Azio Ai Holdings, Inc 8-K/A, filed Sep 15, 2026
Azio Ai Holdings, Inc. (AZIO)
About this 8-K/A
Azio Ai Holdings, Inc filed this 8-K/A on September 15, 2026, reporting on events of July 2, 2026.
Items reported
- Item 9.01: Financial statements and exhibits
(Commission File Number) | (IRS Employer Identification No.) |
(Address of Principal Executive Offices) | (Zip Code) |
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a -12) |
Pre -commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d -2(b)) |
Pre -commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
Exhibit | Description |
23.1 | |
99.1 | |
99.2 | |
99.3 | |
104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
AZIO AI HOLDINGS, INC. | |||
Date: September 15, 2026 | By: | /s/ Jason Maddox | |
Jason Maddox | |||
Chief Financial Officer | |||
Exhibit 23.1
Consent of Independent Registered Public Accounting Firm
We consent to the incorporation by reference in the Registration Statements on Form S-8 (File No. 333-224152) and Form S-1 (File Nos. 333-282961, 333-287531 and 333-295351) of Azio AI Holdings Inc. of our report dated September 15, 2026, relating to the financial statements of Azio AI Corporation as of December 31, 2025 and for the period from inception (October 7, 2025) through December 31, 2025, which report is included in the Form 8-K/A of Azio AI Holdings Inc filed on September 15, 2026. Our report contains an explanatory paragraph regarding the Company’s ability to continue as a going concern.
We also consent to the reference to our firm under the heading “Experts” in such Registration Statements, as applicable.
Very truly yours,
Diamond Bar, California
September 15, 2026
Exhibit 99.1
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and
Stockholders of Azio AI Corporation
Opinion on the Financial Statements
We have audited the accompanying balance sheet of Azio AI Corporation (the Company) as of December 31, 2025, and the related statement of income, stockholders’ equity, and cash flows for the period from inception (October 7, 2025) through December 31, 2025, and the related notes and schedules (collectively referred to as the financial statements). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2025, and the results of its operations and its cash flows for the period from inception (October 7, 2025) through December 31, 2025, in conformity with accounting principles generally accepted in the United States of America.
Substantial Doubt About the Company’s Ability to Continue as a Going Concern
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the financial statements, the Company has suffered recurring losses from operations that raise substantial doubt about its ability to continue as a going concern. Management’s plans regarding these matters are also described in Note 2 to the financial statements. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
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We have served as the Company’s auditor since 2026. |
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Diamond Bar, California |
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September 15, 2026 |
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AZIO AI CORPORATION |
BALANCE SHEET |
DECEMBER 31, 2025 |
ASSETS | | | | |
Current assets | | | | |
Cash | | $ | 1,000 | |
Total current assets | | | 1,000 | |
TOTAL ASSETS | | $ | 1,000 | |
| | | | |
LIABILITIES AND SHAREHOLDER’S DEFICIT | | | | |
Current liabilities | | | | |
Accounts payable and accrued liabilities | | $ | 21,055 | |
Accrued expenses, related party | | | 8,867 | |
Loan from related party | | | 1,000 | |
Due to related parties | | | 23,723 | |
Income tax payable | | | 800 | |
Total current liabilities | | | 55,445 | |
TOTAL LIABILITIES | | | 55,445 | |
| | | | |
COMMITMENTS AND CONTINGENCIES (NOTE 6) | | | | |
| | | | |
Shareholder's Deficit | | | | |
Preferred stock, 10,000,000 shares authorized, $0.00001 par value per share, none issued and outstanding as of December 31, 2025 | | | - | |
Common stock, 100,000,000 shares authorized, $0.00001 par value per share, 10,000,000 shares issued and outstanding as of December 31, 2025 | | | 100 | |
Additional paid-in-capital | | | - | |
Accumulated deficit | | | (54,545 | ) |
TOTAL SHAREHOLDER’S DEFICIT | | | (54,445 | ) |
TOTAL LIABILITIES AND SHAREHOLDER'S DEFICIT | | $ | 1,000 | |
*Adjusted for par value change and 1,000-for-1 forward stock split. Refer Note 3 for details.
The accompanying notes are an integral part of these financial statements.
AZIO AI CORPORATION |
STATEMENT OF OPERATIONS |
FOR THE PERIOD FROM OCTOBER 7, 2025 (INCEPTION) THROUGH DECEMBER 31, 2025 |
Operating Expenses | | | | |
General and administrative expenses | | $ | 48,034 | |
Sales and marketing expenses | | | 5,611 | |
Loss before provision for income taxes | | $ | (53,645 | ) |
| | | | |
Provision for income taxes | | | (800 | ) |
| | | | |
Net loss | | $ | (54,445 | ) |
| | | | |
Weighted average common stock outstanding, basic and diluted | | | 10,000,000 | |
Net loss per common share, basic and diluted | | $ | (0.01 | ) |
The accompanying notes are an integral part of these financial statements.
