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DE 47-4752305 580 N. 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NATURE OF OPERATIONS</span></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in;"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify;">Reborn Coffee, Inc. (“Reborn”) was incorporated in the State of Florida in January 2018. In July 2022, Reborn was migrated from Florida to Delaware, and filed a certificate of incorporation with the Secretary of State of the State of Delaware having the same capitalization structure as the Florida predecessor entity. Reborn has the following subsidiaries:</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 38.5pt; text-align: justify; text-indent: -0.25in;"> </p> <table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse;"> <tbody><tr style="vertical-align: top;"><td style="width: 0.25in; text-align: justify;"> </td> <td style="width: 0.25in; text-align: justify;"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">●</span></td> <td style="text-align: justify;"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;"><span style="font-weight: bold;"><i>Reborn Global Holdings, Inc. </i></span>(“Reborn Holdings”), a California corporation incorporated in November 2014. Reborn Holdings is engaged in the operation of wholesale distribution and retail coffee stores in California to sell a variety of coffee, tea, Reborn brand name water and other beverages along with bakery and dessert products.</span></td> </tr><tr style="vertical-align: top;"><td style="text-align: justify;"> </td> <td style="text-align: justify;"> </td> <td style="text-align: justify;"> </td> </tr><tr style="vertical-align: top;"><td style="text-align: justify;"> </td> <td style="text-align: justify;"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">●</span></td> <td style="text-align: justify;"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;"><span style="font-weight: bold;"><i>Reborn Coffee Franchise, LLC</i></span> (“Reborn Coffee Franchise”), a California limited liability company formed in December 2020 and wholly-owned by Reborn Coffee, Inc, is a franchisor providing premier roaster specialty coffee to franchisees or customers. Reborn Coffee Franchise continues to develop the Reborn Coffee system for the establishment and operation of Reborn Coffee stores using one or more Reborn Coffee marks. Reborn Coffee Franchise does not have any franchisee as of June 30, 2026.</span></td> </tr><tr style="vertical-align: top;"><td style="text-align: justify;"> </td> <td style="text-align: justify;"> </td> <td style="text-align: justify;"> </td> </tr><tr style="vertical-align: top;"><td style="text-align: justify;"> </td> <td style="text-align: justify;"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">●</span></td> <td style="text-align: justify;"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;"><span style="font-weight: bold;"><i>Reborn Realty, LLC</i></span> (“Reborn Realty”), a California limited liability company formed in March 2023 and wholly-owned by Reborn Coffee, Inc, is an entity which acquired a real property located at 596 Apollo Street, Brea, California.</span></td> </tr><tr style="vertical-align: top;"><td style="text-align: justify;"> </td> <td style="text-align: justify;"> </td> <td style="text-align: justify;"> </td> </tr><tr style="vertical-align: top;"><td style="text-align: justify;"> </td> <td style="text-align: justify;"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">●</span></td> <td style="text-align: justify;"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;"><span style="font-weight: bold;"><i>Reborn Coffee Korea, Inc. </i></span>(“Reborn Korea”) <span style="font-weight: bold;">– </span>a Korea corporation located in Daejon, South Korea formed in October 2023 and wholly-owned by Reborn Coffee, Inc, with one retail coffee store under the brand name of Reborn Coffee. Reborn Korea had no operations since 2025.</span></td> </tr><tr style="vertical-align: top;"><td style="text-align: justify;"> </td> <td style="text-align: justify;"> </td> <td style="text-align: justify;"> </td> </tr><tr style="vertical-align: top;"><td style="text-align: justify;"> </td> <td style="text-align: justify;"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">●</span></td> <td style="text-align: justify;"><span style="font-weight: bold;"><i>Reborn Malaysia, Inc. </i></span>(“Reborn Malaysia”) <span style="font-weight: bold;">– </span>a Malaysian corporation located in Kuala Lumpur, Malaysia formed in October 2023, is majority owned subsidiary of Reborn with one retail coffee store under the brand name of Reborn Coffee.     </td> </tr><tr style="vertical-align: top;"><td style="text-align: justify;"> </td> <td style="text-align: justify;"> </td> <td> </td> </tr><tr style="vertical-align: top;"><td style="text-align: justify;"> </td> <td style="text-align: justify;">●</td> <td style="text-align: justify;"><span style="font-weight: bold;"><i>Reborn Logistics, Inc.</i></span> (“Reborn Logistics”) – a California corporation incorporated in September 2025. Reborn Logistics provides comprehensive freight forwarding, transportation and logistics services. Reborn holds a 51% interest in Reborn Logistics.</td> </tr></tbody> </table> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify; text-indent: 0.25in;"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify;">Reborn Coffee, Inc., Reborn Global Holdings, Inc., Reborn Coffee Franchise, LLC, Reborn Realty, LLC, Reborn Korea, Reborn Malaysia and Reborn Logistics will be collectively referred as the “Company.”</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify; text-indent: 0.25in;"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify;"><span style="font-weight: bold;"><i>Going Concern Matters</i></span></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify;"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify;"> The accompanying consolidated financial statements have been prepared assuming the Company will continue as a going concern, which contemplates, among other things, the realization of assets and satisfaction of liabilities in the normal course of business. The Company had an accumulated deficit of $35.1 million as of June 30, 2026 and a net loss before income taxes of $4.0 million    during the six months ended June 30, 2026. These matters raise substantial doubt about the Company’s ability to continue as a going concern. </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify;"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify;"> To support its existing and planned business model and to fund its future operations, the Company has taken several steps to strengthen its liquidity and capital resources. The Company previously entered into a Securities Subscription Agreement providing for aggregate proceeds of approximately $6.5 million, which was funded in multiple tranches. In addition, on April 15, 2026, the Company entered into an Amended and Restated Forbearance Agreement with the Arena Investors that amended the repayment terms of the Company’s outstanding convertible debentures and provided forbearance from specified rights and remedies, subject to the Company’s compliance with the terms of the agreement. </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify;"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify;"> Further, on April 29, 2026, the Company entered into a Securities Purchase Agreement pursuant to which the Company agreed to issue and sell shares of common stock in a private placement for aggregate gross proceeds of up to $21.0 million, subject to the satisfaction of specified closing conditions. The Company intends to use the proceeds from the financing, together with cash generated from operations and other available financing sources, to fund working capital, operations and its planned business initiatives. </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify;"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify;">Although management believes that these financing arrangements and its plans to improve operating performance will provide additional liquidity, the Company continues to have significant capital requirements and recurring losses. The Company cannot provide assurance that the contemplated financing transactions will be completed on the expected terms or that sufficient additional financing will be available when needed. Accordingly, substantial doubt about the Company’s ability to continue as a going concern remains.</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center;"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify;"><span style="font-weight: bold;"><i>Unaudited Interim Financial Statements</i></span></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify;"><span style="font-weight: bold;"><i> </i></span></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify;"> The accompanying interim unaudited condensed consolidated financial statements (“Interim Financial Statements”) of the Company and its 100%-owned subsidiaries have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and are presented in accordance with the requirements of Form 10-Q and Regulation S-X. Accordingly, these Interim Financial Statements do not include all of the information and notes required by GAAP for complete financial statements. These Interim Financial Statements should be read in conjunction with the consolidated financial statements and notes thereto for the year ended December 31, 2025 included in the Company’s Form 10-K. In the opinion of management, the Interim Financial Statements included herein contain all adjustments, including normal recurring adjustments, considered necessary to present fairly the Company’s financial position, the results of operations and cash flows for the periods presented. </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify;"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify;">The operating results and cash flows of the interim periods presented herein are not necessarily indicative of the results to be expected for any other interim period or the full year.</p> 0.51 -35100000 -4000000 6500000 21000000 1 <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0;"><span style="font-weight: bold;">2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES</span></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in;"><span style="font-weight: bold;"> </span></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify;"><span style="font-weight: bold;"><i>Reporting</i></span></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in;"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify;">The unaudited condensed consolidated financial statements include Reborn Coffee, Inc. and its subsidiaries as of June 30, 2026 and December 31, 2025 and for the three and six months ended June 30, 2026 and 2025.</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in;"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify;"><span style="font-weight: bold;"><i>Basis of Presentation and Consolidation</i></span></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in;"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify;">The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with GAAP. The consolidated financial statements include Reborn Coffee, Inc. and its subsidiary. All intercompany accounts, transactions, and profits have been eliminated upon consolidation.</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify;"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify;"><span style="font-weight: bold;"><i>Minority Interest</i></span></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify;"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify;"> The Company consolidates Reborn Logistics, which is majority-owned subsidiary (51% own) and presents the portion of equity and earnings attributable to the non-controlling interest separately in the unaudited condensed consolidated financial statements. As of June 30, 2026, non-controlling interest was $368,975. For the six months ended June 30, 2026, net income attributable to non-controlling interest was $234,826. </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify;"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify;"><span style="font-weight: bold;"><i>Segment Reporting</i></span></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in;"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify;">FASB ASC Topic 280, Segment Reporting, requires public companies to report financial and descriptive information about their reportable operating segments. Operating segments are identified based on the manner in which the Company’s chief operating decision maker (“CODM”) evaluates financial information, business activities, and performance results.</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in;"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify;"> Management has identified two reportable operating segments: (i) Reborn Coffee, which includes both wholesale and retail sales of coffee, water, and other beverages, and (ii) Reborn Logistics, which provides freight forwarding services. </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in;"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify;"> The Company’s CODM is its <span style="-sec-ix-hidden:fc_1062217436;">Chief Executive Officer</span>. CODM evaluates segment performance primarily based on revenues, income from operations, and other income (expense). Assets by segment are not reviewed by the CODM in assessing segment performance and, accordingly, are not disclosed. </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in;"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in;"></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify;">The following table presents a summary of operating performance by reportable segment for the periods indicated:</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in;"> </p> <table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif;"> <tbody><tr style="vertical-align: bottom;"><td style="text-align: center;"> </td> <td style="font-weight: bold; padding-bottom: 1.5pt;"> </td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid;">Reborn<br/> Coffee</td> <td style="padding-bottom: 1.5pt; font-weight: bold;"> </td> <td style="font-weight: bold; padding-bottom: 1.5pt;"> </td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid;">Reborn<br/> Logistics</td> <td style="padding-bottom: 1.5pt; font-weight: bold;"> </td> <td style="font-weight: bold; padding-bottom: 1.5pt;"> </td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid;">Others <br/> Elimination</td> <td style="padding-bottom: 1.5pt; font-weight: bold;"> </td> <td style="font-weight: bold; padding-bottom: 1.5pt;"> </td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid;">Total</td> <td style="padding-bottom: 1.5pt; font-weight: bold;"> </td> </tr><tr style="vertical-align: bottom; background-color: rgb(204,238,255);"> <td style="width: 52%;">Revenue</td> <td style="width: 1%;"> </td> <td style="width: 1%; text-align: left;">$</td> <td style="width: 9%; text-align: right;">3,560,571</td> <td style="width: 1%; text-align: left;"> </td> <td style="width: 1%;"> </td> <td style="width: 1%; text-align: left;">$</td> <td style="width: 9%; text-align: right;">7,972,719</td> <td style="width: 1%; text-align: left;"> </td> <td style="width: 1%;"> </td> <td style="width: 1%; text-align: left;">$</td> <td style="width: 9%; text-align: right;"><span style="-sec-ix-hidden:fc_1833476382;">-</span></td> <td style="width: 1%; text-align: left;"> </td> <td style="width: 1%; font-weight: bold;"> </td> <td style="width: 1%; font-weight: bold; text-align: left;">$</td> <td style="width: 9%; font-weight: bold; text-align: right;">11,533,290</td> <td style="width: 1%; font-weight: bold; text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: White;"> <td style="text-align: left;">Income (loss) from operations</td> <td> </td> <td style="text-align: left;">$</td> <td style="text-align: right;">(3,094,155</td> <td style="text-align: left;">)</td> <td> </td> <td style="text-align: left;">$</td> <td style="text-align: right;">638,052</td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;">$</td> <td style="text-align: right;">7,377</td> <td style="text-align: left;"> </td> <td style="font-weight: bold;"> </td> <td style="font-weight: bold; text-align: left;">$</td> <td style="font-weight: bold; text-align: right;">(2,448,726</td> <td style="font-weight: bold; text-align: left;">)</td> </tr><tr style="vertical-align: bottom; background-color: rgb(204,238,255);"> <td style="text-align: left;">Other expenses</td> <td> </td> <td style="text-align: left;">$</td> <td style="text-align: right;">(1,594,067</td> <td style="text-align: left;">)</td> <td> </td> <td style="text-align: left;">$</td> <td style="text-align: right;"><span style="-sec-ix-hidden:fc_1340903563;">-</span></td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;">$</td> <td style="text-align: right;"><span style="-sec-ix-hidden:fc_1382851937;">(3</span></td> <td style="text-align: left;">)</td> <td style="font-weight: bold;"> </td> <td style="font-weight: bold; text-align: left;">$</td> <td style="font-weight: bold; text-align: right;">(1,594,070</td> <td style="font-weight: bold; text-align: left;">)</td> </tr></tbody></table> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in;"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify;"><span style="font-weight: bold;"><i>Use of Estimates</i></span></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in;"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify;">The preparation of consolidated financial statements in conformity with GAAP requires the Company to make estimates and assumptions that affect the amounts reported in our consolidated financial statements and the accompanying notes. Such estimates include accounts receivables, accrued liabilities, income taxes, long-lived assets, and deferred tax valuation allowances. These estimates generally involve complex issues and require management to make judgments, involve analysis of historical and future trends that can require extended periods of time to resolve, and are subject to change from period to period. In all cases, actual results could differ materially from estimates.</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in;"><span style="font-weight: bold;"><i> </i></span></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify;"><span style="font-weight: bold;"><i>Revenue Recognition</i></span></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in;"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify;">The Company recognizes revenue in accordance with Accounting Standards Codification (“ASC”) 606, <i>Revenue from Contracts with Customers</i>. The Company’s net revenue primarily consists of revenues from its retail stores and wholesale and online store. Accordingly, the Company recognizes revenue as follows:</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in;"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify;"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;"><span style="font-weight: bold;">Retail Store Revenue</span></span></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 63pt;"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify;">Retail store revenues are recognized at the point of sale when payment is tendered. Retail store revenues are reported net of sales, use, or other transaction taxes collected from customers and remitted to taxing authorities. Sales taxes payable are recorded as accrued liabilities within other current liabilities.</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center;"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify;"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;"><span style="font-weight: bold;">Wholesale and Online Revenue</span></span></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.75in; text-align: justify;"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify;">Wholesale and online revenues are recognized when products are delivered and title passes to the customer or to wholesale distributors. When customers pick up products at the Company’s warehouse or when products are delivered to wholesale distributors, title transfers and revenue is recognized at that time.</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify;"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify;"><span style="font-weight: bold;">Service Income – Reborn Logistics – Related Party</span></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.75in; text-align: justify;"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify;"> Service income is primarily derived from Reborn Logistics’ freight forwarding and logistics services. The Company recognizes service revenue when shipment transactions are delivered. Each shipment transaction or service order generally represents a separate contract with a customer. A performance obligation is established once a customer agreement with an agreed-upon transaction price exists. The transaction price is typically fixed and is not contingent upon the occurrence or non-occurrence of future events, and payment is generally due within 45 to 60 days from the invoice date. Service income represents related-party revenue from logistics services provided to TJ American, which owns a 49% interest in Reborn Logistics. For six months ended June 30, 2026, substantially all logistics revenue of $7.9 million was generated by TJ America. </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.75in; text-align: justify;"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify;">The Company’s transportation arrangements involve organizing the movement of freight to a customer’s destination. Transportation services, including certain ancillary services such as loading and unloading, freight insurance, and customs clearance, represent a single performance obligation, as these services are not distinct in the context of the contract. This performance obligation is satisfied and revenue is recognized as control of the services transfers to the customer upon delivery, as the customer’s goods move from origin to destination.</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.75in; text-align: justify;"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify;">The Company evaluates whether it controls the specified transportation service before that service is transferred to the customer to determine whether it is acting as a principal or an agent. The Company has determined that it acts as the principal in its transportation service arrangements because it is primarily responsible for fulfilling the customer contract and ensuring that the specified transportation service is completed in accordance with the agreed-upon terms. The Company enters into agreements directly with customers, establishes the price charged to customers, and has discretion in selecting and contracting with third-party carriers and negotiating the amounts paid to those carriers. The Company also assumes the risks associated with delivery and collection. These factors indicate that the Company obtains control of the specified transportation service before it is transferred to the customer. Accordingly, service income is presented on a gross basis in the consolidated statements of operations, with amounts paid to third-party carriers recognized as cost of service income.</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in;"><span style="font-weight: bold;"> </span></p> <table cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%;"><tbody><tr style="vertical-align: top; text-align: justify;"><td style="width: 24px; text-align: left;"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;"><span style="font-weight: bold;"></span></span></td> <td style="text-align: justify;"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;"><span style="font-weight: bold;">License Revenue</span></span></td> </tr></tbody></table> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.75in; text-align: justify;"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify;">The Company has entered into license agreements that allow licensees to operate and market Reborn Coffee branded stores and products under the Reborn Coffee trademarks. Under these agreements, the Company provides ongoing services, including training, marketing support, system updates, and other operational assistance. As the Company is required to provide these ongoing services, license revenue is recognized over the term of the license agreement. License agreements typically have initial terms of three years and may be renewed for additional periods. License income represents related-party revenue from certain board members.</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify;"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify;"> Accounts receivable related to license revenue totaled $1,205,000. Since the related accounts receivable had not been collected for more than one year, the Company ceased recognizing license revenue beginning in the second quarter of 2026 and recorded an allowance for doubtful accounts for the total outstanding balance of $682,500. Of the gross receivable, $255,000 arose from a transaction with a member of the Company’s board of directors and, accordingly, represents a related-party transaction. </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in;"><span style="font-weight: bold;"> </span></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify;"><span style="font-weight: bold;">Product, Food and Drink Costs – Stores, Wholesales and Online </span></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.75in; text-align: justify;"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify;">Product, food and drink costs – stores, wholesale and online primarily include the costs of ingredients of food and beverage sold and related supplies used in customer service.  The wholesale and online sales also include costs of packaging and shipping.</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify;"><span style="font-weight: bold;"><i> </i></span></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify;"><span style="font-weight: bold;">Cost of service income – Subcontractors </span></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.75in; text-align: justify;"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify;">Cost of service income – subcontractors mainly represent the cost of independence contractors and third-party carriers in the performance of its freight forward and transportation services.</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in;"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify;"><span style="font-weight: bold;">Shipping and Handling Costs</span></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.75in; text-align: justify;"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify;">The Company incurred freight out costs, which are primarily included in the Company’s cost of sales – wholesale and online.  Freight in costs, when attached to a specific purchase, are included as a component of the cost of the purchased goods and materials items and allocated to accounts in accordance with the nature of the goods.  When the freight in costs are not allocable to an individual purchase or are more significant, they are recorded to a freight and shipping account within cost of sales.</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in;"><span style="font-weight: bold;"> </span></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify;"><span style="font-weight: bold;">General and Administrative Expense</span></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in;"><span style="font-weight: bold;"> </span></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify;">General and administrative expenses include store-related expenses as well as the Company’s corporate headquarters’ expenses.</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify;"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify;"><span style="font-weight: bold;"><i>Accounts Receivable, Net</i></span></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify;"><span style="font-weight: bold;"><i> </i></span></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify;"> Accounts receivables are stated net of allowance for doubtful accounts. The allowance for doubtful accounts is determined primarily on the basis of past collection experience and general economic conditions. The Company determines terms and conditions for its customers based on volume transacted by the customer, customer creditworthiness and past transaction history. As of June 30, 2026 and December 31, 2025, the allowance for doubtful accounts was $511,719 and $75,689, respectively. The allowance as of June 30, 2026 primarily related to a receivable arising from license income. The Company does <span style="-sec-ix-hidden:fc_1168051911;"><span style="-sec-ix-hidden:fc_1625921839;">not</span></span> have any off-balance sheet exposure related to its customers. </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify;"><span style="font-weight: bold;"><i> </i></span></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify;"><span style="font-weight: bold;"><i>Inventories</i></span></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify;"><span style="font-weight: bold;"><i> </i></span></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify;">Inventories consisted primarily of coffee beans, drink products, and supplies which are recorded at cost or at net realizable value.