Global Interactive Technologies, Inc.

NOTE 1 —NATURE OF OPERATIONS AND BASIS OF PRESENTATION

Business

Global Interactive Technologies, Inc. (“GITS” or the “Company”), formerly known as Hanryu Holdings, Inc., is a Delaware corporation engaged in the development and operation of FANING, a global digital fan engagement platform focused on Korean entertainment and culture, including K-pop. The FANING platform is designed to enable users to consume, create, share, and engage with digital content and fan communities across mobile and web-based services.

In 2024, the Company acquired 100% ownership of FANING KOREA, LLC, a South Korean subsidiary that provides support for the Company’s operations in South Korea.

Corporate History

Since the inception of Global Interactive Technologies, Inc. in 2018, we have accomplished a number of key objectives, as follows:

NOTE 1 — NATURE OF OPERATIONS AND BASIS OF PRESENTATION (cont.)

NOTE 1 — NATURE OF OPERATIONS AND BASIS OF PRESENTATION (cont.)

Going Concern

As of June 30, 2026, the Company had an accumulated deficit of $43,939,617 and working capital of $32,014, and it incurred a net loss of $1,405,423 and used $558,921 of cash in operating activities for the six months ended June 30, 2026. The Company’s working capital at June 30, 2026 reflects the net proceeds of $1,808,907 from the private placement of pre-funded warrants and common stock warrants completed on June 29, 2026 (Note 17); revenue from the Faning platform remains minimal and does not cover the Company’s operating costs.

These conditions raise substantial doubt about the Company’s ability to continue as a going concern for twelve months after the issuance date of these consolidated financial statements. The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. These consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Management intends to address these conditions by continuing the launch and commercialization of the upgraded Faning 2.0 platform, pursuing K-food products and entertainment-related business ventures, seeking to increase user engagement and monetization, controlling operating costs, and pursuing additional capital through equity financings, borrowings, or other available financing arrangements. However, there can be no assurance that the Company will be successful in implementing these plans or that sufficient funding will be available on terms acceptable to the Company, if at all.

NOTE 2 —SIGNIFICANT ACCOUNTING POLICIES

A summary of the significant accounting policies followed by the Company in the preparation of the accompanying consolidated financial statements follows:

Principles of Consolidation

The consolidated financial statements include the accounts of Global Interactive Technologies, Inc. and its wholly owned subsidiary, FANING KOREA, LLC. All significant intercompany transactions and balances have been eliminated in consolidation.

Changes in the Company’s ownership interest in a subsidiary that do not result in a loss of control are accounted for as equity transactions.

NOTE 2 — SIGNIFICANT ACCOUNTING POLICIES(cont.)

Foreign Currency

The functional currency of the Company’s Korean subsidiary is the KRW, and the Company’s reporting currency is the U.S. dollar. Assets and liabilities are translated into U.S. dollars at the exchange rate in effect at each balance sheet date, stockholders’ equity is translated at historical exchange rates, and revenues and expenses are translated at the average exchange rates for the period. The resulting translation adjustments are included in accumulated other comprehensive income (loss) in the consolidated balance sheets as of June 30, 2026 and December 31, 2025. The exchange rate was KRW 1,545.46 per U.S. dollar at June 30, 2026 and KRW 1,434.90 per U.S. dollar at December 31, 2025, and the average exchange rates for the three and six months ended June 30, 2026 were KRW 1,501.56 and KRW 1,483.05 per U.S. dollar, respectively. Cash flows are also translated at average exchange rates for the period; therefore, amounts reported on the statement of cash flows will not necessarily agree with changes in the corresponding balances on the consolidated balance sheets.

Use of Estimates

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 disclosures of contingent assets and liabilities at the date of the financial statements, as well as the reported amounts of revenues and expenses during the reporting period.

Significant estimates and assumptions include:

Management evaluates these estimates on an ongoing basis using historical experience and various other assumptions believed to be reasonable under the circumstances. Actual results may differ materially from these estimates and assumptions.

Cash and Cash Equivalents

The Company considers all highly liquid investments with maturities of three months or less at the date of purchase to be cash equivalents. The Company maintains its cash in bank deposit accounts which, at times, may exceed the federal insurance limit.

Accounts Receivable

Accounts receivables are recorded at the invoiced amount and do not bear interest. Amounts collected on trade accounts receivable are included in net cash provided by operating activities in the consolidated statements of cash flows. The Company maintains an allowance for credit losses for estimated losses inherent in its accounts receivable portfolio. In establishing the required allowance, management considers historical losses adjusted to take into account current market conditions and customers’ financial condition in dispute, and the current receivables aging and current payment patterns. The Company reviews its allowance for credit losses quarterly. Past-due balances over 90 days and over a specified amount are reviewed individually for collectability. Account balances are written off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote. The Company recorded the allowance of $0 on the accompanying consolidated balance sheets as of June 30, 2026 and December 31, 2025. The Company does not have any off-balance-sheet credit exposure related to its customers.

Non-Trade Receivables

Non-trade receivables are recorded at the invoiced amount and do not bear interest. Amounts collected on non-trade receivables are included in net cash provided by operating activities in the consolidated statements of cash flows. The Company maintains an allowance for doubtful accounts for estimated losses inherent in its non-trade receivables portfolio. In establishing the required allowance, management considers historical losses adjusted to take into account current market conditions and customers’ financial condition in dispute, and the current receivables aging and current payment patterns. The Company reviews its allowance for doubtful accounts quarterly. Past-due balances over 90 days and over a specified amount are reviewed individually for collectability. Account balances are written off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote. The Company recorded the allowance of $0 on the accompanying consolidated balance sheets as of June 30, 2026 and December 31, 2025. The Company does not have any off-balance-sheet credit exposure related to its customers.

Revenue Recognition

The Company recognizes revenue in accordance with ASC 606, Revenue from Contracts with Customers. Revenue is recognized when control of promised goods or services is transferred to customers in an amount that reflects the consideration the Company expects to receive in exchange for those goods or services.

The Company’s current and anticipated revenue sources primarily relate to the FANING platform and related digital services, including subscriptions, in-app purchases, advertising services, digital platform services, user engagement services, content-related services, commissions, and other platform-based monetization activities.

Revenue is recognized when the applicable performance obligations are satisfied. For subscription-based services, revenue is recognized over the subscription period. Revenue from in-app purchases, digital engagement services, advertising, platform services, and content-related services is generally recognized at the point in time or over the period in which the applicable services are provided. Amounts billed or collected in advance of satisfying performance obligations are recorded as deferred revenue.

The Company evaluates whether it acts as principal or agent in revenue transactions in accordance with ASC 606-10-55, Principal versus Agent Considerations. Revenue is reported on a gross basis when the Company controls the promised goods or services prior to transfer to the customer and on a net basis when the Company acts as an agent arranging for goods or services to be provided by another party.

For the three and six months ended June 30, 2026, the Company recognized revenue of $126 and $222, respectively, compared to $29 for each of the three and six months ended June 30, 2025, primarily related to subscription and in-app purchase activity on the FANING platform.

NOTE 2 — SIGNIFICANT ACCOUNTING POLICIES(cont.)

