AMASS BRANDS

Note 1 – Organization and Nature of Business

Amass Brands, Inc. (“Amass” or the “Company”), is a corporation formed on September 22, 2016, under the laws of the State of Delaware. Headquartered in Los Angeles, California, the Company sells primarily alcoholic and non-alcohol beverages through wholesale and online platforms globally.

In September 2024, the Company purchased 50.0001% of 222 Spirits Holdco, LLC, and its two wholly owned subsidiaries, 222 Spirits Company, LLC, and 222 Spirits Management Holdco, LLC (collectively, 222 Spirits), which is accounted for as a business acquisition.

Further, see Note 12 for effectiveness of reverse stock split.

Note 2 – Liquidity and Capital Resources

The Company has evaluated whether there are certain conditions and events, considered in the aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date that the consolidated financial statements are issued.

The accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company incurred losses and used cash flow from operations since inception and has limited available capital. These factors, among others, raise substantial doubt about the Company’s ability to continue as a going concern. The Company’s ability to continue as a going concern for the next twelve months is dependent upon its ability to generate sufficient cash flows from operations to meet its obligations, which it has not been able to accomplish to date, and/or to obtain additional working capital.

The Company plans to raise additional capital as necessary to support its operating losses through the issuances of stock and loans. No assurances can be given that the Company will be successful in these efforts. The consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities as a result of this uncertainty.

Note 3 – Summary of Significant Accounting Policies

Basis of accounting

– The accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”) as found in the Accounting Standards Codification (“ASC”) of the Financial Accounting Standards Board (“FASB”). The unaudited condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. The unaudited condensed consolidated financial statements have been prepared in accordance with the rules and regulations of the SEC applicable to interim period financial statements and do not include all of the information and disclosures required by accounting principles generally accepted in the United States (“GAAP”) for complete financial statements. In the opinion of management, the unaudited condensed consolidated financial statements include all adjustments, consisting only of normal recurring adjustments, necessary for a fair statement of the financial position and the results of operations for the periods presented.

These unaudited condensed consolidated financial statements should be read in conjunction with the Company’s audited financial statements and the notes thereto for the year ended December 31, 2025. Interim results are not necessarily indicative of the results that may be expected for a full year.

Concentrations of credit risk

– Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash and cash equivalents. The Company generally maintains balances in various operating accounts at financial institutions that management believes to be of high credit quality, in amounts that may, at times, exceed federally insured limits. The Company has not experienced any losses related to its cash and cash equivalents and does

not

believe that it is subject to unusual credit risk beyond the normal credit risk associated with commercial banking relationships. As of March 31, 2026 and December 31, 2025, all the Company’s cash and cash equivalents were held at accredited financial institutions.

Additionally, the Company had the following concentrations in net sales and accounts receivable during the three months ended March 31, 2026.

Fair value measurements

– Certain assets and liabilities of the Company are carried at fair value under U.S. GAAP. Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. Financial assets and liabilities carried at fair value are to be classified and disclosed in one of the following three levels of the fair value hierarchy, of which the first two are considered observable and the last is considered unobservable:

Level 1

– Quoted prices in active markets for identical assets or liabilities.

Level 2

– Observable inputs (other than Level 1 quoted prices), such as quoted prices in active markets for similar assets or liabilities, quoted prices in markets that are not active for identical or similar assets or liabilities, or other inputs that are observable or can be corroborated by observable market data.

Level 3

– Unobservable inputs that are supported by little or no market activity that are significant to determining the fair value of the assets or liabilities, including pricing models, discounted cash flow methodologies, and similar techniques.

Derivative liabilities, warrant liabilities, SAFEs, investments at fair value, and securities pledged as collateral are measured using Level 3 inputs. Measurement of fair value using Level 3 inputs necessitates the use of estimates and assumptions that are inherently subjective, and the values determined by management as a result of using such inputs may differ from the values that would have been used had observable quotations in an active market existed, the differences could be material.

Except for investments at fair value, securities pledged as collateral, derivative liabilities, warrant liabilities, and SAFEs, the carrying amounts of the Company’s assets and liabilities, which are defined as financial instruments pursuant to U.S. GAAP, approximate fair value due to their short-term nature.

The following tables present changes in investments in fair value, securities pledged as collateral, derivative liabilities, and SAFEs, which are Level 3 assets and liabilities measured at fair value for the three months ended March 31, 2026. Note that during the fiscal year 2025, the Company sold their Investment in De Soi as part of a secured borrowing and, as such, the investment is a security pledged as collateral as of March 31, 2026; the first table below is presented comprehensive of both financial statement line items as they are interrelated:

Derivative liabilities arose from convertible notes November 2025 and were initially recorded at fair value of $37,046. There was a change in fair value of $916 during the year ended December 31, 2025. In 2026, there were additional derivative liabilities incurred of $1,068,790 from the issuance of more convertible notes. Additionally,

s

tock warrants issued in connection with the Company's convertible notes from November 2025 through March 2026 are accounted for as derivative liabilities under ASC 815-40. The Company also recognized a warrant derivative liability of $51,737 during the three months ended March 31, 2026. There was a change in fair value of $49,216 for all derivative liabilities during the three months ended March 31, 2026. Further,

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hanges in the fair value of derivative liabilities are recognized in the consolidated statements of operations within other income (expense).

In February 2025, the Company issued a Simple Agreement for Future Equity (SAFE), which was marked to the fair value of $500,000 at issuance. There was a change in fair value of $10,426 and $0 as of the three months ended March 31, 2026 and March 31, 2025, respectively. Changes in the fair value of SAFEs are recognized in the consolidated statement of operations within other income (expense).

There were no transfers between Levels 1, 2, or 3 during the three months ended March 31, 2026 nor March 31, 2025.

Valuation techniques and inputs

– The Company’s financial instruments measured at fair value on a recurring basis include investments at fair value, which are classified as Level 3 due to significant unobservable inputs used in their valuation.

The fair value of the Company’s investment at fair value/securities pledged as collateral is sensitive to changes in key unobservable inputs such as public company comparables for multiples, the weighting of various models, volatilities, discount rates, and financial projections. If these assumptions were to change materially, it could significantly impact the fair value conclusions.

To value the investment at fair value, the Company used a market based approach by identifying similar companies, applying multiples of revenues and liquidation waterfall to reach the Company’s equity value in the investment, considering discounts for lack of marketability and including weighting for transactions where we sold stock. Further, the Company considers recent transactions that occurred with the investment as evidence of fair value.