AZIO AI CORPORATION |
STATEMENT OF CHANGES IN SHAREHOLDERS’ DEFICIT |
FOR THE PERIOD FROM OCTOBER 7, 2025 (INCEPTION) THROUGH DECEMBER 31, 2025 |
| | Preferred Stock | | | Common Stock | | | Additional paid- in-capital | | | Accumulated Deficit | | | Total Shareholder’s Deficit | |
|||||||||||||
| | Shares | | | Amount | | | Shares | | | Amount | | | | | | | | | | | | | |
||||
Balance, October 7, 2025 (inception) | | | - | | | $ | - | | | | - | | | $ | - | | | $ | - | | | $ | - | | | $ | - | |
Issuance of common stock* | | | - | | | | - | | | | 10,000,000 | | | | 100 | | | | (100 | ) | | | - | | | | - | |
Net loss | | | - | | | | - | | | | - | | | | - | | | | - | | | | (54,445 | ) | | | (54,445 | ) |
Reclassification of negative additional paid-in capital | | | - | | | | - | | | | - | | | | - | | | | 100 | | | | (100 | ) | | | - | |
Balance, December 31, 2025 | | | - | | | $ | - | | | | 10,000,000 | | | $ | 100 | | | $ | - | | | $ | (54,545 | ) | | $ | (54,445 | ) |
*Adjusted for par value change and 1,000-for-1 forward stock split. Refer Note 3 for details.
The accompanying notes are an integral part of these financial statements.
AZIO AI CORPORATION |
STATEMENT OF CASH FLOWS |
FOR THE PERIOD FROM OCTOBER 7, 2025 (INCEPTION) THROUGH DECEMBER 31, 2025 |
Cash flows used in operating activities | | | | |
Net loss | | $ | (54,445 | ) |
Changes in operating assets and liabilities: | | | | |
Accounts payable and accrued liabilities | | | 21,055 | |
Accrued expenses, related party | | | 8,867 | |
Income tax payable | | | 800 | |
Net cash used in operating activities | | | (23,723 | ) |
| | | | |
Cash flows from financing activities | | | | |
Proceeds from related party advances | | | 1,000 | |
Due to related parties | | | 23,723 | |
Net Cash provided by financing activities | | | 24,723 | |
| | | | |
Net change in cash | | | 1,000 | |
Cash, beginning of period | | | - | |
Cash, end of period | | $ | 1,000 | |
| | | | |
Supplemental disclosure of cash flow information | | | | |
Cash paid for interest | | $ | - | |
Cash paid for income taxes | | $ | - | |
The accompanying notes are an integral part of these financial statements.
AZIO AI CORPORATION
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD FROM OCTOBER 7, 2025 (INCEPTION) THROUGH DECEMBER 31, 2025
Note 1 — Description of Organization and Business Operation
Azio AI Corporation (“Azio AI” or the “Company”), a Delaware corporation, was incorporated on October 7, 2025, and is a supplier, distributor and integrator of artificial intelligence graphics processing units (AI GPUs), AI infrastructure solutions, and digital-asset mining infrastructure solutions. The Company’s offerings include OEM server modules that consist of AI GPUs, immersion-cooled and hydro-cooled Bitcoin mining hardware and related consumables, transformers and electrical power-distribution equipment, containerized and modular systems, satellite connectivity equipment and services, and other supporting infrastructure solutions. In addition to equipment supply, the Company coordinates site preparation, installation, testing, commissioning, and related services required to deploy customer AI compute and mining operations. Through December 31, 2025, the Company was in its start-up stage, had devoted substantially all of its efforts to organizational and infrastructure-development activities, and had not commenced revenue-generating operations.
Note 2 — Liquidity and Capital Resources
The Company reported a net loss of $54,445 for the period from October 7, 2025 (inception) through December 31, 2025. As of December 31, 2025, the Company had an aggregate cash balance of $1,000 and accumulated deficit of $54,545.
In July 2026, the Company entered into a merger agreement with Envirotech Vehicles, Inc. (“EVTV”), pursuant to which the companies will combine through a two-step merger transaction. Upon completion of the transaction, Azio AI’s business and operations will be held within a wholly owned subsidiary of EVTV, and EVTV will remain the publicly traded parent company of the combined organization. While the merger is expected to strengthen the Company’s long-term strategic and operational position, the transaction is not expected to provide sufficient near-term liquidity to fund the Company’s operating requirements for the twelve months following the issuance of these financial statements. The Company will continue to require additional capital prior to and following the merger closing to support ongoing operations.
