Biddance AI Systems(BDAI)提交6-K/A重发2026财年中报：收入增65%但净亏扩大49.6%，且更名AI无实质AI业务、并购将带来约5倍股本稀释

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
6-K/A
REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16 OF THE
SECURITIES EXCHANGE ACT OF 1934
For the month of October
2026
Commission File Number
001-39339
Biddance AI Systems, Inc.
(Translation of registrant’s name into English)
Unit 304, No. 30 Guanri Road, Siming District
Xiamen City, Fujian Province, People’s Republic
of China
(Address of principal executive offices)
Indicate by check mark whether the registrant files or will file annual
reports under cover of Form 20-F or Form 40-F:
Form 20-F ☒ Form 40-F ☐
INCORPORATION BY REFERENCE
This report on Form 6-K (“Report”)
shall be deemed to be incorporated by reference into: (i) the registration statement on
Form F-3
, as amended (File No. 333-279459); (ii)
the registration statement on
Form F-3
(File No. 333-281723) of the Company; (iii) the registration statement on
Form S-8
(File No. 333-289245)
of the Company, each filed with the U.S. Securities and Exchange Commission on, respectively, May 16, 2024, August 22, 2024, and August
5, 2025 (collectively, and as amended from time to time, the “Registration Statements”), and into each prospectus or prospectus
supplement outstanding under the Registration Statements, to the extent not superseded by documents or reports subsequently filed or furnished
by the Company under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended.
1
EXPLANATORY NOTE
Biddance AI Systems, Inc. (the “Company”) is furnishing this Amendment No. 1 to its Report on Form 6-K furnished to the U.S. Securities and Exchange Commission on October 23, 2026 (the “Original 6-K”) to provide the unaudited condensed consolidated financial statements included in the Original 6-K with the relevant Interactive Data Files in Inline XBRL format and to furnish the Company’s press release dated October 26, 2026 announcing its financial results for the six months ended June 30, 2026, a copy of which is attached hereto as Exhibit 99.3. Except as described herein, no other changes have been made to the Original 6-K.
2
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Form 6-K Report and the exhibits hereto contain
certain forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995.
These forward-looking statements involve known and unknown risks and uncertainties and are based on the Company’s current expectations
and projections about future events that the Company believes may affect its financial condition, results of operations, business strategy
and financial needs.
Investors can identify these forward-looking statements
by words or phrases such as “approximates,” “assesses,” “believes,” “hopes,” “expects,”
“anticipates,” “estimates,” “projects,” “intends,” “plans,” “will,”
“would,” “should,” “could,” “may” or similar expressions.
Many of these statements are based on our assumptions
about factors that are beyond our ability to control or predict and are subject to significant risks and uncertainties that are described
more fully in “Item 3. Key Information-D. Risk Factors” in our annual report on Form 20-F filed with the SEC on April 24,
2026. Any of these factors or a combination of these factors could materially affect our future results of operations and the ultimate
accuracy of the forward-looking statements.
Fluctuations in our future financial results may
negatively impact the value of our Class A ordinary shares. In addition to these important factors, important factors that, in our view,
could cause actual results to differ materially from those discussed in the forward-looking statements include, among other things:
●
assumptions about our future financial and operating results, including revenue, income, expenditures, cash balances, and other financial items;
●
our ability to execute our growth and expansion, including our ability to meet our goals;
●
current and future economic and political conditions;
●
our capital requirements and our ability to raise any additional financing which we may require;
●
our ability to hire and retain qualified management personnel and key employees in order to enable us to develop our business; and
●
other assumptions described in this Report underlying or relating to any forward-looking statements.
Should one or more of the foregoing risks or uncertainties
materialize, should any of our assumptions prove incorrect, or should we be unable to address any of the foregoing factors, our actual
results may vary in material and adverse respects from those projected in these forward-looking statements.
Consequently, there can be no assurance that actual
results or developments anticipated by us will be realized or, even if substantially realized, that they will have the expected consequences
to, or effects, on us. Given these uncertainties, prospective investors are cautioned not to place undue reliance on such forward-looking
statements.
3
The Company undertakes no obligation to update
or revise publicly any forward-looking statements to reflect subsequent occurring events or circumstances, or changes in its expectations,
except as may be required by law.
Although the Company believes that the expectations
expressed in these forward-looking statements are reasonable, it cannot assure you that such expectations will turn out to be correct,
and the Company cautions investors that actual results may differ materially from the anticipated results and encourages investors to
review other factors that may affect its future results in the Company’s annual report and other filings with the U.S. Securities
and Exchange Commission.
As a result, you are cautioned not to rely on
any forward-looking statements.
Financial Statements and Exhibits.
Exhibits
:
Exhibit No.
Description
99.1
Unaudited Condensed Consolidated Financial Statements as of June 30, 2026 and for the Six Months Ended June 30, 2026 and 2025.
99.2
Operating and Financial Review and Prospects in Connection with the Unaudited Condensed Consolidated Financial Statements for the Six Months Ended June 30, 2026 and 2025.
99.3
Press Release dated October 27, 2026.
101.INS
Inline XBRL Instance Document
101.SCH
Inline XBRL Taxonomy Extension Schema Document.
101.CAL
Inline XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF
Inline XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB
Inline XBRL Taxonomy Extension Label Linkbase Document.
101.PRE
Inline XBRL Taxonomy Extension Presentation Linkbase Document.
104
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).
4
SIGNATURES
Pursuant to the requirements of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Date: October 27, 2026
Biddance AI Systems, Inc.
By:
/s/ Xiaoyang Huang
Xiaoyang Huang
Chief Executive Officer
(Principal Executive Officer)
5

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Exhibit 99.1
BIDDANCE AI SYSTEMS, INC. AND SUBSIDIARIES
INDEX TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
Page
Condensed Consolidated Balance Sheets as of June 30, 2026 and December 31, 2025
F-2
Unaudited Condensed Consolidated Statements of Operations and Comprehensive Loss for the Six Months Ended June 30, 2026 and 2025
F-3
Unaudited Condensed Consolidated Statements of Changes in Shareholders’ Equity for the Six Months Ended June 30, 2026 and 2025
F-4
Unaudited Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2026 and 2025
F-5
Notes to Unaudited Condensed Consolidated Financial Statements
F-6
F-
1
BIDDANCE AI SYSTEMS, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(Expressed in U.S. Dollars, except for
the number of shares)
June 30,
2026
December 31,
2025
(Unaudited)
Assets
Current assets
Cash and cash equivalents
$
17,088,014
$
3,611,999
Short-term investments
19,970,243
18,364,219
Accounts receivable, net
5,350,006
5,407,989
Advances to suppliers, net
4,422
290,680
Inventories, net
85,568
79,411
Loans receivable
589,528
6,020,220
Other receivable
5,846,247
6,846,247
Prepaid expenses and other current assets
10,507
171,661
Total current assets
48,944,535
40,792,426
Non-current assets
Non-current accounts receivable, net
-
1,027,421
Non-current loans receivable
-
285,996
Property, equipment and software, net
332,488
475,189
Total non-current assets
332,488
1,788,606
Total Assets
$
49,277,023
$
42,581,032
Liabilities and Shareholders’ Equity
Current liabilities
Accounts payable
$
255,982
$
292,065
Loan payable – related party
-
2,645,465
Deferred revenue
65,298
73,059
Taxes payable
1,832,077
1,795,736
Accrued expenses and other current liabilities
160,776
148,342
Total current liabilities
2,314,133
4,954,667
Non-current Liabilities
Deferred income tax liabilities, net
1,559,142
1,616,053
Total non-current liabilities
1,559,142
1,616,053
Total Liabilities
3,873,275
6,570,720
Commitments and Contingencies
-
-
Shareholders’ Equity
Class A Ordinary Shares, US$
0.375
par value;
800,000
shares authorized,
799,861
shares issued and outstanding as of June 30, 2026;
800,000
shares authorized,
5,629
shares issued and outstanding as of December 31, 2025*
299,948
2,111
Class B Ordinary Shares, US$
0.0001
par value;
150,000,000
shares authorized,
8,192,000
shares issued and outstanding
819
819
Additional paid-in capital
35,040,217
24,920,060
Statutory reserve
836,215
836,215
Retained earnings
9,301,135
10,671,200
Accumulated other comprehensive loss
(
74,586
)
(
420,093
)
Total Shareholders’ Equity
45,403,748
36,010,312
Total Liabilities and Shareholders’ Equity
$
49,277,023
$
42,581,032
*
The shares data are presented on a retroactive basis to reflect the 1-for-25 reverse share split of the Class A ordinary shares effective on July 6, 2026 (Notes 14 and 19).
The accompanying notes are an integral part of
these condensed consolidated financial statements.
F-
2
BIDDANCE AI SYSTEMS, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS
OF OPERATIONS AND COMPREHENSIVE LOSS
(Expressed in U.S. Dollars, except for
the number of shares)
Six Months Ended
June 30,
2026
2025
(Unaudited)
(Unaudited)
Revenues
$
1,226,046
$
741,541
Cost of revenues
(
1,024,835
)
(
567,675
)
Gross profit
201,211
173,866
Operating expenses:
General and administrative
2,002,067
1,519,128
Selling
1,411
2,325
Total operating expenses
2,003,478
1,521,453
Operating loss
(
1,802,267
)
(
1,347,587
)
Other income (expense)
Net investment gain
102,363
82,463
Interest income
210,639
412,683
Interest expense
-
(
153,049
)
Other income (expense), net
14,337
(
11,501
)
Total other income, net
327,339
330,596
Loss before income taxes
(
1,474,928
)
(
1,016,991
)
Income tax benefit
(
104,863
)
(
100,882
)
Net loss
$
(
1,370,065
)
$
(
916,109
)
Comprehensive loss
Net loss
$
(
1,370,065
)
$
(
916,109
)
Foreign currency translation gain
345,507
236,419
Comprehensive loss
$
(
1,024,558
)
$
(
679,690
)
Loss per ordinary share
Basic and diluted
$
(
0.16
)
$
(
0.11
)
Weighted average number of ordinary shares outstanding
Basic and diluted*
8,313,997
8,197,629
*
The shares data are presented on a retroactive basis to reflect the 1-for-25 reverse share split of the Class A ordinary shares effective on July 6, 2026 (Notes 14 and 19).
The accompanying notes are an integral part of
these unaudited condensed consolidated financial statements.
F-
3
BIDDANCE AI SYSTEMS, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS
OF CHANGES IN SHAREHOLDERS’ EQUITY
Six Months Ended June 30, 2026 and 2025
(Expressed in U.S. Dollars, except for the number
of shares)
Class A
Ordinary Shares*
Class B
Ordinary Shares
Additional
Accumulated
other
Total
Number of
shares
Amount
Number of
shares
Amount
paid-in
capital
Statutory
reserve
Retained
earnings
comprehensive
loss
Shareholders’
Equity
Balance as of December 31, 2024
5,629
$
2,111
8,192,000
$
819
$
24,920,060
$
836,215
$
10,491,058
$
(
975,343
)
$
35,274,920
Foreign currency translation adjustment
-
-
-
-
-
-
-
236,419
236,419
Net loss
-
-
-
-
-
-
(
916,109
)
-
(
916,109
)
Balance as of June 30, 2025 (unaudited)
5,629
$
2,111
8,192,000
$
819
$
24,920,060
$
836,215
$
9,574,949
$
(
738,924
)
$
34,595,230
Class A
Ordinary Shares*
Class B
Ordinary Shares
Additional
Accumulated
other
Total
Number of
shares
Amount
Number of
shares
Amount
paid-in
capital
Statutory
reserve
Retained
earnings
comprehensive
loss
Shareholders’
Equity
Balance as of December 31, 2025
5,629
$
2,111
8,192,000
$
819
$
24,920,060
$
836,215
$
10,671,200
$
(
420,093
)
$
36,010,312
Foreign currency translation adjustment
-
-
-
-
-
-
-
345,507
345,507
Issuance of ordinary shares
794,232
297,837
-
-
10,120,157
-
-
10,417,994
Net loss
-
-
-
-
-
-
(
1,370,065
)
-
(
1,370,065
)
Balance as of June 30, 2026 (unaudited)
799,861
$
299,948
8,192,000
$
819
$
35,040,217
$
836,215
$
9,301,135
$
(
74,586
)
$
45,403,748
*
The shares data are presented on a retroactive basis to reflect the 1-for-25 reverse share split of the Class A ordinary shares effective on July 6, 2026 (Notes 14 and 19).
The accompanying notes are an integral part of
these unaudited condensed consolidated financial statements.
