FiEE, Inc.

Previous wording

The Company continues to experience losses, which in part is due to costs related to our new SaaS operating platform launched in Q1 2025. In the three and six months ended June 30, 2025 and 2024, we generated net sales of $45 thousand and $0, respectively, and $45 thousand and $640 thousand, respectively.

Current wording

The Company continues to experience losses, which in part is due to costs related to our new SaaS operating platform launched in Q1 2025. In the three and nine months ended September 30, 2025 and 2024, we generated net sales of $2 million and $0, respectively, and $2 million and $640 thousand, respectively.

Previous wording

The following table sets forth certain financial data derived from our condensed consolidated statements of operations for the three and six months ended June 30, 2025 and 2024, presented in absolute dollars and as a percentage of net sales, with dollars and percentage change period over period:

Current wording

The following table sets forth certain financial data derived from our condensed consolidated statements of operations for the three and nine months ended September 30, 2025 and 2024, presented in absolute dollars and as a percentage of net sales, with dollars and percentage change period over period:

Previous wording

Comparison of the three and six months ended June 30, 2025 to the three and six months ended June 30, 2024

Current wording

Comparison of the three and nine months ended September 30, 2025 to the three and nine months ended September 30, 2024

Previous wording

The following table sets forth our revenues by product and the changes in revenues for the three and six months ended June 30, 2025, as compared to the three and six months ended June 30, 2024:

Current wording

The following table sets forth our revenues by product and the changes in revenues for the three and nine months ended September 30, 2025, as compared to the three and nine months ended September 30, 2024:

Previous wording

The majority of the Company’s revenues by geographic area are earned in North America for the three and six months ended June 30, 2024. For the three and six months ended June 30, 2025, the Company recognized revenue under a service agreement executed in March 2025, which governs content creation, account operations, and commercial monetization services.

Current wording

The majority of the Company’s revenues by geographic area are earned in North America for the three and nine months ended September 30, 2024. For the three and nine months ended September 30, 2025, the Company recognized revenue under MCN service agreements executed commencing in March 2025, which governs content creation, account operations, and commercial monetization services, along with revenue from customized software R&D contracts signed beginning in July 2025.

Previous wording

Our net sales increased by $45 thousand for the three months ended June 30, 2025 compared to the three months ended June 30, 2024. The increase in net sales primarily reflects the Company’s strategic transition from legacy hardware operations to software-as-a-service (SaaS) solutions, with a new business focus on integrating artificial intelligence and big data into content creation and brand management. Notably, during March 2025, the new Company successfully secured its first customer orders and generated initial sales, marking a critical milestone in the strategic pivot. Our target clients are individuals or entities seeking to grow their online presence as influencers or content creators. As of June 30, 2025, the Company onboarded 245 customers, corresponding to prepaid service fees totaling $1.5 million, which underscore the early traction of the Company’s SaaS offerings.

Current wording

Our net sales increased by $2 million for the three months ended September 30, 2025 compared to the three months ended September 30, 2024. The increase in net sales primarily reflects the Company’s strategic transition from legacy hardware operations to software-as-a-service (SaaS) solutions, with a new business focus on integrating artificial intelligence and big data into content creation and brand management. Notably, during March 2025, the new Company successfully secured its first customer orders and generated initial sales, marking a critical milestone in the strategic pivot. Our target clients are individuals or entities seeking to grow their online presence as influencers or content creators.

Previous wording

Cost of sales consisted primarily of the following: the cost of direct labor; the cost of finished products from our third-party manufacturers; overhead costs, including purchasing, product planning, inventory control, warehousing and distribution logistics; third-party software licensing fees; inbound freight; import duties/tariffs; warranty costs associated with returned goods; write-downs for excess and obsolete inventory; amortization of certain acquired intangibles and software development costs; and costs attributable to the provision of service offerings.