The Company sold a portion of its investments during the three months ended March 31, 2025, which caused losses. These losses were incurred for strategic reasons and not necessarily the value the Company would get for its highest and best use. However, such was used as an input in determining fair value as described above.

The Company’s derivative liabilities relate to embedded features in convertible debt instruments. These instruments are measured at fair value using a with-or-without probability weighted model. Significant unobservable inputs used in valuing derivative liabilities include the probability of conversion, the timeline for which the events are expected to occur, and discount rates applied. The fair value of the derivative liabilities is sensitive to changes in these significant unobservable inputs.

Additionally, the convertible debt instruments include embedded warrants. The Company values the warrant liabilities at fair value using a Monte Carlo simulation, which captures the path-dependent cash settlement mechanic under the Exchange Cap and the probability-weighted outcomes associated with a qualified financing event. Because the valuation relies on significant unobservable inputs, the

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arrant derivative liability is classified within Level 3 of the fair value hierarchy.

The Company’s SAFE is measured at fair value using a probability-weighted expected return valuation method. Significant unobservable inputs used in valuing the SAFE include the probability of each scenario, timeline for which the events are expected to occur, and discount rates. Because these inputs are unobservable and involve management judgement, the SAFE is classified as Level 3.

The fair value of the SAFE is sensitive to changes in these significant unobservable inputs. Increases in expected volatility, expected term, discount rates or probability of outcomes would generally increase the fair value of the SAFE, while decreases in these assumptions would generally decrease the fair value.

There were no changes in the valuation techniques used to determine the fair value of Level 3 instruments during the three months ended March 31, 2026 nor the three months ended March 31, 2025.

Accounts receivable, net

– Accounts receivable are derived from products and services delivered to customers and are stated at their net realizable value. The Company evaluates the creditworthiness of its customers prior to extending credit and monitors the aging and collectability of receivables on a continuous basis. Accounts receivable are generally written off when deemed uncollectible, and recoveries of receivables previously written off are recognized when received. Generally, no interest is charged on past-due accounts. The accounts receivable on Maison Thomas serve as collateral for the credit facility.

In accordance with ASC 326, the Company establishes an allowance for expected credit losses on financial assets, including trade and other receivables, at each reporting date. The allowance reflects management’s estimate of lifetime expected credit losses based on historical collection experience, the type and credit quality of the customer, the age of outstanding receivables, and current and expected future economic conditions.

Management uses the best information available to make these estimates; however, future adjustments may be required if there are significant changes in customer financial condition or broader economic trends. As of March 31, 2026 and December 31, 2025, the Company had a reserve for expected credit losses of $101,253 and $83,389, respectively.

Property and equipment, net

– Property and equipment, net includes long-term fixed assets such as machinery, equipment, furniture, and fixtures reported, net of depreciation. Property and equipment are recorded at cost. Depreciation

is

expensed using the straight-line method over the estimated useful lives of the assets. During the three months ended March 31, 2026 and March 31, 2025, the Company’s property and equipment were depreciated over five years, and leasehold improvements are amortized over the shorter of one to five years or the lease life. Additions and improvements are capitalized, while routine repairs and maintenance are charged to expense as incurred.

Intangible assets, net

– Intangible

assets

consist of capitalized website development costs, tradenames and transferred intellectual property, customer base, and non-competes. Intangible assets have been determined to have definite lives and are amortized on a straight-line bases over their estimated economic lives which range from 5 to 15 years. Website development costs are amortized over two years.

Impairment of long-lived assets

– The Company accounts for the impairment and disposition of long-lived assets in accordance with ASC Subtopic 360-10-35,

Property, Plant, and Equipment – Overall – Subsequent Measurement

(ASC 360). In accordance with ASC 360, the Company reviews its long-lived assets, including finite-lived intangible assets, for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The Company measures recoverability of assets to be held and used by comparing the carrying amount of an asset to future undiscounted net cash flows that it expects the asset to generate. When an asset is determined to be impaired, the Company recognizes the impairment amount, which is measured by the amount the carrying value of the asset exceeds its fair value. In addition, the Company evaluates goodwill for impairment in accordance

with

ASC 350,

Intangibles-Goodwill and Other

(ASC 350). Goodwill is tested at least annually, or more frequently if a triggering event occurs. If the carrying amount of the reporting unit exceeds its fair value, an impairment loss is recognized in an amount equal to the excess, not to exceed the total amount of goodwill. During the three months ended March 31, 2026 and March 31, 2025, impairment loss of $110,402 and $0, respectively, was recognized.

Customer deposits

– Customer

deposits

represent cash received from customers in advance of the Company satisfying its performance obligations and are recorded as a liability within accrued expenses and other current liabilities. The balance as of December 31, 2025 relates to a single customer deposit that is expected to be earned in 2026, as the related performance obligation had not been fulfilled as of year-end. The obligation was not fully satisfied as of March 31, 2026.

Revenue recognition

– The Company recognizes revenue under FASB ASC 606,

Revenue from Contracts with Customers

. The Company derives its revenue primarily through the sale of alcohol and non-alcoholic spirits and wine products in both wholesale and direct to consumer channels. Spirits and wine end customers consist primarily of retailers, bars, and restaurants. The Company determines revenue recognition through the following steps:

The Company’s revenue generating activities have a single performance obligation and are recognized when the ordered goods are shipped to the end customer, which is when control transfers. Revenue is measured as the amount of consideration the Company expects to receive in exchange for the sale of its product. The Company’s sales terms do not typically allow for a right of return on sales to wholesale and distributor customers except for matters related to any manufacturing defects. Amounts billed to customers for shipping and handling are included in net revenues.

As the Company’s standard payment terms are less than one year, the Company has elected, as a practical expedient, to not assess whether a contract has a significant financing component. The Company allocates the transaction price to each distinct product based on its relative standalone selling price. The product price as specified on the purchase order is considered the standalone selling price as it is an observable source that depicts the price as if sold to a similar customer in similar circumstances. Incidental items that are immaterial in the context of the contract are recognized as expense. The Company does not have any significant financing component as payments are received at or shortly after the point of sale.

Costs incurred to obtain a contract are expensed as incurred when the amortization period is less than a year. The Company recognizes an asset for the incremental costs of obtaining a contract with a customer if it expects the benefit of those costs to be longer than one year. The Company has concluded that none of the costs it has incurred to obtain and fulfill its sales contracts meet the capitalization criteria, and as such, there are no costs deferred and recognized as assets on the consolidated balance sheets as of March 31, 2026 and December 31, 2025.