</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify;"><span style="font-weight: bold;"><i> </i></span></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify;"><span style="font-weight: bold;"><i>Property and Equipment</i></span></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 31.05pt; text-align: justify;"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify;">Property and equipment are recorded at cost. Maintenance and repairs are charged to expense as incurred. Depreciation and amortization are provided using both the straight-line and declining balance methods over the following estimated useful lives:</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify;"> </p> <table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse;"> <tbody><tr style="vertical-align: top; background-color: rgb(204,238,255);"><td style="width: 40%;"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">Furniture and fixtures</span></td> <td style="width: 10%;"> </td> <td style="width: 50%;"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">5-7 Years</span></td> </tr><tr style="vertical-align: top; background-color: White;"><td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">Store construction</span></td> <td> </td> <td style="text-align: justify;">Lesser of the lease term or the estimated useful lives of the improvements, generally 6 years</td> </tr><tr style="vertical-align: top; background-color: rgb(204,238,255);"><td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">Leasehold improvement</span></td> <td> </td> <td style="text-align: justify;">Lesser of the lease term or the estimated useful lives of the improvements, generally 6 years</td> </tr></tbody> </table> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in;"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify;">When assets are retired or disposed of, the cost and accumulated depreciation thereon are removed, and any resulting gains or losses are included in the consolidated statements of operations. Leasehold improvements are amortized using the straight-line method over the estimated life of the asset, not to exceed the length of the lease. Repair and maintenance costs are expensed as incurred.</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in;"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify;"><span style="font-weight: bold;"><i>Operating Leases</i></span></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in;"><span style="font-weight: bold;"><i> </i></span></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify;">The Company accounts for its leases under ASC Topic 842, <i>Leases</i>. The Company determines if an arrangement is or contains a lease at inception. The Company’s operating leases with a term greater than one year are included in operating lease right-of-use (“ROU”) assets, operating lease liabilities, current and operating lease liabilities, net of current in the unaudited condensed consolidated balance sheets. ROU assets represent the Company’s right to use an underlying asset during the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at the lease commencement date, based on the present value of lease payments over the lease term. In determining the net present value of lease payments, the Company uses its incremental borrowing rate which represents an estimated rate of interest that the Company would have to pay to borrow equivalent funds on a collateralized basis at the lease commencement date. Operating lease expense is recognized on a straight-line basis over the expected lease term.</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in;"><span style="font-weight: bold;"><i> </i></span></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify;"><span style="font-weight: bold;"><i>Earnings Per Share</i></span></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in;"><span style="font-weight: bold;"><i> </i></span></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify;">FASB ASC Topic 260, Earnings Per Share, requires a reconciliation of the numerator and denominator of the basic and diluted earnings (loss) per share computations.</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify;"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify;">Basic earnings (loss) per share are computed by dividing net earnings available to common shareholders by the weighted-average number of common shares outstanding during the period. Diluted earnings (loss) per share is computed similar to basic earnings per share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common shares had been issued and if the additional common shares were dilutive. In periods where losses are reported, the weighted-average number of common stock outstanding excludes common stock equivalents, because their inclusion would be anti-dilutive.</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify;"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify;">The Company had potentially dilutive securities, including convertible debentures and warrants, outstanding during the six months ended June 30, 2026 and 2025. Because the Company incurred a net loss for the periods presented, the effect of these securities would have been anti-dilutive and, accordingly, they were excluded from the computation of diluted net loss per share. As a result, basic and diluted net losses per share were the same for the periods presented.</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in;"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify;"><span style="font-weight: bold;"><i>Long-lived Assets</i></span></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in;"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify;">In accordance with FASB ASC Topic 360, Property, Plant, and Equipment, the Company reviews for impairment of long-lived assets and certain identifiable intangibles whenever events or circumstances indicate that the carrying amount of assets may not be recoverable. The Company considers the carrying value of assets may not be recoverable based upon our review of the following events or changes in circumstances: the asset’s ability to continue to generate income from operations and positive cash flow in future periods; loss of legal ownership or title to the assets; significant changes in our strategic business objectives and utilization of the asset; or significant negative industry or economic trends. An impairment loss would be recognized when estimated future cash flows expected to result from the use of the asset are less than its carrying amount. As of June 30, 2026 and December 31, 2025, the Company was not aware of any events or changes in circumstances that would indicate that the long-lived assets are impaired.</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify;"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify;"><span style="font-weight: bold;"><i>Fair Value of Financial Instruments</i></span></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify;"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify;">The Company records its financial assets and liabilities at fair value, which is defined under the applicable accounting standards as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measure date. The Company uses valuation techniques to measure fair value, maximizing the use of observable outputs and minimizing the use of unobservable inputs. The standard describes a fair value hierarchy based on three levels of input, of which the first two are considered observable and the last unobservable, that may be used to measure fair value which are the following:</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify;"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify;">Level 1 – Quoted prices in active markets for identical assets or liabilities.</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify;"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify;">Level 2 – Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify;"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify;">Level 3 – Inputs include management’s best estimate of what market participants would use in pricing the asset or liability at the measurement date. The inputs are unobservable in the market and significant to the instrument’s valuation.</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify;"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify;">The carrying value of financial assets and liabilities recorded at fair value is measured on a recurring basis. Financial assets and liabilities measured on a non-recurring basis are those that are adjusted to fair value when a significant event occurs. There were no financial assets or liabilities carried and measured on a nonrecurring basis during the reporting periods. Financial assets and liabilities measured on a recurring basis are those that are adjusted to fair value each time a financial statement is prepared. There have been no transfers between levels.</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify;"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify;"> As of June 30, 2026 and December 31, 2025, the Company believes that the carrying value of accounts receivable, accounts payable, accrued expenses, and other current assets and liabilities approximate fair value due to the short maturity of these financial instruments. The Company had a derivative liability with a fair value of approximately $1.1 million that was measured on a recurring basis and classified within Level 3 of the fair value hierarchy. See Note 11 for additional information. The financial statements include financial instruments at fair value on a recurring or non-recurring basis.   </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in;"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0.25in; text-align: justify;"><span style="font-weight: bold;"><i>Income Taxes</i></span></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in;"><span style="font-weight: bold;"><i> </i></span></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0.25in; text-align: justify;">Income taxes are provided for the tax effects of transactions reported in the financial statements and consist of taxes currently due and deferred taxes. Deferred taxes are recognized for the differences between the basis of assets and liabilities for financial statement and income tax purposes.</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify;"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0.25in; text-align: justify;">The Company follows FASB ASC Topic 740, Income Taxes, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred income taxes are recognized for the tax consequences in future years of differences between the tax bases of assets and liabilities and their financial reporting amounts at each period end based on enacted tax laws and statutory tax rates, applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized. ASC 740-10-25 provides criteria for the recognition, measurement, presentation and disclosure of uncertain tax position. The Company must recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position.</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify;"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify;"> We estimate our annual effective income tax rate to be -7.08% for calendar 2026, which is different from the U.S. federal statutory rate, primarily due to its full valuation position and dual rate approach. The Company recorded $160,016 of tax expense as of June 30, 2026. As of June 30, 2026, we have <span style="-sec-ix-hidden:fc_228680333;">no</span> material unrecognized tax benefits, and we expect no material unrecognized tax benefits for next 12 months. </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in;"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify;"><span style="font-weight: bold;"><i>Concentration of Credit Risk</i></span></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in;"><span style="font-weight: bold;"><i> </i></span></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify;">Financial instruments that potentially subject the Company to concentrations of credit risk are accounts receivable arising from its normal business activities. The Company performs ongoing credit evaluations to its customers and establishes allowances when appropriate.</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify;"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify;">Company purchases from various vendors for its operations. For the three and six months ended June 30, 2026 and 2025, no purchases from any vendors accounted for a significant amount of the Company’s bean coffee purchases.</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in;"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify;"> For the six months ended June 30, 2026, revenue from one customer was approximately $7.9 million, representing a significant concentration of the Company’s revenue. </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in;"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify;"><span style="font-weight: bold;"><i>Related Parties</i></span></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in;"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify;">The Company follows ASC Topic 850, Related Party Disclosures, for the identification of related parties and disclosure of related party transactions. Related parties are any entities or individuals that, through employment, ownership, or other means, possess the ability to direct or cause the direction of management and policies of the Company.</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify;"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify;"> As of June 30, 2026 and December 31, 2025, the Company has $3,759,156 and $2,000,000 of related party loan receivable which is non-interest bearing and payable upon demand. </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify;"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in;">The following table presents the Company’s related parties and the nature of their relationships:</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify;"> </p> <table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse;"> <tbody><tr style="vertical-align: top;"><td style="border-bottom: Black 1.5pt solid; text-align: left; width: 34%;"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;"><span style="font-weight: bold;">Related Party</span></span></td> <td style="text-align: center; padding-bottom: 1.5pt; width: 1%;"> </td> <td style="text-align: center; border-bottom: Black 1.5pt solid; width: 32%;"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;"><span style="font-weight: bold;">Relationship</span></span></td> <td style="text-align: center; padding-bottom: 1.5pt; width: 1%;"> </td> <td style="text-align: center; border-bottom: Black 1.5pt solid; width: 32%;"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;"><span style="font-weight: bold;">Account Type</span></span></td> </tr><tr style="vertical-align: top; background-color: rgb(204,238,255);"> <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">Arjomand Group LLC</span></td> <td> </td> <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">Related party of Farooq Arjomand</span></td> <td> </td> <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">Accounts Receivable</span></td> </tr><tr style="vertical-align: top; background-color: White;"> <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">Farooq Arjomand</span></td> <td> </td> <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">Chairman of Board</span></td> <td> </td> <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">Accounts Receivable</span></td> </tr><tr style="vertical-align: top; background-color: rgb(204,238,255);"> <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">Jay Kim</span></td> <td> </td> <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">Shareholder</span></td> <td> </td> <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">Shareholder Balance</span></td> </tr><tr style="vertical-align: top; background-color: White;"> <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">TJ Americaf</span></td> <td> </td> <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">Shareholder of Subsidiary</span></td> <td> </td> <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">Accounts Payable</span></td> </tr><tr style="vertical-align: top; background-color: rgb(204,238,255);"> <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">Alex Yeon</span></td> <td> </td> <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">Related party</span></td> <td> </td> <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">Accounts Payable</span></td> </tr><tr style="vertical-align: top; background-color: White;"> <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">DRE</span></td> <td> </td> <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">Related Party of Dennis Egidi</span></td> <td> </td> <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">Loan Payable</span></td> </tr><tr style="vertical-align: top; background-color: rgb(204,238,255);"> <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">Dennis Egidi</span></td> <td> </td> <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">Vice Chairman of the Board</span></td> <td> </td> <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">Loan Payable</span></td> </tr><tr style="vertical-align: top; background-color: White;"> <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">Charles Jeong</span></td> <td> </td> <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">Shareholder</span></td> <td> </td> <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">Shareholder Balance</span></td> </tr><tr style="vertical-align: top; background-color: rgb(204,238,255);"> <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">Yeil Advisory</span></td> <td> </td> <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">Related party of shareholder</span></td> <td> </td> <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">Loan receivable </span></td> </tr><tr style="vertical-align: top; background-color: White;"> <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">KCC Mexico Transport System</span></td> <td> </td> <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">Related party of shareholder</span></td> <td> </td> <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">Loan receivable</span></td> </tr><tr style="vertical-align: top; background-color: rgb(204,238,255);"> <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">Jung Jae Lim</span></td> <td> </td> <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">Chief Executive Officer, Board Member</span></td> <td> </td> <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">No transactions</span></td> </tr><tr style="vertical-align: top; background-color: White;"> <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">Mi Jeong Lee</span></td> <td> </td> <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">Independent director</span></td> <td> </td> <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">No transactions</span></td> </tr><tr style="vertical-align: top; background-color: rgb(204,238,255);"> <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">Mi Young Jeong</span></td> <td> </td> <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">Independent director</span></td> <td> </td> <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">No transactions</span></td> </tr><tr style="vertical-align: top; background-color: White;"> <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">Reborn Realty, LLC</span></td> <td> </td> <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">Wholly owned Subsidiary</span></td> <td> </td> <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">No transactions</span></td> </tr><tr style="vertical-align: top; background-color: rgb(204,238,255);"> <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">Reborn Malaysia, Inc</span></td> <td> </td> <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">Wholly owned Subsidiary</span></td> <td> </td> <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">Investments</span></td> </tr><tr style="vertical-align: top; background-color: White;"> <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">Reborn Logistics, Inc.</span></td> <td> </td> <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">Subsidiary</span></td> <td> </td> <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">Intercompany loan</span></td> </tr></tbody></table> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify;"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify;"><span style="font-weight: bold;"><i>Recent Accounting Pronouncement</i></span></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify;"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify;">The Company has reviewed all recently issued, but not yet effective, accounting pronouncements and does not believe the future adoption of any such pronouncements may be expected to cause a material impact on our financial statements.</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify;"><span style="font-weight: bold;"><i>Reporting</i></span></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in;"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify;">The unaudited condensed consolidated financial statements include Reborn Coffee, Inc. and its subsidiaries as of June 30, 2026 and December 31, 2025 and for the three and six months ended June 30, 2026 and 2025.</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify;"><span style="font-weight: bold;"><i>Basis of Presentation and Consolidation</i></span></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in;"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify;">The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with GAAP. The consolidated financial statements include Reborn Coffee, Inc. and its subsidiary. All intercompany accounts, transactions, and profits have been eliminated upon consolidation.</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify;"><span style="font-weight: bold;"><i>Minority Interest</i></span></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify;"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify;"> The Company consolidates Reborn Logistics, which is majority-owned subsidiary (51% own) and presents the portion of equity and earnings attributable to the non-controlling interest separately in the unaudited condensed consolidated financial statements. As of June 30, 2026, non-controlling interest was $368,975. For the six months ended June 30, 2026, net income attributable to non-controlling interest was $234,826. </p> 0.51 368975 234826 <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify;"><span style="font-weight: bold;"><i>Segment Reporting</i></span></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in;"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify;">FASB ASC Topic 280, Segment Reporting, requires public companies to report financial and descriptive information about their reportable operating segments. Operating segments are identified based on the manner in which the Company’s chief operating decision maker (“CODM”) evaluates financial information, business activities, and performance results.</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in;"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify;"> Management has identified two reportable operating segments: (i) Reborn Coffee, which includes both wholesale and retail sales of coffee, water, and other beverages, and (ii) Reborn Logistics, which provides freight forwarding services. </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in;"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify;"> The Company’s CODM is its <span style="-sec-ix-hidden:fc_1062217436;">Chief Executive Officer</span>. CODM evaluates segment performance primarily based on revenues, income from operations, and other income (expense). Assets by segment are not reviewed by the CODM in assessing segment performance and, accordingly, are not disclosed. </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in;"> </p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify;">The following table presents a summary of operating performance by reportable segment for the periods indicated:</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in;"> </p> <table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif;"> <tbody><tr style="vertical-align: bottom;"><td style="text-align: center;"> </td> <td style="font-weight: bold; padding-bottom: 1.5pt;"> </td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid;">Reborn<br/> Coffee</td> <td style="padding-bottom: 1.5pt; font-weight: bold;"> </td> <td style="font-weight: bold; padding-bottom: 1.5pt;"> </td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid;">Reborn<br/> Logistics</td> <td style="padding-bottom: 1.5pt; font-weight: bold;"> </td> <td style="font-weight: bold; padding-bottom: 1.5pt;"> </td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid;">Others <br/> Elimination</td> <td style="padding-bottom: 1.5pt; font-weight: bold;"> </td> <td style="font-weight: bold; padding-bottom: 1.5pt;"> </td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid;">Total</td> <td style="padding-bottom: 1.5pt; font-weight: bold;"> </td> </tr><tr style="vertical-align: bottom; background-color: rgb(204,238,255);"> <td style="width: 52%;">Revenue</td> <td style="width: 1%;"> </td> <td style="width: 1%; text-align: left;">$</td> <td style="width: 9%; text-align: right;">3,560,571</td> <td style="width: 1%; text-align: left;"> </td> <td style="width: 1%;"> </td> <td style="width: 1%; text-align: left;">$</td> <td style="width: 9%; text-align: right;">7,972,719</td> <td style="width: 1%; text-align: left;"> </td> <td style="width: 1%;"> </td> <td style="width: 1%; text-align: left;">$</td> <td style="width: 9%; text-align: right;"><span style="-sec-ix-hidden:fc_1833476382;">-</span></td> <td style="width: 1%; text-align: left;"> </td> <td style="width: 1%; font-weight: bold;"> </td> <td style="width: 1%; font-weight: bold; text-align: left;">$</td> <td style="width: 9%; font-weight: bold; text-align: right;">11,533,290</td> <td style="width: 1%; font-weight: bold; text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: White;"> <td style="text-align: left;">Income (loss) from operations</td> <td> </td> <td style="text-align: left;">$</td> <td style="text-align: right;">(3,094,155</td> <td style="text-align: left;">)</td> <td> </td> <td style="text-align: left;">$</td> <td style="text-align: right;">638,052</td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;">$</td> <td style="text-align: right;">7,377</td> <td style="text-align: left;"> </td> <td style="font-weight: bold;"> </td> <td style="font-weight: bold; text-align: left;">$</td> <td style="font-weight: bold; text-align: right;">(2,448,726</td> <td style="font-weight: bold; text-align: left;">)</td> </tr><tr style="vertical-align: bottom; background-color: rgb(204,238,255);"> <td style="text-align: left;">Other expenses</td> <td> </td> <td style="text-align: left;">$</td> <td style="text-align: right;">(1,594,067</td> <td style="text-align: left;">)</td> <td> </td> <td style="text-align: left;">$</td> <td style="text-align: right;"><span style="-sec-ix-hidden:fc_1340903563;">-</span></td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;">$</td> <td style="text-align: right;"><span style="-sec-ix-hidden:fc_1382851937;">(3</span></td> <td style="text-align: left;">)</td> <td style="font-weight: bold;"> </td> <td style="font-weight: bold; text-align: left;">$</td> <td style="font-weight: bold; text-align: right;">(1,594,070</td> <td style="font-weight: bold; text-align: left;">)</td> </tr></tbody></table> 2 The Company’s CODM is its Chief Executive Officer. CODM evaluates segment performance primarily based on revenues, income from operations, and other income (expense). <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify;">The following table presents a summary of operating performance by reportable segment for the periods indicated:</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in;"> </p> <table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif;"> <tbody><tr style="vertical-align: bottom;"><td style="text-align: center;"> </td> <td style="font-weight: bold; padding-bottom: 1.5pt;"> </td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid;">Reborn<br/> Coffee</td> <td style="padding-bottom: 1.5pt; font-weight: bold;"> </td> <td style="font-weight: bold; padding-bottom: 1.5pt;"> </td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid;">Reborn<br/> Logistics</td> <td style="padding-bottom: 1.5pt; font-weight: bold;"> </td> <td style="font-weight: bold; padding-bottom: 1.5pt;"> </td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid;">Others <br/> Elimination</td> <td style="padding-bottom: 1.5pt; font-weight: bold;"> </td> <td style="font-weight: bold; padding-bottom: 1.5pt;"> </td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid;">Total</td> <td style="padding-bottom: 1.5pt; font-weight: bold;"> </td> </tr><tr style="vertical-align: bottom; background-color: rgb(204,238,255);"> <td style="width: 52%;">Revenue</td> <td style="width: 1%;"> </td> <td style="width: 1%; text-align: left;">$</td> <td style="width: 9%; text-align: right;">3,560,571</td> <td style="width: 1%; text-align: left;"> </td> <td style="width: 1%;"> </td> <td style="width: 1%; text-align: left;">$</td> <td style="width: 9%; text-align: right;">7,972,719</td> <td style="width: 1%; text-align: left;"> </td> <td style="width: 1%;"> </td> <td style="width: 1%; text-align: left;">$</td> <td style="width: 9%; text-align: right;"><span style="-sec-ix-hidden:fc_1833476382;">-</span></td> <td style="width: 1%; text-align: left;"> </td> <td style="width: 1%; font-weight: bold;"> </td> <td style="width: 1%; font-weight: bold; text-align: left;">$</td> <td style="width: 9%; font-weight: bold; text-align: right;">11,533,290</td> <td style="width: 1%; font-weight: bold; text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: White;"> <td style="text-align: left;">Income (loss) from operations</td> <td> </td> <td style="text-align: left;">$</td> <td style="text-align: right;">(3,094,155</td> <td style="text-align: left;">)</td> <td> </td> <td style="text-align: left;">$</td> <td style="text-align: right;">638,052</td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;">$</td> <td style="text-align: right;">7,377</td> <td style="text-align: left;"> </td> <td style="font-weight: bold;"> </td> <td style="font-weight: bold; text-align: left;">$</td> <td style="font-weight: bold; text-align: right;">(2,448,726</td> <td style="font-weight: bold; text-align: left;">)</td> </tr><tr style="vertical-align: bottom; background-color: rgb(204,238,255);"> <td style="text-align: left;">Other expenses</td> <td> </td> <td style="text-align: left;">$</td> <td style="text-align: right;">(1,594,067</td> <td style="text-align: left;">)</td> <td> </td> <td style="text-align: left;">$</td> <td style="text-align: right;"><span style="-sec-ix-hidden:fc_1340903563;">-</span></td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;">$</td> <td style="text-align: right;"><span style="-sec-ix-hidden:fc_1382851937;">(3</span></td> <td style="text-align: left;">)</td> <td style="font-weight: bold;"> </td> <td style="font-weight: bold; text-align: left;">$</td> <td style="font-weight: bold; text-align: right;">(1,594,070</td> <td style="font-weight: bold; text-align: left;">)</td> </tr></tbody></table> 3560571 7972719 11533290 -3094155 638052 7377 -2448726 -1594067 -1594070 <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify;"><span style="font-weight: bold;"><i>Use of Estimates</i></span></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in;"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify;">The preparation of consolidated financial statements in conformity with GAAP requires the Company to make estimates and assumptions that affect the amounts reported in our consolidated financial statements and the accompanying notes. Such estimates include accounts receivables, accrued liabilities, income taxes, long-lived assets, and deferred tax valuation allowances. These estimates generally involve complex issues and require management to make judgments, involve analysis of historical and future trends that can require extended periods of time to resolve, and are subject to change from period to period. In all cases, actual results could differ materially from estimates.