Cost of Revenue

Cost of revenue consists of costs directly attributable to revenue-generating activities. For the periods presented, the Company did not incur any costs that were directly attributable to revenue-generating activities and, accordingly, no cost of revenue was recorded. Costs associated with the maintenance and operation of the Company’s platform, including hosting and infrastructure costs, are recorded within general and administrative expenses as incurred. The Company will classify costs directly attributable to revenue-generating activities as cost of revenue when such costs are incurred.

Cost of revenue is recognized as the related goods or services are delivered or provided to customers.

Capitalized Software

The Company records software acquired through asset acquisitions at cost. Acquired software is accounted for as a finite-lived intangible asset and is amortized on a straight-line basis over its estimated useful life. The Company evaluates software assets for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable.

Amortization expense related to capitalized software is included in operating expenses in the consolidated statements of operations for the three and six months ended June 30, 2026 and 2025.

Property, Plant and Equipment

Property, plant and equipment are carried at cost (see Note 4). Depreciation expense is provided over the estimated useful lives of the assets using the straight line method for vehicles and the declining balance method for fixtures and equipment. A summary of the estimated useful lives is as follows:

Maintenance and repairs are charged to expense as incurred, while any additions or improvements are capitalized.

The Company reviews property and equipment for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.

Impairment of Long-Lived Assets

The Company reviews operating lease right-of-use assets and finite-lived intangible assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability is measured by comparing the carrying amount of the asset to the estimated undiscounted future cash flows expected to result from the use and eventual disposition of the asset. If the carrying amount is not recoverable, an impairment loss is recognized for the amount by which the carrying amount exceeds the asset’s estimated fair value. Impairment losses on long-lived assets held and used are presented within other expenses in the consolidated statements of operations.

Concentrations of Credit Risk

Cash and cash equivalents are financial instruments that potentially subject the Company to concentrations of credit risk. The Company may maintain deposits in financial institutions in excess of government insured limits. The Company believes that it is not exposed to significant credit risk as its deposits are held at financial institutions that management believes to be of high credit quality and the Company has not experienced any losses on these deposits. The Company is also potentially subject to concentrations of credit risk in its accounts receivable and loans. Credit risk with respect to receivables is limited due to the number of individuals comprising the Company’s customer base. Credit risk with respect to loans is limited since they are made principally related to the collaborative activities between the Company and loan holders. Since the Company is directly affected by the financial condition of its customers and loan holders, management carefully watches if any significant credit risks exist, and they will take actions to remove or mitigate such risks if there are any. The Company had accounts receivable balances of $18 and $46 as of June 30, 2026 and December 31, 2025, respectively. The Company believes that the credit risk related to accounts receivable is manageable and controllable as of June 30, 2026 and December 31, 2025. Generally, the Company does not require collateral or other securities to support its accounts receivable and loans.

Fair Value of Financial Instruments

The fair value of Company’s financial instruments, consisting of cash and cash equivalents, accounts receivable, accounts payable, accrued liabilities, debt receivables, debt payables approximate their recorded amounts due to their relatively short settlement terms.

Fair Value Measurements

The Company applies a three-level valuation hierarchy for fair value measurements. The categorization of assets and liabilities within the valuation hierarchy is based on the lowest level of input that is significant to the measurement of fair value.

A change to the level of an asset or liability within the fair value hierarchy is determined at the end of a reporting period.

Earnings (Loss) Per Share

Basic earnings (loss) per share is computed by dividing the income or loss by the weighted-average number of outstanding shares of Common Stock for the applicable period. Diluted earnings (loss) per share is computed by dividing the income or loss by the weighted-average number of outstanding shares of Common Stock for the applicable period, including the dilutive effect of Common Stock equivalents. Potentially dilutive Common Stock equivalents primarily consist of warrants issued in connection with financings. The Company calculates net loss per share in accordance with FASB ASC Topic 260,Earnings Per Share. Shares issuable upon the exercise of pre-funded warrants for nominal consideration ($0.001 per share) are included in the weighted-average number of common shares outstanding used to compute basic net loss per share from the date of their issuance; the 1,092,896 shares underlying the Pre-Funded Warrants issued on June 29, 2026 (Note 17) added 24,020 and 12,076 weighted-average shares for the three and six months ended June 30, 2026, respectively. For the three and six months ended June 30, 2026 and 2025, the Company reported net losses and, accordingly, potential common shares were not included since such inclusion would have been anti-dilutive. Warrants to purchase 1,300,018 and 332,505 shares of Common Stock were excluded from the computation of diluted net loss per share at June 30, 2026 and 2025, respectively. As a result, our basic and diluted net loss per share are the same because the Company generated a net loss in all periods presented.

Lease

The Company evaluates contracts at inception to determine whether an arrangement contains a lease in accordance with ASC 842,Leases. Right-of-use (“ROU”) assets represent the Company’s right to use an underlying asset over the lease term and are recognized at commencement based on the terms of the arrangement.

The Company’s lease arrangement is classified as an operating lease. Because the arrangement does not require future lease payments, no lease liability has been recognized. Lease expense is recognized on a straight-line basis over the lease term.

The Company’s operating lease ROU asset is held by its Korean subsidiary, whose functional currency is the Korean won. The ROU asset is translated into U.S. dollars at exchange rates in effect at each balance sheet date, while lease expense is translated at average exchange rates for the applicable period. Resulting translation adjustments are recorded in accumulated other comprehensive income (loss) in accordance with ASC 830. ROU assets are evaluated for impairment under the long-lived asset guidance of ASC 360.

Refer to Note 6 for additional disclosures related to the Company’s lease.

Recently Issued Accounting Standards

In November 2024, the FASB issued ASU 2024-03 (as clarified by ASU 2025-01 in January 2025),Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40). This standard requires public business entities to disclose disaggregated information about specific categories underlying certain income statement expense line items (such as employee compensation, depreciation, and amortization) in the notes to the financial statements. The amendments are effective for annual reporting periods beginning after December 15, 2026. The Company is currently evaluating the potential impact of adopting this standard on its financial statement disclosures.

The Company has evaluated, or is in the process of evaluating, the potential impact of these new accounting standards on its consolidated financial statements and related disclosures. Based on its current assessment, management does not expect the adoption of these standards to have a material impact on the Company’s financial position, results of operations, or cash flows. The Company will continue to monitor developments and evaluate the impact of these standards, including any additional interpretive guidance that may be issued prior to adoption.

NOTE 3 —SHORT-TERM LOAN RECEIVABLES

The following table summarizes information with regard to short-term loan receivables outstanding as of June 30, 2026 and December 31, 2025. Interest income from short-term loan receivables was $0 for each of the six months ended June 30, 2026 and 2025.

NOTE 4 —PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment consist of the following:

Total depreciation expense for the six months ended June 30, 2026 and 2025 was $330 and $616, respectively ($163 and $313 for the three months ended June 30, 2026 and 2025, respectively). Depreciation expense is reflected in operating cost and expenses in the Condensed Consolidated statements of operations.

NOTE 5 —SOFTWARE

The Company acquired the software through an asset transfer agreement with its former subsidiary, Hanryu Bank Co., Ltd., from which it sold all equity interest in December 2024, and through the transfer of the Faning application. The Company recognized the acquisition cost of $4,940,000 based on the appraised value determined by an independent valuation firm.