Management is actively pursuing additional financing arrangements to address these liquidity needs and currently expects to obtain additional capital through equity financing. The Company’s future capital requirements will depend on a number of factors, including the timing and completion of the proposed merger transaction and the level of resources required to support planned operations. However, there can be no assurance that additional financing will be available on acceptable terms, or at all. If the Company is unable to obtain additional capital when needed, it may be required to delay, reduce, or eliminate certain operating activities and strategic initiatives.
As a result of the Company’s recurring operating losses, limited cash resources, and need for additional financing to fund its operations and capital requirements, substantial doubt exists regarding the Company’s ability to continue as a going concern through the twelve months from the date these financial statements are issued. Management’s plans to mitigate these conditions include raising additional capital and completing the proposed merger with EVTV; however, these plans have not alleviated the substantial doubt as there can be no assurance they will be successfully implemented or that sufficient funding will be obtained.
These financial statements do not include any adjustments relating to the recoverability or classification of assets or the amounts and classification of liabilities that may be necessary should the Company be unable to continue as a going concern.
Note 3 — Summary of Significant Accounting Policies
Basis of Presentation
The accompanying financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”), expressed in U.S. dollars. The accompanying financial statements reflect all adjustments including normal recurring adjustments, which, in the opinion of the Company’s management, are necessary to present fairly the financial position, results of operations, and cash flows for the period presented in accordance with U.S. GAAP. References to U.S. GAAP issued by the Financial Accounting Standards Board (“FASB”) in these accompanying notes to the financial statements are to the FASB Accounting Standards Codification (“ASC”). The financial statements have been prepared assuming the Company will continue as a going concern.
AZIO AI CORPORATION
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD FROM OCTOBER 7, 2025 (INCEPTION) THROUGH DECEMBER 31, 2025
Forward stock split
The Company amended its Certificate of Incorporation to increase the authorized common shares from 10,000 to 100,000,000 and reduce the par value from $0.0001 to $0.00001 per share. The amendment also authorized 10,000,000 shares of preferred stock, which had not previously been authorized.
In connection with the amendment, on February 10, 2026, the Company effected a forward split of its issued and outstanding shares of common stock at a ratio of 1,000-for-1. As a result of the forward stock split, each issued and outstanding share of the Company’s common stock prior to the effective time of the forward stock split are split into 1,000 shares of common stock and the total number of issued and outstanding shares of common stock increases from 10,000 shares to 10,000,000 shares.
While the par value change and forward stock split occurred subsequent to the period ended December 31, 2025, all common stock and preferred stock share quantities, prices, and par values contained in these financial statements and accompanying notes have been adjusted to reflect the impact of the par value change and forward stock split as though it had occurred in all periods presented. Accordingly, an amount equal to the par value of the increased shares resulting from the par value change and forward stock split was reclassified from additional paid-in-capital to common stock.
Use of Estimates
The preparation of financial statements in conformity with U.S. GAAP requires the Company’s management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements. Making estimates requires management to exercise significant judgment. Such estimates may be subject to change as more current information becomes available and accordingly the actual results could differ significantly from those estimates. It is at least reasonably possible that the estimate of the effect of a condition, situation or set of circumstances that existed at the date of the financial statements, which management considered in formulating its estimate, could change in the near term due to one or more future confirming events. The Company evaluates its estimates on an ongoing basis and makes revisions to these estimates.
Segment Information
The Company identifies operating segments as components of the enterprise for which discrete financial information is available and is regularly reviewed by the chief operating decision maker (“CODM”) to allocate resources and assess performance. The Company operates as a single operating and reportable segment. See Note 8 — Segment Reporting for further information.
Cash
The Company considers all short-term investments with an original maturity of three months or less when purchased to be cash equivalents. As of December 31, 2025, there was a cash balance of $1,000. The Company did not have any cash equivalents as of December 31, 2025.
Credit Risk and Major Customers/Supplier Concentration
Financial instruments potentially subject the Company to credit risk concentrations consisting of cash. The Company maintains all its cash in commercial depository accounts, insured by the Federal Deposit Insurance Corporation. At times, cash deposits may exceed federally insured limits. Any loss incurred or lack of access to such funds could have an adverse impact on the Company’s financial condition, results of operations, and cash flows.
Fair Value Measurements
The Company accounts for certain assets and liabilities at fair value in accordance with ASC 820, Fair Value Measurement. ASC 820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.
AZIO AI CORPORATION
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD FROM OCTOBER 7, 2025 (INCEPTION) THROUGH DECEMBER 31, 2025
ASC 820 establishes a three-level hierarchy for fair value measurements based on the transparency of inputs used in the valuation of an asset or liability as of the measurement date. The three levels are defined as follows:
Level 1 — Quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2 — Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities in active markets or inputs that are observable for substantially the full term of the asset or liability.