</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify;"><span style="font-weight: bold;"><i>Revenue Recognition</i></span></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in;"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify;">The Company recognizes revenue in accordance with Accounting Standards Codification (“ASC”) 606, <i>Revenue from Contracts with Customers</i>. The Company’s net revenue primarily consists of revenues from its retail stores and wholesale and online store. Accordingly, the Company recognizes revenue as follows:</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in;"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify;"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;"><span style="font-weight: bold;">Retail Store Revenue</span></span></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 63pt;"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify;">Retail store revenues are recognized at the point of sale when payment is tendered. Retail store revenues are reported net of sales, use, or other transaction taxes collected from customers and remitted to taxing authorities. Sales taxes payable are recorded as accrued liabilities within other current liabilities.</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center;"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify;"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;"><span style="font-weight: bold;">Wholesale and Online Revenue</span></span></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.75in; text-align: justify;"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify;">Wholesale and online revenues are recognized when products are delivered and title passes to the customer or to wholesale distributors. When customers pick up products at the Company’s warehouse or when products are delivered to wholesale distributors, title transfers and revenue is recognized at that time.</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify;"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify;"><span style="font-weight: bold;">Service Income – Reborn Logistics – Related Party</span></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.75in; text-align: justify;"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify;"> Service income is primarily derived from Reborn Logistics’ freight forwarding and logistics services. The Company recognizes service revenue when shipment transactions are delivered. Each shipment transaction or service order generally represents a separate contract with a customer. A performance obligation is established once a customer agreement with an agreed-upon transaction price exists. The transaction price is typically fixed and is not contingent upon the occurrence or non-occurrence of future events, and payment is generally due within 45 to 60 days from the invoice date. Service income represents related-party revenue from logistics services provided to TJ American, which owns a 49% interest in Reborn Logistics. For six months ended June 30, 2026, substantially all logistics revenue of $7.9 million was generated by TJ America. </p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify;">The Company’s transportation arrangements involve organizing the movement of freight to a customer’s destination. Transportation services, including certain ancillary services such as loading and unloading, freight insurance, and customs clearance, represent a single performance obligation, as these services are not distinct in the context of the contract. This performance obligation is satisfied and revenue is recognized as control of the services transfers to the customer upon delivery, as the customer’s goods move from origin to destination.</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.75in; text-align: justify;"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify;">The Company evaluates whether it controls the specified transportation service before that service is transferred to the customer to determine whether it is acting as a principal or an agent. The Company has determined that it acts as the principal in its transportation service arrangements because it is primarily responsible for fulfilling the customer contract and ensuring that the specified transportation service is completed in accordance with the agreed-upon terms. The Company enters into agreements directly with customers, establishes the price charged to customers, and has discretion in selecting and contracting with third-party carriers and negotiating the amounts paid to those carriers. The Company also assumes the risks associated with delivery and collection. These factors indicate that the Company obtains control of the specified transportation service before it is transferred to the customer. Accordingly, service income is presented on a gross basis in the consolidated statements of operations, with amounts paid to third-party carriers recognized as cost of service income.</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in;"><span style="font-weight: bold;"> </span></p> <table cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%;"><tbody><tr style="vertical-align: top; text-align: justify;"><td style="width: 24px; text-align: left;"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;"><span style="font-weight: bold;"></span></span></td> <td style="text-align: justify;"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;"><span style="font-weight: bold;">License Revenue</span></span></td> </tr></tbody></table> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.75in; text-align: justify;"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify;">The Company has entered into license agreements that allow licensees to operate and market Reborn Coffee branded stores and products under the Reborn Coffee trademarks. Under these agreements, the Company provides ongoing services, including training, marketing support, system updates, and other operational assistance. As the Company is required to provide these ongoing services, license revenue is recognized over the term of the license agreement. License agreements typically have initial terms of three years and may be renewed for additional periods. License income represents related-party revenue from certain board members.</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify;"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify;"> Accounts receivable related to license revenue totaled $1,205,000. Since the related accounts receivable had not been collected for more than one year, the Company ceased recognizing license revenue beginning in the second quarter of 2026 and recorded an allowance for doubtful accounts for the total outstanding balance of $682,500. Of the gross receivable, $255,000 arose from a transaction with a member of the Company’s board of directors and, accordingly, represents a related-party transaction. </p> 0.49 7900000 1205000 682500 255000 <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify;"><span style="font-weight: bold;">Product, Food and Drink Costs – Stores, Wholesales and Online </span></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.75in; text-align: justify;"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify;">Product, food and drink costs – stores, wholesale and online primarily include the costs of ingredients of food and beverage sold and related supplies used in customer service.  The wholesale and online sales also include costs of packaging and shipping.</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify;"><span style="font-weight: bold;">Cost of service income – Subcontractors </span></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.75in; text-align: justify;"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify;">Cost of service income – subcontractors mainly represent the cost of independence contractors and third-party carriers in the performance of its freight forward and transportation services.</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify;"><span style="font-weight: bold;">Shipping and Handling Costs</span></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.75in; text-align: justify;"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify;">The Company incurred freight out costs, which are primarily included in the Company’s cost of sales – wholesale and online.  Freight in costs, when attached to a specific purchase, are included as a component of the cost of the purchased goods and materials items and allocated to accounts in accordance with the nature of the goods.  When the freight in costs are not allocable to an individual purchase or are more significant, they are recorded to a freight and shipping account within cost of sales.</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify;"><span style="font-weight: bold;">General and Administrative Expense</span></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in;"><span style="font-weight: bold;"> </span></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify;">General and administrative expenses include store-related expenses as well as the Company’s corporate headquarters’ expenses.</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify;"><span style="font-weight: bold;"><i>Accounts Receivable, Net</i></span></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify;"><span style="font-weight: bold;"><i> </i></span></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify;"> Accounts receivables are stated net of allowance for doubtful accounts. The allowance for doubtful accounts is determined primarily on the basis of past collection experience and general economic conditions. The Company determines terms and conditions for its customers based on volume transacted by the customer, customer creditworthiness and past transaction history. As of June 30, 2026 and December 31, 2025, the allowance for doubtful accounts was $511,719 and $75,689, respectively. The allowance as of June 30, 2026 primarily related to a receivable arising from license income. The Company does <span style="-sec-ix-hidden:fc_1168051911;"><span style="-sec-ix-hidden:fc_1625921839;">not</span></span> have any off-balance sheet exposure related to its customers. </p> 511719 75689 <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify;"><span style="font-weight: bold;"><i>Inventories</i></span></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify;"><span style="font-weight: bold;"><i> </i></span></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify;">Inventories consisted primarily of coffee beans, drink products, and supplies which are recorded at cost or at net realizable value.</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify;"><span style="font-weight: bold;"><i>Property and Equipment</i></span></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 31.05pt; text-align: justify;"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify;">Property and equipment are recorded at cost. Maintenance and repairs are charged to expense as incurred. Depreciation and amortization are provided using both the straight-line and declining balance methods over the following estimated useful lives:</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify;"> </p> <table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse;"> <tbody><tr style="vertical-align: top; background-color: rgb(204,238,255);"><td style="width: 40%;"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">Furniture and fixtures</span></td> <td style="width: 10%;"> </td> <td style="width: 50%;"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">5-7 Years</span></td> </tr><tr style="vertical-align: top; background-color: White;"><td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">Store construction</span></td> <td> </td> <td style="text-align: justify;">Lesser of the lease term or the estimated useful lives of the improvements, generally 6 years</td> </tr><tr style="vertical-align: top; background-color: rgb(204,238,255);"><td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">Leasehold improvement</span></td> <td> </td> <td style="text-align: justify;">Lesser of the lease term or the estimated useful lives of the improvements, generally 6 years</td> </tr></tbody> </table> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in;"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify;">When assets are retired or disposed of, the cost and accumulated depreciation thereon are removed, and any resulting gains or losses are included in the consolidated statements of operations. Leasehold improvements are amortized using the straight-line method over the estimated life of the asset, not to exceed the length of the lease. Repair and maintenance costs are expensed as incurred.</p> Depreciation and amortization are provided using both the straight-line and declining balance methods over the following estimated useful lives:<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse;"> <tbody><tr style="vertical-align: top; background-color: rgb(204,238,255);"><td style="width: 40%;"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">Furniture and fixtures</span></td> <td style="width: 10%;"> </td> <td style="width: 50%;"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">5-7 Years</span></td> </tr><tr style="vertical-align: top; background-color: White;"><td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">Store construction</span></td> <td> </td> <td style="text-align: justify;">Lesser of the lease term or the estimated useful lives of the improvements, generally 6 years</td> </tr><tr style="vertical-align: top; background-color: rgb(204,238,255);"><td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">Leasehold improvement</span></td> <td> </td> <td style="text-align: justify;">Lesser of the lease term or the estimated useful lives of the improvements, generally 6 years</td> </tr></tbody> </table> P5Y P7Y P6Y P6Y <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify;"><span style="font-weight: bold;"><i>Operating Leases</i></span></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in;"><span style="font-weight: bold;"><i> </i></span></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify;">The Company accounts for its leases under ASC Topic 842, <i>Leases</i>. The Company determines if an arrangement is or contains a lease at inception. The Company’s operating leases with a term greater than one year are included in operating lease right-of-use (“ROU”) assets, operating lease liabilities, current and operating lease liabilities, net of current in the unaudited condensed consolidated balance sheets. ROU assets represent the Company’s right to use an underlying asset during the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at the lease commencement date, based on the present value of lease payments over the lease term. In determining the net present value of lease payments, the Company uses its incremental borrowing rate which represents an estimated rate of interest that the Company would have to pay to borrow equivalent funds on a collateralized basis at the lease commencement date. Operating lease expense is recognized on a straight-line basis over the expected lease term.</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify;"><span style="font-weight: bold;"><i>Earnings Per Share</i></span></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in;"><span style="font-weight: bold;"><i> </i></span></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify;">FASB ASC Topic 260, Earnings Per Share, requires a reconciliation of the numerator and denominator of the basic and diluted earnings (loss) per share computations.</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify;"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify;">Basic earnings (loss) per share are computed by dividing net earnings available to common shareholders by the weighted-average number of common shares outstanding during the period. Diluted earnings (loss) per share is computed similar to basic earnings per share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common shares had been issued and if the additional common shares were dilutive. In periods where losses are reported, the weighted-average number of common stock outstanding excludes common stock equivalents, because their inclusion would be anti-dilutive.</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify;"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify;">The Company had potentially dilutive securities, including convertible debentures and warrants, outstanding during the six months ended June 30, 2026 and 2025. Because the Company incurred a net loss for the periods presented, the effect of these securities would have been anti-dilutive and, accordingly, they were excluded from the computation of diluted net loss per share. As a result, basic and diluted net losses per share were the same for the periods presented.</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify;"><span style="font-weight: bold;"><i>Long-lived Assets</i></span></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in;"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify;">In accordance with FASB ASC Topic 360, Property, Plant, and Equipment, the Company reviews for impairment of long-lived assets and certain identifiable intangibles whenever events or circumstances indicate that the carrying amount of assets may not be recoverable. The Company considers the carrying value of assets may not be recoverable based upon our review of the following events or changes in circumstances: the asset’s ability to continue to generate income from operations and positive cash flow in future periods; loss of legal ownership or title to the assets; significant changes in our strategic business objectives and utilization of the asset; or significant negative industry or economic trends. An impairment loss would be recognized when estimated future cash flows expected to result from the use of the asset are less than its carrying amount. As of June 30, 2026 and December 31, 2025, the Company was not aware of any events or changes in circumstances that would indicate that the long-lived assets are impaired.</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify;"><span style="font-weight: bold;"><i>Fair Value of Financial Instruments</i></span></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify;"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify;">The Company records its financial assets and liabilities at fair value, which is defined under the applicable accounting standards as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measure date. The Company uses valuation techniques to measure fair value, maximizing the use of observable outputs and minimizing the use of unobservable inputs. The standard describes a fair value hierarchy based on three levels of input, of which the first two are considered observable and the last unobservable, that may be used to measure fair value which are the following:</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify;"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify;">Level 1 – Quoted prices in active markets for identical assets or liabilities.</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify;"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify;">Level 2 – Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify;"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify;">Level 3 – Inputs include management’s best estimate of what market participants would use in pricing the asset or liability at the measurement date. The inputs are unobservable in the market and significant to the instrument’s valuation.</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify;"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify;">The carrying value of financial assets and liabilities recorded at fair value is measured on a recurring basis. Financial assets and liabilities measured on a non-recurring basis are those that are adjusted to fair value when a significant event occurs. There were no financial assets or liabilities carried and measured on a nonrecurring basis during the reporting periods. Financial assets and liabilities measured on a recurring basis are those that are adjusted to fair value each time a financial statement is prepared. There have been no transfers between levels.</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify;"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify;"> As of June 30, 2026 and December 31, 2025, the Company believes that the carrying value of accounts receivable, accounts payable, accrued expenses, and other current assets and liabilities approximate fair value due to the short maturity of these financial instruments. The Company had a derivative liability with a fair value of approximately $1.1 million that was measured on a recurring basis and classified within Level 3 of the fair value hierarchy. See Note 11 for additional information. The financial statements include financial instruments at fair value on a recurring or non-recurring basis.   </p> 1100000 <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0.25in; text-align: justify;"><span style="font-weight: bold;"><i>Income Taxes</i></span></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in;"><span style="font-weight: bold;"><i> </i></span></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0.25in; text-align: justify;">Income taxes are provided for the tax effects of transactions reported in the financial statements and consist of taxes currently due and deferred taxes. Deferred taxes are recognized for the differences between the basis of assets and liabilities for financial statement and income tax purposes.</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify;"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0.25in; text-align: justify;">The Company follows FASB ASC Topic 740, Income Taxes, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred income taxes are recognized for the tax consequences in future years of differences between the tax bases of assets and liabilities and their financial reporting amounts at each period end based on enacted tax laws and statutory tax rates, applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized. ASC 740-10-25 provides criteria for the recognition, measurement, presentation and disclosure of uncertain tax position. The Company must recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position.</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify;"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify;"> We estimate our annual effective income tax rate to be -7.08% for calendar 2026, which is different from the U.S. federal statutory rate, primarily due to its full valuation position and dual rate approach. The Company recorded $160,016 of tax expense as of June 30, 2026. As of June 30, 2026, we have <span style="-sec-ix-hidden:fc_228680333;">no</span> material unrecognized tax benefits, and we expect no material unrecognized tax benefits for next 12 months. </p> 0.0708 160016 <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify;"><span style="font-weight: bold;"><i>Concentration of Credit Risk</i></span></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in;"><span style="font-weight: bold;"><i> </i></span></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify;">Financial instruments that potentially subject the Company to concentrations of credit risk are accounts receivable arising from its normal business activities. The Company performs ongoing credit evaluations to its customers and establishes allowances when appropriate.</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify;"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify;">Company purchases from various vendors for its operations. For the three and six months ended June 30, 2026 and 2025, no purchases from any vendors accounted for a significant amount of the Company’s bean coffee purchases.</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in;"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify;"> For the six months ended June 30, 2026, revenue from one customer was approximately $7.9 million, representing a significant concentration of the Company’s revenue. </p> 7900000 <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify;"><span style="font-weight: bold;"><i>Related Parties</i></span></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in;"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify;">The Company follows ASC Topic 850, Related Party Disclosures, for the identification of related parties and disclosure of related party transactions. Related parties are any entities or individuals that, through employment, ownership, or other means, possess the ability to direct or cause the direction of management and policies of the Company.