v3.26.3
SEGMENT REPORTING
 6 Months Ended 12 Months Ended
Jun. 30, 2026
Dec. 31, 2025
Segment Reporting [Abstract]    
SEGMENT REPORTING

 

13. SEGMENT REPORTING

 

The Company determines its reportable operating segments using the management approach in accordance with ASC 280, Segment Reporting. Operating segments are identified based on the internal reports regularly reviewed by the Company’s Chief Executive Officer, who serves as the CODM, for purposes of evaluating performance and allocating resources.

 

The Company conducts its operations primarily through online e-commerce platforms serving customers in North America and Europe. Accordingly, the Company has identified two reportable operating segments: North America and Europe.

 

Following the termination of the Company’s VIE arrangements in December 2025, the Company no longer conducts operations in China. Accordingly, beginning in 2026, China is no longer presented as a reportable operating segment.

 

Revenue is attributed to the geographic region in which the related sales are generated. Cost of revenues and operating expenses are directly assigned or allocated to the reportable segments based on the nature of the underlying activities. For costs and expenses that are not directly attributable to a specific segment, the Company generally allocates such amounts based on each segment’s proportionate share of revenue for the applicable quarterly period. For interim year-to-date reporting, the quarterly allocations are aggregated to derive the cumulative year-to-date segment amounts. Interest income and interest expense are allocated based on the use of the related assets and liabilities.

 

Certain expenses, assets, liabilities and other amounts associated with AMCV are included solely to reconcile the Company’s reportable segment information to the corresponding consolidated amounts. These items are presented separately as Reconciliation and Other and do not represent a separate operating or reportable segment.

 

 

The following tables present selected financial information for the Company’s reportable operating segments.

 SCHEDULE OF SEGMENT REPORTING

             
   Three months ended 
   June 30, 2026 
   North America   Europe   Reconciliation
and Other		   Total 
                 
REVENUES                    
Product revenue  $157,947   $-   $-   $157,947 
Product revenue - related party   103    5,040    -    5,143 
Revenue share – related party   575,874    18,364    -    594,238 
Intelligent Information Service - related party   147,999    4,720    -    152,719 
AI Service Sharing - related party   26,292    838    -    27,130 
Total Revenues   908,215    28,962    -    937,177 
Less:                    
Cost of Revenue:                    
E-commerce platform expenses   37,274    1,189    -    38,463 
Product cost   86,161    6,329    -    92,490 
Delivery and freight cost   5,812    185    -    5,997 
Inventory impairment losses   48,087    1,533    -    49,620 
Total Cost of Revenue   177,334    9,236    -    186,570 
Gross Profit   730,881    19,726    -    750,607 
Less:                    
Operating Expenses:                    
Marketing and advertising   2,854    91    42    2,987 
Consulting fee   32,822    1,047    -    33,869 
Warranty expense   669    -    -    669 
Payroll expenses   165,803    5,287    -    171,090 
Professional fees   487,988    15,561    29,885    533,434 
Travel and entertainment   16,478    525    -    17,003 
Credit loss   -    -    -    - 
Office expenses   14,987    478    320    15,785 
Sales tax   4,291    137    -    4,428 
State B&O tax   -    -    -    - 
Other segment expenses   123,131    3,927    784    127,842 
Plus:                    
Other Income/(Expenses):                    
Marketing campaign   -    -    -    - 
Interest income   31,610    1,008    424    33,042 
Loss on deconsolidation   -    -    -    - 
Interest expense   -    -    -    - 
Other income   -    -    -    - 
Other expense   (51,884)   (1,655)   (388)   (53,927)
Add (Less):                    
Income tax (provision) benefit   1,604    51    -    1,655 
Segment Net Income (Loss)  $(136,812)  $(7,923)   (30,995)  $(175,730)

 

 

              
    Three months ended 
    June 30, 2025 
    North America   Europe   China   Total 
                  