This software has been accounted for as an intangible asset in accordance with ASC 350 – Intangibles—Goodwill and Other.

The software is being amortized on a straight-line basis over its estimated useful life of 5 years. Amortization expense related to the software is recognized in operating expenses in the consolidated statements of operations.

The Company reviews the software for impairment whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. During the year ended December 31, 2025, management identified impairment indicators, including the Company’s limited revenue generation from the Faning platform, continuing operating losses, and early-stage commercialization status. As a result, the Company evaluated the recoverability of the software and recognized an impairment loss of $1,019,611 for the year ended December 31, 2025. The impairment loss is included in other expense in the consolidated statements of operations.

During the six months ended June 30, 2026, management identified indicators of impairment related to the FANING platform, including continued minimal revenue generation, continuing operating losses, lower-than-expected commercialization activities, a revised commercialization timeline, and the need for additional financing to execute the Company’s business plan. As a result, management performed a recoverability assessment pursuant to ASC 360-10 for the Faning asset group, which consists primarily of the Faning software intangible asset and the related right-of-use asset utilized in its operations.

Under ASC 360, management first evaluated whether the carrying amount of the asset group was recoverable based on the estimated undiscounted future cash flows expected to result from the use and eventual disposition of the asset group. Based on management’s analysis, the aggregate undiscounted future cash flows exceeded the carrying amount of the asset group. Accordingly, the asset group passed the recoverability test and no impairment loss was recognized during the three and six months ended June 30, 2026.

The recoverability analysis was based on management’s updated operating forecast and included significant assumptions regarding future commercialization of the Faning platform, including projected user acquisition beginning in fiscal year 2027, estimated customer acquisition costs, monthly active user conversion rates, user retention, and monetization assumptions. Because the platform has generated minimal revenue since acquisition, these assumptions required significant management judgment and are inherently uncertain. The forecast also assumes the Company’s ability to obtain additional financing beyond the June 2026 private placement to execute its commercialization strategy.

Compared with the assumptions utilized in the Company’s December 31, 2025 impairment assessment, management revised its forecast to reflect an approximate twelve-month delay in commercialization and revenue generation. The delay reduced expected near-term cash flows and was a significant factor in management’s decision to perform an interim recoverability analysis.

Although management estimated the fair value of the Faning software intangible asset to be approximately $2.2 million as of June 30, 2026, compared with its carrying amount of approximately $2.7 million, no impairment charge was recognized. Under ASC 360, impairment is recognized only if the carrying amount of the asset group exceeds the sum of its estimated undiscounted future cash flows. Because the estimated undiscounted future cash flows exceeded the carrying amount of the asset group, the Company concluded the asset group was recoverable and did not proceed to the impairment measurement step.

Management’s recoverability conclusion is sensitive to assumptions regarding projected user acquisition, monthly active user conversion rates, user engagement, and monetization. A meaningful reduction in projected user growth or monetization relative to management’s forecast would cause estimated undiscounted future cash flows to no longer exceed the carrying amount of the asset group. Under such circumstances, management estimates that an impairment charge could range from approximately $1.2 million to $2.3 million, depending on the estimated fair value of the asset group at the time of testing.

NOTE 5 — SOFTWARE(cont.)

The carrying value of software consisted of the following:

Amortization expense related to the software was $189,316 and $378,632 for the three and six months ended June 30, 2026, respectively, compared to $258,603 and $508,551 for the three and six months ended June 30, 2025, respectively, and $1,021,192 for the year ended December 31, 2025. The Company did not recognize an impairment loss during the three and six months ended June 30, 2026, compared to $1,019,611 for the year ended December 31, 2025. Following recognition of the impairment loss, the remaining carrying value of the software intangible asset will be amortized on a straight-line basis over its remaining estimated useful life. The Company will continue to evaluate the software asset for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable.

As of June 30, 2026, the software had a remaining useful life of approximately 3.5 years. Future estimated amortization expense related to the software intangible asset is expected to be as follows:

NOTE 6 —LEASE

The Company uses approximately 19,200 square feet of office space at the Seoul Marina free of charge. Although there is no formal lease agreement, the Company determined that the ASC 842 accounting standard applies and recognized the fair value of the rent-free use of the property through May 2031 as a right-of-use (ROU) asset, with corresponding lease expense recognized in the statement of operations.

At the time of initial acquisition from Seoul Marina Co., Ltd. “SMC” in July 2021, the Company used the following assumptions:

Based on the assumptions outlined, the Company calculated the present value of 10 years of free rent to be $2,775,512 and recognized it as a long-term right-of-use (ROU) asset as of September 30, 2021. Since the space was provided free of charge, no lease liability was recognized. The ROU asset was amortized at approximately $23,000 per month over the 10-year lease term.

As the Company initially allocated $2,935,658 to the SMC receivable and leasehold rights, an impairment loss of $158,278 was recognized on the ROU asset as of December 31, 2021.

In December 2024, the Company sold its entire equity interest in Hanryu Bank Co., Ltd. (“HBC”), a subsidiary that held the rent-free rights to the Seoul Marina building. However, through an asset transfer agreement between the Company and HBC, the Company acquired the rent-free rights to the Seoul Marina building. The transfer amount was based on the net book value of the ROU asset as of the contract date and was offset against the Company’s outstanding loan receivable. As of June 30, 2026 and December 31, 2025, the carrying amounts of the ROU asset were $1,067,348 and $1,264,546, respectively. Lease expense related to the ROU asset was $54,945 and $111,273 for the three and six months ended June 30, 2026, respectively, and $58,742 and $115,519 for the three and six months ended June 30, 2025, respectively.

NOTE 6 — LEASE(cont.)

The carrying amount of the ROU asset consisted of the following:

The ROU asset is a KRW-denominated asset of the Company’s Korean subsidiary. It is translated into U.S. dollars at the exchange rate in effect at each balance sheet date, lease expense is translated at the average exchange rates in effect during the period, and the resulting translation adjustment is included in accumulated other comprehensive income (loss). The carrying amount reflects the change in the exchange rate from KRW 1,434.90 per U.S. dollar at December 31, 2025 to KRW 1,545.46 per U.S. dollar at June 30, 2026.

During the three months ended June 30, 2026, the Company determined that the ROU asset as of March 31, 2026 had been translated at an exchange rate that did not reflect the March 31, 2026 closing rate, which overstated the ROU asset and accumulated other comprehensive income (loss) by $58,361. The correction was recorded within the currency translation adjustment for the three months ended June 30, 2026 as an out-of-period adjustment. It had no effect on net loss, loss per share or cash flows for any period, and management concluded that the misstatement was not material to any previously issued financial statements.

As of June 30, 2026, the remaining term of the arrangement was approximately 4.9 years, ending in May 2031. Because the Company is not required to make lease payments under the arrangement, no lease liability was recognized as of June 30, 2026 or December 31, 2025.

NOTE 7 —SHORT-TERM LOAN PAYABLES

The following table summarizes information with regard to short-term loan payables outstanding as of June 30, 2026 and December 31, 2025.