Net revenues reflect reductions attributable to consideration given to customers in various customer incentive programs, including pricing discounts on single transactions, volume discounts, promotional and advertising allowances, coupons, and rebates. This variable consideration is recognized as a reduction of the transaction price based upon expected amounts at the time revenue for the corresponding product sale is recognized. For example, customer promotional discount programs are entered into with certain distributors for certain periods of time. The amount ultimately reimbursed to distributors is determined based upon agreed-upon promotional discounts which are applied to distributors’ sales to retailers. Other common forms of variable consideration include volume rebates for meeting established sales targets, including discounts offered to the end customer. The determination of the reduction of the transaction price for variable consideration requires certain estimates and assumptions that affect the timing and amounts of revenue and liabilities recognized. Management estimates this variable consideration by taking into account factors such as the nature of the promotional activity, historical information, and current trends, availability of actual results, and expectations of customer and consumer behavior. All such estimates were not material for the three months ended March 31, 2026 and March 31, 2025.

Further, the Company offers discounts on e-commerce transitions such as first order discounts, free shipping on sales over certain thresholds, subscription discounts, and bundled set discounts. All e-commerce discounts are included as part of net revenues on the statements of operations and known at the time of the transaction.

Sales tax collected from customers is not considered revenue and is included in accrued expenses until remitted to the taxing authorities. Excise taxes were not material to the consolidated financial statements for the three months ended March 31, 2026, nor March 31, 2025.

Cost of net revenues

– Cost of net revenues consists of the costs of inventory sold, which includes inbound freight, and production and fulfillment-related payroll. Outbound freight, third-party logistics costs, customs and duties, packaging materials, payment processing fees, and other fulfillment costs are also included in cost of net revenues. Shipping and handling costs amounted to $206,508 and $111,918 for the three months ended March 31, 2026 and March 31, 2025, respectively.

Sales and marketing expenses

– Sales and marketing expenses include all expenditures incurred to market or sell products. These costs include expenditures by the sales team while in the field, marketing and advertising costs, distributor costs, and payroll costs for the sales, marketing, and digital departments.

Advertising costs

– Advertising costs are expensed in the period incurred and are included as sales and marketing expenses in the consolidated statements of operations. Advertising costs amounted to $154,038 and $30,986 for the three months ended March 31, 2026 and March 31, 2025, respectively.

Net loss per share

– Basic net loss per share is computed by dividing net loss by the weighted-average number of shares of common shares outstanding during the period, excluding shares subject to redemption or forfeiture. The Company presents basic and diluted net loss per share on the consolidated statements of operations. Diluted net loss per share reflect the actual weighted average of common shares issued and outstanding during the period, adjusted for potentially dilutive securities outstanding. Potentially dilutive securities are excluded from the computation of the diluted net loss per share if their inclusion would be anti-dilutive. Potentially dilutive securities include the any options, warrants, and convertible debt. The number of shares convertible debt is convertible into is indeterminable. Options and warrants outstanding are described in Note 13.

Income taxes

–

In December 2023, the FASB issued a standard to enhance the transparency and decision usefulness of income tax disclosures. This standard requires public companies to disclose (i) specific categories in the rate reconciliation and provide additional information for reconciling items that meet a quantitative threshold, (ii) the amount of income taxes paid disaggregated by federal, state, and foreign taxes and disaggregated by material individual jurisdictions, and (iii) income from continuing operations before income tax expense

disaggregated between domestic and foreign and income tax expense from continuing operations disaggregated by federal, state, and foreign. We adopted the update on January 1, 2026. We expect this standard to impact our disclosures with no material impacts to our results of operations, cash flows, or financial condition.

Accounting pronouncements not yet adopted

Disaggregation of income statement expenses

– In November 2024, the FASB issued a standard requiring disaggregated information about certain income statement expense line items to be disclosed on an annual and interim basis. We are required to adopt these disclosures for our annual period ending December 31, 2028, with early adoption permitted and this standard may be applied retrospectively. We expect this standard to impact our disclosures with no material impacts to our results of operations, cash flows, or financial condition.

Management does not believe that any other recently issued, but not yet effective, accounting standards could have a material effect on the accompanying consolidated financial statements. As new accounting pronouncements are issued, the Company will adopt those that are applicable under the circumstances.

Note 4 – Inventory, net

Inventory, net consisted of the following as of March 31, 2026 and December 31, 2025:

At March 31, 2026 and March 31, 2025, the Company allocated the following amounts in inventory reserve: $371,645 and $386,439 for Raw Materials, respectively; $759,536 and $521,488 for Work in Process, respectively; and $2,068,694 and $2,551,336 for Finished Goods, respectively.

As of March 31, 2026 and December 31, 2025, the Company had no deposits for inventory purchases and production runs.

Note 5 – Long-Lived Assets

Property and equipment, net

– Property and equipment, net consists of the following:

Depreciation and amortization expenses of $4,081 and $25,645 were included in general and administrative expenses in the accompanying consolidated statements of operations for the three months ended March 31, 2026 and March 31, 2025, respectively.

Intangible assets, net

– Intangible assets, net consist of the following:

Amortization expense was $133,139 and $124,624 for the three months ended March 31, 2026 and March 31, 2025, respectively, and is included in general and administrative expenses in the accompanying consolidated statements of operations.

During the three months ended March 31, 2026, the Company assessed the Gem&Bolt tradename, customer base, and non-competes for impairment. The Company concluded that due to the fact that Gem&Bolt has ceased production, the remaining carrying value of these intangible assets should be fully impaired. The total impairment loss recognized in the three month

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ended March 31, 2026 is $110,402, and is included in impairment loss in the accompanying consolidated statements of operations.

Note 6 – Investments

De Soi

– In August 2020, the Company entered into a joint venture to create De Soi, a celebrity-founded, non-alcoholic wine product company. De Soi first made its product available for sale in January 2022 through the release of three flavors available in both bottles and cans. The Company was granted 2,500,000 of 5,000,000 shares of common stock in De Soi for no consideration. In 2022, the Company acquired certain preferred stock and sold common stock, resulting in ownership of less than 50%, at which point De Soi ceased being a joint venture, as De Soi had raised outside capital in the year and the Company owned less than 50% of De Soi. In December 2024, the Company sold 340,864 shares of Common Stock to a related party for $500,000 and recognized a loss on sale of $363,982 which is included in other expenses in the accompanying consolidated statements of operations. In January 2025, the Company sold another portion of its investment in De Soi for $500,000.