F-
4
BIDDANCE AI SYSTEMS, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS
OF CASH FLOWS
(Expressed in U.S. Dollars)
Six Months Ended
June 30,
2026
2025
(Unaudited)
(Unaudited)
Cash flows from operating activities:
Net loss
$
(
1,370,065
)
$
(
916,109
)
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:
Depreciation and amortization
154,064
145,775
Loss on disposal of property, plant and equipment
1,433
-
Accrued interest income from loans, net
-
(
104,790
)
Net investment gain
(
55,640
)
(
66,820
)
Provision for expected credit losses of receivables
506,980
482,621
Provision for obsolete inventories
2,019
3,832
Deferred income tax
(
105,252
)
(
100,882
)
Changes in operating assets and liabilities:
Short-term investments - trading securities
(
1,312,113
)
2,427,711
Accounts receivable
710,590
1,044,167
Advance to suppliers
291,845
(
2,272,803
)
Inventories
(
5,700
)
12,483
Prepaid expenses and other current assets
164,540
265,122
Accounts payable
(
42,330
)
(
50,983
)
Advance from customers
-
291,466
Deferred revenue
(
9,888
)
(
16,056
)
Tax payable
(
18,497
)
5,781
Due to related parties
-
16,546
Accrued expenses and other current liabilities
7,798
(
13,461
)
Net cash (used in) provided by operating activities
(
1,080,216
)
1,153,600
Cash flows from investing activities:
Loans to third parties
(
291,443
)
(
413,645
)
Loans repayment by third parties
3,439,030
137,882
Purchases of held-to-maturity investments
(
1,000,000
)
(
1,650,000
)
Redemption of held-to-maturity investments
2,000,000
700,000
Refund of deposit for acquisition
-
1,000,000
Net cash provided by (used in) investing activities
4,147,587
(
225,763
)
Cash flows from financing activities:
Proceeds from issuance of ordinary shares
10,417,994
-
Net cash provided by financing activities
10,417,994
-
Effect of exchange rate changes on cash
(
9,350
)
33,690
Net increase in cash
13,476,015
961,527
Cash and cash equivalents at the beginning of period
3,611,999
7,236,798
Cash and cash equivalents at the end of period
$
17,088,014
$
8,198,325
Supplemental disclosures of cash flow information:
Cash paid for income taxes
$
-
$
-
Cash paid for interest
$
-
$
-
The accompanying notes are an integral part of
these unaudited condensed consolidated financial statements.
F-
5
BIDDANCE AI SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
June 30, 2026 and 2025
NOTE 1 – NATURE OF OPERATIONS
Hitek Global Inc. (“HiTek Global”) was incorporated under the laws of the Cayman Islands on November 3, 2017 in anticipation of an initial public offering (“IPO”) that was completed in 2023. HiTek Global, through its subsidiaries, variable interest entity (“VIE”) and VIE’s subsidiary (collectively, the “Company”) generates revenues from the sale of hardware and equipment, sale of software, and delivery of tax services to customers in the People’s Republic of China (the “PRC”).
The Company’s corporate structure as of June 30, 2026 was as follows:
On August 24, 2026, HiTek Global completed the process of changing its jurisdiction of incorporation from the Cayman Islands to the British Virgin Islands and changed its name to Biddance AI Systems, Inc. (See Note 19).
NOTE 2 – BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The condensed consolidated financial statements (“CFS”) as of June 30, 2026 and for the six months ended June 30, 2026 and 2025 are unaudited. The accompanying unaudited condensed CFS were prepared by the Company in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial reporting. Operating results as presented are not necessarily indicative of the results expected for a full year. Certain prior year amounts have been reclassified to conform with the current year presentation. The reclassification has no effect on the results of operations.
F-
6
Principles of Consolidation
The accompanying unaudited condensed CFS include financial information for the Company and its wholly-owned subsidiaries and those VIEs where the Company is the primary beneficiary. In preparing the unaudited condensed CFS, all significant inter-company accounts and transactions were eliminated.
VIE Agreements with HiTek
Due to PRC legal restrictions of foreign ownership in certain sectors, neither we nor our subsidiaries own any equity interest in HiTek. Instead, WFOE, HiTek and HiTek’s shareholders entered into a series of contractual arrangements (“VIE Agreements”) on March 31, 2018, which have not been tested in a court of law. The VIE Agreements by and among WFOE, HiTek, and HiTek’s shareholders include (i) certain power of attorney agreements and equity interest pledge agreement, which provide WFOE effective control over HiTek; (ii) an exclusive technical consulting and service agreement which allows WFOE to receive substantially all of the economic benefits from HiTek; and (iii) certain exclusive equity interest purchase agreements which provide WFOE with an exclusive option to purchase all or part of the equity interests in and/or assets of HiTek when and to the extent permitted by PRC laws. Accordingly, the Company is considered the primary beneficiary of VIE for accounting purpose and has consolidated the VIE and the VIE’s subsidiaries’ assets, liabilities, results of operations, and cash flows in the accompanying consolidated financial statements.
Each of the VIE Agreements is described in detail below:
Exclusive Technical Consulting and Service Agreement
Pursuant to the Exclusive Technical Consulting and Service Agreement between HiTek and WFOE, WFOE provides HiTek with technical support, consulting services and other management services relating to its day-to-day business operations and management, on an exclusive basis. The Exclusive Technical Consulting and Service Agreement came into effect as of March 31, 2018. For services rendered to HiTek by WFOE under this agreement, WFOE is entitled to collect a service fee that shall be paid per quarter of
100
% of HiTek’s quarterly profit. The term of the Exclusive Technical Consulting and Service Agreement is ten years unless it is terminated by WFOE with
30
-day prior notice.
Equity Interest Pledge Agreement
WFOE, HiTek and HiTek shareholders entered into an Equity Interest Pledge Agreement, pursuant to which HiTek shareholders pledged all of their equity interests in HiTek to WFOE in order to guarantee the performance of HiTek’s obligations under the Exclusive Technical Consulting and Service Agreement as described above. The Equity Interest Pledge Agreement came into effect as of March 31, 2018. During the term of the pledge, WFOE is entitled to receive any dividends declared on the pledged equity interests of HiTek. The Equity Interest Pledge Agreement ends when all contractual obligations under the Exclusive Technical Consulting and Service Agreement have been fully performed.
Exclusive Equity Interests Purchase Agreement
Under the Exclusive Equity Interests Purchase Agreement, the HiTek Shareholders granted WFOE (or its designee) an exclusive option to purchase, to the extent permitted under PRC law, part or all of their equity interests in HiTek. The option price is equal to the capital paid in by the HiTek Shareholders subject to any appraisal or restrictions required by applicable PRC laws and regulations. The Exclusive Equity Interests Purchase Agreement remains effective for a term of ten years and may be extended for another ten years at WFOE’s election.
F-
7
Power of Attorney
Pursuant to the Power of Attorney, each HiTek Shareholder authorizes WFOE to act on their behalf as their exclusive agent and attorney with respect to all rights as shareholders, including but not limited to: (a) the attendance of the shareholder’s meeting and the execution of relative shareholder resolution(s) of HiTek; (b) exercising all the shareholder’s rights, including voting, that shareholders are entitled to under the laws of China and the articles of association, including but not limited to the sale or transfer or pledge or disposition of shares in part or in whole; and (c) designating and appointing on behalf of shareholders the legal representative, the executive director, supervisor, the chief executive officer and other senior management members of HiTek.
Excluding the effect of intercompany balances, the VIEs accounted for
28
% and
99
% of the Company’s total assets and total liabilities, respectively, as of June 30, 2026, and
46
% and
99
% of the Company’s total assets and total liabilities, respectively, as of December 31, 2025. As of June 30, 2026 and December 31, 2025, $
214,976
and $
307,191
of cash was denominated in RMB, respectively.
Risks in relation to the VIE structure
The Company’s operations and businesses through its VIE could be found by PRC authorities to violate PRC law and regulations prohibiting or restricting foreign ownership of companies that engage in such operations and businesses. While the Company’s management considers the possibility of such a finding by PRC regulatory authorities under current law and regulations to be remote, on January 19, 2015, the Ministry of Commerce of the PRC, or (the “MOFCOM”) released on its Website for public comment a proposed PRC law (the “Draft FIE Law”) that appears to include VIEs within the scope of entities that could be considered foreign invested companies (or “FIEs”) that would be subject to restrictions under existing PRC law on foreign investment in certain industries. Specifically, the Draft FIE Law introduces the concept of “actual control” for determining if an entity is considered to be an FIE. In addition to control through direct or indirect ownership or equity, the Draft FIE Law includes control through contractual arrangements within the definition of “actual control.” If the Draft FIE Law is passed by the People’s Congress of the PRC and goes into effect in its current form, these provisions regarding control through contractual arrangements could be construed to reach the Company’s VIE arrangements, and as a result, the Company’s VIE could become subject to the current restrictions on foreign investment in certain categories of industry. If a finding were made by PRC authorities, under existing law and regulations or under the Draft FIE Law if it becomes effective, about the Company’s operation of certain of its operations and businesses through its VIEs, regulatory authorities with jurisdiction over the licensing and operation of such operations and businesses would have broad discretion in dealing with such a violation, including levying fines, confiscating the Company’s income, revoking the business or operating licenses of the affected businesses, requiring the Company to restructure its ownership structure or operations, or requiring the Company to discontinue all or any portion of its operations. Any of these actions could cause significant disruption to the Company’s business operations and have a severe adverse impact on the Company’s cash flows, financial position and operating performance.
In addition, the contracts among WFOE, HiTek and HiTek’s shareholders would not be enforceable in China if PRC government authorities or courts found that such contracts contravene PRC laws and regulations or are otherwise not enforceable for public policy reasons. If the Company was unable to enforce these contractual arrangements, the Company would not be able to exert effective control over the VIEs. Consequently, the VIEs’ results of operations, assets and liabilities would not be included in the Company’s consolidated financial statements. If such were the case, the Company’s cash flows, financial position, and operating performance would be materially adversely affected. The Company’s contractual arrangements WFOE, HiTek and HiTek’s shareholders are approved and in place. Management believes such contracts are enforceable and considers the possibility remote that PRC regulatory authorities with jurisdiction over the Company’s operations and contractual relationships would find the contracts to be unenforceable.
The Company’s operations and businesses are conducted by its VIEs, which hold revenue-producing assets. The VIEs also have an assembled workforce, focused primarily on R&D, whose costs are expensed as incurred. The Company’s operations and businesses may be adversely impacted if the Company loses the ability to use and enjoy assets held by its VIE.
VIEs are generally entities that lack sufficient equity to finance their activities without additional financial support from other parties or whose equity holders lack adequate decision-making ability. All VIEs and their subsidiaries of the Company must be evaluated to determine the primary beneficiary of the risks and rewards of the VIE. The primary beneficiary is required to consolidate the VIE for financial reporting purposes.
F-
8
Summary information regarding consolidated VIEs and their subsidiaries is as follows.
As of
June 30,
2026
As of
December 31,
2025
(Unaudited)
Total current assets
$
17,904,033
$
19,622,217
Total non-current assets
332,488
1,788,606
Total Assets
$
18,236,521
$
21,410,823
Total Liabilities
$
3,904,015
$
6,954,572
Six Months Ended June 30,
2026
2025
(Unaudited)
(Unaudited)
Revenues
$
795,544
$
737,904
Net loss
$
(
560,526
)
$
(
469,268
)
Six Months Ended June 30,
2026
2025
(Unaudited)
(Unaudited)
Net cash (used in) provided by operating activities
$
(
552,224
)
$
1,844,037
Net cash provided by (used in) investing activities
$
451,737
$
(
275,763
)
Use of Estimates and Assumptions
The preparation of the Company’s consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period.
Significant accounting estimates reflected in the Company’s consolidated financial statements include allowance for expected credit losses, inventory obsolescence, deferred taxes, and the useful lives of property and equipment. Since the use of estimates is an integral component of the financial reporting process, actual results could differ from those estimates.
Reverse Share Split
On June 4, 2026, the Board approved a reverse split at a ratio of 1-for-25 that became effective on July 6, 2026. Pursuant to the Board approval, every
25
issued and unissued Class A ordinary shares were combined into
one
Class A ordinary share. No fractional shares were issued in connection with the reverse split. Any fractional share resulting from the reverse split was rounded up to the nearest whole share at the participant level. Following the reverse split, the par value of each Class A ordinary share was changed from $
0.015
to $
0.375
. All shares and per share data presented in the unaudited condensed consolidated financial statements and related notes have been retroactively restated to reflect the reverse split (See Notes 14 and 19).
Fair Values of Financial Instruments
The U.S. GAAP regarding fair value of financial instruments and related fair value measurements define fair value, establish a three-level valuation hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.
The three levels of inputs are defined as follows:
●
Level 1 inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.
●
Level 2 inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.
●
Level 3 inputs to the valuation methodology are unobservable.
F-
9
ASC 825-10 “Financial Instruments” allows entities to choose to measure certain financial assets and liabilities at fair value (fair value option). The fair value option may be elected on an instrument-by-instrument basis and is irrevocable, unless a new election date occurs. If the fair value option is elected for an instrument, unrealized gains and losses for that instrument should be reported in earnings at each subsequent reporting date. The Company did not elect to apply the fair value option to any outstanding instruments.