</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify;"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify;"> As of June 30, 2026 and December 31, 2025, the Company has $3,759,156 and $2,000,000 of related party loan receivable which is non-interest bearing and payable upon demand. </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify;"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in;">The following table presents the Company’s related parties and the nature of their relationships:</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify;"> </p> <table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse;"> <tbody><tr style="vertical-align: top;"><td style="border-bottom: Black 1.5pt solid; text-align: left; width: 34%;"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;"><span style="font-weight: bold;">Related Party</span></span></td> <td style="text-align: center; padding-bottom: 1.5pt; width: 1%;"> </td> <td style="text-align: center; border-bottom: Black 1.5pt solid; width: 32%;"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;"><span style="font-weight: bold;">Relationship</span></span></td> <td style="text-align: center; padding-bottom: 1.5pt; width: 1%;"> </td> <td style="text-align: center; border-bottom: Black 1.5pt solid; width: 32%;"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;"><span style="font-weight: bold;">Account Type</span></span></td> </tr><tr style="vertical-align: top; background-color: rgb(204,238,255);"> <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">Arjomand Group LLC</span></td> <td> </td> <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">Related party of Farooq Arjomand</span></td> <td> </td> <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">Accounts Receivable</span></td> </tr><tr style="vertical-align: top; background-color: White;"> <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">Farooq Arjomand</span></td> <td> </td> <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">Chairman of Board</span></td> <td> </td> <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">Accounts Receivable</span></td> </tr><tr style="vertical-align: top; background-color: rgb(204,238,255);"> <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">Jay Kim</span></td> <td> </td> <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">Shareholder</span></td> <td> </td> <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">Shareholder Balance</span></td> </tr><tr style="vertical-align: top; background-color: White;"> <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">TJ Americaf</span></td> <td> </td> <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">Shareholder of Subsidiary</span></td> <td> </td> <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">Accounts Payable</span></td> </tr><tr style="vertical-align: top; background-color: rgb(204,238,255);"> <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">Alex Yeon</span></td> <td> </td> <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">Related party</span></td> <td> </td> <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">Accounts Payable</span></td> </tr><tr style="vertical-align: top; background-color: White;"> <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">DRE</span></td> <td> </td> <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">Related Party of Dennis Egidi</span></td> <td> </td> <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">Loan Payable</span></td> </tr><tr style="vertical-align: top; background-color: rgb(204,238,255);"> <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">Dennis Egidi</span></td> <td> </td> <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">Vice Chairman of the Board</span></td> <td> </td> <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">Loan Payable</span></td> </tr><tr style="vertical-align: top; background-color: White;"> <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">Charles Jeong</span></td> <td> </td> <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">Shareholder</span></td> <td> </td> <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">Shareholder Balance</span></td> </tr><tr style="vertical-align: top; background-color: rgb(204,238,255);"> <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">Yeil Advisory</span></td> <td> </td> <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">Related party of shareholder</span></td> <td> </td> <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">Loan receivable </span></td> </tr><tr style="vertical-align: top; background-color: White;"> <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">KCC Mexico Transport System</span></td> <td> </td> <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">Related party of shareholder</span></td> <td> </td> <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">Loan receivable</span></td> </tr><tr style="vertical-align: top; background-color: rgb(204,238,255);"> <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">Jung Jae Lim</span></td> <td> </td> <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">Chief Executive Officer, Board Member</span></td> <td> </td> <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">No transactions</span></td> </tr><tr style="vertical-align: top; background-color: White;"> <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">Mi Jeong Lee</span></td> <td> </td> <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">Independent director</span></td> <td> </td> <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">No transactions</span></td> </tr><tr style="vertical-align: top; background-color: rgb(204,238,255);"> <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">Mi Young Jeong</span></td> <td> </td> <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">Independent director</span></td> <td> </td> <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">No transactions</span></td> </tr><tr style="vertical-align: top; background-color: White;"> <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">Reborn Realty, LLC</span></td> <td> </td> <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">Wholly owned Subsidiary</span></td> <td> </td> <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">No transactions</span></td> </tr><tr style="vertical-align: top; background-color: rgb(204,238,255);"> <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">Reborn Malaysia, Inc</span></td> <td> </td> <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">Wholly owned Subsidiary</span></td> <td> </td> <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">Investments</span></td> </tr><tr style="vertical-align: top; background-color: White;"> <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">Reborn Logistics, Inc.</span></td> <td> </td> <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">Subsidiary</span></td> <td> </td> <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">Intercompany loan</span></td> </tr></tbody></table> 3759156 2000000 <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in;">The following table presents the Company’s related parties and the nature of their relationships:</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify;"> </p> <table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse;"> <tbody><tr style="vertical-align: top;"><td style="border-bottom: Black 1.5pt solid; text-align: left; width: 34%;"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;"><span style="font-weight: bold;">Related Party</span></span></td> <td style="text-align: center; padding-bottom: 1.5pt; width: 1%;"> </td> <td style="text-align: center; border-bottom: Black 1.5pt solid; width: 32%;"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;"><span style="font-weight: bold;">Relationship</span></span></td> <td style="text-align: center; padding-bottom: 1.5pt; width: 1%;"> </td> <td style="text-align: center; border-bottom: Black 1.5pt solid; width: 32%;"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;"><span style="font-weight: bold;">Account Type</span></span></td> </tr><tr style="vertical-align: top; background-color: rgb(204,238,255);"> <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">Arjomand Group LLC</span></td> <td> </td> <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">Related party of Farooq Arjomand</span></td> <td> </td> <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">Accounts Receivable</span></td> </tr><tr style="vertical-align: top; background-color: White;"> <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">Farooq Arjomand</span></td> <td> </td> <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">Chairman of Board</span></td> <td> </td> <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">Accounts Receivable</span></td> </tr><tr style="vertical-align: top; background-color: rgb(204,238,255);"> <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">Jay Kim</span></td> <td> </td> <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">Shareholder</span></td> <td> </td> <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">Shareholder Balance</span></td> </tr><tr style="vertical-align: top; background-color: White;"> <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">TJ Americaf</span></td> <td> </td> <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">Shareholder of Subsidiary</span></td> <td> </td> <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">Accounts Payable</span></td> </tr><tr style="vertical-align: top; background-color: rgb(204,238,255);"> <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">Alex Yeon</span></td> <td> </td> <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">Related party</span></td> <td> </td> <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">Accounts Payable</span></td> </tr><tr style="vertical-align: top; background-color: White;"> <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">DRE</span></td> <td> </td> <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">Related Party of Dennis Egidi</span></td> <td> </td> <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">Loan Payable</span></td> </tr><tr style="vertical-align: top; background-color: rgb(204,238,255);"> <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">Dennis Egidi</span></td> <td> </td> <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">Vice Chairman of the Board</span></td> <td> </td> <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">Loan Payable</span></td> </tr><tr style="vertical-align: top; background-color: White;"> <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">Charles Jeong</span></td> <td> </td> <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">Shareholder</span></td> <td> </td> <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">Shareholder Balance</span></td> </tr><tr style="vertical-align: top; background-color: rgb(204,238,255);"> <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">Yeil Advisory</span></td> <td> </td> <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">Related party of shareholder</span></td> <td> </td> <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">Loan receivable </span></td> </tr><tr style="vertical-align: top; background-color: White;"> <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">KCC Mexico Transport System</span></td> <td> </td> <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">Related party of shareholder</span></td> <td> </td> <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">Loan receivable</span></td> </tr><tr style="vertical-align: top; background-color: rgb(204,238,255);"> <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">Jung Jae Lim</span></td> <td> </td> <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">Chief Executive Officer, Board Member</span></td> <td> </td> <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">No transactions</span></td> </tr><tr style="vertical-align: top; background-color: White;"> <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">Mi Jeong Lee</span></td> <td> </td> <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">Independent director</span></td> <td> </td> <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">No transactions</span></td> </tr><tr style="vertical-align: top; background-color: rgb(204,238,255);"> <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">Mi Young Jeong</span></td> <td> </td> <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">Independent director</span></td> <td> </td> <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">No transactions</span></td> </tr><tr style="vertical-align: top; background-color: White;"> <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">Reborn Realty, LLC</span></td> <td> </td> <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">Wholly owned Subsidiary</span></td> <td> </td> <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">No transactions</span></td> </tr><tr style="vertical-align: top; background-color: rgb(204,238,255);"> <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">Reborn Malaysia, Inc</span></td> <td> </td> <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">Wholly owned Subsidiary</span></td> <td> </td> <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">Investments</span></td> </tr><tr style="vertical-align: top; background-color: White;"> <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">Reborn Logistics, Inc.</span></td> <td> </td> <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">Subsidiary</span></td> <td> </td> <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">Intercompany loan</span></td> </tr></tbody></table> Related party of Farooq Arjomand Accounts Receivable Chairman of Board Accounts Receivable Shareholder Shareholder Balance Shareholder of Subsidiary Accounts Payable Related party Accounts Payable Related Party of Dennis Egidi Loan Payable Vice Chairman of the Board Loan Payable Shareholder Shareholder Balance Related party of shareholder Loan receivable Related party of shareholder Loan receivable Chief Executive Officer, Board Member No transactions Independent director No transactions Independent director No transactions Wholly owned Subsidiary No transactions Wholly owned Subsidiary Investments Subsidiary Intercompany loan <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify;"><span style="font-weight: bold;"><i>Recent Accounting Pronouncement</i></span></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify;"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify;">The Company has reviewed all recently issued, but not yet effective, accounting pronouncements and does not believe the future adoption of any such pronouncements may be expected to cause a material impact on our financial statements.</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0;"><span style="font-weight: bold;">3. PROPERTY AND EQUIPMENT</span></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in;"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in;">Property and equipment consisted of the following:</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in;"> </p> <table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif;"> <tbody><tr style="vertical-align: bottom;"><td> </td> <td style="font-weight: bold; font-style: italic;"> </td> <td colspan="2" style="font-weight: bold; font-style: italic; text-align: center;">June 30,</td> <td style="font-weight: bold; font-style: italic;"> </td> <td style="font-weight: bold; font-style: italic;"> </td> <td colspan="2" style="font-weight: bold; font-style: italic; text-align: center;">December 31,</td> <td style="font-weight: bold; font-style: italic;"> </td> </tr><tr style="vertical-align: bottom;"><td> </td> <td style="font-weight: bold; font-style: italic; padding-bottom: 1.5pt;"> </td> <td colspan="2" style="font-weight: bold; font-style: italic; text-align: center; border-bottom: Black 1.5pt solid;">2026</td> <td style="padding-bottom: 1.5pt; font-weight: bold; font-style: italic;"> </td> <td style="font-weight: bold; font-style: italic; padding-bottom: 1.5pt;"> </td> <td colspan="2" style="font-weight: bold; font-style: italic; text-align: center; border-bottom: Black 1.5pt solid;">2025</td> <td style="padding-bottom: 1.5pt; font-weight: bold; font-style: italic;"> </td> </tr><tr style="vertical-align: bottom;"><td> </td> <td> </td> <td colspan="2"> </td> <td> </td> <td> </td> <td colspan="2"> </td> <td> </td> </tr><tr style="vertical-align: bottom; background-color: rgb(204,238,255);"> <td style="width: 76%; text-align: left;">Furniture and equipment</td> <td style="width: 1%;"> </td> <td style="width: 1%; text-align: left;">$</td> <td style="width: 9%; text-align: right;">966,911</td> <td style="width: 1%; text-align: left;"> </td> <td style="width: 1%;"> </td> <td style="width: 1%; text-align: left;">$</td> <td style="width: 9%; text-align: right;">964,157</td> <td style="width: 1%; text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: White;"> <td style="text-align: left;">Leasehold improvement</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">1,020,515</td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">1,020,515</td> <td style="text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: rgb(204,238,255);"> <td>Store</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">2,322,027</td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">2,322,027</td> <td style="text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: White;"> <td style="text-align: left;">Store construction</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">411,585</td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">379,356</td> <td style="text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: rgb(204,238,255);"> <td style="padding-bottom: 1.5pt;">Vehicle</td> <td style="padding-bottom: 1.5pt;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: right;">45,005</td> <td style="padding-bottom: 1.5pt; text-align: left;"> </td> <td style="padding-bottom: 1.5pt;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: right;">103,645</td> <td style="padding-bottom: 1.5pt; text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: White;"><td> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;"> </td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;"> </td> <td style="text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: rgb(204,238,255);"> <td style="text-align: left;">Total property and equipment</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">4,766,043</td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">4,789,700</td> <td style="text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: White;"> <td style="text-align: left; padding-bottom: 1.5pt;">Less accumulated depreciation</td> <td style="padding-bottom: 1.5pt;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: right;">(2,080,476</td> <td style="padding-bottom: 1.5pt; text-align: left;">)</td> <td style="padding-bottom: 1.5pt;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: right;">(1,894,807</td> <td style="padding-bottom: 1.5pt; text-align: left;">)</td> </tr><tr style="vertical-align: bottom; background-color: rgb(204,238,255);"> <td style="font-weight: bold; text-align: left; padding-bottom: 4pt;">Total property and equipment, net</td> <td style="font-weight: bold; padding-bottom: 4pt;"> </td> <td style="border-bottom: Black 4pt double; font-weight: bold; text-align: left;">$</td> <td style="border-bottom: Black 4pt double; font-weight: bold; text-align: right;">2,685,567</td> <td style="padding-bottom: 4pt; font-weight: bold; text-align: left;"> </td> <td style="font-weight: bold; padding-bottom: 4pt;"> </td> <td style="border-bottom: Black 4pt double; font-weight: bold; text-align: left;">$</td> <td style="border-bottom: Black 4pt double; font-weight: bold; text-align: right;">2,894,893</td> <td style="padding-bottom: 4pt; font-weight: bold; text-align: left;"> </td> </tr></tbody></table> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in;"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify;"> Depreciation expense on property and equipment amounted to approximately $209,492 and $144,341 for the six months ended June 30, 2026 and 2025, respectively, and $105,461 and $83,333 for the three-month periods ended June 30, 2026 and 2025, respectively. </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in;">Property and equipment consisted of the following:</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in;"> </p> <table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif;"> <tbody><tr style="vertical-align: bottom;"><td> </td> <td style="font-weight: bold; font-style: italic;"> </td> <td colspan="2" style="font-weight: bold; font-style: italic; text-align: center;">June 30,</td> <td style="font-weight: bold; font-style: italic;"> </td> <td style="font-weight: bold; font-style: italic;"> </td> <td colspan="2" style="font-weight: bold; font-style: italic; text-align: center;">December 31,</td> <td style="font-weight: bold; font-style: italic;"> </td> </tr><tr style="vertical-align: bottom;"><td> </td> <td style="font-weight: bold; font-style: italic; padding-bottom: 1.5pt;"> </td> <td colspan="2" style="font-weight: bold; font-style: italic; text-align: center; border-bottom: Black 1.5pt solid;">2026</td> <td style="padding-bottom: 1.5pt; font-weight: bold; font-style: italic;"> </td> <td style="font-weight: bold; font-style: italic; padding-bottom: 1.5pt;"> </td> <td colspan="2" style="font-weight: bold; font-style: italic; text-align: center; border-bottom: Black 1.5pt solid;">2025</td> <td style="padding-bottom: 1.5pt; font-weight: bold; font-style: italic;"> </td> </tr><tr style="vertical-align: bottom;"><td> </td> <td> </td> <td colspan="2"> </td> <td> </td> <td> </td> <td colspan="2"> </td> <td> </td> </tr><tr style="vertical-align: bottom; background-color: rgb(204,238,255);"> <td style="width: 76%; text-align: left;">Furniture and equipment</td> <td style="width: 1%;"> </td> <td style="width: 1%; text-align: left;">$</td> <td style="width: 9%; text-align: right;">966,911</td> <td style="width: 1%; text-align: left;"> </td> <td style="width: 1%;"> </td> <td style="width: 1%; text-align: left;">$</td> <td style="width: 9%; text-align: right;">964,157</td> <td style="width: 1%; text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: White;"> <td style="text-align: left;">Leasehold improvement</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">1,020,515</td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">1,020,515</td> <td style="text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: rgb(204,238,255);"> <td>Store</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">2,322,027</td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">2,322,027</td> <td style="text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: White;"> <td style="text-align: left;">Store construction</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">411,585</td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">379,356</td> <td style="text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: rgb(204,238,255);"> <td style="padding-bottom: 1.5pt;">Vehicle</td> <td style="padding-bottom: 1.5pt;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: right;">45,005</td> <td style="padding-bottom: 1.5pt; text-align: left;"> </td> <td style="padding-bottom: 1.5pt;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: right;">103,645</td> <td style="padding-bottom: 1.5pt; text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: White;"><td> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;"> </td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;"> </td> <td style="text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: rgb(204,238,255);"> <td style="text-align: left;">Total property and equipment</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">4,766,043</td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">4,789,700</td> <td style="text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: White;"> <td style="text-align: left; padding-bottom: 1.5pt;">Less accumulated depreciation</td> <td style="padding-bottom: 1.5pt;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: right;">(2,080,476</td> <td style="padding-bottom: 1.5pt; text-align: left;">)</td> <td style="padding-bottom: 1.5pt;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: right;">(1,894,807</td> <td style="padding-bottom: 1.5pt; text-align: left;">)</td> </tr><tr style="vertical-align: bottom; background-color: rgb(204,238,255);"> <td style="font-weight: bold; text-align: left; padding-bottom: 4pt;">Total property and equipment, net</td> <td style="font-weight: bold; padding-bottom: 4pt;"> </td> <td style="border-bottom: Black 4pt double; font-weight: bold; text-align: left;">$</td> <td style="border-bottom: Black 4pt double; font-weight: bold; text-align: right;">2,685,567</td> <td style="padding-bottom: 4pt; font-weight: bold; text-align: left;"> </td> <td style="font-weight: bold; padding-bottom: 4pt;"> </td> <td style="border-bottom: Black 4pt double; font-weight: bold; text-align: left;">$</td> <td style="border-bottom: Black 4pt double; font-weight: bold; text-align: right;">2,894,893</td> <td style="padding-bottom: 4pt; font-weight: bold; text-align: left;"> </td> </tr></tbody></table> 966911 964157 1020515 1020515 2322027 2322027 411585 379356 45005 103645 4766043 4789700 2080476 1894807 2685567 2894893 209492 144341 105461 83333 <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0;"><span style="font-weight: bold;">4. LOANS PAYABLE TO FINANCIAL INSTITUTIONS</span></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in;"><span style="font-weight: bold;"> </span></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in;">Loans payable to financial institutions consisted of the following:</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in;"> </p> <table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif;"> <tbody><tr style="vertical-align: bottom;"><td style="font-weight: bold; font-style: italic; border-bottom: Black 1.5pt solid;">As of</td> <td style="font-weight: bold; font-style: italic; padding-bottom: 1.5pt;"> </td> <td colspan="2" style="font-weight: bold; font-style: italic; text-align: center; border-bottom: Black 1.5pt solid;">June 30,<br/> 2026</td> <td style="padding-bottom: 1.5pt; font-weight: bold; font-style: italic;"> </td> <td style="font-weight: bold; font-style: italic; padding-bottom: 1.5pt;"> </td> <td colspan="2" style="font-weight: bold; font-style: italic; text-align: center; border-bottom: Black 1.5pt solid;">December 31,<br/> 2025</td> <td style="padding-bottom: 1.5pt; font-weight: bold; font-style: italic;"> </td> </tr><tr style="vertical-align: bottom;"><td> </td> <td> </td> <td colspan="2"> </td> <td> </td> <td> </td> <td colspan="2"> </td> <td> </td> </tr><tr style="vertical-align: bottom; background-color: rgb(204,238,255);"> <td style="width: 76%; text-align: left; padding-bottom: 1.5pt; text-indent: -0.125in; padding-left: 0.125in;">Loan agreements with principal amount of $960,777 and repayment rate of 14.75% to 20.0%. The loans payable mature on various dates in 2026</td> <td style="width: 1%; padding-bottom: 1.5pt;"> </td> <td style="width: 1%; border-bottom: Black 1.5pt solid; text-align: left;">$</td> <td style="width: 9%; border-bottom: Black 1.5pt solid; text-align: right;">510,089</td> <td style="width: 1%; padding-bottom: 1.5pt; text-align: left;"> </td> <td style="width: 1%; padding-bottom: 1.5pt;"> </td> <td style="width: 1%; border-bottom: Black 1.5pt solid; text-align: left;">$</td> <td style="width: 9%; border-bottom: Black 1.5pt solid; text-align: right;">109,247</td> <td style="width: 1%; padding-bottom: 1.5pt; text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: White;"> <td style="text-align: left; text-indent: -0.125in; padding-left: 0.125in;">Total loan payable</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">510,089</td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">109,247</td> <td style="text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: rgb(204,238,255);"> <td style="text-align: left; padding-bottom: 1.5pt; text-indent: -0.125in; padding-left: 0.125in;">Less: current portion</td> <td style="padding-bottom: 1.5pt;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: right;">(510,089</td> <td style="padding-bottom: 1.5pt; text-align: left;">)</td> <td style="padding-bottom: 1.5pt;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: right;">(109,247</td> <td style="padding-bottom: 1.5pt; text-align: left;">)</td> </tr><tr style="vertical-align: bottom; background-color: White;"> <td style="font-weight: bold; text-align: left; padding-bottom: 1.5pt; text-indent: -0.125in; padding-left: 0.125in;">Total loan payable, net of current</td> <td style="font-weight: bold; padding-bottom: 1.5pt;"> </td> <td style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: left;">$</td> <td style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: right;"><span style="-sec-ix-hidden:fc_2025112227;">-</span></td> <td style="padding-bottom: 1.5pt; font-weight: bold; text-align: left;"> </td> <td style="font-weight: bold; padding-bottom: 1.5pt;"> </td> <td style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: left;">$</td> <td style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: right;"><span style="-sec-ix-hidden:fc_1112410795;">-</span></td> <td style="padding-bottom: 1.5pt; font-weight: bold; text-align: left;"> </td> </tr></tbody></table> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in;">Loans payable to financial institutions consisted of the following:</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in;"> </p> <table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif;"> <tbody><tr style="vertical-align: bottom;"><td style="font-weight: bold; font-style: italic; border-bottom: Black 1.5pt solid;">As of</td> <td style="font-weight: bold; font-style: italic; padding-bottom: 1.5pt;"> </td> <td colspan="2" style="font-weight: bold; font-style: italic; text-align: center; border-bottom: Black 1.5pt solid;">June 30,<br/> 2026</td> <td style="padding-bottom: 1.5pt; font-weight: bold; font-style: italic;"> </td> <td style="font-weight: bold; font-style: italic; padding-bottom: 1.5pt;"> </td> <td colspan="2" style="font-weight: bold; font-style: italic; text-align: center; border-bottom: Black 1.5pt solid;">December 31,<br/> 2025</td> <td style="padding-bottom: 1.5pt; font-weight: bold; font-style: italic;"> </td> </tr><tr style="vertical-align: bottom;"><td> </td> <td> </td> <td colspan="2"> </td> <td> </td> <td> </td> <td colspan="2"> </td> <td> </td> </tr><tr style="vertical-align: bottom; background-color: rgb(204,238,255);"> <td style="width: 76%; text-align: left; padding-bottom: 1.5pt; text-indent: -0.125in; padding-left: 0.125in;">Loan agreements with principal amount of $960,777 and repayment rate of 14.75% to 20.0%. The loans payable mature on various dates in 2026</td> <td style="width: 1%; padding-bottom: 1.5pt;"> </td> <td style="width: 1%; border-bottom: Black 1.5pt solid; text-align: left;">$</td> <td style="width: 9%; border-bottom: Black 1.5pt solid; text-align: right;">510,089</td> <td style="width: 1%; padding-bottom: 1.5pt; text-align: left;"> </td> <td style="width: 1%; padding-bottom: 1.5pt;"> </td> <td style="width: 1%; border-bottom: Black 1.5pt solid; text-align: left;">$</td> <td style="width: 9%; border-bottom: Black 1.5pt solid; text-align: right;">109,247</td> <td style="width: 1%; padding-bottom: 1.5pt; text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: White;"> <td style="text-align: left; text-indent: -0.125in; padding-left: 0.125in;">Total loan payable</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">510,089</td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">109,247</td> <td style="text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: rgb(204,238,255);"> <td style="text-align: left; padding-bottom: 1.5pt; text-indent: -0.125in; padding-left: 0.125in;">Less: current portion</td> <td style="padding-bottom: 1.5pt;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: right;">(510,089</td> <td style="padding-bottom: 1.5pt; text-align: left;">)</td> <td style="padding-bottom: 1.5pt;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: right;">(109,247</td> <td style="padding-bottom: 1.5pt; text-align: left;">)</td> </tr><tr style="vertical-align: bottom; background-color: White;"> <td style="font-weight: bold; text-align: left; padding-bottom: 1.5pt; text-indent: -0.125in; padding-left: 0.125in;">Total loan payable, net of current</td> <td style="font-weight: bold; padding-bottom: 1.5pt;"> </td> <td style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: left;">$</td> <td style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: right;"><span style="-sec-ix-hidden:fc_2025112227;">-</span></td> <td style="padding-bottom: 1.5pt; font-weight: bold; text-align: left;"> </td> <td style="font-weight: bold; padding-bottom: 1.5pt;"> </td> <td style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: left;">$</td> <td style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: right;"><span style="-sec-ix-hidden:fc_1112410795;">-</span></td> <td style="padding-bottom: 1.5pt; font-weight: bold; text-align: left;"> </td> </tr></tbody></table> 960777 0.1475 0.20 510089 109247 510089 109247 510089 109247 <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0;"><span style="font-weight: bold;">5. LOAN PAYABLE TO OTHER</span></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in;"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in;">Loans payable to others consisted of the following:</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in;"> </p> <table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif;"> <tbody><tr style="vertical-align: bottom;"><td> </td> <td style="font-weight: bold; font-style: italic; padding-bottom: 1.5pt;"> </td> <td colspan="2" style="font-weight: bold; font-style: italic; text-align: center; border-bottom: Black 1.5pt solid;">June 30,<br/> 2026</td> <td style="padding-bottom: 1.5pt; font-weight: bold; font-style: italic;"> </td> <td style="font-weight: bold; font-style: italic; padding-bottom: 1.5pt;"> </td> <td colspan="2" style="font-weight: bold; font-style: italic; text-align: center; border-bottom: Black 1.5pt solid;">December 31,<br/> 2025</td> <td style="padding-bottom: 1.5pt; font-weight: bold; font-style: italic;"> </td> </tr><tr style="vertical-align: bottom;"><td> </td> <td> </td> <td colspan="2"> </td> <td> </td> <td> </td> <td colspan="2"> </td> <td> </td> </tr><tr style="vertical-align: bottom; background-color: rgb(204,238,255);"> <td style="width: 76%; text-align: left; text-indent: -9pt; padding-left: 9pt;">Loan agreements with principal amount of $500,000 and repayment rate of 12.0% per annum. The loans payable mature on various dates in 2026</td> <td style="width: 1%;"> </td> <td style="width: 1%; text-align: left;">$</td> <td style="width: 9%; text-align: right;">174,026</td> <td style="width: 1%; text-align: left;"> </td> <td style="width: 1%;"> </td> <td style="width: 1%; text-align: left;">$</td> <td style="width: 9%; text-align: right;">184,026</td> <td style="width: 1%; text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: White;"> <td style="text-align: left; text-indent: -9pt; padding-left: 9pt;">Loan agreements with principal amount of $350,000 and weekly repayment amount of $19,519.24. The loan matures in December 2026</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">312,981</td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;"><span style="-sec-ix-hidden:fc_231918502;">-</span></td> <td style="text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: rgb(204,238,255);"> <td style="text-align: left; text-indent: -9pt; padding-left: 9pt;">Loan amount of $92,210, bearing <span style="-sec-ix-hidden:fc_826930812;">no</span> interest and due upon demand.</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">92,210</td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;"><span style="-sec-ix-hidden:fc_1657264204;">-</span></td> <td style="text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: White;"> <td style="text-align: left; padding-bottom: 1.5pt;">Loan amount of $220,000 with <span style="-sec-ix-hidden:fc_1155256493;">no</span> interest. The loans payable mature in 2026</td> <td style="padding-bottom: 1.5pt;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: right;">95,000</td> <td style="padding-bottom: 1.5pt; text-align: left;"> </td> <td style="padding-bottom: 1.5pt;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: right;">95,000</td> <td style="padding-bottom: 1.5pt; text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: rgb(204,238,255);"><td> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;"> </td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;"> </td> <td style="text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: White;"> <td style="text-align: left;">Total loan payable to others</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">674,217</td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">279,026</td> <td style="text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: rgb(204,238,255);"> <td style="text-align: left; padding-bottom: 1.5pt;">Less: current portion</td> <td style="padding-bottom: 1.5pt;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: right;">(674,217</td> <td style="padding-bottom: 1.5pt; text-align: left;">)</td> <td style="padding-bottom: 1.5pt;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: right;">(279,026</td> <td style="padding-bottom: 1.5pt; text-align: left;">)</td> </tr><tr style="vertical-align: bottom; background-color: White;"><td> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;"> </td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;"> </td> <td style="text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: rgb(204,238,255);"> <td style="font-weight: bold; text-align: left; padding-bottom: 1.5pt;">Total loan payable to others, net of current</td> <td style="font-weight: bold; padding-bottom: 1.5pt;"> </td> <td style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: left;"><span style="font-weight: bold;">$</span></td> <td style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: right;"><span style="font-weight: bold;"><span style="-sec-ix-hidden:fc_759756678;">-</span></span></td> <td style="padding-bottom: 1.5pt; font-weight: bold; text-align: left;"> </td> <td style="padding-bottom: 1.5pt;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left;"><span style="font-weight: bold;">$</span></td> <td style="border-bottom: Black 1.5pt solid; text-align: right;"><span style="font-weight: bold;"><span style="-sec-ix-hidden:fc_971706168;">-</span></span></td> <td style="padding-bottom: 1.5pt; text-align: left;"> </td> </tr></tbody></table> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in;">Loans payable to others consisted of the following:</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in;"> </p> <table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif;"> <tbody><tr style="vertical-align: bottom;"><td> </td> <td style="font-weight: bold; font-style: italic; padding-bottom: 1.5pt;"> </td> <td colspan="2" style="font-weight: bold; font-style: italic; text-align: center; border-bottom: Black 1.5pt solid;">June 30,<br/> 2026</td> <td style="padding-bottom: 1.5pt; font-weight: bold; font-style: italic;"> </td> <td style="font-weight: bold; font-style: italic; padding-bottom: 1.5pt;"> </td> <td colspan="2" style="font-weight: bold; font-style: italic; text-align: center; border-bottom: Black 1.5pt solid;">December 31,<br/> 2025</td> <td style="padding-bottom: 1.5pt; font-weight: bold; font-style: italic;"> </td> </tr><tr style="vertical-align: bottom;"><td> </td> <td> </td> <td colspan="2"> </td> <td> </td> <td> </td> <td colspan="2"> </td> <td> </td> </tr><tr style="vertical-align: bottom; background-color: rgb(204,238,255);"> <td style="width: 76%; text-align: left; text-indent: -9pt; padding-left: 9pt;">Loan agreements with principal amount of $500,000 and repayment rate of 12.0% per annum. The loans payable mature on various dates in 2026</td> <td style="width: 1%;"> </td> <td style="width: 1%; text-align: left;">$</td> <td style="width: 9%; text-align: right;">174,026</td> <td style="width: 1%; text-align: left;"> </td> <td style="width: 1%;"> </td> <td style="width: 1%; text-align: left;">$</td> <td style="width: 9%; text-align: right;">184,026</td> <td style="width: 1%; text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: White;"> <td style="text-align: left; text-indent: -9pt; padding-left: 9pt;">Loan agreements with principal amount of $350,000 and weekly repayment amount of $19,519.24. The loan matures in December 2026</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">312,981</td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;"><span style="-sec-ix-hidden:fc_231918502;">-</span></td> <td style="text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: rgb(204,238,255);"> <td style="text-align: left; text-indent: -9pt; padding-left: 9pt;">Loan amount of $92,210, bearing <span style="-sec-ix-hidden:fc_826930812;">no</span> interest and due upon demand.</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">92,210</td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;"><span style="-sec-ix-hidden:fc_1657264204;">-</span></td> <td style="text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: White;"> <td style="text-align: left; padding-bottom: 1.5pt;">Loan amount of $220,000 with <span style="-sec-ix-hidden:fc_1155256493;">no</span> interest. The loans payable mature in 2026</td> <td style="padding-bottom: 1.5pt;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: right;">95,000</td> <td style="padding-bottom: 1.5pt; text-align: left;"> </td> <td style="padding-bottom: 1.5pt;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: right;">95,000</td> <td style="padding-bottom: 1.5pt; text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: rgb(204,238,255);"><td> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;"> </td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;"> </td> <td style="text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: White;"> <td style="text-align: left;">Total loan payable to others</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">674,217</td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">279,026</td> <td style="text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: rgb(204,238,255);"> <td style="text-align: left; padding-bottom: 1.5pt;">Less: current portion</td> <td style="padding-bottom: 1.5pt;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: right;">(674,217</td> <td style="padding-bottom: 1.5pt; text-align: left;">)</td> <td style="padding-bottom: 1.5pt;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: right;">(279,026</td> <td style="padding-bottom: 1.5pt; text-align: left;">)</td> </tr><tr style="vertical-align: bottom; background-color: White;"><td> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;"> </td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;"> </td> <td style="text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: rgb(204,238,255);"> <td style="font-weight: bold; text-align: left; padding-bottom: 1.5pt;">Total loan payable to others, net of current</td> <td style="font-weight: bold; padding-bottom: 1.5pt;"> </td> <td style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: left;"><span style="font-weight: bold;">$</span></td> <td style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: right;"><span style="font-weight: bold;"><span style="-sec-ix-hidden:fc_759756678;">-</span></span></td> <td style="padding-bottom: 1.5pt; font-weight: bold; text-align: left;"> </td> <td style="padding-bottom: 1.5pt;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left;"><span style="font-weight: bold;">$</span></td> <td style="border-bottom: Black 1.5pt solid; text-align: right;"><span style="font-weight: bold;"><span style="-sec-ix-hidden:fc_971706168;">-</span></span></td> <td style="padding-bottom: 1.5pt; text-align: left;"> </td> </tr></tbody></table> 500000 0.12 2026 174026 184026 350000 195.1924 312981 92210 92210 220000 2026 95000 95000 674217 279026 674217 279026 <p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0in; margin-bottom: 0in; margin-left: 0in; text-indent: 0in; text-align: justify;"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;"><span style="font-weight: bold;">6. LOAN PAYABLE TO SHAREHOLDER</span></span></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in;"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in;">Loans payable to shareholders consisted of the following:</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0;"> </p> <table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif;"> <tbody><tr style="vertical-align: bottom;"><td> </td> <td style="font-weight: bold; font-style: italic; padding-bottom: 1.5pt;"> </td> <td colspan="2" style="font-weight: bold; font-style: italic; text-align: center; border-bottom: Black 1.5pt solid;">June 30,<br/> 2026</td> <td style="padding-bottom: 1.5pt; font-weight: bold; font-style: italic;"> </td> <td style="font-weight: bold; font-style: italic; padding-bottom: 1.5pt;"> </td> <td colspan="2" style="font-weight: bold; font-style: italic; text-align: center; border-bottom: Black 1.5pt solid;">December 31,<br/> 2025</td> <td style="padding-bottom: 1.5pt; font-weight: bold; font-style: italic;"> </td> </tr><tr style="vertical-align: bottom;"><td> </td> <td> </td> <td colspan="2"> </td> <td> </td> <td> </td> <td colspan="2"> </td> <td> </td> </tr><tr style="vertical-align: bottom; background-color: rgb(204,238,255);"> <td style="width: 76%; text-align: left;"><p style="margin: 0pt 0; font: 10pt Times New Roman, Times, Serif;">Borrowing from a shareholder, bearing no interest and due upon demand.</p></td> <td style="width: 1%; padding-bottom: 1.5pt;"> </td> <td style="width: 1%; border-bottom: Black 1.5pt solid; text-align: left;">$</td> <td style="width: 9%; border-bottom: Black 1.5pt solid; text-align: right;">414,516</td> <td style="width: 1%; padding-bottom: 1.5pt; text-align: left;"> </td> <td style="width: 1%; padding-bottom: 1.5pt;"> </td> <td style="width: 1%; border-bottom: Black 1.5pt solid; text-align: left;">$</td> <td style="width: 9%; border-bottom: Black 1.5pt solid; text-align: right;">70,000</td> <td style="width: 1%; padding-bottom: 1.5pt; text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: White;"><td style="text-indent: -9pt; padding-left: 9pt;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;"> </td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;"> </td> <td style="text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: rgb(204,238,255);"> <td style="font-weight: bold; text-align: left; padding-bottom: 1.5pt; text-indent: -9pt; padding-left: 9pt;">Total loan payable to shareholder</td> <td style="font-weight: bold; padding-bottom: 1.5pt;"> </td> <td style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: left;">$</td> <td style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: right;">414,516</td> <td style="padding-bottom: 1.5pt; font-weight: bold; text-align: left;"> </td> <td style="font-weight: bold; padding-bottom: 1.5pt;"> </td> <td style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: left;">$</td> <td style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: right;">70,000</td> <td style="padding-bottom: 1.5pt; font-weight: bold; text-align: left;"> </td> </tr></tbody></table> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in;">Loans payable to shareholders consisted of the following:</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0;"> </p> <table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif;"> <tbody><tr style="vertical-align: bottom;"><td> </td> <td style="font-weight: bold; font-style: italic; padding-bottom: 1.5pt;"> </td> <td colspan="2" style="font-weight: bold; font-style: italic; text-align: center; border-bottom: Black 1.5pt solid;">June 30,<br/> 2026</td> <td style="padding-bottom: 1.5pt; font-weight: bold; font-style: italic;"> </td> <td style="font-weight: bold; font-style: italic; padding-bottom: 1.5pt;"> </td> <td colspan="2" style="font-weight: bold; font-style: italic; text-align: center; border-bottom: Black 1.5pt solid;">December 31,<br/> 2025</td> <td style="padding-bottom: 1.5pt; font-weight: bold; font-style: italic;"> </td> </tr><tr style="vertical-align: bottom;"><td> </td> <td> </td> <td colspan="2"> </td> <td> </td> <td> </td> <td colspan="2"> </td> <td> </td> </tr><tr style="vertical-align: bottom; background-color: rgb(204,238,255);"> <td style="width: 76%; text-align: left;"><p style="margin: 0pt 0; font: 10pt Times New Roman, Times, Serif;">Borrowing from a shareholder, bearing no interest and due upon demand.</p></td> <td style="width: 1%; padding-bottom: 1.5pt;"> </td> <td style="width: 1%; border-bottom: Black 1.5pt solid; text-align: left;">$</td> <td style="width: 9%; border-bottom: Black 1.5pt solid; text-align: right;">414,516</td> <td style="width: 1%; padding-bottom: 1.5pt; text-align: left;"> </td> <td style="width: 1%; padding-bottom: 1.5pt;"> </td> <td style="width: 1%; border-bottom: Black 1.5pt solid; text-align: left;">$</td> <td style="width: 9%; border-bottom: Black 1.5pt solid; text-align: right;">70,000</td> <td style="width: 1%; padding-bottom: 1.5pt; text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: White;"><td style="text-indent: -9pt; padding-left: 9pt;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;"> </td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;"> </td> <td style="text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: rgb(204,238,255);"> <td style="font-weight: bold; text-align: left; padding-bottom: 1.5pt; text-indent: -9pt; padding-left: 9pt;">Total loan payable to shareholder</td> <td style="font-weight: bold; padding-bottom: 1.5pt;"> </td> <td style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: left;">$</td> <td style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: right;">414,516</td> <td style="padding-bottom: 1.5pt; font-weight: bold; text-align: left;"> </td> <td style="font-weight: bold; padding-bottom: 1.5pt;"> </td> <td style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: left;">$</td> <td style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: right;">70,000</td> <td style="padding-bottom: 1.5pt; font-weight: bold; text-align: left;"> </td> </tr></tbody></table> 414516 70000 414516 70000 <p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0in; margin-bottom: 0in; margin-left: 0in; text-indent: 0in; text-align: justify;"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;"><span style="font-weight: bold;">7. LOAN PAYABLE TO RELATED PARTY</span></span></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in;"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in;">Loans payable to related parties consisted of the following:</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0;"> </p> <table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif;"> <tbody><tr style="vertical-align: bottom;"><td> </td> <td style="font-weight: bold; font-style: italic; padding-bottom: 1.5pt;"> </td> <td colspan="2" style="font-weight: bold; font-style: italic; text-align: center; border-bottom: Black 1.5pt solid;">June 30,<br/> 2026</td> <td style="padding-bottom: 1.5pt; font-weight: bold; font-style: italic;"> </td> <td style="font-weight: bold; font-style: italic; padding-bottom: 1.5pt;"> </td> <td colspan="2" style="font-weight: bold; font-style: italic; text-align: center; border-bottom: Black 1.5pt solid;">December 31,<br/> 2025</td> <td style="padding-bottom: 1.5pt; font-weight: bold; font-style: italic;"> </td> </tr><tr style="vertical-align: bottom; background-color: rgb(204,238,255);"> <td style="width: 76%; text-align: left; padding-bottom: 1.5pt; text-indent: -9pt; padding-left: 9pt;">Borrowing from related party bearing 6% interest and due upon demand.</td> <td style="width: 1%; padding-bottom: 1.5pt;"> </td> <td style="width: 1%; border-bottom: Black 1.5pt solid; text-align: left;">$</td> <td style="width: 9%; border-bottom: Black 1.5pt solid; text-align: right;">1,294,214</td> <td style="width: 1%; padding-bottom: 1.5pt; text-align: left;"> </td> <td style="width: 1%; padding-bottom: 1.5pt;"> </td> <td style="width: 1%; border-bottom: Black 1.5pt solid; text-align: left;">$</td> <td style="width: 9%; border-bottom: Black 1.5pt solid; text-align: right;">153,605</td> <td style="width: 1%; padding-bottom: 1.5pt; text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: White;"> <td style="font-weight: bold; text-align: left; padding-bottom: 1.5pt; text-indent: -9pt; padding-left: 9pt;">Total loan payable to related party</td> <td style="font-weight: bold; padding-bottom: 1.5pt;"> </td> <td style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: left;">$</td> <td style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: right;">1,294,214</td> <td style="padding-bottom: 1.5pt; font-weight: bold; text-align: left;"> </td> <td style="font-weight: bold; padding-bottom: 1.5pt;"> </td> <td style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: left;">$</td> <td style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: right;">153,605</td> <td style="padding-bottom: 1.5pt; font-weight: bold; text-align: left;"> </td> </tr></tbody></table> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in;">Loans payable to related parties consisted of the following:</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0;"> </p> <table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif;"> <tbody><tr style="vertical-align: bottom;"><td> </td> <td style="font-weight: bold; font-style: italic; padding-bottom: 1.5pt;"> </td> <td colspan="2" style="font-weight: bold; font-style: italic; text-align: center; border-bottom: Black 1.5pt solid;">June 30,<br/> 2026</td> <td style="padding-bottom: 1.5pt; font-weight: bold; font-style: italic;"> </td> <td style="font-weight: bold; font-style: italic; padding-bottom: 1.5pt;"> </td> <td colspan="2" style="font-weight: bold; font-style: italic; text-align: center; border-bottom: Black 1.5pt solid;">December 31,<br/> 2025</td> <td style="padding-bottom: 1.5pt; font-weight: bold; font-style: italic;"> </td> </tr><tr style="vertical-align: bottom; background-color: rgb(204,238,255);"> <td style="width: 76%; text-align: left; padding-bottom: 1.5pt; text-indent: -9pt; padding-left: 9pt;">Borrowing from related party bearing 6% interest and due upon demand.</td> <td style="width: 1%; padding-bottom: 1.5pt;"> </td> <td style="width: 1%; border-bottom: Black 1.5pt solid; text-align: left;">$</td> <td style="width: 9%; border-bottom: Black 1.5pt solid; text-align: right;">1,294,214</td> <td style="width: 1%; padding-bottom: 1.5pt; text-align: left;"> </td> <td style="width: 1%; padding-bottom: 1.5pt;"> </td> <td style="width: 1%; border-bottom: Black 1.5pt solid; text-align: left;">$</td> <td style="width: 9%; border-bottom: Black 1.5pt solid; text-align: right;">153,605</td> <td style="width: 1%; padding-bottom: 1.5pt; text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: White;"> <td style="font-weight: bold; text-align: left; padding-bottom: 1.5pt; text-indent: -9pt; padding-left: 9pt;">Total loan payable to related party</td> <td style="font-weight: bold; padding-bottom: 1.5pt;"> </td> <td style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: left;">$</td> <td style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: right;">1,294,214</td> <td style="padding-bottom: 1.5pt; font-weight: bold; text-align: left;"> </td> <td style="font-weight: bold; padding-bottom: 1.5pt;"> </td> <td style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: left;">$</td> <td style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: right;">153,605</td> <td style="padding-bottom: 1.5pt; font-weight: bold; text-align: left;"> </td> </tr></tbody></table> -1294214 -153605 1294214 153605 <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0;"><span style="font-weight: bold;">8. LOAN PAYABLE, ECONOMIC INJURY DISASTER LOAN (EIDL)</span></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in;"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in;">Loans payable, Economic Injury Disaster Loan (EIDL) consisted of the following:</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in;"> </p> <table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif;"> <tbody><tr style="vertical-align: bottom;"><td style="font-weight: bold; font-style: italic; border-bottom: Black 1.5pt solid;">As of</td> <td style="font-weight: bold; font-style: italic; padding-bottom: 1.5pt;"> </td> <td colspan="2" style="font-weight: bold; font-style: italic; text-align: center; border-bottom: Black 1.5pt solid;">June 30,<br/> 2026</td> <td style="padding-bottom: 1.5pt; font-weight: bold; font-style: italic;"> </td> <td style="font-weight: bold; font-style: italic; padding-bottom: 1.5pt;"> </td> <td colspan="2" style="font-weight: bold; font-style: italic; text-align: center; border-bottom: Black 1.5pt solid;">December 31,<br/> 2025</td> <td style="padding-bottom: 1.5pt; font-weight: bold; font-style: italic;"> </td> </tr><tr style="vertical-align: bottom;"><td> </td> <td> </td> <td colspan="2"> </td> <td> </td> <td> </td> <td colspan="2"> </td> <td> </td> </tr><tr style="vertical-align: bottom; background-color: rgb(204,238,255);"> <td style="width: 76%; text-align: left; text-indent: -9pt; padding-left: 9pt;">May 16, 2020 ($150,000) - Loan agreement with principal amount of $150,000   with an interest rate of 3.75% and maturity date on May 16, 2050</td> <td style="width: 1%;"> </td> <td style="width: 1%; text-align: left;">$</td> <td style="width: 9%; text-align: right;">150,000</td> <td style="width: 1%; text-align: left;"> </td> <td style="width: 1%;"> </td> <td style="width: 1%; text-align: left;">$</td> <td style="width: 9%; text-align: right;">150,000</td> <td style="width: 1%; text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: White;"> <td style="text-align: left; padding-bottom: 1.5pt; text-indent: -9pt; padding-left: 9pt;">June 28, 2021 ($350,000) – Loan agreement with principal amount of $350,000 with an interest rate of 3.75% and maturity date on May 18, 2050</td> <td style="padding-bottom: 1.5pt;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: right;">350,000</td> <td style="padding-bottom: 1.5pt; text-align: left;"> </td> <td style="padding-bottom: 1.5pt;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: right;">350,000</td> <td style="padding-bottom: 1.5pt; text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: rgb(204,238,255);"> <td style="text-align: left; text-indent: -9pt; padding-left: 9pt;">Total long-term loan payable, EIDL</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">500,000</td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">500,000</td> <td style="text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: White;"> <td style="text-indent: -9pt; padding-left: 9pt;">Interest payment</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">(11,833</td> <td style="text-align: left;">)</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">(7,608</td> <td style="text-align: left;">)</td> </tr><tr style="vertical-align: bottom; background-color: rgb(204,238,255);"> <td style="text-align: left; padding-bottom: 1.5pt; text-indent: -9pt; padding-left: 9pt;">Less - current portion</td> <td style="padding-bottom: 1.5pt;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: right;">(18,227</td> <td style="padding-bottom: 1.5pt; text-align: left;">)</td> <td style="padding-bottom: 1.5pt;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: right;">(22,452</td> <td style="padding-bottom: 1.5pt; text-align: left;">)</td> </tr><tr style="vertical-align: bottom; background-color: White;"> <td style="font-weight: bold; text-align: left; text-indent: -9pt; padding-left: 9pt;">Total loan payable, EIDL, less current portion</td> <td> </td> <td style="text-align: left;">$</td> <td style="text-align: right;">469,940</td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;">$</td> <td style="text-align: right;">469,940</td> <td style="text-align: left;"> </td> </tr></tbody></table> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in;"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in;">The following table provides future minimum payments:</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in;"> </p> <table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif;"> <tbody><tr style="vertical-align: bottom;"><td style="font-weight: bold; font-style: italic; border-bottom: Black 1.5pt solid;">For the years ended December 31,</td> <td style="font-weight: bold; font-style: italic; padding-bottom: 1.5pt;"> </td> <td colspan="2" style="font-weight: bold; font-style: italic; text-align: center; border-bottom: Black 1.5pt solid;">Amount</td> <td style="padding-bottom: 1.5pt; font-weight: bold; font-style: italic;"> </td> </tr><tr style="vertical-align: bottom; background-color: rgb(204,238,255);"> <td style="width: 88%; text-align: left;">2026</td> <td style="width: 1%;"> </td> <td style="width: 1%; text-align: left;">$</td> <td style="width: 9%; text-align: right;">30,060</td> <td style="width: 1%; text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: White;"> <td style="text-align: left;">2027</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">30,060</td> <td style="text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: rgb(204,238,255);"> <td style="text-align: left;">2028</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">30,060</td> <td style="text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: White;"> <td style="text-align: left;">2029</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">30,060</td> <td style="text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: rgb(204,238,255);"> <td style="text-align: left;">2030</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">30,060</td> <td style="text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: White;"> <td style="padding-bottom: 1.5pt;">Thereafter</td> <td style="padding-bottom: 1.5pt;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: right;">349,700</td> <td style="padding-bottom: 1.5pt; text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: rgb(204,238,255);"> <td style="font-weight: bold; padding-bottom: 1.5pt;">Total</td> <td style="font-weight: bold; padding-bottom: 1.5pt;"> </td> <td style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: left;">$</td> <td style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: right;">500,000</td> <td style="padding-bottom: 1.5pt; font-weight: bold; text-align: left;"> </td> </tr></tbody></table> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in;"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify;"> <span style="font-weight: bold;"><i>May 16, 2020 – $150,000</i></span> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in;"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify;">On May 16, 2020, the Company executed the standard loan documents required for securing a loan from the U.S. Small Business Administration (“SBA”) under its Economic Injury Disaster Loan (“EIDL”) assistance program in light of the impact of the COVID-19 pandemic on the Company’s business. As of June 30, 2026, the loan payable, EIDL noted above is not in default.