Level 3 — Unobservable inputs supported by little or no market activity and reflecting the Company’s own assumptions about the assumptions market participants would use.
The carrying amounts of cash, accounts payable and income tax payable approximate fair value due to their short-term nature. As of December 31, 2025, the Company did not have any assets or liabilities measured at fair value on a recurring basis.
Income Taxes
The Company follows the asset and liability method of accounting for income taxes under ASC Topic 740, Income Taxes (“ASC 740”), which requires an asset and liability approach to financial accounting and reporting for income taxes. Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that included the enactment date. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized.
ASC 740 prescribes a recognition threshold and a measurement attribute for the financial statement recognition and the measurement of tax positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more likely than not to be sustained upon examination by taxing authorities. The Company recognizes accrued interest and penalties related to unrecognized tax benefits as income tax expense. The Company is currently not aware of any issues under review that could result in significant payments, accruals, or material deviation from its position. The Company is subject to income tax examinations by major taxing authorities since inception.
Net Loss per Share
Basic net loss per share is computed by dividing net loss by the weighted average number of common shares outstanding during the reporting period. Diluted net loss per share is computed similar to basic net loss per share except that the denominator is increased to include the number of additional common stock that would have been outstanding if the potential common stock equivalents had been issued and if the additional common stock were dilutive.
For the period from October 7, 2025 (inception) through December 31, 2025, the Company’s diluted weighted-average common stock outstanding is equal to the basic weighted-average common stock, as there were no potentially dilutive securities currently issued and outstanding during the period.
| | For the period from October 7, 2025 (inception) through December 31, 2025 | |
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Net loss | | $ | (54,445 | ) |
Weighted-average number of common shares outstanding – Basic and diluted | | | 10,000,000 | |
Basic and diluted loss per share | | $ | (0.01 | ) |
AZIO AI CORPORATION
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD FROM OCTOBER 7, 2025 (INCEPTION) THROUGH DECEMBER 31, 2025
Recent Accounting Pronouncements:
Recent Accounting Pronouncements, not yet adopted:
ASU 2024-03, “Disaggregation of Income Statement Expenses (“DISE”)” (“ASU 2024-03”) requires disclosures about specific types of expenses included in the expense captions presented on the face of the income statement as well as disclosure about selling expenses. ASU 2024-03 is effective for fiscal years beginning after December 15, 2027, with early adoption permitted. The Company is currently evaluating the impact of this ASU on its financial statements and disclosures.
There are no new recently issued accounting standards that will have a material impact on the Company’s financial statements. The Company does not believe other recently issued but not yet effective accounting standards, if currently adopted, would have a material effect on the Company’s financial statements.
Recent Accounting Standards Adopted by the Company
ASU 2023-09: In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which requires entities to expand their existing income tax disclosures, specifically related to the rate reconciliation and income taxes paid. The standard is effective for the Company beginning in fiscal year 2025. The Company adopted the standard from the incorporation date. Refer to Note 7—Income Taxes for additional information.
Note 4 — Related party transactions
Loan from related party
During the period ended December 31, 2025, a member of the Company’s Board of Directors, advanced $1,000 to the Company. As of December 31, 2025, the outstanding balance due to the director was $1,000. The advance was non-interest bearing, unsecured, and payable on demand.
Due to related parties
During the period ended December 31, 2025, directors of the company made payments on behalf of the Company totaling $23,723. As of December 31, 2025, the outstanding balance due to the directors was $23,723.
Accrued expenses, related party
As of December 31, 2025, accrued expenses payable to related party was $8,867. Accrued expenses, related party include obligations for goods and services received but not yet invoiced or paid as of the reporting date.
Note 5 — Equity
Common Stock
The Company is authorized to issue 100,000,000 shares of common stock at par value $0.00001 each. At December 31, 2025, there were 10,000,000 shares of common stock issued and outstanding.
AZIO AI CORPORATION
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD FROM OCTOBER 7, 2025 (INCEPTION) THROUGH DECEMBER 31, 2025
Voting
Holders of common stock are entitled to one vote for each share of common stock held on all matters submitted to a vote of shareholders. Holders may vote either in person or by proxy. Except as otherwise required by law or as provided in the Certificate of Incorporation, each share of common stock carries identical voting rights.
Dividends
Subject to the preferential rights of any outstanding preferred stock, holders of common stock are entitled to receive such cash dividends as may be declared by the Board of Directors from time to time out of funds legally available therefore. The Board of Directors may also declare stock dividends or other distributions payable in shares of common stock.