Current wording

Cost of sales for the year ended December 31, 2024 consisted primarily of the following: the cost of direct labor; the cost of finished products from our third-party manufacturers; overhead costs, including purchasing, product planning, inventory control, warehousing and distribution logistics; third-party software licensing fees; inbound freight; import duties/tariffs; warranty costs associated with returned goods; write-downs for excess and obsolete inventory; and costs attributable to the provision of service offerings.

Previous wording

The increase in gross profit was attributable to less sales in 2024, largely resulting from the termination of the Motorola license. Our gross margin can be affected by a number of factors, including fluctuation in labor cost, foreign exchange rates, sales returns, changes in average selling prices, end-user customer rebates and other channel sales incentives, changes in our cost of goods sold due to fluctuations and increases in prices paid for components, overhead costs, inbound freight and duty/tariffs, conversion costs, and charges for excess or obsolete inventory.

Current wording

The increase in gross profit was attributable to lower sales in 2024, largely resulting from the termination of the Motorola license. Our gross margin can be affected by a number of factors, including fluctuation in labor cost, foreign exchange rates, sales returns, changes in average selling prices, end-user customer rebates and other channel sales incentives, changes in our cost of goods sold due to fluctuations and increases in prices paid for components, overhead costs, inbound freight and duty/tariffs, conversion costs, and charges for excess or obsolete inventory.

Previous wording

The gross margin for the three and six months ended June 30, 2025 is not representative of future trends, as the new business was in its initial launch phase during this period, incurring elevated upfront costs associated with market entry, product deployment, and operational ramp-up. Forecasting gross margin percentages is difficult, and there are several risks related to our ability to maintain or improve our current gross margin levels. Our cost of goods sold, as a percentage of net sales, can vary significantly based upon factors such as: uncertainties surrounding revenue volumes, including future pricing and/or potential discounts as a result of the economy, competition, the timing of sales, and related production level variances; and changes in technology components.

Current wording

The gross margin for the three and nine months ended September 30, 2025 is not representative of future trends, as the new business was in its initial launch phase during this period, incurring elevated upfront costs associated with market entry, product deployment, and operational ramp-up. Forecasting gross margin percentages is difficult, and there are several risks related to our ability to maintain or improve our current gross margin levels. Our cost of goods sold, as a percentage of net sales, can vary significantly based upon factors such as: uncertainties surrounding revenue volumes, including future pricing and/or potential discounts as a result of the economy, competition, the timing of sales, and related production level variances; and changes in technology components.

Previous wording

Selling and marketing expenses decreased by $28 thousand and $49 thousand in the three and six months ended June 30, 2025, as compared to the three and six months ended June 30, 2024, primarily due to reductions in sales support costs in 2024 and lower operational scale during the initial phases of business development in 2025​​.

Current wording

Selling and marketing expenses increased by $32 thousand and decreased by $17 thousand in the three and nine months ended September 30, 2025, as compared to the three and nine months ended September 30, 2024, primarily due to reductions in sales support costs in 2024 and lower operational scale during the initial phases of business development in 2025.

Previous wording

General and administrative expenses increased by $37 thousand and decreased by $641 thousand in the three and six months ended June 30, 2025, as compared to the three and six months ended June 30, 2024, primarily due to the reallocation of our business operation from hardware - focus to software - focus and cost reduction effort in 2024, which significantly reduced expenses associated with personnel, administrative support, and related infrastructure. Expenses from new SaaS business launched in Q1 2025 remained within projected budget for market-entry initiatives during its startup phase.

Current wording

General and administrative expenses increased by $1.09 million and increased by $450 thousand in the three and nine months ended September 30, 2025, as compared to the three and nine months ended September 30, 2024, primarily due to the reallocation of our business operation from hardware - focus to software - focus and cost reduction effort in 2024, which significantly reduced expenses associated with personnel, administrative support, and related infrastructure.

Previous wording

Research and development expenses decreased by $23 thousand and $66 thousand in the three and six months ended June 30, 2025, as compared to the three and six months ended June 30, 2024. The R&D expense incurred in 2025 were primarily used for software subscriptions and support costs.