NOTE 7 — SHORT-TERM LOAN PAYABLES(cont.)

Levanston Korea LLC

From time to time, Levanston pays operating expenses to the Company’s vendors on the Company’s behalf. Such payments are recognized as operating expense and a corresponding credit to short-term borrowings. Expenses paid by Levanston on the Company’s behalf were $4,288 and $14,417 for the three and six months ended June 30, 2026, respectively. As of June 30, 2026 and December 31, 2025, amounts due to Levanston consisted of subsidiary-level loans of $1,521 and $1,638, respectively, bearing interest at 4.6%, and non-interest-bearing operating advances of $34,703 andnil, respectively. Accordingly, total amounts due to Levanston Korea LLC were $36,224 and $1,638 as of June 30, 2026 and December 31, 2025, respectively.

Corner Piece Capital Partners Pte. Ltd.

During the three months ended March 31, 2026, the Company borrowed $46,200 from Corner Piece Capital Partners Pte. Ltd. at an interest rate of 8% per annum. The loan, together with accrued interest of $513, was repaid in full on April 24, 2026.

FirstFire Global Opportunities Fund, LLC

On April 22, 2026, the Company issued a promissory note to FirstFire Global Opportunities Fund, LLC (“FirstFire”) with a principal amount of $550,000, an original issue discount of $44,000, a stated interest rate of 9% per annum, with the first twelve months of interest $49,500 guaranteed and deemed earned in full at issuance, and a maturity date of April 22, 2027. Of the $506,000 purchase price, $45,420 was paid directly to the placement agent and to FirstFire for its due diligence and legal fees, and the Company received net cash proceeds of $460,580. The original issue discount and issuance costs, totaling $89,420, were recorded as a discount against the note in accordance with ASC 835-30. Pursuant to the terms of the promissory note, the Company became obligated to repay the note following the completion of the June 2026 financing transaction.

In June 2026, the Company negotiated the settlement with FirstFire Global Opportunities Fund, LLC and repaid the obligation in full for $650,000. The repayment consisted of $550,000 of principal, $49,500 of contractual interest, and a $50,500 settlement premium. The repayment was funded with a portion of the proceeds received from the Company’s private placement completed in June 2026. The Company recognized interest expense of $49,500 and a loss on extinguishment of debt of $139,920, consisting of the write-off of the $89,420 unamortized discount and the $50,500 premium, for the three and six months ended June 30, 2026.

GIT Korea

During the three months ended June 30, 2026, the Company obtained non-interest-bearing advances from GIT Korea, consisting of a cash advance of $66,057 and $100,000 paid by GIT Korea directly to a marketing vendor on the Company’s behalf. The advances were repaid in full in cash during the quarter for a total of $168,000, including a foreign currency transaction loss of $1,943 on the KRW-denominated cash advance, which is included in other expenses.

NOTE 8 —SHORT-TERM LOAN PAYABLES FROM RELATED PARTIES

The following table summarizes information regarding short-term loan payables from related parties as of June 30, 2026 and December 31, 2025. Jaeman Lee is a family member of an independent director of the Company and Hangmuk Shin is the largest shareholder of Global Interactive Technologies, Inc.

NOTE 9 —FAIR VALUE MEASUREMENTS

Fair value has been determined on a basis consistent with the requirements of FASB ASC Topic 825,Financial Instruments, and the Company adopted on a prospective basis required provisions of FASB ASC Topic 820,Fair Value Measurement.

Financial Items Measured at Fair Value on a Recurring Basis

The carrying amounts reported in the Condensed Consolidated balance sheet for short-term financial instruments, including cash and cash equivalents, short-term loans, accounts receivable, prepaid expenses, short-term borrowings, accrued expenses and other current liabilities approximate their fair values due to the short maturities of these instruments.

Financial Items Measured at Fair Value on a Nonrecurring Basis

There areno financial assets or liabilities measured at fair value on a nonrecurring basis as of June 30, 2026 and December 31, 2025, other than the measurement at issuance of the Pre-Funded Warrants and Common Stock Warrants issued on June 29, 2026, which was performed solely to allocate the proceeds of the private placement between the two equity-classified instruments and is described in Note 17.

Non-financial Items Measured at Fair Value on a Nonrecurring Basis

The Company’s long-lived assets, including capitalized software, operating lease right-of-use assets, and other finite-lived assets, are measured at fair value on a nonrecurring basis when events or changes in circumstances indicate that the carrying amount may not be recoverable.

During the year ended December 31, 2025, the Company identified impairment indicators related to its capitalized software asset, including limited current revenue generation, continuing operating losses, and revised expectations regarding the timing of commercialization of the Faning platform. As a result, the Company evaluated the recoverability of the asset and recognized an impairment loss of $1,019,611 during the year ended December 31, 2025, which is included in other expense in the consolidated statements of operations.

The fair value measurements related to the software impairments were based on significant unobservable inputs and are classified as Level 3 measurements within the fair value hierarchy.

The following table summarizes nonfinancial assets measured at fair value on a nonrecurring basis:

Valuation Technique and Significant Unobservable Inputs (Level 3)

The fair value of the Faning software intangible asset used in the December 31, 2025 impairment measurement was estimated using the Relief-from-Royalty (RfR) method, an income approach. Under the Relief-from-Royalty method, fair value is measured as the present value of the after-tax royalty payments that the Company would hypothetically be required to pay to license the Asset from a third party, assuming the Company did not own it. The hypothetical royalty payments were projected over a discrete forecast period through fiscal 2029, tax-effected at an assumed statutory rate, and discounted to present value using a risk-adjusted discount rate. A mid-year discounting convention was applied to reflect the assumption that cash flows are received evenly throughout each year.

The fair value measurement is categorized within Level 3 of the fair value hierarchy because it relies on significant unobservable inputs, including projected revenues, royalty rate, discount rate, effective tax rate, and management assumptions regarding future monetization of the platform.

The measurement relied on significant unobservable inputs, including projected revenue, royalty rate, discount rate, conversion rates, and assumptions regarding future commercialization and monetization of the platform. The significant unobservable inputs included a royalty rate of 19.9%, a discount rate of 51.2%, a subscription conversion rate of 2.1% of monthly active users, and a monthly active user conversion rate of 55.0%.

The following table summarizes the significant unobservable inputs used in the Level 3 fair value measurements of the Faning software intangible asset as of December 31, 2025.

The projected revenue assumptions incorporate management’s estimates of user growth, user retention, conversion rates, subscription pricing, in-app purchase activity, advertising monetization, and customer acquisition trends.

The fair value measurement is sensitive to changes in significant unobservable inputs. Projected user acquisition, monthly active user conversion, monetization rates, and customer acquisition costs significantly affect expected revenue and cash flow forecasts. A decline in projected user engagement or monetization levels, delays in commercialization activities, or the inability to obtain additional financing required to execute the current business plan could result in materially lower fair value estimates and increase the likelihood of future impairment charges.

June 30, 2026 Recoverability Assessment

During the six months ended June 30, 2026, management identified additional impairment indicators and performed a recoverability assessment of the Faning asset group under ASC 360. The asset group consists primarily of the Faning software intangible asset and the related right-of-use asset utilized in its operations.