</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify;"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify;"> Pursuant to that certain Loan Authorization and Agreement (the “SBA Loan Agreement”), the Company borrowed an aggregate principal amount of the EIDL Loan of $150,000, with proceeds to be used for working capital purposes. Interest accrues at the rate of 3.75% per annum and will accrue only on funds actually advanced from the date of each advance. Installment payments, including principal and interest, are due monthly beginning May 16, 2021 (12 months from the date of the SBA Loan) in the amount of $731. The balance of principal and interest is payable 30 years from the date of the SBA Loan. In connection with this, the Company also received a $10,000 grant, which does not have to be repaid. During the year ended December 31, 2020, $10,000 was recorded in EIDL grant income in the Statements of Operations. The schedule of payments on this loan was later deferred to commence 24 months from the date of loan, which was May 2022. </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify;"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify;">In connection therewith, the Company executed (i) a loan for the benefit of the SBA (the “SBA Loan”), which contains customary events of default and (ii) a Security Agreement, granting the SBA a security interest in all tangible and intangible personal property of the Company, which also contains customary events of default (the “SBA Security Agreement”).</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify;"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify;"> <span style="font-weight: bold;"><i>June 28, 2021 – $350,000</i></span> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify;"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify;">On June 28, 2021, the Company executed the standard loan documents required for securing a second loan (the “Second EIDL”) from the SBA under its EIDL assistance program in light of the impact of the COVID-19 pandemic on the Company’s business. As of June 30, 2026, the loan payable, the Second EIDL noted above is not in default.</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify;"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify;"> Pursuant to that certain Amended Loan Authorization and Agreement (the “SBA Loan Agreement”), the Company borrowed an aggregate principal amount of the Second EIDL of $500,000, with proceeds to be used for working capital purposes. Interest accrues at the rate of 3.75% per annum and will accrue only on funds actually advanced from the date of each advance. Installment payments, including principal and interest, are due monthly beginning April 16, 2022 (24 months from the original date of the SBA Loan) in the amount of $2,505. The balance of principal and interest is payable 30 years from the original date of the SBA Loan. </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in;">Loans payable, Economic Injury Disaster Loan (EIDL) consisted of the following:</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in;"> </p> <table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif;"> <tbody><tr style="vertical-align: bottom;"><td style="font-weight: bold; font-style: italic; border-bottom: Black 1.5pt solid;">As of</td> <td style="font-weight: bold; font-style: italic; padding-bottom: 1.5pt;"> </td> <td colspan="2" style="font-weight: bold; font-style: italic; text-align: center; border-bottom: Black 1.5pt solid;">June 30,<br/> 2026</td> <td style="padding-bottom: 1.5pt; font-weight: bold; font-style: italic;"> </td> <td style="font-weight: bold; font-style: italic; padding-bottom: 1.5pt;"> </td> <td colspan="2" style="font-weight: bold; font-style: italic; text-align: center; border-bottom: Black 1.5pt solid;">December 31,<br/> 2025</td> <td style="padding-bottom: 1.5pt; font-weight: bold; font-style: italic;"> </td> </tr><tr style="vertical-align: bottom;"><td> </td> <td> </td> <td colspan="2"> </td> <td> </td> <td> </td> <td colspan="2"> </td> <td> </td> </tr><tr style="vertical-align: bottom; background-color: rgb(204,238,255);"> <td style="width: 76%; text-align: left; text-indent: -9pt; padding-left: 9pt;">May 16, 2020 ($150,000) - Loan agreement with principal amount of $150,000   with an interest rate of 3.75% and maturity date on May 16, 2050</td> <td style="width: 1%;"> </td> <td style="width: 1%; text-align: left;">$</td> <td style="width: 9%; text-align: right;">150,000</td> <td style="width: 1%; text-align: left;"> </td> <td style="width: 1%;"> </td> <td style="width: 1%; text-align: left;">$</td> <td style="width: 9%; text-align: right;">150,000</td> <td style="width: 1%; text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: White;"> <td style="text-align: left; padding-bottom: 1.5pt; text-indent: -9pt; padding-left: 9pt;">June 28, 2021 ($350,000) – Loan agreement with principal amount of $350,000 with an interest rate of 3.75% and maturity date on May 18, 2050</td> <td style="padding-bottom: 1.5pt;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: right;">350,000</td> <td style="padding-bottom: 1.5pt; text-align: left;"> </td> <td style="padding-bottom: 1.5pt;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: right;">350,000</td> <td style="padding-bottom: 1.5pt; text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: rgb(204,238,255);"> <td style="text-align: left; text-indent: -9pt; padding-left: 9pt;">Total long-term loan payable, EIDL</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">500,000</td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">500,000</td> <td style="text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: White;"> <td style="text-indent: -9pt; padding-left: 9pt;">Interest payment</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">(11,833</td> <td style="text-align: left;">)</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">(7,608</td> <td style="text-align: left;">)</td> </tr><tr style="vertical-align: bottom; background-color: rgb(204,238,255);"> <td style="text-align: left; padding-bottom: 1.5pt; text-indent: -9pt; padding-left: 9pt;">Less - current portion</td> <td style="padding-bottom: 1.5pt;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: right;">(18,227</td> <td style="padding-bottom: 1.5pt; text-align: left;">)</td> <td style="padding-bottom: 1.5pt;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: right;">(22,452</td> <td style="padding-bottom: 1.5pt; text-align: left;">)</td> </tr><tr style="vertical-align: bottom; background-color: White;"> <td style="font-weight: bold; text-align: left; text-indent: -9pt; padding-left: 9pt;">Total loan payable, EIDL, less current portion</td> <td> </td> <td style="text-align: left;">$</td> <td style="text-align: right;">469,940</td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;">$</td> <td style="text-align: right;">469,940</td> <td style="text-align: left;"> </td> </tr></tbody></table> 150000 0.0375 2050-05-16 150000 150000 350000 0.0375 2050-05-18 350000 350000 500000 500000 11833 7608 18227 22452 469940 469940 <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in;">The following table provides future minimum payments:</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in;"> </p> <table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif;"> <tbody><tr style="vertical-align: bottom;"><td style="font-weight: bold; font-style: italic; border-bottom: Black 1.5pt solid;">For the years ended December 31,</td> <td style="font-weight: bold; font-style: italic; padding-bottom: 1.5pt;"> </td> <td colspan="2" style="font-weight: bold; font-style: italic; text-align: center; border-bottom: Black 1.5pt solid;">Amount</td> <td style="padding-bottom: 1.5pt; font-weight: bold; font-style: italic;"> </td> </tr><tr style="vertical-align: bottom; background-color: rgb(204,238,255);"> <td style="width: 88%; text-align: left;">2026</td> <td style="width: 1%;"> </td> <td style="width: 1%; text-align: left;">$</td> <td style="width: 9%; text-align: right;">30,060</td> <td style="width: 1%; text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: White;"> <td style="text-align: left;">2027</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">30,060</td> <td style="text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: rgb(204,238,255);"> <td style="text-align: left;">2028</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">30,060</td> <td style="text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: White;"> <td style="text-align: left;">2029</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">30,060</td> <td style="text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: rgb(204,238,255);"> <td style="text-align: left;">2030</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">30,060</td> <td style="text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: White;"> <td style="padding-bottom: 1.5pt;">Thereafter</td> <td style="padding-bottom: 1.5pt;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: right;">349,700</td> <td style="padding-bottom: 1.5pt; text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: rgb(204,238,255);"> <td style="font-weight: bold; padding-bottom: 1.5pt;">Total</td> <td style="font-weight: bold; padding-bottom: 1.5pt;"> </td> <td style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: left;">$</td> <td style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: right;">500,000</td> <td style="padding-bottom: 1.5pt; font-weight: bold; text-align: left;"> </td> </tr></tbody></table> 30060 30060 30060 30060 30060 349700 500000 150000 150000 0.0375 731 P30Y 10000 10000 350000 500000 0.0375 2505 P30Y <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0;"><span style="font-weight: bold;">9. LOAN PAYABLE, PAYROLL PROTECTION LOAN PROGRAM (PPP)</span></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in;"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in;">Loans payable, Payroll Protection Loan Program (PPP) consisted of the following:</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in;"> </p> <table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif;"> <tbody><tr style="vertical-align: bottom;"><td style="font-weight: bold; font-style: italic; border-bottom: Black 1.5pt solid;">As of</td> <td style="font-weight: bold; font-style: italic; padding-bottom: 1.5pt;"> </td> <td colspan="2" style="font-weight: bold; font-style: italic; text-align: center; border-bottom: Black 1.5pt solid;">June 30,<br/> 2026</td> <td style="padding-bottom: 1.5pt; font-weight: bold; font-style: italic;"> </td> <td style="font-weight: bold; font-style: italic; padding-bottom: 1.5pt;"> </td> <td colspan="2" style="font-weight: bold; font-style: italic; text-align: center; border-bottom: Black 1.5pt solid;">December 31,<br/> 2025</td> <td style="padding-bottom: 1.5pt; font-weight: bold; font-style: italic;"> </td> </tr><tr style="vertical-align: bottom;"><td> </td> <td> </td> <td colspan="2"> </td> <td> </td> <td> </td> <td colspan="2"> </td> <td> </td> </tr><tr style="vertical-align: bottom; background-color: rgb(204,238,255);"> <td style="width: 76%; text-align: left; text-indent: -0.125in; padding-left: 0.125in;">Loan payable from Payroll protection program (PPP)</td> <td style="width: 1%;"> </td> <td style="width: 1%; text-align: left;">$</td> <td style="width: 9%; text-align: right;">52,025</td> <td style="width: 1%; text-align: left;"> </td> <td style="width: 1%;"> </td> <td style="width: 1%; text-align: left;">$</td> <td style="width: 9%; text-align: right;">52,025</td> <td style="width: 1%; text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: White;"> <td style="text-align: left; padding-bottom: 1.5pt; text-indent: -0.125in; padding-left: 0.125in;">Less - current portion</td> <td style="padding-bottom: 1.5pt;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: right;">(52,025</td> <td style="padding-bottom: 1.5pt; text-align: left;">)</td> <td style="padding-bottom: 1.5pt;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: right;">(26,307</td> <td style="padding-bottom: 1.5pt; text-align: left;">)</td> </tr><tr style="vertical-align: bottom; background-color: rgb(204,238,255);"><td style="text-indent: -0.125in; padding-left: 0.125in;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;"> </td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;"> </td> <td style="text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: White;"> <td style="font-weight: bold; text-align: left; padding-bottom: 1.5pt; text-indent: -0.125in; padding-left: 0.125in;">Total loan payable, payroll protection program (PPP), less current portion</td> <td style="padding-bottom: 1.5pt;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left;">$</td> <td style="border-bottom: Black 1.5pt solid; text-align: right;"><span style="-sec-ix-hidden:fc_157041161;">-</span></td> <td style="padding-bottom: 1.5pt; text-align: left;"> </td> <td style="padding-bottom: 1.5pt;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left;">$</td> <td style="border-bottom: Black 1.5pt solid; text-align: right;">25,718</td> <td style="padding-bottom: 1.5pt; text-align: left;"> </td> </tr></tbody></table> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in;"> </p> <p style="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in;"> The Paycheck Protection Program Loan (the “PPP Loan”) is administered by the U.S. Small Business Administration (the “SBA”). The interest rate of the loan is 1.00% per annum and accrues on the unpaid principal balance computed on the basis of the actual number of days elapsed in a year of 360 days. Commencing seven months after the effective date of the PPP Loan, the Company is required to pay the Lender equal monthly payments of principal and interest as required to fully amortize any unforgiven principal balance of the loan by the two-year anniversary of the effective date of the PPP Loan (the “Maturity Date”). The PPP Loan contains customary events of default relating to, among other things, payment defaults, making materially false or misleading representations to the SBA or the Lender, or breaching the terms of the PPP Loan. The occurrence of an event of default may result in the repayment of all amounts outstanding under the PPP Loan, collection of all amounts owing from the Company, or filing suit and obtaining judgment against the Company. Under the terms of the CARES Act, PPP loan recipients can apply for and be granted forgiveness for all or a portion of the loan granted under the PPP. Such forgiveness will be determined, subject to limitations, based on the use of loan proceeds for payment of payroll costs and any payments of mortgage interest, rent, and utilities. Recent modifications to the PPP by the U.S. Treasury and Congress have extended the time period for loan forgiveness beyond the original eight-week period, making it possible for the Company to apply for forgiveness of its PPP loan. </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in;">Loans payable, Payroll Protection Loan Program (PPP) consisted of the following:</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in;"> </p> <table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif;"> <tbody><tr style="vertical-align: bottom;"><td style="font-weight: bold; font-style: italic; border-bottom: Black 1.5pt solid;">As of</td> <td style="font-weight: bold; font-style: italic; padding-bottom: 1.5pt;"> </td> <td colspan="2" style="font-weight: bold; font-style: italic; text-align: center; border-bottom: Black 1.5pt solid;">June 30,<br/> 2026</td> <td style="padding-bottom: 1.5pt; font-weight: bold; font-style: italic;"> </td> <td style="font-weight: bold; font-style: italic; padding-bottom: 1.5pt;"> </td> <td colspan="2" style="font-weight: bold; font-style: italic; text-align: center; border-bottom: Black 1.5pt solid;">December 31,<br/> 2025</td> <td style="padding-bottom: 1.5pt; font-weight: bold; font-style: italic;"> </td> </tr><tr style="vertical-align: bottom;"><td> </td> <td> </td> <td colspan="2"> </td> <td> </td> <td> </td> <td colspan="2"> </td> <td> </td> </tr><tr style="vertical-align: bottom; background-color: rgb(204,238,255);"> <td style="width: 76%; text-align: left; text-indent: -0.125in; padding-left: 0.125in;">Loan payable from Payroll protection program (PPP)</td> <td style="width: 1%;"> </td> <td style="width: 1%; text-align: left;">$</td> <td style="width: 9%; text-align: right;">52,025</td> <td style="width: 1%; text-align: left;"> </td> <td style="width: 1%;"> </td> <td style="width: 1%; text-align: left;">$</td> <td style="width: 9%; text-align: right;">52,025</td> <td style="width: 1%; text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: White;"> <td style="text-align: left; padding-bottom: 1.5pt; text-indent: -0.125in; padding-left: 0.125in;">Less - current portion</td> <td style="padding-bottom: 1.5pt;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: right;">(52,025</td> <td style="padding-bottom: 1.5pt; text-align: left;">)</td> <td style="padding-bottom: 1.5pt;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: right;">(26,307</td> <td style="padding-bottom: 1.5pt; text-align: left;">)</td> </tr><tr style="vertical-align: bottom; background-color: rgb(204,238,255);"><td style="text-indent: -0.125in; padding-left: 0.125in;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;"> </td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;"> </td> <td style="text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: White;"> <td style="font-weight: bold; text-align: left; padding-bottom: 1.5pt; text-indent: -0.125in; padding-left: 0.125in;">Total loan payable, payroll protection program (PPP), less current portion</td> <td style="padding-bottom: 1.5pt;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left;">$</td> <td style="border-bottom: Black 1.5pt solid; text-align: right;"><span style="-sec-ix-hidden:fc_157041161;">-</span></td> <td style="padding-bottom: 1.5pt; text-align: left;"> </td> <td style="padding-bottom: 1.5pt;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left;">$</td> <td style="border-bottom: Black 1.5pt solid; text-align: right;">25,718</td> <td style="padding-bottom: 1.5pt; text-align: left;"> </td> </tr></tbody></table> 52025 52025 52025 26307 25718 0.01 <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0;"><span style="font-weight: bold;">10. CONVERTIBLE NOTES PAYABLE NET OF DEBT DISCOUNT</span></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in;"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in;">Convertible Notes Payable consisted of the following:</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in;"> </p> <table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif;"> <tbody><tr style="vertical-align: bottom;"><td> </td> <td style="font-weight: bold; font-style: italic;"> </td> <td colspan="2" style="font-weight: bold; font-style: italic; text-align: center;">June 30,</td> <td style="font-weight: bold; font-style: italic;"> </td> <td style="font-weight: bold; font-style: italic;"> </td> <td colspan="2" style="font-weight: bold; font-style: italic; text-align: center;">December 31,</td> <td style="font-weight: bold; font-style: italic;"> </td> </tr><tr style="vertical-align: bottom;"><td> </td> <td style="font-weight: bold; font-style: italic; padding-bottom: 1.5pt;"> </td> <td colspan="2" style="font-weight: bold; font-style: italic; text-align: center; border-bottom: Black 1.5pt solid;">2026</td> <td style="padding-bottom: 1.5pt; font-weight: bold; font-style: italic;"> </td> <td style="font-weight: bold; font-style: italic; padding-bottom: 1.5pt;"> </td> <td colspan="2" style="font-weight: bold; font-style: italic; text-align: center; border-bottom: Black 1.5pt solid;">2025</td> <td style="padding-bottom: 1.5pt; font-weight: bold; font-style: italic;"> </td> </tr><tr style="vertical-align: bottom;"><td> </td> <td> </td> <td colspan="2"> </td> <td> </td> <td> </td> <td colspan="2"> </td> <td> </td> </tr><tr style="vertical-align: bottom; background-color: rgb(204,238,255);"> <td style="width: 76%; text-indent: -9pt; padding-left: 9pt;">Tranche 1: February 10 2025</td> <td style="width: 1%;"> </td> <td style="width: 1%; text-align: left;">$</td> <td style="width: 9%; text-align: right;">555,555</td> <td style="width: 1%; text-align: left;"> </td> <td style="width: 1%;"> </td> <td style="width: 1%; text-align: left;"> </td> <td style="width: 9%; text-align: right;">555,555</td> <td style="width: 1%; text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: White;"> <td style="text-indent: -9pt; padding-left: 9pt;">Tranche 2: February 27 2025</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">1,111,111</td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">1,111,111</td> <td style="text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: rgb(204,238,255);"> <td style="text-indent: -9pt; padding-left: 9pt;">Tranche 3: March 28 2025</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">1,666,666</td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">1,666,666</td> <td style="text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: White;"> <td style="padding-bottom: 1.5pt; text-indent: -9pt; padding-left: 9pt;">Tranche 4: August 1, 2025</td> <td style="padding-bottom: 1.5pt;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: right;">833,333</td> <td style="padding-bottom: 1.5pt; text-align: left;"> </td> <td style="padding-bottom: 1.5pt;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: right;">833,333</td> <td style="padding-bottom: 1.5pt; text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: rgb(204,238,255);"> <td style="text-align: left; text-indent: -9pt; padding-left: 9pt;">Total Convertible Debt</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">4,166,665</td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">4,166,665</td> <td style="text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: White;"> <td style="text-align: left; padding-bottom: 1.5pt; text-indent: -9pt; padding-left: 9pt;">Less: Debt Discount</td> <td style="padding-bottom: 1.5pt;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: right;">(302,698</td> <td style="padding-bottom: 1.5pt; text-align: left;">)</td> <td style="padding-bottom: 1.5pt;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: right;">(900,198</td> <td style="padding-bottom: 1.5pt; text-align: left;">)</td> </tr><tr style="vertical-align: bottom; background-color: rgb(204,238,255);"> <td style="text-align: left; padding-bottom: 1.5pt; text-indent: -9pt; padding-left: 9pt;">Less: Repayment</td> <td style="padding-bottom: 1.5pt;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: right;">(882,500</td> <td style="padding-bottom: 1.5pt; text-align: left;">)</td> <td style="padding-bottom: 1.5pt;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: right;"><span style="-sec-ix-hidden:fc_731020863;">-</span></td> <td style="padding-bottom: 1.5pt; text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: White;"> <td style="font-weight: bold; text-align: left; padding-bottom: 4pt; text-indent: -9pt; padding-left: 9pt;">Total Convertible Notes Payable</td> <td style="padding-bottom: 4pt;"> </td> <td style="border-bottom: Black 4pt double; text-align: left;">$</td> <td style="border-bottom: Black 4pt double; text-align: right;">2,981,467</td> <td style="padding-bottom: 4pt; text-align: left;"> </td> <td style="padding-bottom: 4pt;"> </td> <td style="border-bottom: Black 4pt double; text-align: left;"> </td> <td style="border-bottom: Black 4pt double; text-align: right;">3,266,467</td> <td style="padding-bottom: 4pt; text-align: left;"> </td> </tr></tbody></table> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in;"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify;">During the initial recognition company calculated fair value of derivative liability on convertible debt and warrants and recorded the difference as debt discount subject to maximum of notes payable amount. Debt discount will be amortized over the term of the note.</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify;"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify;"> On February 6, 2025, the Company entered into a Securities Purchase Agreement with Arena Special Opportunities (Offshore) Master II, LP and Arena Special Opportunities Partners III, LP (collectively, the “Arena Investors”), pursuant to which the Company issued secured convertible debentures with an aggregate principal amount of $4,166,665. The Debentures accrue interest at 10% per annum, payable in kind, and contain a variable-price conversion feature. The accounting for the embedded conversion feature is described in Note 11. </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify;"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify;">On April 15, 2026, the Company entered into an Amended and Restated Forbearance Agreement with the Arena Investors, which revised the repayment terms of the Debentures. Under the agreement, the Company was required to make scheduled monthly payments and repay all remaining amounts outstanding by September 30, 2026, subject to earlier repayment or conversion.