Liquidation
In the event of any liquidation, dissolution, or winding up of the Company, holders of common stock are entitled to share ratably in the net assets of the Company available for distribution to shareholders after payment of all liabilities and satisfaction of any preferential rights of holders of preferred stock.
Preferred Stock
The Company is authorized to issue 10,000,000 shares of preferred stock at par value $0.00001 each. At December 31, 2025, there were no shares of preferred stock issued and outstanding.
Voting
The voting powers, if any, of any series of preferred stock shall be determined by the Board of Directors at the time such series is designated. The Board of Directors may determine whether the voting powers are full, limited or otherwise restricted. Except as otherwise required by law or provided in the applicable certificate of designation, holders of preferred stock shall have such voting rights as established for the respective series.
Dividends
The Board of Directors may determine whether dividends on any series of preferred stock shall be cumulative or non-cumulative, the dividend rate or rates applicable to such series, and the dates and preferences of dividend payments. Any dividend rights of a series of preferred stock shall have such priority over other classes of capital stock as established by the Board of Directors.
Liquidation
Upon the voluntary or involuntary liquidation, dissolution, or winding up of the Company, holders of any series of preferred stock shall be entitled to receive such liquidation preferences and distributions as may be fixed by the Board of Directors for such series prior to any distribution to holders of common stock, unless otherwise provided in the applicable certificate of designation.
Conversion
The Board of Directors may provide that shares of any series of preferred stock are convertible into or exchangeable for shares of common stock, another class or series of capital stock, or other securities of the Company or any other entity. The terms, conditions, rates and other determinants of such conversion or exchange shall be established by the Board of Directors at the time of designation of the applicable series.
Redemption
The Board of Directors may establish redemption provisions applicable to any series of preferred stock, including the redemption price or prices to be paid and the terms and conditions under which such shares may be redeemed.
AZIO AI CORPORATION
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD FROM OCTOBER 7, 2025 (INCEPTION) THROUGH DECEMBER 31, 2025
Other Rights and Preferences
The Board of Directors is authorized, without further shareholder approval, to determine the number of shares constituting each series of preferred stock and to fix any additional rights, preferences, privileges, qualifications, limitations, restrictions, participation rights, optional rights, subscription rights, sinking fund provisions and other designations applicable to such series.
As of December 31, 2025, no shares of preferred stock were issued or outstanding.
Note 6— Commitments and Contingencies
From time to time, the Company may become involved in various lawsuits and legal proceedings, which arise in the ordinary course of business. Litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm business. Management is currently not aware of any such legal proceedings or claims that could have, individually or in the aggregate, a material adverse effect on our business, financial condition, or operating results.
Note 7 — Income Taxes
Income taxes are provided for the tax effects of transactions reported in the financial statements and consist of taxes currently due. Deferred taxes relate to differences between the basis of assets and liabilities for financial and income tax reporting which will be either taxable or deductible when the assets or liabilities are recovered or settled.
The provision for income taxes consisted of the following:
| | For the period from October 7, 2025 (inception) to December 31, 2025, | |
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Current income tax expense: | | | | |
Federal | | $ | - | |
State | | | 800 | |
Total current income tax expense | | | 800 | |
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Deferred income tax expense: | | | | |
Federal | | | - | |
State | | | - | |
Total deferred income tax expense | | | - | |
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Provision for income taxes | | $ | 800 | |
AZIO AI CORPORATION
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD FROM OCTOBER 7, 2025 (INCEPTION) THROUGH DECEMBER 31, 2025
The reconciliation of taxes at the federal statutory rate to our provision for (benefit from) income taxes and rate reconciliation for the period from October 7, 2025 (inception) through December 31, 2025, was as follows:
| | For the period from October 7, 2025 (inception) through December 31, 2025. | |
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| | Amount | | | Percentage | |
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U.S. federal statutory tax rate | | | (11,266 | ) | | | 21.00 | % |
State taxes, net of federal benefit | | | (3,170 | ) | | | 5.91 | |
Changes in valuation allowances | | | 15,236 | | | | (28.40 | ) |
Provision for income taxes | | $ | 800 | | | | (1.49 | )% |
Cash paid for income taxes, net of refunds, during the period from October 7, 2025 (inception) through December 31, 2025, was as follows:
| | For the period from October 7, 2025 (inception) through December 31, 2025 | |
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Federal | | $ | - | |
State | | | - | |
Foreign | | | - | |
Total cash paid for income taxes, net of refunds | | $ | - | |
Deferred income tax reflects the tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The categories that give rise to significant components of the deferred tax assets as of December 31, 2025, are as follows:
| | As of December 31, 2025 | |
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Deferred tax assets: | | | | |
Net operating loss carryforwards | | $ | 15,236 | |
Total deferred tax assets | | | 15,236 | |
Less: valuation allowance | | | (15,236 | ) |
Total deferred tax assets, net of valuation allowance | | | - | |
Net deferred tax assets (liabilities) | | $ | - | |
The Company has evaluated the available evidence supporting the realization of its gross deferred tax assets, including the amount and timing of future taxable income, and has determined that it is more likely than not that the deferred tax assets will not be realized. Due to such uncertainties surrounding the realization of the deferred tax assets, the Company maintains a valuation allowance of $15,236 against its deferred tax assets as of December 31, 2025. Realization of the deferred tax assets will be primarily dependent upon the Company’s ability to generate sufficient taxable income prior to the expiration of its net operating losses.