During 2025, the Company transferred its investment in De Soi to a related party in exchange for

$400,000

in cash (Note 14)

. The transferee pledged the investment as collateral under a third-party secured promissory note, and the Company entered into a repurchase agreement obligating it to repurchase the investment at maturity. Based on its evaluation under ASC 860, the Company concluded that it retained effective control over the investment and, therefore, the transaction did not qualify for sale accounting. The transaction has been accounted for as a secured borrowing, with the investment remaining on the consolidated balance sheet as securities pledged as collateral and a $400,000 obligation under repurchase commitment recorded. No gain or loss was recognized.

At the valuation dates of March 31, 2026 and December 31, 2025, management used the market approach to determine the fair value of the Company’s investment in De Soi was $3,347,564, which includes common stock and Series Seed holdings. The market approach was based on valuations related to financing transactions with third-party investors and market multiples of comparable companies, adjusted for certain time and market factors. See note 3 above for fair value measurement disclosures.

Full Glass

– As partial consideration for the sale of the Winc.com DTC business unit, the Company received 39,500 Common Units and warrants convertible to 40,000 Common Units of the buyer with a total implied value of $1,500,000. The warrants had an exercise price of $0.01 and have a five-year maturity. During the year ended December 31, 2023, the Company elected to record the investment at cost and evaluate the investment for impairment whenever a triggering event occurs. In February 2024,8,892 of the Common Units were converted to Series A Preferred Units and the Company was awarded an additional 41,345 Common Units in consideration for the dilution the Company took on Full Glass’ Series A as contemplated by the original contract with Full Glass. Further in February 2024, the Company entered into a Restatement Agreement in which it forfeited its warrants in exchange for a $3,500,000 lump payment on the promissory notes. As such forfeiture represented approximately half of the initial value of the investment, the Company reduced the value of the investment by $754,717 and recorded the loss as a component of other expense, net. During the three months ended March 31, 2026, the Company received $300,000

as a deposit that is expected to reduce our investment in Full Glass. The deposit is included in accrued expenses in the accompanying balance sheets as of March 31, 2026. Therefore, as of March 31, 2026 and December 31, 2025, no triggering events occurred and the investment had a value of

$745,283

.

HpO –

The Company received a 15%

equity interest in Zerra Nutrition, Inc. (“HpO”) upon HpO’s formation in April 2025 for no consideration. During 2025, the Company made certain advances to HpO to support operations. In June 2026, the Company formalized the investment in a Simple Agreement for Future Equity (SAFE) issued by HpO for a purchase amount of up to

$300,000

funded through July 2026. The SAFE is a post-money (valuation cap) instrument with

a $5,000,000

post-money valuation cap and no discount, and is non-interest-bearing with no fixed maturity or repayment obligation. It carries no voting rights and entitles the Company to shares of HpO’s capital stock upon a future equity financing, or to a cash or as-converted payout upon a liquidity or dissolution event, ranking junior to indebtedness, on par with other SAFEs and preferred stock, and senior to common stock. The investment has historically been carried at cost, and its ultimate realization is contingent on a future conversion or liquidity event at the issuer. HpO is considered a related party because it is controlled by Geoff McFarlane, who is the majority owner and President of Resonant, an entity consolidated by the Company as a variable interest entity. The balance of the cost investment as of March 31, 2026 and December 31, 2025

was $117,136 and $78,463, respectively.

Note 7 – Contract Losses

The Company identified that evidence existed, including declining bulk wine market and demand concerns for finished goods wine, indicating that some of its long-term, unhedged purchase commitment contracts of bulk wine would incur losses in future periods. The identified contracts included bulk wine expected to be received in 2025. In accordance with ASC 330,

Inventory

, the Company records a provision when evidence exists that net realizable value is lower than the contractual price. The provision is measured at the best estimate of the expected loss, recorded in cost of net revenues, and will be reassessed each period for changes in estimates. Key estimates include remaining expected consideration and market pricing affecting net realizable value. The total liability associated with firm purchase commitment contracts was $2,961,166 and $3,042,044 as of March 31, 2026 and December 31, 2025, respectively, and is presented within contract liabilities and within current liabilities on the consolidated balance sheets.

In February 2024, the Company entered into a supplier agreement to sell finished goods wine to Full Glass at prices below cost. This contract was entered into as a mitigation tool for its long-term purchase commitment contracts above, and on-hand bulk wine in inventory, as the Company is not expecting there to be enough demand for utilization of the bulk wine commitments. The Company utilized the Full Glass supplier agreement in considering the net realizable value for finished goods produced through the long-term purchase commitments above. The Company recognizes losses on the fulfilment of this contract as incurred, which totaled $2,122 during the year ended December 31, 2025 andno losses were incurred during the three months ended March 31, 2026.

Note 8 – Derivative Liabilities

The Company has issued convertible notes with embedded conversion features and warrants. The notes contain embedded redemption

fea

tures that do not qualify for equity classification under ASC 815,

Derivatives and Hedging

, and must be bifurcated and carried at fair value. As a result, the embedded redemption features are recognized as derivative liabilities, measured at fair value at issuance and at each subsequent reporting date in accordance with ASC 820, Fair Value Measurement, with changes in fair value recorded in earnings.

Additionally, the associated warrants do not qualify for equity classification because they contain settlement features and other terms that preclude equity treatment under ASC 815. As a result, the warrants are recognized as liabilities, measured at fair value at issuance and at each subsequent reporting date in accordance with ASC 820, with changes in fair value recorded in earnings. At March 31, 2026, the Company recognized the derivative liability value of the warrants on an aggregate basis at a fair value of $51,737. As of December 31, 2025, the warrant liability was determined to be negligible. Changes in the fair value of the warrant derivative liability are recognized in the consolidated statements of operations.

As of March 31, 2026 and December 31, 2025, the carrying amount of the derivative liabilities was $1,207,705 and $37,962. There were no conversions of repayments of the underlying convertible debts during the periods presents, nor were there any warrant exercises.

The derivative liability is included in the consolidated balance sheets as of March 31, 2026 and December 31, 2025. Changes in the fair value of the derivative liability for the three months ended March 31, 2026 and March 31, 2025 were $49,216 and $0, respectively, which were recognized in the consolidated statement of operations.

Note 9 – Debt

Secured credit facility –

In September 2023, the Company entered into a Loan and Security Agreement to open a credit facility with the maximum aggregate principal amount of $8,000,000 (the ABL). The maximum aggregate principal amount was reduced to $5,000,000 in 2026. Interest is accrued at the greater of (i)12% and (ii) Prime Rate (6.75% as of March 31, 2026 and December 31, 2025) plus 3.75% per annum. The ABL matures in September 2026 with an automatic renewal for one year if not terminated before 60 days before the termination date. The outstanding balance on the ABL was $2,928,161 and $3,277,034 as of March 31, 2026 and December 31, 2025, respectively. In August 2025, the Company breached a financial covenant which put the ABL into technical default. Through the date of these financial statements, the breach has not affected the functionality of the facility and both parties are actively working to resolve the matter. The Company received a waiver of their default as of December 31, 2025.