The estimated undiscounted future cash flows of the Faning asset group exceeded its carrying amount. Accordingly, the asset group was considered recoverable, the Company did not proceed to the impairment measurement step, and no impairment loss was recognized during the three and six months ended June 30, 2026.

As supplemental information in evaluating the asset, management estimated that the fair value of the software intangible asset was approximately $2.2 million as of June 30, 2026, compared with its carrying amount of approximately $2.7 million. This estimate did not result in an impairment charge because ASC 360 requires the asset group to first fail the undiscounted cash flow recoverability test before an impairment loss is measured.

The June 30, 2026 analysis reflected an approximately twelve-month delay in expected commercialization and revenue generation compared with the assumptions used at December 31, 2025. The analysis included significant assumptions regarding projected user acquisition beginning in fiscal year 2027, customer acquisition costs, monthly active-user conversion rates, user retention, and monetization. The analysis also assumes that the Company will obtain additional financing beyond the June 2026 private placement to execute its commercialization strategy. Because the Faning platform has generated minimal revenue since acquisition, these assumptions involve significant judgment and are subject to substantial uncertainty.

Additional information regarding the impairment indicators, recoverability assessment, significant assumptions, and sensitivity analysis is included in Note 5.

Nonfinancial Items Measured at Fair Value on a Recurring Basis

There are no nonfinancial assets measured at fair value on a recurring basis as of June 30, 2026 and December 31, 2025.

Nonfinancial Items Measured at Fair Value on a Nonrecurring Basis

The fair value of long-lived assets is measured whenever the carrying value of a long-lived asset or asset group is not recoverable on an undiscounted cash flow basis. Except for the intangible asset impairments disclosed in Note 5 and above, no impairment was recognized for long-lived assets as of June 30, 2026 and December 31, 2025.

NOTE 10 —SIGNIFICANT NON-CASH TRANSACTION

On March 19, 2025, the Company issued 300,000 shares of Common Stock at a conversion price of $0.70 per share in connection with the conversion of $210,000 of indebtedness payable to Evan Trust. Debt conversion loss was $300,030.

On May 7, 2025, the Company issued 90,123 shares of Common Stock at a conversion price of $1.19 per share, together with warrants to purchase 81,739 shares of Common Stock at an exercise price of $1.29 per share and expiring on the fifth anniversary of the issuance date, in connection with the conversion of $105,444 of indebtedness payable to Hangmuk Shin. Debt conversion loss was $178,748.

On May 7, 2025, the Company issued 135,817 shares of Common Stock at a conversion price of $1.27 per share, together with warrants to purchase 125,383 shares of Common Stock at an exercise price of $1.42 per share and expiring on the fifth anniversary of the issuance date, in connection with the conversion of $175,205 of indebtedness payable to Jeyoun Baeg. Debt conversion loss was $257,054.

On May 7, 2025, the Company issued 135,817 shares of Common Stock at a conversion price of $1.27 per share, together with warrants to purchase 125,383 shares of Common Stock at an exercise price of $1.42 per share and expiring on the fifth anniversary of the issuance date, in connection with the conversion of $175,205 of indebtedness payable to Jungok You. Debt conversion loss was $257,054.

On May 20, 2025, the Company issued 246,666 shares of Common Stock at a conversion price of $0.70 per share in connection with the conversion of $172,666 of indebtedness payable to PixelArc LLC. Debt conversion loss was $175,343.

On August 19, 2025, warrants held by Jungok You were exercised at an exercise price of $1.42 per share, resulting in the issuance of 125,383 shares of Common Stock for aggregate cash proceeds of approximately $178,044.

During the six months ended June 30, 2026, lenders paid $114,417 of operating expenses directly to the Company’s vendors on the Company’s behalf, consisting of $14,417 paid by Levanston and $100,000 paid by GIT Korea, which were recorded as operating expenses and short-term borrowings (Note 7). No shares of Common Stock were issued during the six months ended June 30, 2026.

NOTE 11 —SHARE CAPITAL

As of June 30, 2026 and December 31, 2025, Global Interactive Technologies’ total authorized capital stock is 110,000,000 shares, consisting of 100,000,000 shares of Common Stock, par value $0.001 per share, and 10,000,000 shares of undesignated preferred stock, par value $0.001 per share.

On January 27, 2025, the Company effected a 1-for-20 reverse stock split of its issued and outstanding common shares. As a result of the reverse stock split, every 20 shares of the Company’s issued and outstanding common stock were combined into one share, reducing the total number of issued shares from 52,808,589 to 2,640,402. The par value per share is $0.001. All share and per-share amounts in the accompanying consolidated financial statements and related notes have been retroactively adjusted to reflect the reverse stock split for all periods presented.

NOTE 11 — SHARE CAPITAL(cont.)

On March 19, 2025, the Company issued 300,000 shares of Common Stock at a price of $0.7 per share in connection with the conversion of $210,000 of debt owed to Evan Trust.

On May 7, 2025, the Company issued 90,123 shares of Common Stock at a price of $1.19 per share, plus warrants to purchase 81,739 shares of Common Stock at an exercise price of $1.29 per share, expiring on the fifth anniversary of the issuance date, in connection with the conversion of $105,444 of debt owed to Hangmuk Shin.

On May 7, 2025, the Company issued 135,817 shares of Common Stock at a price of $1.27 per share, plus warrants to purchase 125,383 shares of Common Stock at an exercise price of $1.42 per share, expiring on the fifth anniversary of the issuance date, in connection with the conversion of $175,205 of debt owed to Jeyoun Baeg.

On May 7, 2025, the Company issued 135,817 shares of Common Stock at a price of $1.27 per share, plus warrants to purchase 125,383 shares of Common Stock at an exercise price of $1.42 per share, expiring on the fifth anniversary of the issuance date, in connection with the conversion of $175,205 of debt owed to Jungok You. On August 19, 2025, warrants totaling $178,044 were exercised for cash at an exercise price of $1.42 per share, resulting in the issuance of 125,383 shares of Common Stock.

On May 20, 2025, the Company issued 246,666 shares of Common Stock at a price of $0.7 per share in connection with the conversion of $172,666 of debt owed to PixelArc LLC.

On June 25, 2026, the Company entered into a securities purchase agreement with an institutional investor for the issuance and sale, in a private placement, of (i) pre-funded warrants to purchase up to 1,092,896 shares of Common Stock (the “Pre-Funded Warrants”) and (ii) accompanying warrants to purchase up to 1,092,896 shares of Common Stock (the “Common Stock Warrants”), at a combined purchase price of $1.829 per Pre-Funded Warrant and accompanying Common Stock Warrant. The placement closed on June 29, 2026, and no shares of Common Stock were issued at the closing. Gross proceeds were $1,998,907, before deducting placement agent fees and expenses of $189,999 withheld at closing, for net proceeds of $1,808,907, which were credited to additional paid-in capital. The Pre-Funded Warrants have an exercise price of $0.001 per share, are immediately exercisable and may be exercised at any time until exercised in full. The Common Stock Warrants have an exercise price of $1.83 per share, subject to adjustment, become exercisable on December 25, 2026 and expire on December 25, 2031. In connection with the private placement, the Company entered into a registration rights agreement requiring the Company to register the resale of the shares issuable upon exercise of the Pre-Funded Warrants and Common Stock Warrants, and the Company filed the required registration statement on Form S-1 on July 29, 2026. The terms of, and the accounting for, the warrants are described in Note 17. As of June 30, 2026,2,185,792 shares of Common Stock were reserved for issuance upon exercise of the warrants.