AZIO AI CORPORATION
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD FROM OCTOBER 7, 2025 (INCEPTION) THROUGH DECEMBER 31, 2025
The Company had a federal net operating loss carryforward of $54,445 as on December 31, 2025, which can be carried forward indefinitely. While these federal NOLs do not expire, the Tax Cuts & Jobs Act of 2017 limits the amount of federal net operating loss utilized each year after December 31, 2017, to 80% of taxable income. As of December 31, 2025, the Company has a state net operating loss carryforward of approximately $54,445. The state NOLs generated have various expiration rules and dates with the first amount of NOLs expiring in 2032.
The Company is subject to taxation in U.S. federal and state tax jurisdictions. All of the Company’s tax years will remain open for three years for examination by the federal and state tax authorities from the date of utilization of net operating loss. There are no active tax compliance audits as of December 31, 2025.
In accordance with ASC 740, Income Taxes, specifically related to uncertain tax positions, the Company is required to use a recognition threshold and a measurement attribute for the financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more likely than not to be sustained upon examination by taxing authorities. The Company has determined that its income tax filing positions and deductions are more likely than not to be sustained upon examination, and accordingly, no reserves or related accruals for interest and penalties have been recorded as of December 31, 2025.
The Company believes that no material amount of the liabilities for uncertain tax positions are expected to reverse within 12 months of December 31, 2025.
As of December 31, 2025, the Company had not made any payments for federal or state income taxes.
Note 8 — Segment Reporting
The Company operates as a single operating segment. The Company’s CODM is the chief executive officer, who has ultimate responsibility for the operating performance of the Company and the allocation of resources. The CODM uses net loss as the primary measure to manage the business. As the Company is in the start-up phase, the CODM reviews general and administrative and sales and marketing expenses as a key component of operating results and cash usage to manage and forecast cash to ensure enough capital is available to achieve its business plan over the short-term period (i.e., less than a year). The CODM does not segment the business for internal reporting or decision making.
Net loss is also used to monitor budget versus actual results, and actual results compared against budget are used in assessing segment performance and establishing management compensation.
Significant segment expenses that are regularly provided to the CODM and included within the reported measure of segment profit or loss are sales and marketing and general and administrative expenses. The statement of operations reflects these significant segment expenses and other segment items for the period ended December 31, 2025.
The measure of segment assets is total assets, as reported on the balance sheet as of December 31, 2025.
The Company currently operates exclusively within the United States and has not commenced its operations.
Note 9 — Subsequent Events
The Company evaluated subsequent events and transactions that occurred after the balance sheet date and through September 15, 2026, the date that the financial statements were available to be issued. Based upon this review, other than as described below, the Company did not identify any other subsequent events that would have required adjustment or disclosure in the financial statements.
AZIO AI CORPORATION
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD FROM OCTOBER 7, 2025 (INCEPTION) THROUGH DECEMBER 31, 2025
Merger with Envirotech Vehicles
In July 2026, Azio AI entered into a merger agreement with Envirotech Vehicles, Inc. (“EVTV”), pursuant to which the companies combined through a two-step merger transaction. Upon completion of the transaction, Azio AI’s business and operations are being held within a wholly owned subsidiary of EVTV, and EVTV remained the publicly traded parent company of the combined organization. As consideration, holders of Azio AI common stock received an aggregate of 2,460,351 shares of EVTV common stock, subject to certain adjustments and limitations, and 973,450 shares of EVTV Series A Non-Voting Convertible preferred stock. Each preferred share is convertible into 100 shares of EVTV common stock, subject to shareholder approval and other applicable requirements. As a result, Azio AI shareholders received a minority voting interest at closing through the issuance of EVTV common stock, with a significant portion of the economic consideration represented by the non-voting convertible preferred stock.