Loans payable

– In May 2020, the Coronavirus Aid, Relief, and Economic Security (CARES) Act was established to provide economic relief to small businesses facing COVID-19-related economic hardships. In June 2020, the Company applied and received COVID relief funding for qualified small businesses under the Economic Injury Disaster Loan (EIDL) assistance program by the Small Business Administration (SBA). Per the terms of the EIDL agreement, the Company received total proceeds of $150,000. The loan matures in thirty years from the effective date of the loan and has a fixed interest rate of 3.75% per annum. As of March 31, 2026 and December 31, 2025, the outstanding balance was $160,389 and $160,296, inclusive of accrued interest, respectively. Interest expense for this loan was $2,286 for the three months ended March 31, 2026 and March 31, 2025.

In December 2022 and 2023, the Company obtained three Mezzanine Secured Notes with shareholders in an aggregate principal amount of $1,700,000, of which $500,000 was from a related party. The notes originally accrued interest at a rate of 15% for the first month and monthly thereafter based on a range of 12-14% per annum. The loans were past due but subsequently extended through July 2026. As of March 31, 2026 and December 31, 2025, the principal balance of Mezzanine Secured Notes was $200,000,

and $297,854 respectively, of which $97,854 was due to a related party as of December 31, 2025. The balance due to a related party was fully repaid in March 2026. In February 2026, the Company extinguished $276,475 of interest in exchange for the exercise of 65,509 shares of Common Stock warrants for $26,479 and 20,833 shares of Common Stock for $249,996. As of March 31, 2026 and December 31, 2025, the accrued interest balance of Mezzanine Secured Notes was $266,827 and $524,125, respectively; none of the accrued interest was due to a related party.

In April 2024, the Company issued a Secured Promissory Note with the principal balance of $2,500,000. The note originally accrued interest at $72,917 per month with default interest of $2,000 per day with original maturity in April 2025. The note was amended during 2025, to include reduced monthly payments, extension of the note, and settlement of all default and past due interest. As consideration, the Company transferred $1,000,000 of its investment at fair value and issued a $500,000 SAFE under the Company’s subsidiary Good Twin. The Note also contains a post-closing provision requiring the Company to transfer additional equity interests in Good Twin to the Lender if the Lender's ownership interest falls below ten percent (10%) upon SAFE conversion, with the fair market value of any such shares transferred applied as a dollar-for-dollar reduction to the outstanding principal balance. The Company determined this qualified as a debt modification, with the additional consideration charged to interest expense Additionally, in January 2026, the note was amended twice:

The outstanding balance was $1,067,000 and $1,267,000 as of March 31, 2026 and December 31, 2025, respectively. The Company incurred $0 and $1,033,668 of interest and late fees on the note during the three months ended March 31, 2026 and March 31, 2025, respectively.

Promissory notes

payable

– In 2021 and 2022, the Company issued promissory notes with a total principal amount of $1,900,000. As of March 31, 2026 and December 31, 2025, the Company had promissory notes with the total outstanding principal balance of $1,650,000 and accrue interest at a rate of 12% per annum.

The promissory notes mature between August 2026 and September 2027. Interest accrued on the notes is paid quarterly in arrears. The notes incurred $42,862 and $48,822 of interest expense for the three months ended March 31, 2026 and March 31, 2025, respectively, of which $151,937 and $149,758 was payable at March 31, 2026 and March 31, 2025, respectively.

In January 2025, the Company issued an additional Promissory Note to a shareholder with greater than 5% ownership with a principal balance of $1,000,000. The note accrues interest at 6.25% per annum and matures in January 2026 and contained warrants further discussed below. The outstanding balance was $1,000,000 as of December 31, 2025, all of which was principal. The balance was converted to a convertible note in February 2026. The Company incurred $4,583 and $9,167

of interest on the note during the three months ended March 31, 2026 and 2025, respectively.

The promissory note contained warrants to purchase 214,229 shares of common stock at the exercise price of $0.24 or through a cashless exercise. The warrants were exercised for cash in February 2025. The warrants were allocated a relative fair value of $615,000 upon issuance, which was amortized over the life of the note. During the three months ended March 31, 2026, the Company recognized $51,286 of interest expense related to the accretion of the discount, with $0 remaining at the end of the period.

Note 10 – Convertible Debt

From November 2025 through March 2026, the Company issued unsecured convertible promissory notes (“Convertible Notes”) to investors in the principal amount of $2,766,316 and $414,641 as of March 31, 2026 and December 31, 2025, respectively. The Convertible Notes bear interest at a rate of 9% per annum and mature on the earlier of (i) 24 months from issuance or (ii) a change of control. The Convertible Notes may not be prepaid without the consent of the holder.

Of the convertible notes, $1,822,415 was issued to related parties.

The Convertible Notes are convertible, at the holder’s option or automatically upon certain events, into shares of the Company’s common stock. Upon a qualified financing, the outstanding principal and accrued interest automatically convert at a price equal to 80% of the price paid by new investors. Upon a change of control, the holder may elect to receive either repayment equal to two times the outstanding balance or conversion based on an implied valuation of $30.0 million and the Company’s fully diluted capitalization as of immediately prior to the closing of the change of control transaction. If the Notes remain outstanding at maturity and no conversion event has occurred, the outstanding balance automatically converts based on the same $30.0 million valuation framework.

In connection with the issuance of the Notes, the Company also issued warrants to purchase shares of common stock with an exercise price equal to the greater of $10.00 or the volume-weighted average trading price, exercisable following the Company’s listing on Nasdaq and expiring 180 days thereafter. Issuance of shares under the Note and Warrant is subject to a 19.99% exchange cap absent stockholder approval.

The Company evaluated the Notes and Warrants in accordance with applicable accounting guidance and concluded that the embedded conversion feature was required to be bifurcated and held at fair value, and the warrants qualified for liability treatment due to failing indexation guidance. Accordingly, the features of the Notes and the Warrants are recorded as liabilities at fair value, with changes in fair value recognized in earnings until conversion, settlement, or expiration. See Note 3.