</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify;"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify;"> The Company evaluated the revised terms under ASC 470-50 and determined that the transaction resulted in an extinguishment of the existing debt and recognition of replacement debt. In connection with the restructuring, the Company also issued warrants to purchase 250,000 shares of common stock. </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify;"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify;"> During the three months ended June 30, 2026, the Company made aggregate cash payments of approximately $1.06 million, of which approximately $0.88 million reduced contractual principal, with the remaining amount primarily representing contractual redemption premiums and other amounts due under the debt agreements. </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify;"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify;"> The Company recognized a loss on debt extinguishment of approximately $619,000 during the three and six months ended June 30, 2026. The replacement debt was initially recorded at fair value, and the resulting debt discount is being amortized over the remaining term using the effective interest method. </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in;">Convertible Notes Payable consisted of the following:</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in;"> </p> <table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif;"> <tbody><tr style="vertical-align: bottom;"><td> </td> <td style="font-weight: bold; font-style: italic;"> </td> <td colspan="2" style="font-weight: bold; font-style: italic; text-align: center;">June 30,</td> <td style="font-weight: bold; font-style: italic;"> </td> <td style="font-weight: bold; font-style: italic;"> </td> <td colspan="2" style="font-weight: bold; font-style: italic; text-align: center;">December 31,</td> <td style="font-weight: bold; font-style: italic;"> </td> </tr><tr style="vertical-align: bottom;"><td> </td> <td style="font-weight: bold; font-style: italic; padding-bottom: 1.5pt;"> </td> <td colspan="2" style="font-weight: bold; font-style: italic; text-align: center; border-bottom: Black 1.5pt solid;">2026</td> <td style="padding-bottom: 1.5pt; font-weight: bold; font-style: italic;"> </td> <td style="font-weight: bold; font-style: italic; padding-bottom: 1.5pt;"> </td> <td colspan="2" style="font-weight: bold; font-style: italic; text-align: center; border-bottom: Black 1.5pt solid;">2025</td> <td style="padding-bottom: 1.5pt; font-weight: bold; font-style: italic;"> </td> </tr><tr style="vertical-align: bottom;"><td> </td> <td> </td> <td colspan="2"> </td> <td> </td> <td> </td> <td colspan="2"> </td> <td> </td> </tr><tr style="vertical-align: bottom; background-color: rgb(204,238,255);"> <td style="width: 76%; text-indent: -9pt; padding-left: 9pt;">Tranche 1: February 10 2025</td> <td style="width: 1%;"> </td> <td style="width: 1%; text-align: left;">$</td> <td style="width: 9%; text-align: right;">555,555</td> <td style="width: 1%; text-align: left;"> </td> <td style="width: 1%;"> </td> <td style="width: 1%; text-align: left;"> </td> <td style="width: 9%; text-align: right;">555,555</td> <td style="width: 1%; text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: White;"> <td style="text-indent: -9pt; padding-left: 9pt;">Tranche 2: February 27 2025</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">1,111,111</td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">1,111,111</td> <td style="text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: rgb(204,238,255);"> <td style="text-indent: -9pt; padding-left: 9pt;">Tranche 3: March 28 2025</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">1,666,666</td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">1,666,666</td> <td style="text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: White;"> <td style="padding-bottom: 1.5pt; text-indent: -9pt; padding-left: 9pt;">Tranche 4: August 1, 2025</td> <td style="padding-bottom: 1.5pt;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: right;">833,333</td> <td style="padding-bottom: 1.5pt; text-align: left;"> </td> <td style="padding-bottom: 1.5pt;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: right;">833,333</td> <td style="padding-bottom: 1.5pt; text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: rgb(204,238,255);"> <td style="text-align: left; text-indent: -9pt; padding-left: 9pt;">Total Convertible Debt</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">4,166,665</td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">4,166,665</td> <td style="text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: White;"> <td style="text-align: left; padding-bottom: 1.5pt; text-indent: -9pt; padding-left: 9pt;">Less: Debt Discount</td> <td style="padding-bottom: 1.5pt;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: right;">(302,698</td> <td style="padding-bottom: 1.5pt; text-align: left;">)</td> <td style="padding-bottom: 1.5pt;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: right;">(900,198</td> <td style="padding-bottom: 1.5pt; text-align: left;">)</td> </tr><tr style="vertical-align: bottom; background-color: rgb(204,238,255);"> <td style="text-align: left; padding-bottom: 1.5pt; text-indent: -9pt; padding-left: 9pt;">Less: Repayment</td> <td style="padding-bottom: 1.5pt;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: right;">(882,500</td> <td style="padding-bottom: 1.5pt; text-align: left;">)</td> <td style="padding-bottom: 1.5pt;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: right;"><span style="-sec-ix-hidden:fc_731020863;">-</span></td> <td style="padding-bottom: 1.5pt; text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: White;"> <td style="font-weight: bold; text-align: left; padding-bottom: 4pt; text-indent: -9pt; padding-left: 9pt;">Total Convertible Notes Payable</td> <td style="padding-bottom: 4pt;"> </td> <td style="border-bottom: Black 4pt double; text-align: left;">$</td> <td style="border-bottom: Black 4pt double; text-align: right;">2,981,467</td> <td style="padding-bottom: 4pt; text-align: left;"> </td> <td style="padding-bottom: 4pt;"> </td> <td style="border-bottom: Black 4pt double; text-align: left;"> </td> <td style="border-bottom: Black 4pt double; text-align: right;">3,266,467</td> <td style="padding-bottom: 4pt; text-align: left;"> </td> </tr></tbody></table> 555555 555555 1111111 1111111 1666666 1666666 833333 833333 4166665 4166665 302698 900198 -882500 2981467 3266467 4166665 0.10 250000 1060000.00 880000 619000 619000 <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify;"><span style="font-weight: bold;">11. DERIVATIVE LIABILITY</span></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify;"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify;">The Company accounts for the embedded conversion feature of its Convertible debentures and certain warrants as derivative liabilities. Derivative liabilities are measured at fair value at each reporting date, with changes in fair value recognized in earnings.</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify;"> </p> <table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif;"> <tbody><tr style="vertical-align: bottom;"><td style="text-align: justify;"> </td> <td style="font-weight: bold; padding-bottom: 1.5pt;"> </td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid;">June 30,<br/> 2026</td> <td style="padding-bottom: 1.5pt; font-weight: bold;"> </td> <td style="font-weight: bold; padding-bottom: 1.5pt;"> </td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid;">December 31,<br/> 2025</td> <td style="padding-bottom: 1.5pt; font-weight: bold;"> </td> </tr><tr style="vertical-align: bottom; background-color: rgb(204,238,255);"> <td style="width: 76%; text-align: justify;">Embedded conversion derivative</td> <td style="width: 1%;"> </td> <td style="width: 1%; text-align: left;">$</td> <td style="width: 9%; text-align: right;">746,915</td> <td style="width: 1%; text-align: left;"> </td> <td style="width: 1%;"> </td> <td style="width: 1%; text-align: left;">$</td> <td style="width: 9%; text-align: right;">503,384</td> <td style="width: 1%; text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: White;"> <td style="font-weight: bold; text-align: justify; padding-bottom: 1.5pt;"><span style="font-style: normal; font-weight: normal;">Forbearance warrant liability</span></td> <td style="font-weight: bold; padding-bottom: 1.5pt;"><span style="font-style: normal; font-weight: normal;"> </span></td> <td style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: left;"><span style="font-style: normal; font-weight: normal;"> </span></td> <td style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: right;"><span style="font-style: normal; font-weight: normal;">351,000</span></td> <td style="padding-bottom: 1.5pt; font-weight: bold; text-align: left;"><span style="font-style: normal; font-weight: normal;"> </span></td> <td style="font-weight: bold; padding-bottom: 1.5pt;"><span style="font-style: normal; font-weight: normal;"> </span></td> <td style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: left;"><span style="font-style: normal; font-weight: normal;"> </span></td> <td style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: right;"><span style="font-style: normal; font-weight: normal;"><span style="-sec-ix-hidden:fc_416604376;">—</span></span></td> <td style="padding-bottom: 1.5pt; font-weight: bold; text-align: left;"><span style="font-style: normal; font-weight: normal;"> </span></td> </tr><tr style="vertical-align: bottom; background-color: rgb(204,238,255);"> <td style="font-weight: bold; text-align: justify; padding-bottom: 4pt;">Total derivative liabilities</td> <td style="font-weight: bold; padding-bottom: 4pt;"> </td> <td style="border-bottom: Black 4pt double; font-weight: bold; text-align: left;">$</td> <td style="border-bottom: Black 4pt double; font-weight: bold; text-align: right;">1,097,915</td> <td style="padding-bottom: 4pt; font-weight: bold; text-align: left;"> </td> <td style="font-weight: bold; padding-bottom: 4pt;"> </td> <td style="border-bottom: Black 4pt double; font-weight: bold; text-align: left;">$</td> <td style="border-bottom: Black 4pt double; font-weight: bold; text-align: right;">503,384</td> <td style="padding-bottom: 4pt; font-weight: bold; text-align: left;"> </td> </tr></tbody></table> <p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center;"><span style="font-weight: bold;"> </span></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify;"><span style="font-weight: bold;">Embedded Conversion Derivative</span></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify;"><span style="font-weight: bold;"> </span></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify;">The Arena convertible debentures contain a variable-price conversion feature based on the market price of the Company’s common stock. The Company determined that the conversion feature requires bifurcation from the debt host and separate accounting as a derivative liability under ASC 815.</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify;"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify;"> In April 2026, in connection with the Amended and Restated Forbearance Agreement described in Note 10, the Company accounted for the revised debt terms as an extinguishment of the existing debt and recognition of replacement convertible debt. Immediately prior to extinguishment, the existing conversion derivative was remeasured to fair value of approximately $798,365 and derecognized with the existing debt. The conversion derivative associated with the replacement debt was initially recognized at fair value of approximately $820,171. As of June 30, 2026, the fair value of the embedded conversion derivative was approximately $746,915. The change in fair value from initial recognition of the replacement derivative through June 30, 2026 was recognized in earnings. </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify;"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify;"><span style="font-weight: bold;">Forbearance Warrants</span></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify;"><span style="font-weight: bold;"> </span></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify;"> In connection with the April 2026 forbearance arrangements, the Company issued warrants to the Arena Investors to purchase an aggregate of 250,000 shares of common stock at an exercise price of $2.00 per share. Based on the settlement provisions of the warrants, the Company classified the warrant as liabilities. </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify;"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify;"> The warrants had an aggregate initial fair value of approximately $677,250. As of June 30, 2026, the warrant liability had a fair value of approximately $351,000. The decrease in fair value of approximately $326,250 was recognized as a gain in earnings during the three months ended June 30, 2026. </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify;"><span style="font-weight: bold;"> </span></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify;"><span style="font-weight: bold;">Fair Value Measurement</span></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify;"><span style="font-weight: bold;"> </span></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify;">The Company estimated the fair value of the embedded conversion derivative using a Monte Carlo simulation model and the fair value of the warrant liability using a Black-Scholes-Merton option pricing model. The principal assumptions as of June 30, 2026 were as follows:</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify;"> </p> <table cellpadding="0" cellspacing="0" style="width: 100%; font: 10pt Times New Roman, Times, Serif; border-collapse: collapse;"> <tbody><tr><td style="border-bottom: Black 1.5pt solid; text-align: left; width: 32%;"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;"><span style="font-weight: bold;">Assumption</span></span></td> <td style="padding-bottom: 1.5pt; width: 2%;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: center; width: 32%;"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;"><span style="font-weight: bold;">Conversion Derivative</span></span></td> <td style="padding-bottom: 1.5pt; width: 2%;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: center; width: 32%;"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;"><span style="font-weight: bold;">Warrant Liability</span></span></td> </tr><tr style="background-color: rgb(204,238,255);"> <td style="text-align: justify;"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">Risk-free interest rate</span></td> <td> </td> <td style="text-align: justify;"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">3.87%</span></td> <td> </td> <td style="text-align: justify;"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">4.19%</span></td> </tr><tr style="background-color: White;"> <td style="text-align: justify;"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">Expected remaining term</span></td> <td> </td> <td style="text-align: justify;"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">0.25 years</span></td> <td> </td> <td style="text-align: justify;"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">4.79 years</span></td> </tr><tr style="background-color: rgb(204,238,255);"> <td style="text-align: justify;"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">Expected volatility</span></td> <td> </td> <td style="text-align: justify;"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">166.98%</span></td> <td> </td> <td style="text-align: justify;"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">166.98%</span></td> </tr><tr style="background-color: White;"> <td style="text-align: justify;"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">Expected dividend yield</span></td> <td> </td> <td style="text-align: justify;"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;"><span style="-sec-ix-hidden:fc_828941144;">None</span></span></td> <td> </td> <td style="text-align: justify;"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;"><span style="-sec-ix-hidden:fc_538328544;">None</span></span></td> </tr></tbody></table> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify;"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify;">The fair value measurements use significant unobservable inputs and are classified within Level 3 of the fair value hierarchy.</p> Derivative liabilities are measured at fair value at each reporting date, with changes in fair value recognized in earnings.<table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif;"> <tbody><tr style="vertical-align: bottom;"><td style="text-align: justify;"> </td> <td style="font-weight: bold; padding-bottom: 1.5pt;"> </td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid;">June 30,<br/> 2026</td> <td style="padding-bottom: 1.5pt; font-weight: bold;"> </td> <td style="font-weight: bold; padding-bottom: 1.5pt;"> </td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid;">December 31,<br/> 2025</td> <td style="padding-bottom: 1.5pt; font-weight: bold;"> </td> </tr><tr style="vertical-align: bottom; background-color: rgb(204,238,255);"> <td style="width: 76%; text-align: justify;">Embedded conversion derivative</td> <td style="width: 1%;"> </td> <td style="width: 1%; text-align: left;">$</td> <td style="width: 9%; text-align: right;">746,915</td> <td style="width: 1%; text-align: left;"> </td> <td style="width: 1%;"> </td> <td style="width: 1%; text-align: left;">$</td> <td style="width: 9%; text-align: right;">503,384</td> <td style="width: 1%; text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: White;"> <td style="font-weight: bold; text-align: justify; padding-bottom: 1.5pt;"><span style="font-style: normal; font-weight: normal;">Forbearance warrant liability</span></td> <td style="font-weight: bold; padding-bottom: 1.5pt;"><span style="font-style: normal; font-weight: normal;"> </span></td> <td style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: left;"><span style="font-style: normal; font-weight: normal;"> </span></td> <td style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: right;"><span style="font-style: normal; font-weight: normal;">351,000</span></td> <td style="padding-bottom: 1.5pt; font-weight: bold; text-align: left;"><span style="font-style: normal; font-weight: normal;"> </span></td> <td style="font-weight: bold; padding-bottom: 1.5pt;"><span style="font-style: normal; font-weight: normal;"> </span></td> <td style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: left;"><span style="font-style: normal; font-weight: normal;"> </span></td> <td style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: right;"><span style="font-style: normal; font-weight: normal;"><span style="-sec-ix-hidden:fc_416604376;">—</span></span></td> <td style="padding-bottom: 1.5pt; font-weight: bold; text-align: left;"><span style="font-style: normal; font-weight: normal;"> </span></td> </tr><tr style="vertical-align: bottom; background-color: rgb(204,238,255);"> <td style="font-weight: bold; text-align: justify; padding-bottom: 4pt;">Total derivative liabilities</td> <td style="font-weight: bold; padding-bottom: 4pt;"> </td> <td style="border-bottom: Black 4pt double; font-weight: bold; text-align: left;">$</td> <td style="border-bottom: Black 4pt double; font-weight: bold; text-align: right;">1,097,915</td> <td style="padding-bottom: 4pt; font-weight: bold; text-align: left;"> </td> <td style="font-weight: bold; padding-bottom: 4pt;"> </td> <td style="border-bottom: Black 4pt double; font-weight: bold; text-align: left;">$</td> <td style="border-bottom: Black 4pt double; font-weight: bold; text-align: right;">503,384</td> <td style="padding-bottom: 4pt; font-weight: bold; text-align: left;"> </td> </tr></tbody></table> 746915 503384 351000 1097915 503384 798365 820171 746915 250000 2 677250 351000 326250 The principal assumptions as of June 30, 2026 were as follows:<table cellpadding="0" cellspacing="0" style="width: 100%; font: 10pt Times New Roman, Times, Serif; border-collapse: collapse;"> <tbody><tr><td style="border-bottom: Black 1.5pt solid; text-align: left; width: 32%;"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;"><span style="font-weight: bold;">Assumption</span></span></td> <td style="padding-bottom: 1.5pt; width: 2%;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: center; width: 32%;"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;"><span style="font-weight: bold;">Conversion Derivative</span></span></td> <td style="padding-bottom: 1.5pt; width: 2%;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: center; width: 32%;"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;"><span style="font-weight: bold;">Warrant Liability</span></span></td> </tr><tr style="background-color: rgb(204,238,255);"> <td style="text-align: justify;"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">Risk-free interest rate</span></td> <td> </td> <td style="text-align: justify;"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">3.87%</span></td> <td> </td> <td style="text-align: justify;"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">4.19%</span></td> </tr><tr style="background-color: White;"> <td style="text-align: justify;"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">Expected remaining term</span></td> <td> </td> <td style="text-align: justify;"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">0.25 years</span></td> <td> </td> <td style="text-align: justify;"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">4.79 years</span></td> </tr><tr style="background-color: rgb(204,238,255);"> <td style="text-align: justify;"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">Expected volatility</span></td> <td> </td> <td style="text-align: justify;"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">166.98%</span></td> <td> </td> <td style="text-align: justify;"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">166.98%</span></td> </tr><tr style="background-color: White;"> <td style="text-align: justify;"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">Expected dividend yield</span></td> <td> </td> <td style="text-align: justify;"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;"><span style="-sec-ix-hidden:fc_828941144;">None</span></span></td> <td> </td> <td style="text-align: justify;"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;"><span style="-sec-ix-hidden:fc_538328544;">None</span></span></td> </tr></tbody></table> 3.87 4.19 0.25 4.79 166.98 166.98 <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0;"><span style="font-weight: bold;">12. COMMITMENTS AND CONTINGENCIES</span></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in;"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify;"><span style="font-weight: bold;"><i>Operating Leases</i></span></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify;"><span style="font-weight: bold;"><i> </i></span></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify;">The Company has the following operating facility leases:</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify;"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify;"> <span style="font-weight: bold;">Brea (Corporate office)</span> – On August 12, 2024, the Company entered into an operating facility lease for its corporate office located in Brea, California with term of 36 months at $10,589 per month. The lease started on September 1, 2024 and expires in August 2026. </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.75in; text-align: justify;"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify;"> <span style="font-weight: bold;"><i>Brea</i></span> – On August 16, 2024, the Company entered into an operating lease agreement for its store located at La Floresta Shopping Village in Brea, California, with a term of 60 months and an option to extend. The lease commenced on December 1, 2024 and was initially set to expire on November 30, 2029. The monthly lease payment under the lease agreement is approximately $7,965. </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify;"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify;"> <span style="font-weight: bold;"><i>La Crescenta</i></span> - On May 2017, the Company entered into an operating facility lease for its store located in La Crescenta, California with 120 months term with option to extend. The lease started in May 2017 and expires in May 2027. The Company entered into non-cancellable lease agreement for a coffee shop approximately 1,607 square feet located in La Crescenta, California commencing in May 2017 and expiring in April 2027. The monthly lease payment under the lease agreement is approximately $6,026. </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.75in; text-align: justify;"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify;"> <span style="font-weight: bold;"><i>Corona Del Mar</i></span> - On January 18, 2023, the Company renewed its retail store in Corona Del Mar, California. As part of that lease renewal, the Company renewed the original operating lease with 60 months term with an option to extend. The lease expires in January 2028. The monthly lease payment under the renewed lease agreement is approximately $5,001. </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.75in; text-align: justify;"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify;"> <span style="font-weight: bold;"><i>Laguna Woods</i></span><i> - </i>On February 12, 2021, the Company entered into an operating facility lease for its store located at Home Depot Center in Laguna Woods, California with a term of 60 months and an option to extend. The lease has been renewed until Jan 2031. </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify;"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify;"> <span style="font-weight: bold;"><i>Manhattan Village</i></span> - On March 1, 2022, the Company entered into an operating facility lease for its store located at Manhattan Beach, California with 60 months term with option to extend. The lease started in March 2022 and expires in February 2027. </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.75in; text-align: justify;"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify;"> <span style="font-weight: bold;"><i>Huntington Beach</i></span> - On October 7, 2022, the Company entered into an operating facility lease for its store located at Huntington Beach, California with a 124-month term with option to extend. The lease started in November 2021 and expires in February 2032. </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.75in; text-align: justify;"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify;"> <span style="font-weight: bold;"><i>Riverside </i></span><i>- </i>On February 4, 2021, the Company entered into an operating facility lease for its store located at Galleria at Tyler in Riverside, California with a term of 84 months and an option to extend. The lease started in April 2021 and expires in March 2028. </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify;"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify;"> <span style="font-weight: bold;"><i>Reborn Logistics</i></span> – On October 1, 2025, Reborn Logistics entered into a sublease agreement for its location at Buena Park, California with a term of 36 months at a $1,500 per month. </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify;">  </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify;"> <span style="font-weight: bold;"><i>Diamond Bar</i></span> – On March 20, 2023, the Company entered into an operating facility lease for its store located at Diamond Bar, California which matures on March 31, 2027. The monthly lease payment under the lease agreement is approximately $5,900.   </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.75in; text-align: justify;"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify;"> <span style="font-weight: bold;"><i>Anaheim</i></span> - On March 3, 2023, the Company entered into an operating facility lease for its store located at Anaheim, California with 120 months term with option to extend. The lease started in March 2023 and expires in February 2033.   </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.75in; text-align: justify;"><span style="font-weight: bold;"> </span></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify;"> <span style="font-weight: bold;"><i>Pasadena</i></span> – On December 1, 2024, the Company entered into an operating lease agreement for its store located in Pasadena, California. The lease has a term of 120 months (10 years), with an option to extend. The lease commenced on December 1, 2024 and is set to expire in December 2034. </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify;"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify;">Operating lease right-of-use (“ROU”) assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Generally, the implicit rate of interest in arrangements is not readily determinable and the Company utilizes its incremental borrowing rate in determining the present value of lease payments. The Company’s incremental borrowing rate is a hypothetical rate based on its understanding of what its credit rating would be. The operating lease ROU asset includes any lease payments made and excludes lease incentives. Our variable lease payments primarily consist of maintenance and other operating expenses from our real estate leases. Variable lease payments are excluded from the ROU assets and lease liabilities and are recognized in the period in which the obligation for those payments is incurred. Our lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise that option. Lease expense for minimum lease payments is recognized on a straight-line basis over the lease term.