Forward stock split
On February 10, 2026, the Company's Board of Directors and shareholders approved (i) a decrease in the par value of the Company's common stock from $0.0001 per share to $0.00001 per share (the “Par Value Change”), (ii) an increase in the authorized common shares from 10,000 shares to 100,000,000 shares and the authorization of 10,000,000 shares of preferred stock (the “Share Increase”), and (iii) a 1,000-for-1 forward stock split whereby each issued and outstanding share of common stock was exchanged for 1,000 shares of common stock (the “Forward Stock Split”, collectively with par value change and share increase referred as the “Recapitalization”). As of February 10, 2026, the Recapitalization are complete and effectuated. All share information included in the financial statements and notes thereto have been adjusted for the Recapitalization as if such Par Value Change, Forward Stock Split and Share Increase occurred on the first day of the first period presented. Refer Note 3 for additional information.
Exhibit 99.2
AZIO AI CORPORATION
CONDENSED BALANCE SHEETS
(Unaudited)
| | June 30, 2026 | | | December 31, 2025 | |
||
ASSETS | | | | | | | | |
Current assets | | | | | | | | |
Cash | | $ | 102,081 | | | $ | 1,000 | |
Inventory | | | 291,498 | | | | - | |
Prepaid expenses | | | 40,000 | | | | - | |
Advance to suppliers | | | 232,500 | | | | - | |
Total current assets | | | 666,079 | | | | 1,000 | |
TOTAL ASSETS | | $ | 666,079 | | | $ | 1,000 | |
| | | | | | | | |
LIABILITIES AND SHAREHOLDERS' DEFICIT | | | | | | | | |
Current liabilities | | | | | | | | |
Accounts payable and accrued liabilities | | $ | 102,268 | | | $ | 21,055 | |
Accrued Expenses- related party | | | - | | | | 8,867 | |
Deferred revenue | | | 4,033,230 | | | | - | |
Loan from related party | | | 100,000 | | | | 1,000 | |
Due to related parties | | | - | | | | 23,723 | |
Income tax payable | | | 1,200 | | | | 800 | |
Total current liabilities | | | 4,236,698 | | | | 55,445 | |
| | | | | | | | |
Convertible Notes, net | | | 249,602 | | | | - | |
TOTAL LIABILITIES | | | 4,486,300 | | | | 55,445 | |
| | | | | | | | |
COMMITMENTS AND CONTINGENCIES (NOTE 6) | | | | | | | | |
| | | | | | | | |
Shareholders' Deficit | | | | | | | | |
Preferred stock, 10,000,000 shares authorized, $0.00001 par value per share, none issued and outstanding as of June 30, 2026 and December 31, 2025 | | | - | | | | - | |
Common stock, 100,000,000 shares authorized, $0.00001 par value per share, 10,000,000 shares issued and outstanding as of June 30, 2026 and December 31, 2025 | | | 100 | | | | 100 | |
Accumulated deficit | | | (3,820,321 | ) | | | (54,545 | ) |
TOTAL SHAREHOLDERS' DEFICIT | | | (3,820,221 | ) | | | (54,445 | ) |
TOTAL LIABILITIES AND SHAREHOLDERS' DEFICIT | | $ | 666,079 | | | $ | 1,000 | |
The accompanying notes are an integral part of these unaudited condensed financial statements.
AZIO AI CORPORATION
CONDENSED STATEMENT OF OPERATIONS
(Unaudited)
| | For the six months ended, | |
|
| | June 30, 2026, | |
|
Revenue | | $ | 232,800 | |
Cost of revenue | | | 210,817 | |
Gross margin | | | 21,983 | |
| | | | |
Operating expenses | | | | |
General and administrative expenses | | | 3,657,797 | |
Sales and marketing expenses | | | 54,960 | |
Total operating expenses | | | 3,712,757 | |
| | | | |
Net operating loss | | | (3,690,774 | ) |
| | | | |
Other income (expense) | | | | |
Interest expense | | | (2,308 | ) |
Other income | | | 25,000 | |
Loss on fair value adjustment of convertible debt | | | (97,294 | ) |
Total other income (expense), net | | | (74,602 | ) |
| | | | |
Loss before provision for income taxes | | | (3,765,376 | ) |
| | | | |
Provision for income taxes | | | (400 | ) |
| | | | |
Net loss | | $ | (3,765,776 | ) |
| | | | |
Weighted average common stock outstanding, basic and diluted | | | 10,000,000 | |
Net loss per common share, basic and diluted | | $ | (0.38 | ) |
The accompanying notes are an integral part of these unaudited condensed financial statements.