The Company recorded discounts from the derivative and warrant liabilities totaling $1,120,527 and $37,346 for the three months ended March 31, 2026 and the year ended December 31, 2025, respectively. See Notes 3 and 8 for valuation of derivative and warrant liabilities. As of March 31, 2026 and December 31, 2025, the net carrying value of the debt was $

1,731,710

and $

378,725

with remaining debt discount of $

1,034,606

and $

35,916

and accrued interest of $

55,370

and $

4,551

, respectively. Interest expense from accretion of the discount during the three months ended March 31, 2026 and March 31, 2025 was $

120,760

and $

, respectively.

Accrued interest from the related party was $32,432.

Note 11 – Simple Agreement for Future Equity (“SAFE”)

In February 2025, the Company issued a Simple Agreement for Future Equity (“SAFE”) in Good Twin to an investor in exchange for $500,000, which was applied toward the repayment of amounts outstanding under a previously issued secured promissory note. The SAFE provides the investor with the right to receive shares of the Good Twin’s capital stock upon the occurrence of a qualifying equity financing, liquidity event, or dissolution event.

The SAFE has a post-money valuation cap of $5.0 million, does not bear interest, and has no stated maturity date. Upon an equity financing, the SAFE automatically converts into equity at a price based on the lower of the valuation cap or the price paid by new investors. In the event of a liquidity or dissolution event prior to conversion, the investor is entitled to receive the greater of the original investment amount or the value of the shares issuable under the valuation cap, subject to customary liquidation priority provisions.

The Company determined that the SAFE does not qualify for equity classification. Accordingly, the SAFE is classified as a liability and recorded at fair value, with changes in fair value recognized in earnings. As of March 31, 2026 and December 31, 2025, the carrying value of the SAFE was $530,668 and $520,242, respectively. No conversion or settlement events had occurred to date.

Note 12 – Stockholders’ Equity

Reverse stock split and capital reorganization –

In January 2026, the Company filed its Seventh Amended and Restated Certificate of Incorporation with the State of Delaware, which became effective upon filing. Pursuant to the amended certificate, the Company effected a 1-for-3 reverse stock split of its issued and outstanding shares of common stock, whereby each three shares of common stock issued and outstanding immediately prior to the effective time were automatically combined into one share of common stock.

No fractional shares were issued in connection with the reverse stock split. Any fractional shares resulting from the reverse stock split were rounded up to the nearest whole share, and no cash was paid in lieu of fractional shares.

The reverse stock split did not affect the par value per share of the Company’s common stock, the total number of authorized shares of common stock, or the Company’s total stockholders’ equity. It also did not affect the outstanding preferred stock, but did affect the conversion ratio where it is now 3:1.

In connection with the effectiveness of the amended certificate, each outstanding share of the Company’s non-voting common stock was automatically converted on a one-for-one basis into a share of voting common stock, and the Company no longer has authority to issue shares of non-voting common stock. Accordingly non-voting and voting shares of common stock have been presented together in the stockholders’ equity (deficit).

All share and per-share amounts presented in the accompanying consolidated financial statements have been retroactively adjusted for all periods presented to reflect the reverse stock split and related reclassification.

Common stock

– As of March 31, 2026 and December 31, 2025, the Company was authorized to issue a total of 250,000,000 and 66,700,000 shares of Common Stock, respectively, with $0.00001 par value, of which 250,000,000 and 63,500,000, respectively, were voting shares and 0 and 3,200,000 were non-voting shares. In January 2026, the Company eliminated the non-voting shares class and converted all outstanding shares of non-voting Common Stock to voting shares of Common Stock.

Each holder of stock (both common and preferred) is entitled to one vote for each share of stock held, with the exception of non-voting common stock. No distributions have been made as of March 31, 2026.

Preferred stock

– The holders of Series B Preferred Stock are initially entitled to repayment amount at the greater of (i) the Original Issue Price of the Series B Preferred Stock, plus any dividends declared but unpaid thereon or (ii) such amount per share as would have been payable had all shares of the Series B Preferred Stock been converted into Common Stock immediately prior to such liquidation, dissolution, winding up, or Deemed Liquidation Event.

After holders of Series B Preferred Stock are repaid, the holders of shares of all other series of Preferred Stock then outstanding shall be entitled to be paid out of the consideration payable to stockholders in such Deemed Liquidation Event or out of the Available Proceeds, as applicable, on a pari passu basis among each other and before any payment shall be made to the holders of Common Stock by reason of their ownership thereof, an amount per share equal to the greater of (i) the applicable Original Issue Price, plus any dividends declared but unpaid thereon or (ii) such amount per share as would have been payable had all shares of the applicable series of Preferred Stock been converted into Common Stock immediately prior to such liquidation, dissolution, winding up, or Deemed Liquidation Event. If upon any such liquidation, dissolution, or winding up of the Corporation or Deemed Liquidation Event, the assets of the Corporation available for distribution to its stockholders shall be insufficient to pay the holders of shares of Preferred Stock the full amount to which they shall be entitled, the holders of shares of Preferred Stock shall on a pari passu basis share ratably in any distribution of the assets available for distribution in proportion to the respective amounts which would otherwise be payable in respect of the shares held by them upon such distribution if all amounts payable on or with respect to such shares were paid in full.

In the event of any voluntary or involuntary liquidation, dissolution, or winding up of the Corporation, after the payment in full of all Liquidation Amounts required to be paid to the holders of shares of Preferred Stock, the remaining assets of the Corporation available for distribution to its stockholders or, in the case of a Deemed Liquidation Event, the consideration not payable to the holders of shares of Preferred Stock or the remaining Available Proceeds, as the case may be, shall be distributed among the holders of shares of Common Stock, pro rata based on the number of shares held by each such holder.

The Company authorized and had outstanding the following shares as of March 31, 2026 and December 31, 2025:

Stock transactions for the three months ended March 31, 2025

– During the three months ended March 31, 2025, the Company issued 2,084 shares of common stock for the exercise of stock options and received cash proceeds of $375. Further, the Company issued 214,229 shares of common stock for the exercise of warrants and received cash proceeds of $51,408.

Stock transactions for the three months ended March 31, 2026

– During the three months ended March 31, 2026, the Company issued 77,331 shares of Common Stock in advisory shares and incurred an expense of $693,658. The value of the shares was based on the effective purchase price per share from the Company’s most recent regulation crowdfunding round.

During the three months ended March 31, 2026, the Company converted 91,019 shares of non-voting Common Stock into 91,464 shares of voting Common Stock and did not receive any additional proceeds.

The Company issued 4,667 shares of Common Stock for the exercise of stock options for $1,260. The Company issued 740,328 shares of Series

B-1 Preferred Stock and 225,351 shares of Common Stock for the exercise of warrants for an aggregate of $986,217.

362,653 shares of Series B-1 Preferred Stock were issued upon exercise by related parties for $378,000.