The carrying amounts in the consolidated balance sheets for cash, short-term investment, accounts receivable, advances to suppliers, inventories, loans receivable, prepaid expenses and other current assets, accounts payable, advances from customers, loan payable, deferred revenue, taxes payable, and accrued expenses and other current liabilities approximate their fair value based on the short-term maturity of these instruments.
The Company’s investments measured at fair value on a recurring basis consist of trading securities and bank deposits. The valuation for the Level 1 position is based on quoted prices in active markets. For detailed information, please see “NOTE 3 – INVESTMENTS.”
Loss Per Share (“EPS”)
Basic EPS is computed by dividing net loss by the weighted-average number of ordinary shares outstanding during the period. Diluted EPS is computed by dividing net loss by the weighted-average number of ordinary shares and dilutive potential ordinary shares outstanding during the period.
Cash and Cash Equivalents
Cash consists of cash on hand and in banks. The Company considers all highly liquid investments with an original maturity of three months or less when purchased to be cash equivalents. The Company maintains cash with various financial institutions in the PRC. As of June 30, 2026 and December 31, 2025, cash balances held in PRC banks were uninsured. The Company has not experienced any losses in bank accounts during the six months ended June 30, 2026 and 2025.
Concentrations of Credit Risk
Currently, all of the Company’s operations are in the PRC. Accordingly, the Company’s business, financial condition and results of operations may be influenced by the political, economic, and legal environment in the PRC, and by the general state of the PRC’s economy. The Company’s operations in the PRC are subject to specific considerations and significant risks not typically associated with companies in the United States of America. The Company’s results may be adversely affected by changes in governmental policies with respect to laws and regulations, anti-inflationary measures, currency conversion and remittance abroad, and rates and methods of taxation, among other things.
Financial instruments which potentially subject the Company to concentrations of credit risk consist principally of cash, short-term investments, trade accounts receivable, and accounts receivable from related parties and advances to suppliers. A portion of the Company’s sales are credit sales which are to the customers whose ability to pay is dependent upon the industry economics prevailing in these areas; however, concentrations of credit risk with respect to trade accounts receivables is limited due to generally short payment terms. The Company also performs ongoing credit evaluations of its customers to help further reduce credit risk.
Investments
Short-term investments consist of trading securities and held-to-maturity securities, which include trading stock, mutual funds and wealth management products issued by commercial banks with maturity within
one year
. Considering some of the Company’s short-term investments are highly liquid in nature, changes in the fair value and related transactions of short-term investments are presented as operating activities in the Company’s consolidated statements of cash flows. Long-term investments include mutual funds and wealth management products with a maturity of over one year. The Company accounts for investments in accordance with FASB ASC Topic 320 “Investments — Debt and Equity Securities.” Dividend and interest income, including amortization of the premium and discount at acquisition, for all categories of investments in securities is included in consolidated statements of operations. Net realized and unrealized holding gains and losses for investments are included in consolidated statements of operations.
F-
10
If a security is acquired with the intent of selling it within hours or days, the security is classified as a trading security. The Company classifies investments in trading stock and mutual funds as trading securities. Unrealized holding gains and losses for trading securities are included in earnings.
If the Company has positive intent and ability to hold the security to maturity, the security is classified as a held-to-maturity security. The Company classifies its investment in wealth management products as held-to-maturity securities as the Company intends to hold these investments until maturity. The investment in wealth management products is valued at carrying value, which approximates the amortized cost. For individual securities classified as held-to-maturity securities, the Company evaluates whether a decline in fair value below the amortized cost basis is other-than-temporary, in accordance with ASC 320. Other-than-temporary impairment loss is recognized in earnings equal to the entire excess of the debt security’s amortized cost basis over its fair value at the balance sheet date of the reporting period for which the assessment is made. The Company did not record any impairment charge for the six months ended June 30, 2026 and 2025.
Expected Credit Losses
The Company maintains an allowance for expected credit losses in accordance with ASC 326 and records it as an offset to related asset such as accounts receivable, and the provision for estimated credit losses is expensed. The Company assesses collectability by reviewing receivables on a collective basis where similar characteristics exist, primarily based on the size and nature of specific customers’ receivables. In determining the amount of the allowance for credit losses, the Company considers historical collectability based on past due status, the age of the receivable balances, credit quality of the Company’s customers based on ongoing credit evaluations, current economic conditions, reasonable and supportable forecasts of future economic conditions, and other factors that may affect the Company’s ability to collect from customers. Bad debts are written off as incurred.
Advances to Suppliers
Advances to suppliers are amounts prepaid to suppliers for purchases of inventories and outsourced software services. In evaluating the recoverability of such advances, the Company mainly considers the age of the balance and the ability of the suppliers to perform the related obligations.
Inventories
Inventories include computer, network hardware, and selected safety monitoring equipment for sale to petrochemical companies. Inventories are stated at the lower of cost (weighted average basis) or net realizable value. The methods of determining inventory costs are used consistently from year to year. Allowance for inventory obsolescence is provided when the market value of certain inventory items is lower than the cost.
Other Receivable
Other receivable represents the principal and realized gain from short-term investments that have not yet been remitted to the Company subsequent to the termination of the associated investment agreements.
Property, Equipment and Software
Property, equipment and software are carried at cost and are depreciated on a straight-line basis over the estimated useful lives of the assets. The cost of repairs and maintenance is expensed as incurred; major replacements and improvements are capitalized. When assets are retired or disposed of, the cost and accumulated depreciation and amortization are removed from the accounts, and any resulting gains or losses are included in the statement of operations in the year of disposition. The Company examines the possibility of decreases in the value of property, equipment and software, when events or changes in circumstances reflect the fact that their recorded value may not be recoverable.
F-
11
Estimated useful lives are as follows, taking into account the assets’ estimated residual value:
Classification
Estimated useful lives
Furniture and office equipment
2
-
3
years
Computer equipment
2
-
3
years
Transportation equipment
5
years
Buildings
20
years
Building improvements
5
years
Software
3
years
Impairment of Long-lived Assets
In accordance with ASC Topic 360, the Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be fully recoverable. The Company recognizes an impairment loss when the sum of expected undiscounted future cash flows is less than the carrying amount of the asset. The amount of impairment is measured as the difference between the asset’s estimated fair value and its book value. The Company did
not
record any impairment charge during the six months ended June 30, 2026 and 2025.
Revenue Recognition
The Company follows ASU 2014-09, Topic 606, “Revenue from Contracts with Customers” and its related amendments (collectively referred to as “ASC 606”) for its revenue recognition accounting policy that depicts the transfer of promised goods or services to customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services. In accordance with ASC 606, revenue is recognized when all of the following five steps are met: (i) identify the contract(s) with the customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations; (v) recognize revenue when (or as) each performance obligation is satisfied.
The Company generates revenues primarily from three sources: (1) hardware and equipment sales, (2) software sales, and (3) tax services. The Company recognizes revenue when performance obligations under the terms of a contract with its customers are satisfied, which occurs when controls over the goods or services have been transferred to the customer. The Company’s revenue is reported on a gross basis since the Company is primarily obligated in the transaction, is subject to inventory risk and credit risk and has discretion to establish prices. Revenue is recorded net of value-added tax.
The Company elected a practical expedient that it does not adjust the promised amount of consideration for the effects of a significant financing component if the Company expects that, upon the inception of contracts, the period between when the Company transfers its promised services or goods to its customers and when the customers pay for those services or goods will be one year or less.
Hardware and Equipment Sales
Hardware and equipment sales consist primarily of (a) sale of computer and network equipment to end users across various industries, and (b) sale of selected safety monitoring equipment to petrochemical companies. Based on contracts signed with customers, the Company has a single performance obligation and it recognizes revenue when ownership of such hardware and equipment is transferred to the customers.
Software Sales
The Company focuses on perpetual license sales for a self-developed software Communication Interface System (“CIS”). CIS is based on LINUX, which is a general embedded interface system used by petrochemical companies. The system is used to communicate the RCTX-X module, collect the work diagram, the electricity diagram, the pressure temperature and other measures, and can extract the data and import it to the software of the windows platform to display analysis.
Software contracts with customers include sale of perpetual license software, installation of software, operation training service and warranty. The installation and operation training are essential to the functionality of the software which are provided to the clients prior to the acceptance of the software. The Company provides one year warranty which mainly is for telephone supports. The Company concludes the warranty as assurance-type. The Company recognizes revenue from software sales when the software is accepted by the customer. The Company did not have any revenue from software sales during the six months ended June 30, 2026 and 2025.
F-
12
Tax Services
In 2023, Xiamen Taxation Bureau implemented the use of electronic invoices to replace the traditional tax control system. Enterprises can use a free electronic invoice platform provided by the tax bureau, which has had a significant impact on the Company’s tax service business. In 2024, the Company cooperated with a third party to popularize an electronic tax control platform and upgrade its tax services. Such services primarily include the installation of the electronic tax control platform, operation training, such as training on issuing electronic invoice and complete tax declaration automatically, and after-sales telephone supporting services. While installation and operation training are essential to the functionality of the electronic tax control platform, after-sales telephone supporting services is an assurance-type. The entire tax service is accounted for as a single performance obligation.
Since June 2024, the Company charges an annual service fee from customers who use the electronic tax control platform popularized by the Company. Revenue from tax services is recognized as the services are performed and amounts are earned, using the straight-line method over the term of the related service agreement.
Below is a summary of the Company’s revenues by key revenue stream:
Six Months Ended June 30,
2026
2025
(Unaudited)
(Unaudited)
Hardware and equipment sales
$
1,132,887
$
616,929
Tax services
93,159
124,612
Total Revenues
$
1,226,046
$
741,541
Contract balances
Prepayments from customers prior to the services being performed are recorded as deferred revenue. Deferred revenue consists primarily of annual service fees from customers who use the electronic tax control platform popularized by the Company but the services have not yet been performed. The Company recognizes the tax service amount as revenue on a straight-line basis in accordance with the service period, which typically is less than 12 months. For the six months ended June 30, 2026 and 2025, the Company recognized revenue of $
47,205
and $
55,720
respectively, that was included in deferred revenue at the beginning of each period.
Practical expedients and exemptions
The Company generally expenses sales commissions as incurred because the amortization period would have been one year or less.
Cost of Revenues
Cost of revenues is comprised of (i) the direct cost of hardware and equipment purchased from third parties; (ii) logistics-related costs, which include product packaging and freight-in charges; and (iii) salaries and benefits for employees who handle the product sales and other costs necessary to provide the services to the customers.
Selling Expenses
Selling expenses consists of advertising and marketing expenses for promotion of our products.
General and Administrative Expenses
General and administrative expenses consist primarily of costs of salary and welfare for general administrative and management staff, facilities costs, depreciation and amortization expenses, professional fees, accounting fees, meals and entertainment, utilities, additional expenses for public offering, and other miscellaneous expenses incurred in connection with general operations. All depreciation and amortization were recorded in general and administrative expenses because fixed assets are mainly for sales and administrative purposes.
F-
13
Income Taxes
The Company is governed by the Income Tax Law of the PRC. The Company accounts for income taxes using the asset/liability method prescribed by ASC 740, “Accounting for Income Taxes.” Under this method, deferred tax assets and liabilities are determined based on the difference between the financial reporting and tax bases of assets and liabilities using enacted tax rates that will be in effect in the period in which the differences are expected to reverse. The Company records a valuation allowance to offset deferred tax assets if, based on the weight of available evidence, it is more-likely-than-not that some portion, or all, of the deferred tax assets will not be realized. The effect on deferred taxes of a change in tax rates is recognized as income or loss in the period that includes the enactment date.
The Company applies ASC 740-10-50, “Accounting for Uncertainty in Income Taxes,” which provides clarification related to the process associated with accounting for uncertain tax positions recognized in the Company’s consolidated financial statements. Audit periods remain open for review until the statute of limitations has passed. The completion of review or the expiration of the statute of limitations for a given audit period could result in an adjustment to the Company’s liability for income taxes. Any such adjustment could be material to the Company’s results of operations for any given quarterly or annual period based, in part, upon the results of operations for the given period.
Value Added Taxes (“VAT”)
VAT is reported as a deduction of revenue when incurred. Entities that are VAT general taxpayers are allowed to offset qualified input VAT paid to suppliers against their output VAT liabilities. Net VAT balance between input VAT and output VAT is recorded in taxes payable.