REVENUES                     
Product revenue   $536,139   $213,174   $-   $749,313 
Product revenue - related party    104,933    41,722     -    146,655 
Revenue share – related party    354,831    146,476    -    501,307 
Intelligent Information Service - related party    -    -    -    - 
AI Service Sharing - related party    -    -    -    - 
Total Revenues    995,903    401,372    -    1,397,275 
Less:                     
Cost of Revenue:                     
E-commerce platform expenses    152,571    60,478    -    213,049 
Product cost    598,566    238,073    -    836,639 
Delivery and freight cost    14,253    6,105    -    20,358 
Inventory impairment losses    42,246    18,402    -    60,648 
Total Cost of Revenue    807,636    323,058    -    1,130,694 
Gross Profit    188,267    78,314    -    266,581 
Less:                     
Operating Expenses:                     
Marketing and advertising    143,405    55,483    -    198,888 
Consulting fee    53,140    21,855    -    74,995 
Warranty expense    6,509    2,710    -    9,219 
Payroll expenses    59,845    24,150    -    83,995 
Professional fees    316,972    132,773    -    449,745 
Travel and entertainment    17,132    7,112    -    24,244 
Credit loss    -    -    -    - 
Office expenses    2,858    1,147    -    4,005 
Sales tax    3,751    1,304    -    5,055 
State B&O tax    -    -    -    - 
Other segment expenses    117,144    33,836    491    151,471 
Plus:                     
Other Income/(Expenses):                     
Marketing campaign    378,945    154,743    -    533,688 
Interest income    131    -    -    131 
Loss on deconsolidation    -    -    -    - 
Interest expense    (31,834)   -    23,752    (8,082)
Other income    -    -    -    - 
Other expense  (17,863)   -   -    (17,863)

Add (Less):

                     
Income tax (provision) benefit    (1,751)   -    -    (1,751)
Segment Net Income (Loss) $(204,861)  $(47,313)  $23,261   $(228,913)

 

 

   North America   Europe   Reconciliation
and Other		   Total 
   Six months ended 
   June 30, 2026 
  

North

America

   Europe  

Reconciliation

and Other

   Total 
                 
REVENUES                    
Product revenue  $259,965   $-   $-   $259,965 
Product revenue - related party   135,467    6,224    -    141,691 
Revenue share – related party   1,328,130    22,116    -    1,350,246 
Intelligent Information Service - related party   304,600    5,501    -    310,101 
AI Service Sharing - related party   58,790    1,000    -    59,790 
Total Revenues   2,086,952    34,841    -    2,121,793 
Less:                    
Cost of Revenue:                    
E-commerce platform expenses   53,768    1,271    -    55,039 
Product cost   225,779    7,513    -    233,292 
Delivery and freight cost   12,054    216    -    12,270 
Inventory impairment losses   48,394    1,535    -    49,929 
Total Cost of Revenue   339,995    10,535    -    350,530 
Gross Profit   1,746,957    24,306    -    1,771,263 
Less:                    
Operating Expenses:                    
Marketing and advertising   12,251    138    64    12,453 
Consulting fee   66,267    1,213    -    67,480 
Warranty expense   2,161    7    -    2,168 
Payroll expenses   384,617    6,379    -    390,996 
Professional fees   796,262    17,099    42,300    855,661 
Travel and entertainment   46,068    673    -    46,741 
Credit loss   -    -    -    - 
Office expenses   33,702    571    960    35,233 
Sales tax   18,800    209    -    19,009 
State B&O tax   -    -    -    - 
Other segment expenses   363,509    5,125    849    369,483 
Plus:                    
Other Income/(Expenses):                    
Marketing campaign   -    -    -    - 
Interest income   59,702    1,148    843    61,693 
Loss on deconsolidation   -    -    -    - 
Interest expense   -    -    -    - 
Other income   -    -    -    - 
Other expense   (61,047)   (1,700)   (670)   (63,417)
Add (Less):                    
Income tax (provision) benefit   (485)   41   -    (444)
Segment Net Income (Loss)  $21,490   $(7,619)   (44,000)  $(30,129)

 

 

   North America   Europe   Reconciliation
and Other		   Total 
    Six months ended 
    June 30, 2025 
   