NOTE 12 —COMMITMENTS AND CONTINGENCIES

Legal Matters

Former Chief Financial Officer Employment Matter

The Company’s former Chief Financial Officer, who resigned on December 22, 2025, filed a complaint with the Seoul Eastern District Office of the Korean Ministry of Employment and Labor asserting claims for unpaid wages and severance pay. The named respondent in the complaint is an individual rather than the Company. At the request of the labor inspector, the Company’s Korean counsel has submitted a written legal opinion, and the matter is awaiting the inspector’s determination. Based on the advice of counsel, including Korean Supreme Court precedent under which the Labor Standards Act does not apply to executives in comparable positions, the Company believes that the alleged violations will not be substantiated. The Company has not recorded an accrual for this matter and does not expect its resolution to have a material effect on the Company’s financial position or results of operations.

Korean Securities and Futures Commission Matter

On November 6, 2024, the Securities and Futures Commission of the Republic of Korea (the “SFC”) imposed an administrative fine of KRW 142.1 million (approximately $0.1 million) on the Company, then named Hanryu Holdings, Inc., in connection with a failure to submit a securities registration statement for share issuances made to Korean investors between April and July 2023. The Company filed an objection with the SFC, which was dismissed on March 27, 2025, and is now seeking cancellation of the fine before the Seoul Administrative Court. The next hearing is scheduled for October 16, 2026, and a first-instance judgment is expected in the first half of 2027. The fine has not been paid pending the outcome of the proceedings. The Company believes that cancellation of the fine is probable and, accordingly, has not recorded an accrual for this matter as of June 30, 2026. If the cancellation action is ultimately unsuccessful, the Company would recognize a charge for the full amount of the fine, which represents the Company’s estimate of the reasonably possible loss for this matter.

Indemnification Agreements

The Company has entered into certain indemnification arrangements. As of June 30, 2026, no claims had been asserted, and no liability had been recognized related to these arrangements. Because any potential obligation is contingent upon future events, the Company is unable to estimate the maximum potential amount of future payments, if any, that may be required.

NOTE 13 —RELATED PARTY TRANSACTIONS

The Company conducts transactions with related parties under standard commercial terms and follows appropriate procedures to protect the Company’s interests. Below are the related party transaction details as of June 30, 2026, and December 31, 2025.

Short-Term Loan Payables

Non-Trade Payables

The Company has non-trade payables due to Hangmuk Shin in the amount of KRW 3.4 million and to Jaeman Lee in the amount of KRW 6.8 million. These amounts represent unreimbursed business trip expenses that were personally paid on behalf of the Company and are recorded as non-trade payables.

Short-Term Loan Payables

Taehoon Kim* (CEO)*

• On January 8, 2025, the Company entered into a short-term loan agreement with Taehoon Kim with a principal amount of $569 and an interest rate of 0%. The loan matured on January 7, 2026 and remained outstanding at June 30, 2026. The Company subsequently repaid the loan principal in full on July 2, 2026.

Jaeman lee*(Family of an independent director)*

• The Company entered into a short-term loan agreement with Jaeman Lee for the period from July 1, 2024, to December 31, 2024, and the outstanding loan balance as of December 31, 2024, was $255,286.

(The loan was partially deposited in KRW, which may result in a slight difference in the loan amount when converted to USD due to exchange rate fluctuations.)

• On February 4, 2025, the Company entered into a short-term loan agreement with Jaeman Lee at an annual interest rate of 4.6%. The principal amount of the loan was KRW 7,000,000 (USD 4,764). It matured on February 3, 2026.

• On February 7, 2025, the Company entered into a short-term loan agreement with Jaeman Lee at an annual interest rate of 4.6%. The principal amount of the loan was KRW 29,144,850 (USD 21,000). It matured on February 6, 2026.

• On April 7, 2025, the Company entered into a short-term loan agreement with Jaeman Lee at an annual interest rate of 4.6%. The principal amount of the loan was KRW 510,000 (USD 347), and the maturity date is April 6, 2026. The principal remained outstanding as of June 30, 2026 and was subsequently repaid in full on July 8, 2026. There was no default interest or penalties.

• On February 17, 2025, Jaeman Lee, with the Company’s consent, transferred the Company’s loan of $210,000 (KRW 300,000,000) to Evan Trust.

NOTE 13 — RELATED PARTY TRANSACTIONS (cont.)

Short-Term Loan Payables (cont.)

• On April 11, 2025, the Company entered into a short-term loan agreement with Jaeman Lee at an annual interest rate of 4.6%. The principal amount of the loan was KRW 1,020,000 (USD 699), and the maturity date is April 10, 2026. The principal remained outstanding as of June 30, 2026 and was subsequently repaid in full on July 8, 2026.

• On May 5, 2025, the Company entered into a short-term loan agreement with Jaeman Lee at an annual interest rate of 4.6%. The principal amount of the loan was KRW 1,000,000 (USD 701), and the maturity date is May 4, 2026. The principal remained outstanding as of June 30, 2026 and was subsequently repaid in full on July 8, 2026.

• On July 2, 2025, the Company entered into a short-term loan agreement with Jaeman Lee at an annual interest rate of 4.6%. The principal amount of the loan was KRW 150,000 (USD 110), and the maturity date is July 1, 2026. The principal and interest will be repaid at maturity.

• On July 24, 2025, the Company entered into a short-term loan agreement with Jaeman Lee at an annual interest rate of 4.6%. The principal amount of the loan was KRW 6,130,000 (USD 4,444), and the maturity date is July 23, 2026. The principal and interest will be repaid at maturity.

• On August 5, 2025, the Company entered into a short-term loan agreement with Jaeman Lee at an annual interest rate of 4.6%. The principal amount of the loan was KRW 146,000 (USD 105), and the maturity date is August 4, 2026. The principal and interest will be repaid at maturity.

• On December 3, 2025, the Company entered into a short-term loan agreement with Jaeman Lee at an annual interest rate of 4.6%. The principal amount of the loan was KRW 1,212,420 (USD 825), and the maturity date is December 3, 2026. The principal and interest will be repaid at maturity.

• The loans from Jaeman Lee that matured between February and May 2026 were not repaid at maturity and remained outstanding, with interest continuing to accrue at 4.6% per annum, until they were repaid on July 8, 2026. As of June 30, 2026, the aggregate balance of loans payable to Jaeman Lee was $79,619 (December 31, 2025: $84,733).

• The loans from Jaeman Lee that matured between July and August 2026 were not repaid at maturity and remained outstanding, with interest continuing to accrue at 4.6% per annum.

Hangmuk Shin* (Greater than 10% shareholder)*

• The Company entered into a short-term loan agreement with Hangmuk Shin for the period from July 1, 2024, to December 31, 2024, and the outstanding loan balance as of December 31, 2024, was $94,321 (The loan was partially deposited in KRW, which may result in a slight difference in the loan amount when converted to USD due to exchange rate fluctuations.)