Current wording

Research and development expenses decreased by $0 thousand and $66 thousand in the three and nine months ended September 30, 2025, as compared to the three and nine months ended September 30, 2024. The R&D expense incurred in 2025 were primarily used for software subscriptions and support costs.

Previous wording

In 2025, we entered into a collaboration with a new vendor to develop the “FiEE All-in-One Media Operations SaaS Platform”, which is designed to provide content creation, multi-platform publishing, data analytics, and collaboration tools for media teams and individual creators. The total contract price is $300 thousand, as of June 30, 2025, payable under the contract is $90 thousand. Development costs incurred for internal-use software are capitalized only during the application development stage.

Current wording

In 2025, we entered into a collaboration with a new vendor to develop the “FiEE All-in-One Media Operations SaaS Platform”, which is designed to provide content creation, multi-platform publishing, data analytics, and collaboration tools for media teams and individual creators. The total contract price is $300 thousand, as of September 30, 2025, payable under the contract is $180 thousand. Development costs incurred for internal-use software are capitalized only during the application development stage.

Previous wording

Our principal sources of liquidity are cash and cash equivalents. As of June 30, 2025, we had cash and cash equivalents of $4.5 million as compared to $30 thousand on December 31, 2024. On June 30, 2025, we had no borrowings outstanding and working capital of $1.1 million. We have funded our operations and financing activities primarily through sale of our preferred stock and common stock. The Company’s ability to maintain adequate levels of liquidity depends in part on our ability to generate cash from operations and its ability to raise additional funds through equity or debt financing. The Company is evaluating options related to its liquidity. The Company will continue to monitor its costs in relation to its sales and adjust its cost structure accordingly.

Current wording

Our principal sources of liquidity are cash and cash equivalents. As of September 30, 2025, we had cash and cash equivalents of $6 million as compared to $30 thousand on December 31, 2024. On September 30, 2025, we had no borrowings outstanding and working capital of $2 million. We have funded our operations and financing activities primarily through sale of our preferred stock and common stock. The Company’s ability to maintain adequate levels of liquidity depends in part on our ability to generate cash from operations and its ability to raise additional funds through equity or debt financing. The Company is evaluating options related to its liquidity. The Company will continue to monitor its costs in relation to its sales and adjust its cost structure accordingly.

Previous wording

***Cash Flows from Operating Activities.***Cash used from operating activities of $172 thousand during the six months ended June 30, 2025 reflected our net loss of $1 million, adjusted for non-cash expenses, consisting primarily of $91 thousand in depreciation and amortization expense. Uses of cash included increase in other receivables of $520 thousand. Sources of cash included an increase of contract liabilities of $1.5 million.

Current wording

***Cash Flows from Operating Activities.***Cash provided by operating activities of $2.5 million during the nine months ended September 30, 2025 reflected our net loss of $1.3 million, adjusted for non-cash expenses, consisting primarily of $260 thousand in depreciation and amortization expense. Uses of cash included increase in other receivables of $431 thousand, accounts receivable of $187 thousand. Sources of cash included an increase of contract liabilities of $2.5 million.

Previous wording

Cash used from operating activities of $2.9 million during the six months ended June 30, 2024 reflected our net loss of $3.7 million, adjusted for non-cash expenses, consisting primarily of $426 thousand of stock-based compensation expense, $238 thousand in depreciation and amortization expense, and $2.2 million in vendor forgiveness, net of asset transfers. Uses of cash included a decrease in accounts payable of $3.1 million. Sources of cash included primarily a decrease of accounts receivable of $731 thousand, inventories of $404 thousand, and accrued expenses of $16 thousand.

Current wording

Cash used from operating activities of $3.8 million during the nine months ended September 30, 2024 reflected our net loss of $4.4 million, adjusted for non-cash expenses, consisting primarily of $432 thousand of stock-based compensation expense, $313 thousand in depreciation and amortization expense, and $2.2 million in vendor forgiveness, net of asset transfers. Uses of cash included a decrease in accounts payable of $3.1 million and accrued expenses of $394 thousand. Sources of cash included primarily a decrease of accounts receivable of $731 thousand and inventories of $404 thousand.