Foreign Currency Translation
The functional currency of the Company’s operations in the PRC is the Chinese Yuan or Renminbi (“RMB”). The consolidated financial statements are translated to U.S. dollars using the period end rates of exchange for assets and liabilities, equity is translated at historical exchange rates, and average rates of exchange (for the period) are used for revenues and expenses and cash flows. As a result, amounts relating to assets and liabilities reported on the statements of cash flows may not necessarily agree with the changes in the corresponding balances on the balance sheets. Translation adjustments resulting from the process of translating the local currency financial statements into U.S. dollars are included in determining comprehensive income / loss. Transactions denominated in foreign currencies are translated into the functional currency at the exchange rates prevailing on the transaction dates. Assets and liabilities denominated in foreign currencies are translated into the functional currency at the exchange rates prevailing at the balance sheet date with any transaction gains and losses that arise from exchange rate fluctuations on transactions denominated in a currency other than the functional currency are included in the results of operations as incurred.
All of the Company’s revenue transactions are transacted in its functional currency. The Company does not enter into any material transaction in foreign currencies. Transaction gains or losses have not had, and are not expected to have, a material effect on the results of operations of the Company.
The exchange rates as of June 30, 2026 (unaudited) and December 31, 2025 and for the six months ended June 30, 2026 and 2025 (unaudited) are as follows:
June 30,
December 31,
Six months Ended June 30,
2026
2025
2026
2025
Foreign currency
Balance Sheet
Balance Sheet
Profits/Loss
Profits/Loss
RMB:1USD
6.7851
6.9931
6.8624
7.1875
F-
14
Comprehensive Loss
Comprehensive loss is comprised of net loss and all changes to the statements of shareholders’ equity, except those due to investments by shareholders and changes in paid-in capital. For the Company, comprehensive loss for the six months ended June 30, 2026 and 2025 consisted of net loss and unrealized gain from foreign currency translation adjustment.
Related Parties
A party is considered related to the Company if it directly or indirectly or through one or more intermediaries, controls, is controlled by, or is under common control with the Company. Related parties also include principal owners of the Company, its management, members of the immediate families of principal owners of the Company and its management and other parties with which the Company may deal if one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests. A party which can significantly influence the management or operating policies of the transacting parties or if it has an ownership interest in one of the transacting parties and can significantly influence the other to an extent that one or more of the transacting parties might be prevented from fully pursuing its own separate interests is also a related party.
Segment Reporting
ASC Topic 280, “Segment Reporting,” requires use of the management approach model for segment reporting. The Company identifies operating segments as components of the consolidated operations for which discrete financial information is available and is regularly reviewed by the chief operating decision maker (“CODM”), in making decisions regarding resource allocation and evaluating financial performance.
The Company defines the term CODM to be its
Chief Executive Officer.
The Company determined it operates in
one
operating and reportable segment. The CODM reviews operating income (loss) presented only on a consolidated basis and uses this information for purposes of allocating resources and evaluating financial performance. There are no reconciling items between segment information and consolidated financial information
.
The significant segment expenses and other segment items that are provided to the CODM align with expense information that is included in the Company’s consolidated statements of operations and notes thereto.
The measure of segment assets is reported in the balance sheet as total consolidated assets. The Company’s long-lived assets are located in China.
Leases
The Company follows ASC 842 to account for its operating leases and has elected not to record assets and liabilities on its consolidated balance sheets for new or existing lease arrangements with terms of 12 months or less. The Company recognizes lease expenses for such lease on a straight-line basis over the lease term. The Company will evaluate the carrying value of its right-of use (“ROU”) assets if there are indicators of impairment and review the recoverability of the related asset group. From January 1, 2024, the Company has no lease arrangements that qualify for recognition under ASC 842. As a result, the Company does not have any ROU assets or lease liabilities related to ASC 842.
Warrants classification
When the Company issues freestanding instruments, it first analyzes the provisions of ASC Topic 480,
Distinguishing Liabilities from Equity
(“ASC 480”) in order to determine whether the instrument should be classified as a liability, with subsequent changes in fair value recognized in the statements of comprehensive loss in each period. If the instrument is not within the scope of ASC 480, the Company further analyzes the provisions of ASC Topic 815,
Derivatives and Hedging
(“ASC 815-40”) in order to determine whether the instrument is considered indexed to the entity’s own stock, and qualifies for classification within equity. If the provisions of ASC 815-40 for equity classification are not met, the instrument will be classified as a liability, with subsequent changes in fair value recognized in the statements of comprehensive loss in each period.
F-
15
Recent Accounting Pronouncements
In November 2024, the FASB issued ASU 2024-03 on Disaggregation of Income Statement Expenses that enhances disclosure of certain costs and expenses to provide enhanced transparency into the expenses presented in the income statement. The updates are effective for annual periods beginning after December 15, 2026. The Company does not expect the adoption of this ASU will have a material impact on its consolidated financial statements.
The Company does not believe other recently issued but not yet effective accounting standards, if currently adopted, would have a material effect on its consolidated financial statements.
NOTE 3 – INVESTMENTS
Investments consist of trading securities and held-to-maturity securities. Trading securities primarily include trading stock, mutual funds and wealth management products issued by commercial banks which are held for the purpose of selling them in the near term. Held-to-maturity securities primarily include wealth management products which the Company has positive intent and ability to hold them to maturity.
Held-to-maturity securities with maturity over
one year
are recorded in long-term investments.
Below is a summary of the Company’s investments as of June 30, 2026 and December 31, 2025.
Quoted
Significant
Significant
Prices in
Other
Other
Active
Observable
Unobservable
June 30,
Markets
Inputs
Inputs
2026
(Level 1)
(Level 2)
(Level 3)
(Unaudited)
Short-term investments
Trading securities carried at fair value
$
8,870,243
$
89,735
$
8,780,508
$
-
Held-to-maturity securities carried at cost
11,100,000
-
11,100,000
-
Total
$
19,970,243
$
89,735
$
19,880,508
$
-
Quoted
Significant
Significant
Prices in
Other
Other
Active
Observable
Unobservable
December 31,
Markets
Inputs
Inputs
2025
(Level 1)
(Level 2)
(Level 3)
Short-term investments
Trading securities carried at fair value
$
7,264,219
$
93,150
$
7,171,069
$
-
Held-to-maturity securities carried at cost
11,100,000
-
11,100,000
-
Total
$
18,364,219
$
93,150
$
18,271,069
$
-
Net investment gain for the six months ended June 30, 2026 and 2025 consists of the following:
2026
2025
(Unaudited)
(Unaudited)
Gain from sales of short-term investments:
Trading securities
$
9,086
$
24,849
Held-to-maturity debt securities
37,514
15,616
Unrealized gain of short-term investments:
Trading securities
55,763
41,998
Net investment gain
$
102,363
$
82,463
F-
16
NOTE 4 – ACCOUNTS RECEIVABLE, NET
At June 30, 2026 and December 31, 2025, accounts receivable, net consisted of the following.
June 30,
2026
December 31,
2025
(Unaudited)
Accounts receivable
$
6,363,085
$
6,920,852
Less: allowance for expected credit losses
(
1,013,079
)
(
485,442
)
Accounts receivable, net
5,350,006
6,435,410
Less: current portion
5,350,006
5,407,989
Non-current accounts receivable, net
$
-
$
1,027,421
The following table describes the movements in the allowance for expected credit losses during the six months ended June 30, 2026 and 2025.
2026
2025
(Unaudited)
(Unaudited)
Balance at December 31,
$
485,442
$
125,643
Provision for expected credit losses
506,980
482,621
Foreign exchange difference
20,657
8,376
Balance at June 30 (Unaudited)
$
1,013,079
$
616,640
NOTE 5 – INVENTORIES, NET
At June 30, 2026 and December 31, 2025, inventories consisted of the following.
June 30,
2026
December 31,
2025
(Unaudited)
Purchased goods
$
106,150
$
97,399
Less: reserve for obsolete inventories
(
20,582
)
(
17,988
)
Total
$
85,568
$
79,411
The following table describes the movements in the reserve for obsolete inventories during the six months ended June 30, 2026 and 2025.
2026
2025
(Unaudited)
(Unaudited)
Balance at December 31,
$
17,988
$
16,756
Reserve for obsolete inventories
2,019
3,832
Foreign exchange difference
575
365
Balance at June 30 (Unaudited)
$
20,582
$
20,953
The Company established a reserve for
100
% of its GTDs inventory in light of the introduction of the free electronic invoice platform by the tax bureau. Such reserve for GTDs inventory was fully written off in 2025. The allowance as of June 30, 2026 was related mainly to the Company’s network switches and routers.
F-
17
NOTE 6 – PREPAID EXPENSES AND OTHER CURRENT ASSETS
At June 30, 2026 and December 31, 2025, prepaid expenses and current assets consisted of the following.
June 30,
2026
December 31,
2025
(Unaudited)
Interest receivable from third-party loans
$
2,948
$
168,952
Other receivables
(1)
7,559
2,709
Total
$
10,507
$
171,661
(1)
Other receivables primarily consist of reserve funds and social security.
NOTE 7 – LOANS RECEIVABLE
At June 30, 2026 and December 31, 2025, loans receivable consisted of the following.
June 30,
2026
December 31,
2025
(Unaudited)
Guangxi Beihengda Mining Co., Ltd.
(1)
$
-
$
5,290,930
Beijing Liansheng Innovation Technology Co., Ltd
(2)
294,764
285,996
Guangzhou Ruilide Information System Co., Ltd
(3)
-
443,294
Xinjiang New Thai Hua Construction Engineering Co., Ltd
(4)
294,764
285,996
Total loan receivable
589,528
6,306,216
Less: current portion
589,528
6,020,220
Non-current loan receivable
$
-
$
285,996
(1)
On January 21, 2022, March 28, 2022 and June 14, 2022, the Company made three loans of RMB
30,000,000
($
4,421,453
), RMB
3,000,000
($
442,145
) and RMB
7,000,000
($
1,031,672
) to a third party, which were restricted for its operating activities, carrying interest at
12
%. The RMB
30,000,000
loan ($
4,421,453
) was extended to January 21, 2028. The RMB
7,000,000
loan ($
1,031,672
) was extended to June 14, 2028. The RMB
3,000,000
loan ($
442,145
) was repaid in August 2022 with interest of RMB
120,000
($
17,686
). Pursuant to a mining right pledge agreement dated August 5, 2022 between HiTek, as representative of the Lenders and the Borrower, these three loans are secured by the Borrower’s coal mining permit issued by Bobai County Natural Resources Bureau, which grants the Borrower a
20
-year mining right for certain building granite mine in Daguang Village, Shuiming Town, Bobai County, Guangxi Province, for production of
1.306
million cubic meters per year.
In March 2026, the Company, Guangxi Beihengda Mining Co., Ltd. (“Guangxi Beihengda”), and Beijing Baihengda Petroleum Technology Co., Ltd (“Beijing Baihengda”) entered into an agreement that Guangxi Beihengda assumed the Company’s loan payable and the corresponding interest payable owed to Beijing Baihengda. In March 2026, Guangxi Beihengda settled the obligations by remitting to the Company the principal of $
2,678,899
(RMB
18,500,000
) and interest of $
241,101
(RMB
1,665,000
).
(2)
On January 17, 2024, the Company provided a loan of RMB
2,000,000
($
294,764
) with
1.0
% per month interest to Beijing Liansheng Innovation Technology Co., Ltd for six months, maturing on
July 16, 2024
for its operating activities. The maturity date of the loan was first extended in July 2024 to January 16, 2025, then extended in January 2025 to January 16, 2026, and subsequently extended in January 2026 to January 16, 2027.
(3)
On April 29, 2025, the Company provided a loan of RMB
3,000,000
($
442,145
) with
1.0
% per month interest to Guangzhou Ruilide Information System Co., Ltd (“Ruilide”) for two months, maturing on
June 28, 2025
. The loan was restricted for its operating activities. Ruilide repaid RMB
1,000,000
($
147,382
) in June 2025, and RMB
500,000
($
73,691
) in July 2025. The remaining RMB
1,500,000
($
221,073
) loan was extended to May 31, 2026.
On August 26, 2025, the Company provided a loan of RMB
1,600,000
($
235,811
) with
1.0
% per month interest to Ruilide, maturing on May 31, 2026. The loan was restricted for its operating activities.
On March 27 and April 2, 2026, the Company received loan repayment that totaled RMB
3,100,000
($
456,883
).
(4)
On August 5, 2025, the Company provided a loan of RMB
2,000,000
($
294,764
) with
1.0
% per month interest to Xinjiang New Thai Hua Construction Engineering Co., Ltd (“New Thai Hua”) for six months, maturing on February 4, 2026.
Upon receipt of repayment of RMB
2,000,000
($
294,764
) from New Thai Hua on January 26, 2026, the loan was renewed with
1.0
% per month interest for six months, maturing on July 27, 2026.
Upon receipt of repayment of RMB
2,000,000
($
294,764
) from New Thai Hua on July 28, 2026, the loan was renewed with
1.0
% per month interest for six months, maturing on January 28, 2027.