North

America

   Europe   China   Total 
                  
REVENUES                     
Product revenue   $1,360,081   $611,035   $-   $1,971,116 
Product revenue - related party    105,067    41,722    -    146,789 
Revenue share – related party    739,636    332,259    -    1,071,895 
Intelligent Information Service - related party    -    -    -    - 
AI Service Sharing - related party    -    -    -    - 
Total Revenues    2,204,784    985,016    -    3,189,800 
Less:                     
Cost of Revenue:                     
E-commerce platform expenses    392,637    176,380    -    569,017 
Product cost    1,204,968    541,294    -    1,746,262 
Delivery and freight cost    23,141    10,395    -    33,536 
Inventory impairment losses    59,393    26,680    -    86,073 
Total Cost of Revenue    1,680,139    754,749    -    2,434,888 
Gross Profit    524,645    230,267    -    754,912 
Less:                     
Operating Expenses:                     
Marketing and advertising    409,583    183,992    -    593,575 
Consulting fee    113,192    50,848    -    164,040 
Warranty expense    12,865    5,779    -    18,644 
Payroll expenses    141,253    63,454    -    204,707 
Professional fees    603,371    271,046    -    874,417 
Travel and entertainment    34,531    15,512    -    50,043 
Credit loss    -    -    -    - 
Office expenses    6,925    3,111    -    10,036 
Sales tax    15,111    6,788    -    21,899 
State B&O tax    30    -    -    30 
Other segment expenses    217,234    82,159    916    300,309 
Plus:                     
Other Income/(Expenses):                     
Marketing campaign    840,167    377,419    -    1,217,586 
Interest income    449    -    (1)   448 
Loss on deconsolidation    -    -    -    - 
Interest expense    (31,843)   7,259    -    (24,584)
Other income    -    -    -    - 
Other expense    (7,368)   (3,310)   -    (10,678)
Add (Less):                     
Income tax (provision) benefit    (6,074)   -    -    (6,074)
Segment Net Income (Loss)   $(234,119)  $(71,054)  $(917)  $(306,090)

 

 

The following table presents total assets by segment as of June 30, 2026 and December 31, 2025.

 

             
           June 30, 2026   June 30, 2026  
   North
America		   Europe   Reconciliation
and Other		   Total  
TOTAL SEGMENT ASSETS  $10,267,052   $880,528    79,456   $11,227,035  

 

    North
America		   Europe   China   Total 
    December 31, 2025 
    North
America		   Europe   China   Total 
TOTAL SEGMENT ASSETS   $7,595,063   $3,577,523   --   $11,172,586 

 

 

15. SEGMENT REPORTING

 

The Company determines its reportable operating segments using the “management approach” in accordance with ASC 280, Segment Reporting. Under this approach, operating segments are based on the internal reporting structure used by the Company’s chief operating decision maker (“CODM”) to allocate resources and assess operating performance.

 

The Company’s Chief Executive Officer serves as the CODM and evaluates segment performance primarily based on segment revenue and segment net income (loss).

 

The Company operates online stores on e-commerce platforms with separate platform accounts serving North America and Europe. Accordingly, the Company has identified two primary operating segments: (1) North America and (2) Europe. Revenue generated through these e-commerce platforms is the primary performance indicator because the Company’s business model is based on selling products through online marketplace stores.

 

In addition, the Company previously consolidated two variable interest entities (“VIEs”), Xiaoyun and Yishijue, which operated in China. As a result, for purposes of geographic presentation, the Company presents financial information for three geographic areas: North America, Europe, and China. No revenue was generated from China during the year ended December 31, 2025.

 

 

Segment revenues are directly attributed to the geographic region in which the sales are generated. Cost of revenues and operating expenses are allocated based on the relative proportion of revenue generated by each segment. Interest income and interest expense are allocated based on the use of underlying assets or liabilities within each segment.

 

Other segment expenses primarily include Amazon storage fees, employee medical insurance expenses, software subscription fees, and business license and permit expenses. These costs are not material individually and are therefore not presented separately.