The Company issued 86,342 shares of Common Stock for the extinguishment of $276,474 of Mezzanine Debt Interest Payable (Note 9).

Note 13 – Stock Options and Warrants

Incentive stock options and non-qualified stock options

– In September 2016, the Company adopted the 2016 Stock Plan (2016 Plan), which provides for the grant of shares of stock options and restricted stock awards to employees, non-employee directors, and non-employee consultants. As of March 31, 2026, the 2016 Stock Plan, as amended, authorized 1,726,130 shares. The options typically have a contractual term of ten years. Stock options comprise all of the awards granted since the 2016 Plan’s inception. Stock options granted under the 2016 Plan typically vest over a four-year period with a one-year cliff, but also include grants that vest over shorter periods of time. As of March 31, 2026, the 2016 Plan had 271,687 shares available for future issuance.

A summary of information related to stock options is as follows:

The following table presents the range assumptions used in the Black-Scholes option-pricing model to determine the grant-date fair value of stock options granted to employees and directors in the three months ended March 31:

There wereno grants of options during the three months ended March 31, 2026. Stock-based compensation expense for stock options of $220,932 and $44,548 was recognized for the three months

ended

March 31, 2026 and March 31, 2025, respectively, and is included in general and administrative expenses in the accompanying consolidated statements of operations. Total unrecognized compensation cost related to non-vested stock option awards amounted to $1,802,948, as of March 31, 2026. The remaining expense is expected to be recognized over a weighted-average period of approximately 33 months.

Preferred Stock and Common Stock warrants

– During the year ended December 31, 2025, the Company entered into arrangements with its vendors and investors in which it provided Preferred Stock and Common Stock warrants (the warrants) in lieu of cash for goods and services provided or embedded in the Company promissory notes (see Note 8). The warrants generally have a term of five to ten years and are typically fully vested at issuance.

As of December 31, 2025, there were 1,328,185 Preferred Stock warrants outstanding and exercisable with a weighted average exercise price of $1.46 per share. During the three months ended March 31, 2026,531,274 shares were exercised for cash proceeds of $77,997 and 409,722 shares were exercised for a net 209,054 shares of Series B-1 Preferred Stock. Additionally, during the three months ended March 31, 2026, a total of 387,189 Preferred Stock warrants were converted to 129,063 Common Stock warrants. There was no gain or loss on the conversion as there were no material changes to the economics of the underlying warrants. Accordingly, there were no preferred stock warrants outstanding at March 31, 2026.

A summary of information related to Common Stock warrants is as follows:

Common stock warrants were valued using the Black-Scholes model with the following inputs as of March 31:

Note 14 – Related-Party Transactions

Due from related parties

– The Company’s co-founder has received various advances from the Company. In January 2022, the Company entered into a loan agreement with the founder in which the balance outstanding is incurring interest at a rate of 1.6% per annum. As of March 31, 2026 and December 31, 2025, the net amount due from the founder was $0 and $1,389,996, respectively. Interest earned during the three months ended March 31, 2026 and 2025, respectively, on the advances was not material. These advances were settled in March 2026 through the repurchase of co-founder shares. The share price used for repurchase was based on the Company’s most recent crowdfunding sales price of $8.97 per share.

Secured borrowing of investment De Soi –

The Company entered into an agreement with shareholder with greater than 5% ownership to transfer its investment in De Soi. Refer to Note 6 for further details.

Loan payable – related party

– As discussed in Note 9, the holders of one of the Mezzanine Secured Notes was related party. The balance of Mezzanine Secured Notes due to that related party was $0 and $97,854 as of March 31, 2026 and December 31, 2025, respectively.

Promissory notes

– As discussed in Note 9, the holder of a promissory note issued in 2025 was a shareholder with greater than 5% ownership. Refer therein for further details.

Convertible debt and shareholders’ equity

– As discussed in Notes 10 and 12, shareholders with greater than 5% ownership exercised warrants and was issued convertible debt in the three months ended March 31, 2026. Refer therein for further details.

Investments at cost –

as discussed in Note 6, the majority shareholder of HpO is a related party.

Note 15 – Commitments and Contingencies

Lease commitments

– The Company’s headquarters in Los Angeles, CA was leased on a month-to-month basis through August 2025, at which time the Company moved out of its headquarters. The Company is currently operating without a corporate office lease.

As part of the Winc acquisition in January 2023, the Company acquired contracts for two warehouses: one in Santa Maria, CA and the other in Bethel Township, PA. The Santa Maria lease expired in December 2023 and was renewed in January 2024, January 2025, and January 2026, each for a term of one year. The lease for the Bethel Township property, originally set to expire in December 2027, was terminated in July 2024. As a result, the related right-of-use (ROU) asset and lease liability were removed from the balance sheet. In addition, a lease deposit totaling $300,000 was forfeited upon termination. In March 2025, the Company entered a termination settlement agreement on the Bethel Township property in which it was required to pay an additional $75,000 between April and October 2025. The settlement agreement was fully satisfied as of December 31, 2025.

For the three months ended March 31, 2026 and March 31, 2025, the Company incurred office rent expense of $13,358 and $45,388, respectively, and warehouse rent expense of $153,169 and $210,668, respectively. Office and warehouse rent expense are components of general and administrative expenses in the accompanying consolidated statements of operations. No material obligations exist on the Company’s current operating leases as of March 31, 2026

,

nor December 31, 2025.

Contingencies

– The Company may be subject to pending legal proceedings and regulatory actions in the ordinary course of business. The results of such proceedings cannot be predicted with certainty, but the Company does not anticipate that the final outcome, if any, arising out of any such matters will have a material adverse effect on its business, financial condition, or results of operations.

Note 16 – Business Segment Information

Our internal management financial reporting consists of two business divisions: (i) Wine and (ii) Spirits and we report our operating results intwo segments: (i) Wine and (ii) Spirits. In the Wine segment, our portfolio consists of premium imported and domestic wine brands across multiple varietals and price points (both alcoholic and non-alcoholic). In the Spirits segment, our portfolio includes premium and craft spirits brands across categories such as gin, vodka, mezcal, tequila, and non-alcoholic. Our CODM is our Chief Executive Officer. The business segments reflect how our operations are managed, how resources are allocated, how operating performance is evaluated by senior management, and the structure of our internal financial reporting. Our CODM utilizes segment comparable operating loss performance in deciding how to deploy capital in line with disciplined and balanced priorities. These priorities largely include investing in our people and our brands, making capital investments, and strategic acquisitions. Our CODM also monitors budgeted versus actual results in assessing segment operating performance and understanding underlying business trends.