Interest income for the six months ended June 30, 2026 and 2025 was $
123,365
and $
313,590
, respectively.
F-
18
NOTE 8 - OTHER RECEIVABLE
On April 25, 2023, the Company entered into an investment agreement with a third party, pursuant to which the principal amount was $
1,000,000
with an original maturity of
two years
. In March 2025, the Company elected to extend the term of the investment for an additional
one-year
term, with a new maturity date of
April 24, 2026
.
On June 3, 2024, the Company entered into an investment agreement with another third party, pursuant to which the principal amount was $
5,000,000
with an original maturity of
one year
. Upon the initial maturity in June 2025, the Company elected to extend the term of the investment for an additional
one-year
term, with a new maturity date of
June 2, 2026
.
On December 31, 2025, the Company terminated the above-mentioned investment agreements prior to their maturity dates. As a result, for reporting purposes, $
6,000,000
principal and $
846,247
realized gain were recorded in other receivable as of December 31, 2025. The Company received a principal repayment of $
1,000,000
during March and April 2026 and another repayment of $
215,014
representing realized gain in August 2026. In addition, the Company received repayment of $
5,650,000
that was paid to a bank account designated by the Company in August 2026.
NOTE 9 – PROPERTY, EQUIPMENT AND SOFTWARE, NET
At June 30, 2026 and December 31, 2025, property, equipment and software consisted of the following.
June 30,
2026
December 31,
2025
(Unaudited)
Office furniture
$
51,011
$
49,494
Transportation equipment
143,407
167,274
Buildings and improvements
613,337
595,094
Software
1,742,456
1,690,629
2,550,211
2,502,491
Less: accumulated depreciation and amortization
(
2,217,723
)
(
2,027,302
)
$
332,488
$
475,189
No impairment charge was recorded on property, equipment and software during the six months ended June 30, 2026 and 2025.
NOTE 10 – TAXES PAYABLE
At June 30, 2026 and December 31, 2025, taxes payable consisted of the following.
June 30,
2026
December 31,
2025
(Unaudited)
Value-added taxes
$
1,293,920
$
1,271,687
Income taxes
385,180
373,341
Other
152,977
150,708
Total
$
1,832,077
$
1,795,736
NOTE 11 – ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES
At June 30, 2026 and December 31, 2025, accrued expenses and other current liabilities consisted of the following.
June 30,
2026
December 31,
2025
(Unaudited)
Payroll
$
117,200
$
120,416
Other
43,576
27,926
Total
$
160,776
$
148,342
F-
19
NOTE 12 – LOAN PAYABLE
On January 21, March 28 and June 14, 2022, the Company entered into three loans of RMB
15,000,000
($
2,210,726
), RMB
1,500,000
($
221,073
) and RMB
3,500,000
($
515,836
) from Beijing Baihengda, carrying interest at
12
%. The RMB
15,000,000
($
2,210,726
) loan was extended for three years and will mature on
January 21, 2028
. In May 2025, the RMB
3,500,000
($
515,836
) loan was extended and will mature on
June 14, 2028
. The RMB
1,500,000
($
221,073
) loan was repaid prior to December 31, 2022.
On March 18, 2025, Mr. Yin became a
10
% equity owner in Beijing Baihengda. For financial statements presentation purposes, the original loan payable was reclassified to loan payable - related party as of December 31, 2025.
In March 2026, the Company, Guangxi Beihengda and Beijing Baihengda entered into an agreement that Guangxi Beihengda assumed the Company’s loan payable and the corresponding interest payable owed to Beijing Baihengda, effective on January 1, 2026. See NOTE 7 – LOANS RECEIVABLE.
The interest expense for the six months ended June 30, 2026 and 2025 was
nil
and $
153,049
, respectively.
NOTE 13 – RELATED PARTY TRANSACTIONS
The table below sets forth the major related parties and their relationships with the Company as of June 30, 2026.
Name of related parties
Relationship with the Group
Yin Shenping (Mr. Yin)
Chairman of the Board
Beijing Baihengda Petroleum Technology Co., Ltd (Beijing Baihengda)
Mr. Yin holds 10% equity interest in Beijing Baihengda
The following related party balances are non-interest bearing:
June 30,
2026
December 31,
2025
(Unaudited)
Loan payable – related party:
Beijing Baihengda
(1)
$
-
$
2,645,465
$
-
$
2,645,465
(1)
Mr. Yin became a
10
% equity owner in Beijing Baihengda on March 18, 2025. For financial statements presentation purposes, the original loan payable was reclassified to loan payable - related party. See NOTE 12 – LOAN PAYABLE.
F-
20
NOTE 14 – ORDINARY SHARES
On November 24, 2025, the 2025 annual general meeting adopted resolutions that the Company’s authorized share capital be amended from US$
50,000
divided into
431,808,000
Class A ordinary shares at a par value of US$
0.0001
each,
58,192,000
Class B ordinary shares at a par value of US$
0.0001
each and
10,000,000
preference shares at a par value of US$
0.0001
each to US$
316,000
divided into
3,000,000,000
Class A ordinary shares at a par value of US$
0.0001
each,
150,000,000
Class B ordinary shares at a par value of US$
0.0001
each and
10,000,000
preference shares at a par value of US$
0.0001
each by the creation of an additional
2,568,192,000
Class A Ordinary Shares at a par value US $
0.0001
each and
91,808,000
Class B Ordinary Shares at a par value US $
0.0001
each.
On March 12, 2026, the Company entered into a sales agreement with Maxim Group LLC (the “Sales Agent”), pursuant to which the Company would offer and sell, from time to time, to or through the Sales Agent, shares of its Class A ordinary shares, par value $
0.0001
per share having an aggregate offering price of up to $
100,000,000
.
●
On March 19, 2026,
10,000
shares (
3
shares post reverse splits) of Class A ordinary shares were issued thereunder and the Company received gross proceeds of $
10,637
.
●
On March 24, 2026,
5,852,011
shares  (
1,561
shares post reverse splits) of Class A ordinary shares were issued thereunder and the Company received gross proceeds of $
799,911
.
●
On March 26, 2026, the Sales Agent terminated the sales agreement with immediate effect in accordance with its terms.
On March 27, 2026, the Company entered into a securities purchase agreement with certain investor for the purchase and sale of
1,500,000
Class A ordinary shares of the Company and pre-funded warrants to purchase up to
98,500,000
Class A ordinary shares in a registered direct offering (the “March Offering”). The Class A ordinary shares were sold at a purchase price of $
0.03
per share, and the pre-funded warrants were sold at a purchase price of $
0.0299
per warrant, for an initial aggregate amount of $
3,000,000
, before deducting placement agent fees and expenses. In connection with the March Offering, the Company received net proceeds of $
2,449,987
and issued an aggregate of
34,196,667
shares (
26,667
shares post reverse splits) at par values of $
0.0001
, $
0.005
and $
0.015
(all were $
0.375
post reverse splits).
On June 2, 2026, the Company entered into a securities purchase agreement with certain investors for the purchase and sale, in a registered direct offering (the “June Offering”), of an aggregate of
4,000,000
Class A ordinary shares, par value $
0.015
per share, of the Company or pre-funded warrants in lieu thereof, together with ordinary warrants to purchase Class A ordinary shares. Each Class A ordinary share or pre-funded warrant in lieu thereof was sold at a purchase price of $
2.00
. Each warrant has an exercise price of $
4.5678
per Class A Ordinary Share and is exercisable to purchase approximately
3.8
Class A ordinary shares. The aggregate gross proceeds to the Company from the June Offering were $
8,000,000
, before deducting placement agent fees and other offering expenses and excluding any proceeds that may be received upon the exercise of the warrants. In connection with the June Offering, the Company received net proceeds of $
7,157,489
and issued
19,150,000
shares (
766,000
shares post reverse split) of Class A ordinary shares at par value of $
0.015
($
0.375
post reverse split).
Reverse Share Split
On November 24, 2025, the shareholders of the Company authorized the board of directors (the “Board”) to implement one or more consolidations of the Class A ordinary shares, with the specific ratio or ratios and timing to be determined by the Board within the parameters approved by the shareholders. On March 25, 2026, the board approved a reverse split at a ratio of
1-for-50
(the “March 2026 Reverse Split”), which became effective on April 6, 2026. Following the March 2026 Reverse Split, the par value of each Class A ordinary share was changed from $
0.0001
to $
0.005
.
On May 4, 2026, the Board approved another reverse split (the “May 2026 Reverse Split”) at a ratio of
1-for-3
, which became effective on May 29, 2026. Following the May 2026 Reverse Split, the par value of each Class A ordinary share was changed from $
0.005
to $
0.015
.
On June 4, 2026, the Board approved another reverse split (the “July 2026 Reverse Split”) at a ratio of
1-for-25
, which became effective on July 6, 2026. Following the July 2026 Reverse Split, the par value of each Class A ordinary share was changed from $
0.015
to $
0.375
.
F-
21
NOTE 15 – WARRANTS
On July 29, 2024, the Company closed a private placement of (a)
14,907,000
Class A ordinary shares, par value $
0.0001
per share, and (b) warrants to purchase up to
14,907,000
Class A ordinary shares (the “Private Placement”) pursuant to the Securities Purchase Agreement dated June 11, 2024, between the Company and the purchasers. The warrants are exercisable upon issuance with a term of
two years
at $
0.55
per share. The warrants also contain a cashless exercise provision. In connection with the Private Placement, the Company collected $
8,200,000
from the purchasers in June 2024 to purchase Class A ordinary shares and filed a registration statement on August 22, 2024 to register the resale of the Class A ordinary shares issued and Class A ordinary shares to be issued upon exercise of the warrants. Since the warrants are
indexed to the Company’s own stock, they are treated as equity for accounting purposes.
The summary of warrant activities for the six months ended June 30, 2026 was as follows:
Ordinary
Shares
Number
Outstanding
Weighted
Average
Exercise
Price
Contractual
Life in
Years
Outstanding as of December 31, 2025
14,907,000
$
0.55
1.0
Granted
-
-
-
Exercises
-
-
-
Expired
-
-
-
Warrants Outstanding as of June 30, 2026
14,907,000
0.55
0.1
Warrants Exercisable as of June 30, 2026
14,907,000
$
0.55
0.1
The warrants had an expiration date of July 28, 2026. No warrants were exercised between January 1 to July 28, 2026.
NOTE 16 – INCOME TAXES
The entities within the Company file separate tax returns in the respective tax jurisdictions in which they operate.
Cayman Islands
HiTek Global was a tax-exempt entity incorporated in Cayman Islands.
Hong Kong
Hitek HK was incorporated in Hong Kong and does not conduct any substantial operations. No provision for Hong Kong profits tax has been made in the consolidated financial statements as Hitek HK Limited has no assessable profits for the six months ended June 30, 2026 and 2025.
PRC
The Company’s PRC operating subsidiary and VIEs, being incorporated in the PRC, are governed by the income tax law of the PRC and are subject to PRC enterprise income tax (“EIT”). The EIT rate of PRC is
25
%, which applies to both domestic and foreign invested enterprises. From January 1, 2022 to December 31, 2024, if a small profit-making enterprise had annual taxable income less than or equal to RMB
1
million, only
12.5
% of its annual taxable income will be subject to income tax at a reduced rate of
20
%; for those with annual taxable income more than RMB
1
million but did not exceed RMB
3
million,
25
% of their annual taxable income will be subject to income tax at a reduced rate of
20
%. In March 2023, on the basis of the previous preferential policy, State Administration of Taxation and Ministry of Finance issued a notice stating that, from January 1, 2023 to December 31, 2024, for those with annual taxable income less than or equal to RMB
1
million,
25
% of their annual taxable income will be subject to income tax at the same reduced rate of
20
%. In August 2023, State Administration of Taxation and Ministry of Finance issued a notice stating that the above preferential policies were extended to December 31, 2027.
T
he Company’s loss before income taxes includes the following for the six months ended June 30.
2026
2025
(Unaudited)
(Unaudited)
Non-PRC operations
$
(
809,587
)
$
(
445,352
)
PRC operations
(
665,341
)
(
571,639
)
Total loss before income taxes
$
(
1,474,928
)
$
(
1,016,991
)
F-
22
Income tax expense was comprised of the following for the six months ended June 30.
2026
2025
(Unaudited)
(Unaudited)
Current tax expense
$
389
$
-
Deferred tax benefit
(
105,252
)
(
100,882
)
Total income tax benefit
$
(
104,863
)
$
(
100,882
)
Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes.
The cumulative tax effect at the expected rate of
25
% of significant items comprising the net deferred tax amount at June 30, 2026 and December 31, 2025 as follows.