 

             
   Years ended 
   December 31, 
   2025 (Restated) 
   North America   Europe   China   Total 
                 
REVENUES                    
Product revenue  $1,558,592    787,882    -    2,346,474 
Product revenue - related party   387,136    128,620    -    515,756 
Revenue share – related party   1,968,655    927,301    -    2,895,956 

Intelligent Information service

   151,364    71,297    -    222,661 
Total Revenues   4,065,747    1,915,100         5,980,847 
Less:                    
Cost of Revenue:                    
E-commerce platform expenses   455,738    214,667    -    670,405 
Product cost   1,511,260    711,853    -    2,223,113 
Delivery and freight cost   48,364    22,781    -    71,145 
Inventory impairment losses   110,832    52,205    -    163,037 
Total Cost of Revenue   2,126,193    1,001,506    -    3,127,699 
Gross Profit   1,939,554    913,594    -    2,853,148 
Less:                    
Operating Expenses:                    
Marketing and advertising   416,708    196,284    -    612,992 
Consulting fee   159,691    75,220    -    234,911 
Warranty expense   -    -    -    - 
Payroll expenses   197,470    93,014    -    290,484 
Professional fees   1,106,593    521,242    -    1,627,835 
Travel and entertainment   43,659    20,564    -    64,223 
(Reversal)/provision for credit losses - related party   -    -    -    - 
Office expenses   14,857    6,998    -    21,855 
Sales tax   20,029    9,435    -    29,464 
State B&O tax   21    9    -    30 
Other segment expenses   398,048    187,494         585,542 
Plus:                    
Other Income/(Expenses):                    
Marketing campaign   827,708    389,878    -    1,217,586 
Interest income   9,798    4,615    -    14,413 
Loss on deconsolidation   (3,610)   (1,700)   -    (5,310)
Interest expense   (16,734)   (7,882)   -    (24,616)
Loss from the change of the FV of Warrant Liability   (17,368,256)   (8,181,016)      (25,549,272)
Other income   -    -    -    - 
Other expense   26,971    12,704    -    39,675 
Less:                    
Income tax   (4,651)   -         (4,651)
Segment Net Income (Loss)  $(16,946,296)    (7,980,068)    -    (24,926,364)

 

 

             
   Years ended 
   December 31, 
   2024 
   North America   Europe   China   Total 
                 
REVENUES                    
Product revenue  $5,454,400   $1,985,499   $-   $7,439,899 
Product revenue - related party   6,270    -    -    6,270 
Revenue share – related party   2,020,232    734,556    -    2,754,788 
Intelligent Information service   -    -    -    - 
Total Revenues   7,480,902    2,720,055    -    10,200,957 
Less:                    
Cost of Revenue:                    
E-commerce platform expenses   1,495,826    543,882    -    2,039,708 
Product cost   4,401,924    1,600,539    -    6,002,463 
Delivery and freight cost   129,401    47,050    -    176,451 
Inventory impairment losses   972,686    353,669    -    1,326,355 
Total Cost of Revenue   6,999,837    2,545,140    -    9,544,977 
Gross Profit   481,065    174,915    -    655,980 
Less:                    
Operating Expenses:                    
Marketing and advertising   1,455,946    529,382    -    1,985,328 
Consulting fee   400,619    145,665    -    546,284 
Warranty expense   29,865    10,859    -    40,724 
Payroll expenses   246,716    89,706    -    336,422 
Professional fees   674,159    245,124    -    919,283 
Travel and entertainment   483    176    -    659 
(Reversal)/provision for credit losses - related party   (925,599)   (336,547)   -    (1,262,146)
Office expenses   6,472    2,353    -    8,825 
Sales tax   47,217    17,168    -    64,385 
State B&O tax   5,509    -    -    5,509 
Other segment expenses   204,954    75,786    217    280,957 
Plus:                    
Other Income/(Expenses):                    
Marketing campaign   1,305,022    474,506    -    1,779,528 
Interest income   674    -    2    676 
Loss on deconsolidation   -    -    -    - 
Interest expense   (19,616)   -    (7,326)   (26,942)
Loss from the change of the FV of Warrant Liability   -    -    -    - 
Other income   40,384    14,684    0    55,068 
Other expense   (17,227)   (6,264)   -    (23,491)
Less:                    
Income tax   7,824    -    -    7,824 
Segment Net Income (Loss)  $(571,434)  $(196,039)  $(9,487)  $(776,960)

 

The following table presents total assets by segment as of December 31, 2025 and 2024.

 

             
   December 31, 2025  
   North America   Europe   China   Total  
TOTAL SEGMENT ASSETS  $7,595,063   $3,577,523   $-   $11,172,586  

 

             
    December 31, 2024 
    North America   Europe   China   Total 
TOTAL SEGMENT ASSETS   $5,388,357   $1,959,205   $2,089   $7,349,651