• On January 14, 2025, the Company entered into a short-term borrowing agreement with Hangmuk Shin at an interest rate of 4.6%. The principal amount was KRW 3,310,000 (USD 2,249). It matured on January 13, 2026.

• On March 6, 2025, the Company entered into a short-term borrowing agreement with Hangmuk Shin at an interest rate of 4.6%. The principal amount was KRW 6,500 (USD 4). It matured on March 5, 2026.

• On March 24, 2025, the Company entered into a short-term borrowing agreement with Hangmuk Shin at an interest rate of 4.6%. The principal amount was KRW 50,000 (USD 34). It matured on March 23, 2026.

• On March 26, 2025, the Company entered into a short-term borrowing agreement with Hangmuk Shin at an interest rate of 4.6%. The principal amount was KRW 50,000 (USD 34). It matured on March 25, 2026.

NOTE 13 — RELATED PARTY TRANSACTIONS (cont.)

Short-Term Loan Payables (cont.)

• On May 7, 2025, the Company issued 90,123 shares of Common Stock at a conversion price of $1.19 per share, together with warrants to purchase 81,739 shares of Common Stock at an exercise price of $1.29 per share and expiring on the fifth anniversary of the issuance date, in connection with the conversion of $105,444 of indebtedness payable to Hangmuk Shin.

• On December 31, 2025, the Company entered into a short-term borrowing agreement with Hangmuk Shin at an interest rate of 4.6%. The principal amount was KRW 10,000,000 (USD 6,969), and the maturity date is December 30, 2026. The principal and interest will be repaid at maturity.

• On January 2, 2026, the Company repaid KRW 2,800,000 (USD 1,936) to Hangmuk Shin, reducing the outstanding principal of the December 31, 2025 loan to KRW 7,200,000.

• On January 16, 2026, the Company entered into a short-term borrowing agreement with Hangmuk Shin at an interest rate of 0%. The principal amount was KRW 30,000 (USD 20), and the maturity date is January 15, 2027. The principal and interest will be repaid at maturity.

• On January 23, 2026, the Company entered into a short-term borrowing agreement with Hangmuk Shin at an interest rate of 0%. The principal amount was KRW 5,000,000 (USD 3,415), and the maturity date is January 22, 2027. The principal and interest will be repaid at maturity.

• On February 3, 2026, the Company entered into a short-term borrowing agreement with Hangmuk Shin at an interest rate of 0%. The principal amount was KRW 250,000 (USD 172), and the maturity date is February 2, 2027. The principal and interest will be repaid at maturity.

• As of June 30, 2026, the aggregate principal outstanding to Hangmuk Shin was KRW 12,480,000 (USD 8,075) (December 31, 2025: KRW 10,000,000, or USD 6,969). The loans entered into in January and March 2025 were no longer outstanding at December 31, 2025; the December 31, 2025 loan, as reduced by the January 2, 2026 repayment, and the loans entered into in January and February 2026 remained outstanding at June 30, 2026.

PixelArc, LLC

• On February 18, 2025, the Company entered into a short term borrowing agreement with PixelArc, LLC at an interest rate of 8%. The principal amount was USD $86,666 and the maturity date was March 14, 2026.

• On April 18, 2025, the Company entered into a short term borrowing agreement with PixelArc, LLC at an interest rate of 0%; the principal amount was USD $86,000. The maturity date was May 15 2025.

• On May 20, 2025, the Company accepted PixelArc’s proposal and the total loan principal balance of USD $172,666 was converted into 246,666 shares at $0.7 per share, following the default of the April 18, 2025 loan. The shares were issued on May 24, 2025. Accrued interest in the amount of USD $3490.44 remains outstanding.

• On August 18, 2025, the Company entered into an interest free short term borrowing agreement with PixelArc, LLC, the principal amount was USD $1,000, repayable upon demand.

• On February 24, 2026, the Company entered into an interest free short term borrowing agreement with PixelArc LLC, the principal amount was $500 and the maturity date is February 24, 2027.

• As of June 30, 2026, the principal balance of the loans from PixelArc, LLC was $1,500. On July 2, 2026, subsequent to quarter end, the Company repaid all of the outstanding loan principal and accrued interest in full.

NOTE 14 —NON-TRADE PAYABLES

Non-trade accounts payable as of June 30, 2026 was $687,268, compared to $750,013 as of December 31, 2025. Non-trade accounts payable consists of accrued professional and service fees, accrued salaries and related payroll obligations, and other operating expenses that have been incurred but not yet paid; it does not include the Company’s borrowings, which are presented within short-term borrowings (Notes 7 and 8).

The following table summarizes the components of non-trade payables by nature as of June 30, 2026 and December 31, 2025:

NOTE 15 —STOCK-BASED COMPENSATION

The Company maintains the 2022 Omnibus Equity Incentive Plan, which provides for the grant of stock options and other equity-based awards. As of June 30, 2026, there were 75,000 shares remaining available for future issuance under the plan.

NOTE 16 —SEGMENT INFORMATION

The Company operates its business through its core Faning platform and strategy. As of June 30, 2026, the Company has determined that it operates in a single reportable segment focused on digital fan engagement services.

While the Company’s operations are primarily supported by its subsidiary, FANING KOREA, LLC, located in Seoul, Republic of Korea, the majority of its long-lived assets and revenues are managed as a single global ecosystem.

NOTE 17 — WARRANTS

The Company has issued warrants in connection with debt-to-equity conversion transactions and private placement financing transactions, as described below.

• On May 7, 2025, the Company issued 90,123 shares of Common Stock at a conversion price of $1.19 per share, together with warrants to purchase 81,739 shares of Common Stock at an exercise price of $1.29 per share and expiring on the fifth anniversary of the issuance date, in connection with the conversion of $105,444 of indebtedness payable to Hangmuk Shin.

• On May 7, 2025, the Company issued 135,817 shares of Common Stock at a conversion price of $1.27 per share, together with warrants to purchase 125,383 shares of Common Stock at an exercise price of $1.42 per share and expiring on the fifth anniversary of the issuance date, in connection with the conversion of $175,205 of indebtedness payable to Jeyoun Baeg.

• On May 7, 2025, the Company issued 135,817 shares of Common Stock at a conversion price of $1.27 per share, together with warrants to purchase 125,383 shares of Common Stock at an exercise price of $1.42 per share and expiring on the fifth anniversary of the issuance date, in connection with the conversion of $175,205 of indebtedness payable to Jungok You.

All warrants issued above have a contractual term of five years and expire on the fifth anniversary of the issuance date (May 7, 2030). Subsequently, on August 19, 2025, warrants held by Jungok You were exercised in full at an exercise price of $1.42 per share, resulting in the issuance of 125,383 shares of Common Stock for aggregate cash proceeds of approximately $178,044.

Private Placement Warrants

On June 29, 2026, the Company completed a private placement pursuant to a Securities Purchase Agreement dated June 25, 2026 with an institutional investor, resulting in gross proceeds of $1,998,907, before deducting placement agent fees and expenses of $189,999 (Note 11).