Management excludes certain non-GAAP Comparable Adjustments from its evaluation of the results of each operating segment as these Comparable Adjustments are not reflective of core operations of the segments. Segment operating performance and the incentive compensation of segment management are evaluated based on core segment operating loss which does not include the impact of these Comparable Adjustments, collectively referred to as comparable operating loss. We evaluate segment operating performance based on comparable operating loss of the respective business units.

The accounting policies of the segments are the same as those described for the Company in the Summary of Significant Accounting Policies in Note 3.

Segment information is as follows:

Comparable adjustments were as follows:

Our principal area of operation is in the U.S. Current operations for one of the spirits brands is in Mexico. Revenues are attributed to countries based on the location of the

customer

.

Geographic data is as follows:

Note 17 – Subsequent Events

Direct Listing on the Nasdaq Global Market -

On May

, 2026, the Company's common stock commenced trading on the Nasdaq Global Market under the ticker symbol "AMSS" pursuant to a direct listing (the "Direct Listing") registering the resale of up to 12,432,021 shares of common stock held by existing stockholders. The Direct Listing was not underwritten on a firm-commitment basis; Maxim Group LLC served as the Company's financial advisor under Nasdaq Rule 4120(c)(8).

Streeterville Private Placement -

In connection with the Direct Listing, the Company completed a private placement (the "Private Placement") with Streeterville Capital, LLC ("Streeterville") pursuant to a Securities Purchase Agreement dated March 17, 2026, as amended by a Global Amendment dated April 7, 2026 (the "SPA"). The SPA provides for the issuance and sale by the Company of up to $30.0 million of Series C Convertible Preferred Stock (the "Series C Preferred Stock") across an initial closing (the "First Closing") and a subsequent closing (the "Second Closing").

At the First Closing on April 8, 2026, the Company issued to Streeterville (i)28,125 shares of common stock as commitment fee shares and (ii) a warrant to purchase up to 3,500,000 shares of common stock at an exercise price equal to 110% of the Nasdaq Valuation Price, exercisable through the fifth anniversary of the listing date (subject to the Company's right to terminate the warrant after one year post-listing upon ten days' notice), for which Streeterville paid a warrant purchase price of $10,000.

At the Second Closing on May 2

, 2026, the Company issued to Streeterville 7,000 shares of

Series C Preferred Stock, for which Streeterville paid $6,990,000.

The Series C Preferred Stock is convertible into common stock at an initial conversion price equal to the Nasdaq Valuation Price. After the earlier of (i) six months from the listing date, (ii) a trigger event, or (iii) an event of default, the conversion price becomes the lesser of the Fixed Price and 90% of the lowest daily volume-weighted average price during the ten trading days prior to conversion, subject to a floor price equal to 40% of the Nasdaq Valuation Price. Conversions are subject to a 9.99% beneficial ownership limitation and the Exchange Cap under Nasdaq Rule 5635(d).

Stockholders’ equity

– The Company opened a new Regulation Crowdfunding round in February 2026 closed in April 2026. The Company does not expect to receive funds on this round.

In connection with the Direct Listing, all outstanding shares of the Company's Series Seed, Series Seed-1 through Seed-5, Series A, and Series B-1 through B-3 Preferred Stock automatically converted into an aggregate of

7,483,093 shares of common stock pursuant to the mandatory conversion provisions of the Company's Eighth Amended and Restated Certificate of Incorporation, filed with the Delaware Secretary of State on April 30, 2026. These conversions resulted in a reclassification within stockholders' equity (deficit) with no income statement impact.

Stock-based compensation

– Subsequent to March 31, 2026

,

and before the issuance date, warrants were exercised to 66,563 shares of Common Stock. The Company received funds of $14,211 related to the exercise of warrants.

SAFE Agreement

• On June 16, 2026, the Company entered into a Simple Agreement for Future Equity (the “SAFE”) with AFTERDREAM, Inc ( “Afterdream”), pursuant to which the Company invested $1,435,000 (the “Purchase Amount”) in exchange for the right to receive shares of Afterdream’s capital stock upon the occurrence of certain future events. The SAFE includes a post-money valuation cap of $7,500,000. Capitalized words used but not defined herein shall have the meaning as set forth in the SAFE. Afterdream is a related party, as the majority owner is the Company’s CEO.

If there is an Equity Financing before the termination of the SAFE, on the initial closing of such Equity Financing, the SAFE will automatically convert into the greater of (1) the number of shares of Standard Preferred Stock equal to the Purchase Amount divided by the lowest price per share of Standard Preferred Stock, or (2) the number of shares of Safe Preferred Stock equal to the Purchase Amount divided by the Safe Price. If there is a Liquidity Event before the termination of the SAFE, the Company will automatically be entitled to receive a portion of Proceeds equal to the greater of (i) the Purchase Amount or (ii) the amount payable on the number of shares of Common Stock equal to the Purchase Amount divided by the Liquidity Price. If there is a Dissolution Event before the termination of the SAFE, the Company will automatically be entitled to receive a portion of Proceeds equal to the Purchase Amount, subject to the liquidation priority provisions set forth in the SAFE. The SAFE is not transferable or assignable by either party without the prior written consent of the other, subject to certain customary exceptions.

On June 17, 2026, the Company entered into Amendment No. 1 to the SAFE (the “Amendment”) with Afterdream. Pursuant to the Amendment, the parties agreed to increase the Purchase Amount from $1,435,000 to $1,535,000, representing an additional investment of $100,000 by the Company. The Post-Money Valuation Cap of $7,500,000 remains unchanged. All other material terms of the SAFE remain in full force and effect as originally executed, including the conversion mechanics upon an Equity Financing, Liquidity Event, or Dissolution Event.

On June 24, 2026, the Company entered into Amendment No. 2 to the SAFE (the “Amendment”) with Afterdream. Pursuant to the Amendment, the parties agreed to increase the Purchase Amount from $1,535,000 to $1,735,000, representing an additional investment of $200,000 by the Company. The Post-Money Valuation Cap of $7,500,000 remains unchanged. All other material terms of the SAFE remain in full force and effect as originally executed, including the conversion mechanics upon an Equity Financing, Liquidity Event, or Dissolution Event.

Investment in De Soi

– In June 2026, the Company repaid its repurchase commitment on its investment in De Soi discussed in Notes 6 and 14. Afterdream repaid the loan for which the De Soi equity was used as collateral, which therefore resolved the requisites to release the collateral. The Company is awaiting confirmation that the securities have been released and returned to the Company.

Subsequent to March 31, 2026, certain investments were formalized into a SAFE (see Note 6).