</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify;"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify;">The Company has lease agreements with lease and non-lease components. The Company has elected to account for these lease and non-lease components as a single lease component.</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify;"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify;">In accordance with ASC 842, the components of lease expense were as follows:</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in;"><span style="font-weight: bold;"><i> </i></span></p> <table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif;"> <tbody><tr style="vertical-align: bottom;"><td style="font-weight: bold; font-style: italic; border-bottom: Black 1.5pt solid;">For the six months ended June 30,</td> <td style="font-weight: bold; font-style: italic; padding-bottom: 1.5pt;"> </td> <td colspan="2" style="font-weight: bold; font-style: italic; text-align: center; border-bottom: Black 1.5pt solid;">2026</td> <td style="padding-bottom: 1.5pt; font-weight: bold; font-style: italic;"> </td> <td style="font-weight: bold; font-style: italic; padding-bottom: 1.5pt;"> </td> <td colspan="2" style="font-weight: bold; font-style: italic; text-align: center; border-bottom: Black 1.5pt solid;">2025</td> <td style="padding-bottom: 1.5pt; font-weight: bold; font-style: italic;"> </td> </tr><tr style="vertical-align: bottom; background-color: rgb(204,238,255);"> <td style="width: 76%; text-align: left; padding-bottom: 1.5pt;">Operating lease expense</td> <td style="width: 1%; padding-bottom: 1.5pt;"> </td> <td style="width: 1%; border-bottom: Black 1.5pt solid; text-align: left;">$</td> <td style="width: 9%; border-bottom: Black 1.5pt solid; text-align: right;">322,070</td> <td style="width: 1%; padding-bottom: 1.5pt; text-align: left;"> </td> <td style="width: 1%; padding-bottom: 1.5pt;"> </td> <td style="width: 1%; border-bottom: Black 1.5pt solid; text-align: left;">$</td> <td style="width: 9%; border-bottom: Black 1.5pt solid; text-align: right;">515,956</td> <td style="width: 1%; padding-bottom: 1.5pt; text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: White;"> <td style="text-align: left; padding-bottom: 1.5pt;">Total lease expense</td> <td style="padding-bottom: 1.5pt;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left;">$</td> <td style="border-bottom: Black 1.5pt solid; text-align: right;">322,070</td> <td style="padding-bottom: 1.5pt; text-align: left;"> </td> <td style="padding-bottom: 1.5pt;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left;">$</td> <td style="border-bottom: Black 1.5pt solid; text-align: right;">515,956</td> <td style="padding-bottom: 1.5pt; text-align: left;"> </td> </tr></tbody></table> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in;"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify;">In accordance with ASC 842, other information related to leases was as follows:</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in;"> </p> <table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif;"> <tbody><tr style="vertical-align: bottom;"><td style="border-bottom: Black 1.5pt solid; text-indent: -0.25in; padding-left: 0.25in; font-weight: bold; font-style: italic;">For the six months ended June 30,</td> <td style="font-weight: bold; font-style: italic; padding-bottom: 1.5pt;"> </td> <td colspan="2" style="font-weight: bold; font-style: italic; text-align: center; border-bottom: Black 1.5pt solid;">2026</td> <td style="padding-bottom: 1.5pt; font-weight: bold; font-style: italic;"> </td> <td style="font-weight: bold; font-style: italic; padding-bottom: 1.5pt;"> </td> <td colspan="2" style="font-weight: bold; font-style: italic; text-align: center; border-bottom: Black 1.5pt solid;">2025</td> <td style="padding-bottom: 1.5pt; font-weight: bold; font-style: italic;"> </td> </tr><tr style="vertical-align: bottom; background-color: rgb(204,238,255);"> <td style="text-indent: -0.25in; padding-left: 0.25in; width: 76%; text-align: left; padding-bottom: 1.5pt;">Operating cash flows from operating leases</td> <td style="width: 1%; padding-bottom: 1.5pt;"> </td> <td style="width: 1%; border-bottom: Black 1.5pt solid; text-align: left;">$</td> <td style="width: 9%; border-bottom: Black 1.5pt solid; text-align: right;">327,822</td> <td style="width: 1%; padding-bottom: 1.5pt; text-align: left;"> </td> <td style="width: 1%; padding-bottom: 1.5pt;"> </td> <td style="width: 1%; border-bottom: Black 1.5pt solid; text-align: left;">$</td> <td style="width: 9%; border-bottom: Black 1.5pt solid; text-align: right;">455,712</td> <td style="width: 1%; padding-bottom: 1.5pt; text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: White;"> <td style="text-indent: -0.25in; text-align: left; padding-bottom: 1.5pt; padding-left: 0.375in;">Cash paid for amounts included in the measurement of lease liabilities</td> <td style="padding-bottom: 1.5pt;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left;">$</td> <td style="border-bottom: Black 1.5pt solid; text-align: right;">327,822</td> <td style="padding-bottom: 1.5pt; text-align: left;"> </td> <td style="padding-bottom: 1.5pt;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left;">$</td> <td style="border-bottom: Black 1.5pt solid; text-align: right;">455,712</td> <td style="padding-bottom: 1.5pt; text-align: left;"> </td> </tr></tbody></table> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in;"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify;">In accordance with ASC 842, maturities of operating lease liabilities as of June 30, 2026 were as follows:</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in;"> </p> <table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif;"> <tbody><tr style="vertical-align: bottom;"><td> </td> <td style="font-weight: bold;"> </td> <td colspan="2" style="font-weight: bold; text-align: center;">Operating</td> <td style="font-weight: bold;"> </td> </tr><tr style="vertical-align: bottom;"><td style="font-weight: bold; font-style: italic; border-bottom: Black 1.5pt solid;">Year ending:</td> <td style="font-weight: bold; padding-bottom: 1.5pt;"> </td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid;">Lease</td> <td style="padding-bottom: 1.5pt; font-weight: bold;"> </td> </tr><tr style="vertical-align: bottom; background-color: rgb(204,238,255);"> <td style="width: 88%; text-align: left; padding-left: 9pt;">2026</td> <td style="width: 1%;"> </td> <td style="width: 1%; text-align: left;">$</td> <td style="width: 9%; text-align: right;">423,914</td> <td style="width: 1%; text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: White;"> <td style="text-align: left; padding-left: 9pt;">2027</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">567,980</td> <td style="text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: rgb(204,238,255);"> <td style="text-align: left; padding-left: 9pt;">2028</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">372,677</td> <td style="text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: White;"> <td style="text-align: left; padding-left: 9pt;">2029</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">347,524</td> <td style="text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: rgb(204,238,255);"> <td style="text-align: left; padding-left: 9pt;">2030</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">244,579</td> <td style="text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: White;"> <td style="padding-bottom: 1.5pt; padding-left: 9pt;">Thereafter</td> <td style="padding-bottom: 1.5pt;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: right;">448,951</td> <td style="padding-bottom: 1.5pt; text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: rgb(204,238,255);"> <td style="text-align: left; padding-bottom: 1.5pt;">Total undiscounted cash flows</td> <td style="padding-bottom: 1.5pt;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left;">$</td> <td style="border-bottom: Black 1.5pt solid; text-align: right;">2,405,625</td> <td style="padding-bottom: 1.5pt; text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: White;"><td> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;"> </td> <td style="text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: rgb(204,238,255);"><td style="text-align: left;">Reconciliation of lease liabilities:</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;"> </td> <td style="text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: White;"> <td style="text-align: left; padding-left: 9pt;">Weighted-average remaining lease terms</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">4.58 year</span></td> <td style="text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: rgb(204,238,255);"> <td style="text-align: left; padding-bottom: 1.5pt; padding-left: 9pt;">Weighted-average discount rate</td> <td style="padding-bottom: 1.5pt;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: right;">10.0</td> <td style="padding-bottom: 1.5pt; text-align: left;">%</td> </tr><tr style="vertical-align: bottom; background-color: White;"> <td style="text-align: left; padding-bottom: 1.5pt;">Present values</td> <td style="padding-bottom: 1.5pt;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left;">$</td> <td style="border-bottom: Black 1.5pt solid; text-align: right;">1,943,923</td> <td style="padding-bottom: 1.5pt; text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: rgb(204,238,255);"><td> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;"> </td> <td style="text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: White;"> <td style="text-align: left; padding-left: 9pt;">Lease liabilities—current</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">622,896</td> <td style="text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: rgb(204,238,255);"> <td style="text-align: left; padding-bottom: 1.5pt; padding-left: 9pt;">Lease liabilities—long-term</td> <td style="padding-bottom: 1.5pt;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: right;">1,321,027</td> <td style="padding-bottom: 1.5pt; text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: White;"> <td style="text-align: left; padding-bottom: 1.5pt;">Lease liabilities—total</td> <td style="padding-bottom: 1.5pt;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left;">$</td> <td style="border-bottom: Black 1.5pt solid; text-align: right;">1,943,923</td> <td style="padding-bottom: 1.5pt; text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: rgb(204,238,255);"><td> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;"> </td> <td style="text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: White;"> <td style="text-align: left; padding-bottom: 1.5pt; padding-left: 9pt;">Difference between undiscounted and discounted cash flows</td> <td style="padding-bottom: 1.5pt;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left;">$</td> <td style="border-bottom: Black 1.5pt solid; text-align: right;">461,702</td> <td style="padding-bottom: 1.5pt; text-align: left;"> </td> </tr></tbody></table> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in;"><span style="font-weight: bold;"><i> </i></span></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0in; text-align: justify;"><span style="font-weight: bold;"><i>Contingencies</i></span></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in;"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify;">The Company is subject to various legal proceedings from time to time as part of its business. As of June 30, 2026, the Company was not currently party to any legal proceedings or threatened legal proceedings, the adverse outcome of which, individually or in the aggregate, it believes would have a material adverse effect on its business, financial condition, and results of operations.</p> P36M 10589 August 2026 P60M November 30, 2029 7965 P120M May 2027 1607 6026 P60M January 2028 5001 P60M P60M February 2027 P124M February 2032 P84M March 2028 P36M 1500 March 31, 2027 5900 P120M February 2033 P10Y December 2034 <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify;">In accordance with ASC 842, the components of lease expense were as follows:</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in;"><span style="font-weight: bold;"><i> </i></span></p> <table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif;"> <tbody><tr style="vertical-align: bottom;"><td style="font-weight: bold; font-style: italic; border-bottom: Black 1.5pt solid;">For the six months ended June 30,</td> <td style="font-weight: bold; font-style: italic; padding-bottom: 1.5pt;"> </td> <td colspan="2" style="font-weight: bold; font-style: italic; text-align: center; border-bottom: Black 1.5pt solid;">2026</td> <td style="padding-bottom: 1.5pt; font-weight: bold; font-style: italic;"> </td> <td style="font-weight: bold; font-style: italic; padding-bottom: 1.5pt;"> </td> <td colspan="2" style="font-weight: bold; font-style: italic; text-align: center; border-bottom: Black 1.5pt solid;">2025</td> <td style="padding-bottom: 1.5pt; font-weight: bold; font-style: italic;"> </td> </tr><tr style="vertical-align: bottom; background-color: rgb(204,238,255);"> <td style="width: 76%; text-align: left; padding-bottom: 1.5pt;">Operating lease expense</td> <td style="width: 1%; padding-bottom: 1.5pt;"> </td> <td style="width: 1%; border-bottom: Black 1.5pt solid; text-align: left;">$</td> <td style="width: 9%; border-bottom: Black 1.5pt solid; text-align: right;">322,070</td> <td style="width: 1%; padding-bottom: 1.5pt; text-align: left;"> </td> <td style="width: 1%; padding-bottom: 1.5pt;"> </td> <td style="width: 1%; border-bottom: Black 1.5pt solid; text-align: left;">$</td> <td style="width: 9%; border-bottom: Black 1.5pt solid; text-align: right;">515,956</td> <td style="width: 1%; padding-bottom: 1.5pt; text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: White;"> <td style="text-align: left; padding-bottom: 1.5pt;">Total lease expense</td> <td style="padding-bottom: 1.5pt;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left;">$</td> <td style="border-bottom: Black 1.5pt solid; text-align: right;">322,070</td> <td style="padding-bottom: 1.5pt; text-align: left;"> </td> <td style="padding-bottom: 1.5pt;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left;">$</td> <td style="border-bottom: Black 1.5pt solid; text-align: right;">515,956</td> <td style="padding-bottom: 1.5pt; text-align: left;"> </td> </tr></tbody></table> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in;"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify;">In accordance with ASC 842, other information related to leases was as follows:</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in;"> </p> <table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif;"> <tbody><tr style="vertical-align: bottom;"><td style="border-bottom: Black 1.5pt solid; text-indent: -0.25in; padding-left: 0.25in; font-weight: bold; font-style: italic;">For the six months ended June 30,</td> <td style="font-weight: bold; font-style: italic; padding-bottom: 1.5pt;"> </td> <td colspan="2" style="font-weight: bold; font-style: italic; text-align: center; border-bottom: Black 1.5pt solid;">2026</td> <td style="padding-bottom: 1.5pt; font-weight: bold; font-style: italic;"> </td> <td style="font-weight: bold; font-style: italic; padding-bottom: 1.5pt;"> </td> <td colspan="2" style="font-weight: bold; font-style: italic; text-align: center; border-bottom: Black 1.5pt solid;">2025</td> <td style="padding-bottom: 1.5pt; font-weight: bold; font-style: italic;"> </td> </tr><tr style="vertical-align: bottom; background-color: rgb(204,238,255);"> <td style="text-indent: -0.25in; padding-left: 0.25in; width: 76%; text-align: left; padding-bottom: 1.5pt;">Operating cash flows from operating leases</td> <td style="width: 1%; padding-bottom: 1.5pt;"> </td> <td style="width: 1%; border-bottom: Black 1.5pt solid; text-align: left;">$</td> <td style="width: 9%; border-bottom: Black 1.5pt solid; text-align: right;">327,822</td> <td style="width: 1%; padding-bottom: 1.5pt; text-align: left;"> </td> <td style="width: 1%; padding-bottom: 1.5pt;"> </td> <td style="width: 1%; border-bottom: Black 1.5pt solid; text-align: left;">$</td> <td style="width: 9%; border-bottom: Black 1.5pt solid; text-align: right;">455,712</td> <td style="width: 1%; padding-bottom: 1.5pt; text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: White;"> <td style="text-indent: -0.25in; text-align: left; padding-bottom: 1.5pt; padding-left: 0.375in;">Cash paid for amounts included in the measurement of lease liabilities</td> <td style="padding-bottom: 1.5pt;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left;">$</td> <td style="border-bottom: Black 1.5pt solid; text-align: right;">327,822</td> <td style="padding-bottom: 1.5pt; text-align: left;"> </td> <td style="padding-bottom: 1.5pt;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left;">$</td> <td style="border-bottom: Black 1.5pt solid; text-align: right;">455,712</td> <td style="padding-bottom: 1.5pt; text-align: left;"> </td> </tr></tbody></table> 322070 515956 322070 515956 327822 455712 327822 455712 <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify;">In accordance with ASC 842, maturities of operating lease liabilities as of June 30, 2026 were as follows:</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in;"> </p> <table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif;"> <tbody><tr style="vertical-align: bottom;"><td> </td> <td style="font-weight: bold;"> </td> <td colspan="2" style="font-weight: bold; text-align: center;">Operating</td> <td style="font-weight: bold;"> </td> </tr><tr style="vertical-align: bottom;"><td style="font-weight: bold; font-style: italic; border-bottom: Black 1.5pt solid;">Year ending:</td> <td style="font-weight: bold; padding-bottom: 1.5pt;"> </td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid;">Lease</td> <td style="padding-bottom: 1.5pt; font-weight: bold;"> </td> </tr><tr style="vertical-align: bottom; background-color: rgb(204,238,255);"> <td style="width: 88%; text-align: left; padding-left: 9pt;">2026</td> <td style="width: 1%;"> </td> <td style="width: 1%; text-align: left;">$</td> <td style="width: 9%; text-align: right;">423,914</td> <td style="width: 1%; text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: White;"> <td style="text-align: left; padding-left: 9pt;">2027</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">567,980</td> <td style="text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: rgb(204,238,255);"> <td style="text-align: left; padding-left: 9pt;">2028</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">372,677</td> <td style="text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: White;"> <td style="text-align: left; padding-left: 9pt;">2029</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">347,524</td> <td style="text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: rgb(204,238,255);"> <td style="text-align: left; padding-left: 9pt;">2030</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">244,579</td> <td style="text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: White;"> <td style="padding-bottom: 1.5pt; padding-left: 9pt;">Thereafter</td> <td style="padding-bottom: 1.5pt;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: right;">448,951</td> <td style="padding-bottom: 1.5pt; text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: rgb(204,238,255);"> <td style="text-align: left; padding-bottom: 1.5pt;">Total undiscounted cash flows</td> <td style="padding-bottom: 1.5pt;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left;">$</td> <td style="border-bottom: Black 1.5pt solid; text-align: right;">2,405,625</td> <td style="padding-bottom: 1.5pt; text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: White;"><td> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;"> </td> <td style="text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: rgb(204,238,255);"><td style="text-align: left;">Reconciliation of lease liabilities:</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;"> </td> <td style="text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: White;"> <td style="text-align: left; padding-left: 9pt;">Weighted-average remaining lease terms</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">4.58 year</span></td> <td style="text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: rgb(204,238,255);"> <td style="text-align: left; padding-bottom: 1.5pt; padding-left: 9pt;">Weighted-average discount rate</td> <td style="padding-bottom: 1.5pt;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: right;">10.0</td> <td style="padding-bottom: 1.5pt; text-align: left;">%</td> </tr><tr style="vertical-align: bottom; background-color: White;"> <td style="text-align: left; padding-bottom: 1.5pt;">Present values</td> <td style="padding-bottom: 1.5pt;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left;">$</td> <td style="border-bottom: Black 1.5pt solid; text-align: right;">1,943,923</td> <td style="padding-bottom: 1.5pt; text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: rgb(204,238,255);"><td> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;"> </td> <td style="text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: White;"> <td style="text-align: left; padding-left: 9pt;">Lease liabilities—current</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">622,896</td> <td style="text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: rgb(204,238,255);"> <td style="text-align: left; padding-bottom: 1.5pt; padding-left: 9pt;">Lease liabilities—long-term</td> <td style="padding-bottom: 1.5pt;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: right;">1,321,027</td> <td style="padding-bottom: 1.5pt; text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: White;"> <td style="text-align: left; padding-bottom: 1.5pt;">Lease liabilities—total</td> <td style="padding-bottom: 1.5pt;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left;">$</td> <td style="border-bottom: Black 1.5pt solid; text-align: right;">1,943,923</td> <td style="padding-bottom: 1.5pt; text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: rgb(204,238,255);"><td> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;"> </td> <td style="text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: White;"> <td style="text-align: left; padding-bottom: 1.5pt; padding-left: 9pt;">Difference between undiscounted and discounted cash flows</td> <td style="padding-bottom: 1.5pt;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left;">$</td> <td style="border-bottom: Black 1.5pt solid; text-align: right;">461,702</td> <td style="padding-bottom: 1.5pt; text-align: left;"> </td> </tr></tbody></table> 423914 567980 372677 347524 244579 448951 2405625 P4Y6M29D 0.10 1943923 622896 1321027 1943923 461702 <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0;"><span style="font-weight: bold;">13. SHAREHOLDERS’ EQUITY</span></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in;"><span style="font-weight: bold;"> </span></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify;"><span style="font-weight: bold;"><i>Common Stock</i></span></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in;"><span style="font-weight: bold;"><i> </i></span></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify;"> The Company has authorization to issue and outstanding at any one time 40,000,000 shares of common stock with a par value of $0.0001 per share. The holders of common stock are entitled to one vote per share and dividends declared by the Company’s Board of Directors.  </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify;"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify;"><span style="font-weight: bold;"><i>Preferred Stock</i></span></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify;"><span style="font-weight: bold;"><i> </i></span></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify;"> The Company has authorization to issue and have outstanding at any one time 1,000,000 shares of preferred stock with a par value of $0.0001 per share, in one or more classes or series within a class as may be determined by our board of directors, who establish, from time to time, the number of shares to be included in each class or series, fix the designation, powers, preferences and rights of the shares of each such class or series and any qualifications, limitations or restrictions thereof. Any preferred stock issued is senior to other existing classes of common stock with respect to the payment of dividends or amounts upon liquidation or dissolution. As of June 30, 2026 and December 31, 2025, <span style="-sec-ix-hidden:fc_1739304077;"><span style="-sec-ix-hidden:fc_1377015513;">no</span></span> shares of our preferred stock had been designated any rights, and we had <span style="-sec-ix-hidden:fc_1997406244;"><span style="-sec-ix-hidden:fc_1741606846;"><span style="-sec-ix-hidden:fc_2044482427;"><span style="-sec-ix-hidden:fc_2043977969;">no</span></span></span></span> shares of preferred stock issued and outstanding.  </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify;"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify;"><span style="font-weight: bold;"><i>Dividend policy</i></span></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in;"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify;"> Dividends are paid at the discretion of the Board of Directors. There were <span style="-sec-ix-hidden:fc_1390968365;"><span style="-sec-ix-hidden:fc_353039232;">no</span></span> dividends declared for the six months ended June 30, 2026 and 2025. </p> 40000000 0.0001 one 1000000 0.0001 <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0;"><span style="font-weight: bold;">14. SUBSEQUENT EVENTS</span></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify;"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify;">The Company evaluated all events or transactions that occurred after June 30, 2026 up through the date the consolidated financial statements were available to be issued. Based upon the evaluation, except as disclosed below or within the footnotes, the Company did not identify any recognized or non-recognized subsequent events that would have required adjustment or disclosure in the consolidated financial statements as of and for the period ended June 30, 2026, except as follows:</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0;"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify;"> On July 14, 2026, the Company renewed the lease for its facility in Brea, California. The renewed lease term begins on September 1, 2026 and expires on August 31, 2027, with monthly lease payments of approximately $11,453. No adjustment to the accompanying condensed consolidated financial statements was required as a result of this event. </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0;"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify;"> On August 10, 2026, the Company entered into an Agricultural Import and Supply Agreement (the “Import and Supply Agreement”) with The Mighty Oak, Inc. (“Mighty Oak”), which established the general terms and conditions under which the Company will import, purchase, store, and supply agricultural products to Mighty Oak, and Mighty Oak will supply such products to major markets and retailers in the United States of America (U.S.) using its vendor codes. The specific terms for transactions, including items, quantities, prices, delivery dates, delivery locations, and payment terms, shall be determined in accepted Purchase Orders (“PO”). The annual supply and import volume under the Import and Supply Agreement is guaranteed at a minimum of $20,000,000, and both parties are obligated to supply and purchase the minimum committed volume. If actual PO amounts fall short of the annual minimum guaranteed amount due to reasonable market conditions, the parties shall, upon mutual written agreement, carry over the shortfall quantity to the following year’s PO volume for adjustment and fulfillment. The Import and Supply Agreement remains in effect for two years from August 10, 2026, and automatically renews for successive one-year terms unless either party provides written notice of non-renewal at least 60 days prior to expiration. During the term of the Agreement and for a period of one year following termination, Mighty Oak is precluded from directly purchasing products covered under the Agreement from the Company’s suppliers without the Company’s prior written consent. </p> 11453 20000000 P60D false false false false false false