June 30,
2026
December 31,
2025
(Unaudited)
Deferred tax assets
Net operating loss
$
123,134
$
60,681
Deferred revenue
15,417
17,230
Unbilled cost
475,467
461,325
Unbilled interest
39,462
38,288
Depreciation
11,486
9,373
Software amortization
323,096
287,015
Allowance for expected credit losses
367,413
232,109
Inventories obsolescence
(
6,198
)
(
6,509
)
Unrealized losses on trading securities
2,283
1,787
Accrued bonus
46,992
45,595
Other
50,231
48,569
Total deferred tax assets
1,448,783
1,195,463
Valuation allowance
(
76,599
)
(
15,529
)
Total deferred tax assets, net
1,372,184
1,179,934
Deferred tax liabilities
Unbilled revenue
(
2,344,731
)
(
2,264,589
)
Unbilled interest income
(
459,596
)
(
420,187
)
Deferred government subsidy
(
43,590
)
(
42,293
)
Unrealized gain on short-term investment
(
79,545
)
(
60,877
)
Other
(
3,864
)
(
8,041
)
Total deferred tax liabilities
(
2,931,326
)
(
2,795,987
)
Deferred tax liabilities, net
$
(
1,559,142
)
$
(
1,616,053
)
Following is a reconciliation of
income tax expense
at the effective rate to income tax at the calculated statutory rates for the six months ended June 30.
2026
2025
(Unaudited)
(Unaudited)
Loss before income taxes
$
(
1,474,928
)
$
(
1,016,991
)
Statutory tax rate of
25
%
(
368,732
)
25.0
%
(
254,248
)
25.0
%
Reconciling items:
Tax effect of non-deductible expense
618
-
%
570
(
0.1
)%
Tax effect of PRC preferential tax rates
1,176
(
0.1
)%
1,293
(
0.1
)%
Effect of non-PRC entities not subject to PRC tax
202,164
(
13.7
)%
111,338
(
10.9
)%
Others
59,911
(
4.1
)%
40,165
(
3.9
)%
Income tax benefit
$
(
104,863
)
7.1
%
$
(
100,882
)
10.0
%
Uncertain Tax Positions
The Company had
no
significant unrecognized uncertain tax positions or unrecognized liabilities, interest or penalties associated with unrecognized tax benefit for the six months ended June 30, 2026 and 2025.
F-
23
NOTE 17 – CONCENTRATIONS
Major Customers
Details of the Company’s major customers (including those accounting for 10% or more of the Company’s total revenues) are as follows.
Six Months Ended June 30,
2026
2025
(Unaudited)
(Unaudited)
Customer A
429,827
35
%
-
-
%
Total
$
429,827
35
%
$
-
-
%
Details of the Company’s major customers (those accounting for 10% or more of the Company’s accounts receivable) are as follows.
June 30,
2026
December 31,
2025
(Unaudited)
Customer A
$
3,355,990
53
%
$
3,961,809
57
%
Customer B
1,627,500
26
%
1,697,673
25
%
Customer C
1,012,218
16
%
982,111
14
%
Total
$
5,995,708
95
%
$
6,641,593
96
%
Major Suppliers
Details of the Company’s major suppliers (those accounting for 10% or more of the Company’s total purchases) are as follows.
Six Months Ended June 30,
2026
2025
(Unaudited)
(Unaudited)
Supplier A
$
385,782
38
%
$
-
-
%
Supplier B
77,797
8
%
59,123
11
%
Supplier C
6,692
1
%
72,358
14
%
Total
$
470,271
47
%
$
131,481
25
%
Details of the Company’s major suppliers (those accounting for 10% or more of the Company’s accounts payable) are as follows.
June 30,
2026
December 31,
2025
(unaudited)
Supplier A
$
50,000
20
%
$
85,860
29
%
Supplier D
-
-
%
46,660
16
%
Supplier E
27,943
11
%
-
-
%
Total
$
77,943
31
%
$
132,520
45
%
F-
24
NOTE 18 – COMMITMENTS AND CONTINGENCIES
Contingencies
The Company may be involved in various legal proceedings, claims and other disputes arising from the commercial operations, projects, employees and other matters which, in general, are subject to uncertainties and in which the outcomes are not predictable. The Company determines whether an estimated loss from a contingency should be accrued by assessing whether a loss is deemed probable and can be reasonably estimated. As of June 30, 2026 and as of the date in which these unaudited condensed consolidated financials are released, the Company was not aware of any litigation or proceedings against it.
NOTE 19 – SUBSEQUENT EVENTS
The Company performed an evaluation of events and transactions for potential recognition or disclosure through the date on which the CFS are released. Except as disclosed below, the Company is not aware of any material subsequent event.
Loan Receivable
On July 28, 2026, New Thai Hua repaid RMB
2,000,000
($
294,764
) to the Company. Upon receipt of repayment, the loan was renewed with
1.0
% per month interest for six months, maturing on
January 28, 2027
.
Reverse Split
On June 4, 2026, the Board approved another reverse split (the “July 2026 Reverse Split”) at a ratio of
1-for-25
, which became effective on July 6, 2026. Following the July 2026 Reverse Split, the par value of each Class A ordinary share was changed from $
0.015
to $
0.375
.
Acquisition
In August 2026, the Company entered into a Share Purchase Agreement (the “SPA”) with MAI THI MY UT (the “Seller”), Ju Fu Limited, Fourth Coco Technology Limited and Beijing Fourth Coco Technology Co., Ltd. pursuant to which the Company agreed to acquire from the Seller all of the issued and outstanding shares of Ju Fu Limited, a business company incorporated in the British Virgin Islands (“Ju Fu”) (such transaction, the “Acquisition”). Ju Fu, through its wholly owned subsidiaries, Fourth Coco Technology Limited and Beijing Fourth Coco Technology Co., Ltd., is engaged in the advertising and digital marketing business conducted under the brand of “Beijing Fourth Coco” (四个椰子).
The acquisition was structured to close in two tranches. The first closing (the “First Closing”) was completed in August 2026. In connection with the First Closing, the Company paid the US$
6,000,000
first closing cash payment, of which US$
5,650,000
and US$
350,000
were paid on August 11 and August 12, 2026, respectively.
The Company plans to complete the second closing (the “Second Closing”) of the Acquisition prior to the end of October 2026. In connection with the Second Closing, the Company made the second closing cash payment of US$
5,000,000
on October 16, 2026. The Company will issue
4,000,000
Class A ordinary shares of the Company to the Seller. Upon completion of the Second Closing and the transfer of all issued and outstanding shares of Ju Fu to the Company, Ju Fu will become a wholly owned subsidiary of the Company.
Under the SPA, up to US$
3,000,000
of additional deferred cash consideration may become payable following the Second Closing, subject to the achievement of specified performance targets of Ju Fu and its subsidiaries. The consideration shares remain subject to the applicable lock-up, leak-out, sale-proceeds limitation, carry-forward, forfeiture, surrender and cancellation provisions set forth in the SPA.
F-
25
Other Matters
At the 2026 Annual General Meeting of Shareholders of Hitek Global Inc. held in July 2026, the Company’s shareholders approved (i) the transfer by way of continuation of the Company from the Cayman Islands to the British Virgin Islands and (ii) the change of the Company’s name from “Hitek Global Inc.” to “Biddance AI Systems, Inc.” On August 24, 2026, pursuant to such approvals, the Company completed its continuation from the Cayman Islands to the British Virgin Islands (the “Migration”) and changed its name from “Hitek Global Inc.” to “Biddance AI Systems, Inc.”. In connection with the continuation, the Company adopted the new memorandum and articles of association under the laws of the British Virgin Islands.
Effective October 9, 2026, the Company’s trading symbol for its Class A ordinary shares on the Nasdaq Stock Market was changed from “HKIT” to “BDAI.”
After the Migration, the Company’s corporate structure is as follows:
NOTE 20 - CONDENSED FINANCIAL INFORMATION OF THE PARENT COMPANY
Pursuant to Rules 12-04(a), 5-04(c), and 4-08(e)(3) of Regulation S-X, the condensed financial information of the parent company shall be filed when the restricted net assets of consolidated subsidiaries exceed
25
percent of consolidated net assets as of the end of the most recently completed fiscal year. The Company performed a test on the restricted net assets of consolidated subsidiaries in accordance with such rules and concluded they were applicable to the Company as the restricted net assets of the Company’s PRC subsidiary and VIEs exceeded
25
% of the consolidated net assets of the Company. Therefore, the condensed consolidated financial statements for the parent company are included herein.
F-
26
PARENT COMPANY BALANCE SHEETS
June 30,
2026
December 31,
2025
Assets
Current assets
Cash and cash equivalents
$
16,841,902
$
3,278,253
Short-term investments
11,100,000
11,100,000
Accounts receivable, net
1,627,500
1,697,673
Advances to suppliers, net
-
-
Intercompany receivables
15,000
15,000
Other receivable
5,846,247
6,846,247
Total current assets
35,430,649
22,937,173
Non-current assets
Investments in non-VIE subsidiaries
14,307,351
14,523,251
Total non-current assets
14,307,351
14,523,251
Total Assets
$
49,738,000
$
37,460,424
Liabilities and Shareholders’ Equity
Current liabilities
Accounts payable
$
50,000
$
85,860
Intercompany payable
4,284,252
1,364,252
Total current liabilities
4,334,252
1,450,112
Total Liabilities
4,334,252
1,450,112
Commitments and Contingencies
-
-
Shareholders’ Equity
Class A Ordinary Shares, US$
0.375
par value;
800,000
shares authorized,
799,861
shares issued and outstanding as of June 30, 2026;
800,000
shares authorized,
5,629
shares issued and outstanding as of December 31, 2025*
299,948
2,111
Class B Ordinary Shares, US$
0.0001
par value;
150,000,000
shares authorized,
8,192,000
shares issued and outstanding;
819
819
Additional paid-in capital
35,040,217
24,920,060
Statutory reserve
836,215
836,215
Retained earnings
9,301,135
10,671,200
Accumulated other comprehensive loss
(
74,586
)
(
420,093
)
Total Shareholders’ Equity
45,403,748
36,010,312
Total Liabilities and Shareholders’ Equity
$
49,738,000
$
37,460,424
*
The shares data are presented on a retroactive basis to reflect the 1-for-25 reverse share split of the Class A ordinary shares effective on July 6, 2026 (Notes 14 and 19).
F-
27
PARENT COMPANY STATEMENTS OF OPERATIONS
Six Months Ended June 30,
2026
2025
(Unaudited)
(Unaudited)
Revenues
429,827
-
Cost of revenues
(
385,782
)
-
Gross profit
44,045
-
Operating expenses:
General and administrative
$
977,419
$
548,003
Total operating expenses
977,419
548,003
Operating loss
(
933,374
)
(
548,003
)
Other income (expense)
Net investment gain
37,514
15,616
Interest income
87,203
98,813
Other expense, net
-
(11,608
)
Total other income, net
124,717
102,821
Share of loss from subsidiaries
(
561,408
)
(
470,927
)
Net loss
$
(
1,370,065
)
$
(
916,109
)
Comprehensive income
Net loss
$
(
1,370,065
)
$
(
916,109
)
Comprehensive loss
$
(
1,370,065
)
$
(
916,109
)
Loss per ordinary share
Basic and diluted
$
(
0.16
)
$
(
0.11
)
Weighted average number of ordinary shares outstanding
Basic and diluted*
8,313,997
8,197,629
*
The shares data are presented on a retroactive basis to reflect the 1-for-25 reverse share split of the Class A ordinary shares effective on July 6, 2026 (Notes 14 and 19).
F-
28
PARENT COMPANY STATEMENTS OF CASH FLOWS
Six Months Ended June 30,
2026
2025
(Unaudited)
(Unaudited)
Cash flows from operating activities:
Net loss
$
(
1,370,065
)
$
(
916,109
)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Net investment loss
561,408
470,927
Changes in operating assets and liabilities:
Accounts receivable
70,173
-
Advances to suppliers
-
(
791,780
)
Prepaid expenses and other current assets
-
239,097
Accounts payable
(
35,861
)
-
Advances from customers
-
299,995
Due to intercompany
2,920,000
2,255
Net cash provided by (used in) operating activities
2,145,655
(
695,615
)
Cash flows from investing activities
Purchases of held-to maturity investments
(
1,000,000
)
(
1,650,000
)
Redemption of held-to-maturity investments
2,000,000
700,000
Refund of deposit for acquisition
-
1,000,000
Net cash provided by investing activities
1,000,000
50,000
Cash flows from financing activities
Proceeds from issuance of ordinary shares
10,417,994
-
Net cash provided by financing activities
10,417,994
-
Net increase (decrease) in cash
13,563,649
(
645,615
)
Cash and equivalents at beginning of period
3,278,253
6,489,424
Cash and equivalents at end of period
$
16,841,902
$
5,843,809
F-
29

----- ea030925202ex99-2.htm -----
EX-99.2
3
ea030925202ex99-2.htm
OPERATING AND FINANCIAL REVIEW AND PROSPECTS IN CONNECTION WITH THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED JUNE 30, 2026 AND 2025
Exhibit 99.2
BIDDANCE AI SYSTEMS INC. AND SUBSIDIARIES
MANAGEMENT’S
DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
June 30, 2026 and 2025
The following discussion and analysis should
be read in conjunction with our unaudited condensed consolidated financial statements and related notes thereto.