Previous wording

***Cash Flows from Investing Activities.***During each of the six months ended June 30, 2025 and 2024, the Company had no cash flows generated or used by investing activities.

Current wording

During the nine months ended September 30, 2024, the Company had no cash flows generated or used by investing activities.

Previous wording

Cash Flows from Financing Activities. Cash provided from financing activities during the six months ended June 30, 2025 consisted of proceeds from issuance of common stock of $4 million, net proceeds from the issuance of convertible note of $300 thousand.

Current wording

Cash Flows from Financing Activities. Cash provided from financing activities during the nine months ended September 30, 2025 consisted of proceeds from issuance of common stock of $4 million, net proceeds from the issuance of a convertible note of $300 thousand.

Previous wording

Cash provided from financing activities during the six months ended June 30, 2024 consisted of proceeds from issuance of preferred stock of $2.8 million.

Current wording

Cash provided from financing activities during the nine months ended September 30, 2024 consisted of proceeds from the issuance of preferred stock of $2.8 million and issuance of common stock of $465 thousand.

Previous wording

At June 30, 2025, we have Federal net operating loss carry forwards of approximately $70 million available to reduce future taxable income. A valuation allowance has been established for the full amount of deferred income tax assets as management has concluded that it is more-likely than-not that the benefits from such assets will not realize the benefits of our deferred tax assets. As a result, as of June 30, 2025 and December 31, 2024, we recorded a full valuation allowance against our net deferred tax assets.

Current wording

At September 30, 2025, we have Federal net operating loss carry forwards of approximately $90.6 million available to reduce future taxable income. A valuation allowance has been established for the full amount of deferred income tax assets as management has concluded that it is more-likely than-not that the benefits from such assets will not realize the benefits of our deferred tax assets. As a result, as of September 30, 2025 and December 31, 2024, we recorded a full valuation allowance against our net deferred tax assets.

Previous wording

In consideration for Helena’s execution and delivery of the Helena Purchase Agreement, the Company shall issue or cause to be issued to Helenna, as a commitment fee, shares of Common Stock, having an aggregate value of $150,000, of which (i) $75,000 of such shares shall be issued on a date no later than three (3) Business Days from the Helena Purchase Agreement, and (ii) $75,000 of such shares shall be issued on the date which is ninety (90) days following such date.

Current wording

In consideration for Helena’s execution and delivery of the Helena Purchase Agreement, the Company shall issue or cause to be issued to Helenna, as a commitment fee, shares of Common Stock, having an aggregate value of $150,000, of which (i) $75,000 of such shares were issued on May 14, 2025, and (ii) $75,000 of such shares were issued on August 11, 2025.

Previous wording

During the six months ended June 30, 2025, except as otherwise disclosed in this Form 10-Q, there were no material changes to our capital commitments and contractual obligations from those disclosed in our Form 10-K for the year ended December 31, 2024.

Current wording

During the nine months ended September 30, 2025, except as otherwise disclosed in this Form 10-Q, there were no material changes to our capital commitments and contractual obligations from those disclosed in our Form 10-K for the year ended December 31, 2024.

Previous wording

Our critical accounting policies and estimates, which are revenue recognition, product returns, inventory valuation and costs of goods sold, warrants, valuation of deferred tax assets are described under “Critical Accounting Policies and Estimates” in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in our Annual Report on Form 10-K for the year ended December 31, 2024. For the three and six months ended June 30, 2025, the Company’s critical accounting policies is revenue recognition, and no critical accounting estimates were identified.

Current wording

Our critical accounting policies and estimates, which are revenue recognition, product returns, inventory valuation and costs of goods sold, warrants, valuation of deferred tax assets are described under “Critical Accounting Policies and Estimates” in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in our Annual Report on Form 10-K for the year ended December 31, 2024. For the three and nine months ended September 30, 2025, the Company’s critical accounting policies are revenue recognition, and no critical accounting estimates were identified.