In connection with the private placement, the Company issued Pre-Funded Warrants to purchase up to 1,092,896 shares of Common Stock and Common Stock Warrants to purchase up to 1,092,896 shares of Common Stock. Each Pre-Funded Warrant is exercisable for one share of Common Stock at an exercise price of $0.001 per share, the balance of the exercise price having been prepaid, is immediately exercisable, may be exercised on a cashless basis, and may be exercised at any time until exercised in full. The Common Stock Warrants are exercisable commencing on December 25, 2026, six months after their June 25, 2026 issue date, at an exercise price of $1.83 per share, subject to adjustment, and expire on December 25, 2031, five years after the initial exercise date. Exercise of the warrants is subject to beneficial ownership limitations of 4.99% (or, at the holder’s election, up to 9.99%).

The Company paid the placement agent a cash fee of $139,999, equal to 7.0% of the total proceeds of the financing of $1,999,999.68 (which includes $1,093 of prepaid nominal exercise proceeds held by the placement agent for remittance to the Company as Pre-Funded Warrants are exercised), and reimbursed $50,000 of the placement agent’s fees and expenses. The total offering costs of $189,999 withheld at closing were charged to additional paid-in capital.

The following table summarizes the Company’s warrant activity for the period ended June 30, 2026:

Warrants Outstanding at June 30, 2026:

2026 Private Placement Warrants

The Company evaluated the Pre-Funded Warrants and the Common Stock Warrants under ASC 480, Distinguishing Liabilities from Equity, and ASC 815-40, Contracts in Entity’s Own Equity, and concluded that both instruments are indexed to the Company’s own stock and meet the conditions for equity classification. Neither instrument requires the Company to net-cash settle an exercise, and the fundamental-transaction provisions of the Common Stock Warrants could require a cash payment only upon events within the Company’s control or in circumstances in which holders of Common Stock receive the same form of consideration. Accordingly, the warrants were recorded in additional paid-in capital at issuance and are not subsequently remeasured at fair value.

The gross proceeds of $1,998,907 were allocated between the two instruments based on their relative standalone fair values at the June 29, 2026 closing date in accordance with ASC 505-10-30-6: $1,043,183 to the Pre-Funded Warrants and $955,724 to the Common Stock Warrants. The fair value of the Pre-Funded Warrants was determined as the closing price of the Common Stock on the closing date less the $0.001 exercise price. The fair value of the Common Stock Warrants was estimated using a Black-Scholes option pricing model with the following assumptions. Because the Company’s trading history is shorter than the warrants’ contractual term, expected volatility was estimated as a weighted combination of the Company’s historical volatility over its full trading history and the historical volatility of comparable publicly traded companies:

The fair value measurement of the Common Stock Warrants is a nonrecurring Level 3 measurement, reflecting the significant unobservable volatility input; it was made solely to allocate the issuance proceeds, and the warrants are not remeasured in subsequent periods. As of June 30, 2026, all 1,092,896 Pre-Funded Warrants and all 1,092,896 Common Stock Warrants were outstanding and unexercised, and 2,185,792 shares of Common Stock were reserved for issuance upon their exercise. In connection with the placement, the Company entered into a registration rights agreement requiring the Company to register the resale of the shares underlying the warrants, and filed the required registration statement on Form S-1 on July 29, 2026, within the 30-day contractual deadline.

Warrants Issued in 2025 Debt Conversions

In accordance with ASC 470-50, the Company measured the fair value of the 332,505 warrants issued on May 7, 2025 as part of the consideration for the debt conversions described above using the Black-Scholes Option Pricing Model (BSM) pursuant to the fair value guidance under ASC 820. The following analysis relates only to those warrants and not to the Pre-Funded Warrants or Common Stock Warrants issued in the June 2026 private placement.

The valuation was performed using the following assumptions as of the grant date (May 7, 2025):

Based on the assumptions above, the specific valuation components by each warrant holder tranche are summarized as follows:

The aggregate fair value of the 332,505 warrants issued was $653,094.44, which was included as part of the consideration transferred in determining the total loss on debt extinguishment of approximately $1,168,228. The corresponding amount was recorded within additional paid-in capital (APIC) – warrants.

NOTE 18 —INCOME TAXES

The Company continues to maintain a full valuation allowance against its net deferred tax assets and did not recognize an income tax benefit on current-period losses. Management is not aware of any material changes in its overall income tax position, including uncertain tax positions, during the three and six months ended June 30, 2026. In addition, no deferred tax asset has been recognized with respect to FANING Korea’s loss carryforwards.

The Company’s net operating loss carryforwards may be subject to limitations under Section 382 of the Internal Revenue Code if an ownership change, as defined by the Code, has occurred. Management is not aware of any events or developments during the quarter that would require modification of its previously disclosed position regarding the potential limitation of such carryforwards.

NOTE 19 —SUBSEQUENT EVENTS

The Company evaluated subsequent events in accordance with ASC 855, Subsequent Events, through the date these condensed consolidated financial statements were issued, and identified the following events requiring disclosure:

• On July 2, 2026 and July 8, 2026, the Company repaid in full the outstanding principal and accrued interest on its loans from Taehoon Kim, PixelArc LLC and Jaeman Lee, totaling approximately $81,700 of principal (Notes 8 and 13).

• On July 29, 2026, the Company terminated its Equity Purchase Agreement and related Registration Rights Agreement with Hudson Global Ventures, LLC. The agreement, originally executed on March 26, 2026, provided the Company with access to an equity line of credit of up to $18.0 million. The agreement was terminated pursuant to its contractual termination provisions and no further funding commitments remain available under the arrangement.

• On July 29, 2026, the Company filed a registration statement on Form S-1 registering the resale of the 2,185,792 shares of Common Stock issuable upon exercise of the Pre-Funded Warrants and Common Stock Warrants (Note 17).

• On August 13, 2026, holders exercised 528,896 Pre-Funded Warrants for 528,896 shares of Common Stock, and the Company received the related nominal exercise proceeds. Following the exercise,564,000 Pre-Funded Warrants and 1,092,896 Common Stock Warrants remained outstanding for an aggregate total of 1,656,896 warrants. No Common Stock Warrants had been exercised as of the date of issuance of these financial statements.

• On August 20, 2026, the Company received a notice from the Listing Qualifications Department of The Nasdaq Stock Market LLC stating that, because the Company had not timely filed this Quarterly Report on Form 10-Q, the Company was not in compliance with Nasdaq Listing Rule 5250(c)(1). The notice has no immediate effect on the listing of the Company’s Common Stock. Under Nasdaq rules, the Company has 60 calendar days from the date of the notice to submit a plan to regain compliance, and the Company expects the filing of this report to cure the deficiency.

• On September 1, 2026, the Company entered into a Share Purchase Agreement to acquire 100% of the issued and outstanding shares of AST Co., Ltd. for a purchase price of KRW 10,000,000. The agreement also contemplates potential shareholder loan financing of up to KRW 1,140,000,000 to support repayment of certain existing liabilities of AST Co., Ltd., as well as the issuance of warrants to certain parties, subject to board approvals, regulatory requirements, completion of due diligence, and other closing conditions. Because the transaction had not closed as of the issuance date of these financial statements, no assets or liabilities related to the acquisition have been recognized.