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING
STATEMENTS
This report contains certain statements that
may be deemed “forward-looking statements” within the meaning of United States of America securities laws. All statements,
other than statements of historical fact, that address activities, events or developments that we intend, expect, project, believe or
anticipate and similar expressions or future conditional verbs such as will, should, would, could or may occur in the future are forward-looking
statements. Such statements are based upon certain assumptions and assessments made by our management in light of their experience and
their perception of historical trends, current conditions, expected future developments and other factors they believe to be appropriate.
These statements include, without limitation,
statements about our anticipated expenditures, including those for general and administrative expenses; the potential size of the
market for our services, future development and/or expansion of our services in our markets, our ability to generate revenues,
our ability to obtain regulatory clearance and expectations as to our future financial performance. Our actual results may differ, perhaps
materially, from those anticipated in these forward-looking statements as a result of various factors, including: our need and ability
to raise additional cash. The forward-looking statements included in this report are subject to a number of additional material risks
and uncertainties, including but not limited to the risks described in our filings with the Securities and Exchange Commission.
The following discussion and analysis of our
financial condition and results of operations should be read together with our unaudited condensed consolidated financial statements and
the related notes to those statements included in this filing. In addition to historical financial information, this discussion may contain
forward-looking statements reflecting our current plans, estimates, beliefs and expectations that involve risks and uncertainties. As
a result of many important factors, our actual results and the timing of events may differ materially from those anticipated in these
forward-looking statements.
Recent Developments
At the 2026 Annual General Meeting of Shareholders
of Hitek Global Inc. held in July 2026, the Company’s shareholders approved (i) the transfer by way of continuation of the Company
from the Cayman Islands to the British Virgin Islands and (ii) the change of the Company’s name from “Hitek Global Inc.”
to “Biddance AI Systems, Inc.” On August 24, 2026, pursuant to such approvals, the Company completed its continuation from
the Cayman Islands to the British Virgin Islands and changed its name from “Hitek Global Inc.” to “Biddance AI Systems,
Inc.”. In connection with the continuation, the Company adopted the new memorandum and articles of association under the laws of
the British Virgin Islands.
Effective October 9, 2026, the Company’s
trading symbol for its Class A ordinary shares on the Nasdaq Stock Market was changed from “HKIT” to “BDAI.”
Results of Operations
The following consolidated results of operations
include the results of operations of the Company, its wholly owned subsidiary and consolidated VIEs.
Our historical reporting results are not necessarily
indicative of the results to be expected for any future period.
Six Months Ended June 30, 2026 Compared
to Six Months Ended June 30, 2025
Revenues for the six months ended June 30,
2026 and 2025:
Increase /
Percentage
2026
2025
Decrease
Change
Hardware and equipment sales
$
1,132,887
$
616,929
$
515,958
83.6
%
Tax services
93,159
124,612
(31,453
)
(25.2
)%
Total
$
1,226,046
$
741,541
$
484,505
65.3
%
Our total revenues during the six-month periods
ended June 30, 2026 and 2025 were driven primarily from sales of hardware and equipment. The increase in hardware and equipment sales
during the six-month period ended June 30, 2026 was due mainly to $0.4 million increase in sales of cable trays used in crude oil pipelines
to petrochemical companies. Our hardware and equipment sales are directly related to the procurement needs of our customers which could
be affected by the ongoing macroeconomic conditions in China. Should the economic environment in China remains sluggish, our hardware
and equipment sales could be negatively impacted in the near future.
The slight decrease in tax services revenue was
due mainly to the free use of electronic invoices provided by the tax bureau, which has negatively impacted demand for our fee-based tax
services. We are actively promoting our tax services to expand our customer base, and we believe this may create opportunities for future
growth in revenue from tax services. However, these potential growth opportunities are subject to uncertainties, including customer adoption
rates and competitive market conditions, and there can be no assurance that we will achieve any growth in tax services in the future.
Cost of revenues and gross margin for the six months ended June
30, 2026 and 2025:
Percentage
2026
2025
Variance
Change
Total revenues
$
1,226,046
$
741,541
$
484,505
65.3
%
Cost of revenues
1,024,835
567,675
457,160
80.5
%
Gross profit
$
201,211
$
173,866
$
27,345
15.7
%
Gross margin
16.4
%
23.4
%
(7.0
)%
Cost of revenues is comprised of (i) the direct
cost of hardware and equipment purchased from third parties; and (ii) logistics-related costs, which include product packaging and freight-in
charges; and (iii) salaries and benefits for employees who handle the products and other costs necessary to provide the services to the
customers.
The increase in cost of revenues during the
six-month period ended June 30, 2026 was mainly caused by the increase in hardware and equipment sales.
The decline in our gross margin from 23.4% for
the six months ended June 30, 2025 to 16.4% for the comparable period in 2026 was due mainly to unfavorable sales-mix driven
by the increase in sales of selected safety monitoring equipment that had a low profit margin. The Company expects to focus on sales orders
that could yield a higher gross margin.
Operating expenses for the six months ended June 30, 2026 and
2025:
Percentage
2026
2025
Variance
Change
Selling expenses
$
1,411
$
2,325
$
(914
)
(39.3
)%
% of revenue
0.12
%
0.3
%
(0.2
)%
-
General and administrative expenses
2,002,067
1,519,128
482,939
31.8
%
% of revenue
163.3
%
204.9
%
(41.6
)%
-
Operating expenses
$
2,003,478
$
1,521,453
$
482,025
31.7
%
Selling Expenses. Selling expenses consist of
advertising and marketing expenses for promotion of our products. Selling expenses were 0.12% of total revenues for the six months ended
June 30, 2026 and 0.3% for 2025. The decrease in selling expenses was primarily attributable to a reduction in advertising and marketing
expenses. The Company expects selling expenses to increase due to the Company’s plans to conduct marketing activities to attract purchases from new and existing customers.
General and Administrative Expenses. General and
administrative (“G&A”) expenses consist primarily of salary and welfare expenses for our administrative and management
staff, facilities costs, depreciation, professional fees, accounting fees, director and officers liability insurance and other miscellaneous
expenses incurred in connection with general operations. The increase in G&A expenses was mainly due to an increase of $387,304 in
professional service fees resulting from equity transactions, including registered direct offerings and an ATM offering. We expect our
G&A expenses to stabilize or decline in the future as a result of ongoing cost-control initiatives.
2
Net loss for the six months ended June 30, 2026 and 2025:
Percentage
2026
2025
Variance
Change
Operating loss
$
(1,802,267
)
$
(1,347,587
)
$
(454,680
)
33.7
%
Total other income
327,339
330,596
(3,257
)
(1.0
)%
Loss before income taxes
(1,474,928
)
(1,016,991
)
(457,937
)
45.0
%
Income tax benefit
104,863
100,882
3,981
3.9
%
Net loss
$
(1,370,065
)
$
(916,109
)
$
(453,956
)
49.6
%
Operating loss
. The increase in operating
loss for the six months ended June 30, 2026 was due primarily to an increase in our G&A expenses for approximately $480,000, partially
offset by an increase in gross profit for $27,000.
Other income
. Other income includes primarily
government subsidy income, net investment gain (loss), and interest income and expenses. There was no significant variance in our other
income during the six-month period ended June 30, 2026 and 2025.
Income tax benefit
. The increase in income
tax benefit for the six months ended June 30, 2026 was due primarily to the utilization of prior-year net operating losses (“NOL”)
to offset current-year taxable income.
Liquidity and Capital Resources
Six Months Ended June 30, 2026 Compared to Six Months Ended December
31, 2025
Our principal sources of liquidity come from cash
from operating activities, equity financing and loans. As of June 30, 2026, and December 31, 2025, we had cash and cash equivalents of
$17,088,014 and $3,611,999, respectively.
Working Capital. Total working capital as of June
30, 2026 was $46,630,402 compared to $35,837,759 as of December 31, 2025. The increase was due primarily to the net proceeds of approximately
$10.4 million from our ATM offering and registered direct offerings completed during the six months ended June 30, 2026.
Capital Resources and Capital Needs
. Historically,
we have financed our operations primarily through cash flows from operations, third-party loans, stock offering and private placement.
During the six months ended June 30, 2026, we financed our operations primarily through financing activities with net proceeds of approximately
$10.4 million from our ATM offering and registered direct offerings. During the six months ended June 30, 2025, we did not undertake any
financing activities and relied primarily on cash flows from operations. With the current macroeconomic market condition, we will continue
to focus on collection of outstanding accounts receivable, cost-control, be cautious on operational decisions and project selection. We
believe we have sufficient capital to meet our working capital requirements, undertake additional business development and research and
development activities, hire additional employees, and enhance our business and operating platform.
We review our accounts receivable on a periodic
basis and have recorded an allowance for expected credit losses in accordance with our accounting policy. As of the date of this report,
we have collected approximately $0.3 million (or 87.4%) of our accounts receivable from our small and medium customers as of June 30,
2026 and we will continue to monitor collection of accounts receivable from our oil and coal mine customers.
Off-Balance Sheet Arrangements
.
We have not entered into any financial guarantees
or other commitments to guarantee the payment obligations of any third parties. In addition, we have not entered into any derivative contracts
that are indexed to our own shares and classified as shareholders’ equity, or that are not reflected in our financial statements.
Furthermore, we do not have any retained or contingent interest in assets transferred to an unconsolidated entity that serves as credit,
liquidity or market risk support to such entity. Moreover, we do not have any variable interest in an unconsolidated entity that provides
financing, liquidity, market risk or credit support to us or engages in leasing, hedging or research and development services with us.
3
Cash Flows Analysis
Six Months ended June 30, 2026 Compared to Six Months ended June
30, 2025
2026
2025
(Unaudited)
(Unaudited)
Net cash (used in) provided by operating activities
$
(1,080,216
)
$
1,153,600
Net cash provided by (used in) investing activities
$
4,147,587
$
(225,763
)
Net cash provided by financing activities
$
10,417,994
$
-
(a)
Operating activities
Net cash used in operating activities for the
six months ended June 30, 2026 was primarily attributable to net loss of approximately $1.4 million; increase in short-term investments
for approximately $1.3 million; partially offset by (3) decrease in accounts receivable for $710,000 due to collection from our customers.
Net cash provided by operating activities for
the six months ended June 30, 2025 of approximately $1.2 million was primarily attributable to net loss of $0.9 million; decrease of $2.4
million in short-term investments; decrease of $1 million in accounts; increase of $2.3 million in advances to suppliers due to the increase
in purchasing of goods; and increase of $0.3 million in advances from customers.
(b)
Investing activities
Net cash provided by investing for the six months
ended June 30, 2026 of $4.1 million was primarily attributable to $3.4 million in repayment of third-party loans; $2 million in redemption
of held-to-maturity Investments, offset by $0.3 million in loans made to third parties and $1 million in purchase of held-to-maturity
Investments.
Net cash used in investing activities for the
six months ended June 30, 2025 of $0.2 million was primarily attributable to $0.4 million in loans to third parties; $0.2 million in repayment
of third-party loans; $1.7 million in purchases of held-to-maturity investments; $0.7 million in redemption of held-to-maturity Investments;
and $1 million in refund of deposit for acquisition.
(c)
Financing activities
Net cash provided by financing activities for
the six months ended June 30, 2026 of $10.4 million was attributable to the ATM offering and registered direct offerings during 2026.
Tabular Disclosure of Contractual Obligations
The Company is not exposed to further contractual obligations as of
June 30, 2026.
Research and Development, Patents and Licenses, etc.
We have a dedicated team of three highly skilled
in-house IT specialists, which includes three full-time IT professionals responsible for controlling the direction of outsourced R&D
projects.
Trend information.
Other than as disclosed elsewhere in this 6-K,
we are not aware of any material trends since the year ended December 31, 2025. We are also unaware of any known trends, uncertainties,
demands, commitments or events for the six months ended June 30, 2026 that are reasonably likely to have a material adverse effect on
our revenues, net income, profitability, liquidity or capital resources, or that would cause reported financial information not necessarily
to be indicative of future operating results or financial conditions.
Critical Accounting Estimates
Our unaudited condensed consolidated financial
statements (“CFS”) are prepared in accordance with accounting principles generally accepted in the United States which require
us to make estimates and assumptions that affect the reported amounts of assets and liabilities. On an ongoing basis, we evaluate our
estimates, including those estimates that may have a significant effect on our financial condition and results of operations. Our critical
accounting estimate is the allowance for expected credit losses as disclosed in Note 2 to our unaudited condensed CFS. We base our estimates
and judgment on historical experience and on various other factors that are believed to be reasonable under the circumstances. Actual
results may differ from these estimates under different assumptions or conditions.
