of Amortization
Years ending December 31,	Amortization
2026	$	625,760
2027		1,266,852
2028		996,131
Total	$	2,888,743

Other receivables, net

Other receivables, net as of June 30, 2026 and December 31, 2025 included gross amounts of $70,012 and $85,134, respectively. During the six months ended June 30, 2026, the Company recorded a full allowance of $70,012 against the outstanding balance due from a third party. In addition, other receivables, net included $1,132,558 as of December 31, 2025, representing funds temporarily held in a settlement platform and pending transfer to the Company’s bank account, and no such funds were held as of June 30, 2026.

Prepaid and other current assets

Prepaid and other current assets consist of the following:

Schedule of inventories
	June 30, 2026		December 31, 2025
Insurance fees	$	74,249	$	53,015
Cloud hosting fee		95,980		78,414
Prepayment for property purchase		-		44,613
Nasdaq annual listing fee		28,000		-
Prepaid music costs		161,587		-
Other		14,133		23,267
Total prepaid and other current assets	$	373,949	$	199,309

Other assets

Other assets consist of the following:

Schedule of other assets
	June 30, 2026		December 31, 2025
Insurance fees	$	58,479	$	66,483
Deposits		15,081		15,197
Deferred offering costs		268,254		150,000
Total other assets	$	341,814	$	231,680

Accrued expenses and other current liabilities

Accrued expenses and other current liabilities consist of the following:

Schedule of accrued expenses
	June 30, 2026		December 31, 2025
Payroll & related benefits	$	422,573	$	305,789
Professional fees		631,902		271,501
Sales allowances		-		26,905
Sales and use tax		81,708		81,708
Other payable to Yixuntong⁽¹⁾		115,773		435,957
Project investment from partners		29,365		-
Other⁽²⁾		26,661		47,877
Total accrued expenses and other current liabilities	$	1,307,982	$	1,169,737

(1)	As of June 30, 2026, other payables to Yixuntong primarily included $95 thousand for a software development and $21 thousand for advanced cloud hosting fee.
(2)	There was a balance of $7,232 due to a stockholder of the Company, Cao Yu, which represents the amount paid by Cao Yu to support the Company’s normal operating activities. The remaining balance was primarily for the reimbursement payable to employees and accrued rent.