4

----- ea030925202ex99-3.htm -----
EX-99.3
4
ea030925202ex99-3.htm
PRESS RELEASE DATED OCTOBER 26, 2026
Exhibit 99.3
Biddance AI Systems, Inc. Announces First Half
of Fiscal Year 2026 Financial Results
XIAMEN, China, Oct. 27, 2026 /PRNewswire/ -- Biddance AI Systems, Inc.
(Nasdaq: BDAI) (the “Company”), a China-based information technology consulting and solutions service provider, today announced
its unaudited financial results for the six months ended June 30, 2026.
Ms. Xiaoyang Huang, Chief Executive Officer and Director of Biddance
AI Systems, Inc., commented, “We are delighted with the robust year-over-year revenue growth achieved in the first half of the fiscal
year. Our hardware and equipment sales served as the main revenue driver, providing solid support to the segment’s expansion. Concurrently,
we are aggressively seeking to expand our client base for our tax services.”
First Half 2026 Financial Highlights
●
Revenue was $1.23 million for the six months ended June 30, 2026 compared
to $0.74 million for the same period of last year.
●
Cost of revenue was $1.02 million for the six months ended June 30, 2026
compared to $0.57 million for the same period of last year.
●
Gross profit was $0.20 million for the six months ended June 30, 2026 compared
to $0.17 million for the same period of last year.
●
Net loss was $1.37 million for the six months ended June 30, 2026 compared to a net loss of $0.92 million for the same period of last
year.
First Half 2026 Financial Results
Revenue
Total revenues were $1.23 million for the six months ended June 30,
2026, compared to $0.74 million for the same period of last year. The revenue increase was mainly due to the increase in hardware sales.
Gross Profit and Gross Margin
Gross profit was $0.20 million for the six months ended June 30, 2026
compared to $0.17 million for the same period of last year.
Gross profit margin as a percentage of revenue decreased to 16.4% for
the six months ended June 30, 2026 from 23.4% for the same period of last year.
Operating Expenses
Operating expenses were $2.00 million for the six months ended June
30, 2026, an increase of 31.7% from $1.52 million for the same period of last year. The increase in operating expense in 2026 was primarily
due to the increase in general and administrative expenses.
Other Income
Total other income, net, was $0.33 million ($327,339) and $0.33 million
($330,596) for the six months ended June 30, 2026 and 2025, respectively.
Net Income (Loss)
As a result of the factors described above, net loss was $1.37 million
for the six months ended June 30, 2026, compared to a net loss of $0.92 million for the comparable period of 2025.
Basic and Diluted Loss per Share
Basic and diluted loss per share was $0.16 for the six months ended
June 30, 2026, compared to $0.11 for the same period of last year.
Cash Flow
Net cash used in operating activities was $1.08 million for the six
months ended June 30, 2026, compared to net cash provided by operating activities of $1.15 million for the same period of last year.
Net cash provided by investing activities was $4.15 million for the
six months ended June 30, 2026, compared to net cash used in investing activities of $0.23 million for the same period of last year.
Net cash provided by financing activities was $10.42 million for the
six months ended June 30, 2026.
About Biddance AI Systems, Inc.
Biddance AI Systems, Inc. (formerly known as Hitek Global Inc.), headquartered
in Xiamen, China, is an information technology (“IT”) consulting and solutions service provider in China. The Company has two
lines of business: 1) services to small and medium businesses, which consists of Anti-Counterfeiting Tax Control System (“ACTCS”)
tax devices, ACTCS services, and IT services, and 2) services to large businesses, which consists of hardware sales and software sales.
The Company’s vision is to become a one-stop consulting destination for holistic IT and other business consulting services in China. For
more information, visit the Company’s website at http://www.xmhitek.com/.
Forward-Looking Statements
This announcement contains forward-looking statements within the
meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. All statements other than statements of
historical fact in this announcement are forward-looking statements. These forward-looking statements involve known and unknown risks
and uncertainties and are based on current expectations and projections about future events and financial trends that the Company believes
may affect its financial condition, results of operations, business strategy and financial needs. Investors can identify these forward-looking
statements by words or phrases such as “may,” “will,” “expect,” “anticipate,” “aim,”
“estimate,” “intend,” “plan,” “believe,” “potential,” “continue,” “is/are
likely to” or other similar expressions. The Company undertakes no obligation to update forward-looking statements to reflect subsequent
occurring events or circumstances, or changes in its expectations, except as may be required by law. Although the Company believes that
the expectations expressed in these forward-looking statements are reasonable, it cannot assure you that such expectations will turn out
to be correct, and the Company cautions investors that actual results may differ materially from the anticipated results and encourages
investors to review other factors that may affect its future results in the Company’s registration statement and in its other filings
with the SEC.
For investor and media inquiries please contact:
Biddance AI Systems, Inc.
Investor Relations
Tianyu Xia
xiaty@xmhitek.com
2
BIDDANCE AI SYSTEMS, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(Expressed in U.S. Dollars, except for
the number of shares)
The following tables summarize our
results of operations for the periods indicated:
June 30,
2026
December 31,
2025
(Unaudited)
Assets
Current assets
Cash and cash equivalents
$
17,088,014
$
3,611,999
Short-term investments
19,970,243
18,364,219
Accounts receivable, net
5,350,006
5,407,989
Advances to suppliers, net
4,422
290,680
Inventories, net
85,568
79,411
Loans receivable
589,528
6,020,220
Other receivable
5,846,247
6,846,247
Prepaid expenses and other current assets
10,507
171,661
Total current assets
48,944,535
40,792,426
Non-current assets
Non-current accounts receivable, net
-
1,027,421
Non-current loans receivable
-
285,996
Property, equipment and software, net
332,488
475,189
Total non-current assets
332,488
1,788,606
Total Assets
$
49,277,023
$
42,581,032
Liabilities and Shareholders’ Equity
Current liabilities
Accounts payable
$
255,982
$
292,065
Loan payable – related party
-
2,645,465
Deferred revenue
65,298
73,059
Taxes payable
1,832,077
1,795,736
Accrued expenses and other current liabilities
160,776
148,342
Total current liabilities
2,314,133
4,954,667
Non-current Liabilities
Deferred income tax liabilities, net
1,559,142
1,616,053
Total non-current liabilities
1,559,142
1,616,053
Total Liabilities
3,873,275
6,570,720
Commitments and Contingencies
-
-
Shareholders’ Equity
Class A Ordinary Shares, US$0.375 par value; 800,000 shares authorized, 799,861 shares issued and outstanding as of June 30, 2026; 800,000 shares authorized, 5,629 shares issued and outstanding as of December 31, 2025*
299,948
2,111
Class B Ordinary Shares, US$0.0001 par value; 150,000,000 shares authorized, 8,192,000 shares issued and outstanding
819
819
Additional paid-in capital
35,040,217
24,920,060
Statutory reserve
836,215
836,215
Retained earnings
9,301,135
10,671,200
Accumulated other comprehensive loss
(74,586
)
(420,093
)
Total Shareholders’ Equity
45,403,748
36,010,312
Total Liabilities and Shareholders’ Equity
$
49,277,023
$
42,581,032
3
BIDDANCE AI SYSTEMS, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS
OF OPERATIONS AND COMPREHENSIVE LOSS
(Expressed in U.S. Dollars, except for
the number of shares)
Six Months Ended
June 30,
2026
2025
(Unaudited)
(Unaudited)
Revenues
$
1,226,046
$
741,541
Cost of revenues
(1,024,835
)
(567,675
)
Gross profit
201,211
173,866
Operating expenses:
General and administrative
2,002,067
1,519,128
Selling
1,411
2,325
Total operating expenses
2,003,478
1,521,453
Operating loss
(1,802,267
)
(1,347,587
)
Other income (expense)
Net investment gain
102,363
82,463
Interest income
210,639
412,683
Interest expense
-
(153,049
)
Other income (expense), net
14,337
(11,501
)
Total other income, net
327,339
330,596
Loss before income taxes
(1,474,928
)
(1,016,991
)
Income tax benefit
(104,863
)
(100,882
)
Net loss
$
(1,370,065
)
$
(916,109
)
Comprehensive loss
Net loss
$
(1,370,065
)
$
(916,109
)
Foreign currency translation gain
345,507
236,419
Comprehensive loss
$
(1,024,558
)
$
(679,690
)
Loss per ordinary share
Basic and diluted
$
(0.16
)
$
(0.11
)
Weighted average number of ordinary shares outstanding
Basic and diluted*
8,313,997
8,197,629
4
BIDDANCE AI SYSTEMS, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS
OF CHANGES IN SHAREHOLDERS’ EQUITY
Six Months Ended June 30, 2026 and 2025
(Expressed in U.S. Dollars, except for the number
of shares)
Class A
Ordinary Shares*
Class B
Ordinary Shares
Additional
Accumulated
other
Total
Number of
shares
Amount
Number of
shares
Amount
paid-in
capital
Statutory
reserve
Retained
earnings
comprehensive
loss
Shareholders’
Equity
Balance as of December 31, 2024
5,629
$
2,111
8,192,000
$
819
$
24,920,060
$
836,215
$
10,491,058
$
(975,343
)
$
35,274,920
Foreign currency translation adjustment
-
-
-
-
-
-
-
236,419
236,419
Net loss
-
-
-
-
-
-
(916,109
)
-
(916,109
)
Balance as of June 30, 2025 (unaudited)
5,629
$
2,111
8,192,000
$
819
$
24,920,060
$
836,215
$
9,574,949
$
(738,924
)
$
34,595,230
Class A
Ordinary Shares*
Class B
Ordinary Shares
Additional
Accumulated
other
Total
Number of
shares
Amount
Number of
shares
Amount
paid-in
capital
Statutory
reserve
Retained
earnings
comprehensive
loss
Shareholders’
Equity
Balance as of December 31, 2025
5,629
$
2,111
8,192,000
$
819
$
24,920,060
$
836,215
$
10,671,200
$
(420,093
)
$
36,010,312
Foreign currency translation adjustment
-
-
-
-
-
-
-
345,507
345,507
Issuance of ordinary shares
794,232
297,837
-
-
10,120,157
-
-
10,417,994
Net loss
-
-
-
-
-
-
(1,370,065
)
-
(1,370,065
)
Balance as of June 30, 2026 (unaudited)
799,861
$
299,948
8,192,000
$
819
$
35,040,217
$
836,215
$
9,301,135
$
(74,586
)
$
45,403,748
5
BIDDANCE AI SYSTEMS, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS
OF CASH FLOWS
(Expressed in U.S. Dollars)
Six Months Ended
June 30,
2026
2025
(Unaudited)
(Unaudited)
Cash flows from operating activities:
Net loss
$
(1,370,065
)
$
(916,109
)
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:
Depreciation and amortization
154,064
145,775
Loss on disposal of property, plant and equipment
1,433
-
Accrued interest income from loans, net
-
(104,790
)
Net investment gain
(55,640
)
(66,820
)
Provision for expected credit losses of receivables
506,980
482,621
Provision for obsolete inventories
2,019
3,832
Deferred income tax
(105,252
)
(100,882
)
Changes in operating assets and liabilities:
Short-term investments - trading securities
(1,312,113
)
2,427,711
Accounts receivable
710,590
1,044,167
Advance to suppliers
291,845
(2,272,803
)
Inventories
(5,700
)
12,483
Prepaid expenses and other current assets
164,540
265,122
Accounts payable
(42,330
)
(50,983
)
Advance from customers
-
291,466
Deferred revenue
(9,888
)
(16,056
)
Tax payable
(18,497
)
5,781
Due to related parties
-
16,546
Accrued expenses and other current liabilities
7,798
(13,461
)
Net cash (used in) provided by operating activities
(1,080,216
)
1,153,600
Cash flows from investing activities:
Loans to third parties
(291,443
)
(413,645
)
Loans repayment by third parties
3,439,030
137,882
Purchases of held-to-maturity investments
(1,000,000
)
(1,650,000
)
Redemption of held-to-maturity investments
2,000,000
700,000
Refund of deposit for acquisition
-
1,000,000
Net cash provided by (used in) investing activities
4,147,587
(225,763
)
Cash flows from financing activities:
Proceeds from issuance of ordinary shares
10,417,994
-
Net cash provided by financing activities
10,417,994
-
Effect of exchange rate changes on cash
(9,350
)
33,690
Net increase in cash
13,476,015
961,527
Cash and cash equivalents at the beginning of period
3,611,999
7,236,798
Cash and cash equivalents at the end of period
$
17,088,014
$
8,198,325
Supplemental disclosures of cash flow information:
Cash paid for income taxes
$
-
$
-
Cash paid for interest
$
-
$
-
The accompanying notes are an integral part of
these consolidated financial statements.
6