AZIO AI CORPORATION
CONDENSED STATEMENTS OF CHANGES IN SHAREHOLDERS’ DEFICIT
(Unaudited)
| | Common Stock | | | Accumulated Deficit | | | Shareholders’ Deficit | |
|||||||
| | Shares | | | Amount | | | | | | | | | |
||
Balance, January 1, 2026 | | | 10,000,000 | | | $ | 100 | | | $ | (54,545 | ) | | $ | (54,445 | ) |
Net loss | | | - | | | | - | | | | (1,732,250 | ) | | | (1,732,250 | ) |
Balance, March 31, 2026 | | | 10,000,000 | | | $ | 100 | | | $ | (1,786,795 | ) | | $ | (1,786,695 | ) |
| | | | | | | | | | | | | | | | |
Net loss | | | - | | | | - | | | | (2,033,526 | ) | | | (2,033,526 | ) |
Balance, June 30, 2026 | | | 10,000,000 | | | $ | 100 | | | $ | (3,820,321 | ) | | $ | (3,820,221 | ) |
The accompanying notes are an integral part of these unaudited condensed financial statements.
AZIO AI CORPORATION
CONDENSED STATEMENT OF CASH FLOW
(Unaudited)
| | For the six months ended, | |
|
| | June 30,2026 | |
|
Cash flows used in operating activities | | | | |
Net loss | | $ | (3,765,776 | ) |
| | | | |
Adjustments to reconcile net loss to net cash used in operating activities: | | | | |
Loss on fair value adjustment of convertible debt | | | 97,294 | |
Changes in operating assets and liabilities: | | | | |
Inventory | | | (291,498 | ) |
Prepaid expenses | | | (40,000 | ) |
Advance to suppliers | | | (232,500 | ) |
Accounts payable and accrued liabilities | | | 83,521 | |
Accrued expenses, related party | | | (8,867 | ) |
Deferred Revenue | | | 4,033,230 | |
Income tax payable | | | 400 | |
Net cash used in operating activities | | $ | (124,196 | ) |
| | | | |
Cash flows used in investing activities | | | | |
Loans to related parties | | | (306,590 | ) |
Repayment of loans to related parties | | | 306,590 | |
Net cash used in investing activity | | $ | - | |
| | | | |
Cash flows from financing activity | | | | |
Proceeds from issuance of convertible debt | | | 150,000 | |
Proceeds of loan from related party | | | 100,000 | |
Repayment of loan from related party | | | (1,000 | ) |
Due to related parties | | | (23,723 | ) |
Net cash provided by financing activities | | $ | 225,277 | |
| | | | |
Net change in cash | | | 101,081 | |
Cash, beginning of period | | | 1,000 | |
Cash, end of period | | $ | 102,081 | |
| | | | |
Supplemental disclosure of cash flow information | | | - | |
Cash paid for interest | | $ | - | |
Cash paid for income taxes | | $ | - | |
The accompanying notes are an integral part of these unaudited condensed financial statements.
AZIO AI CORPORATION
NOTES TO THE UNAUDITED CONDENSED FINANCIAL STATEMENTS
FOR THE PERIOD FROM JANUARY 1, 2026 TO JUNE 30, 2026
Note 1 - Description of Organization and Business Operation
Azio AI Corporation (“Azio AI” or the “Company”), a Delaware corporation, was incorporated on October 7, 2025, and is a supplier, distributor and integrator of artificial intelligence graphics processing units (AI GPUs), AI infrastructure solutions, and digital-asset mining infrastructure solutions. The Company’s offerings include OEM server modules that consist of AI GPUs, immersion-cooled and hydro-cooled Bitcoin mining hardware and related consumables, transformers and electrical power-distribution equipment, containerized and modular systems, satellite connectivity equipment and services, and other supporting infrastructure solutions. In addition to equipment supply, the Company coordinates site preparation, installation, testing, commissioning, and related services required to deploy customer AI compute and mining operations.
Since commencing operations, the Company has focused on the deployment and commercialization of its digital-asset mining infrastructure solutions as well as developing its modular data center infrastructure.
Note 2 - Liquidity and Capital Resources
The Company reported a net loss of $3,765,776 for the six months ended June 30, 2026. As of June 30, 2026, the Company had an aggregate cash balance of $102,081 and accumulated deficit of $3,820,321.
In July 2026, the Company entered into a merger agreement with Envirotech Vehicles, Inc. (“EVTV”), pursuant to which the companies will combine through a two-step merger transaction. Upon completion of the transaction, Azio AI’s business and operations will be held within a wholly owned subsidiary of EVTV, and EVTV will remain the publicly traded parent company of the combined organization. While the merger is expected to strengthen the Company’s long-term strategic and operational position, the transaction is not expected to provide sufficient near-term liquidity to fund the Company’s operating requirements for the twelve months following the issuance of these financial statements. The Company will continue to require additional capital prior to and following the merger closing to support ongoing operations.
Management is actively pursuing additional financing arrangements to address these liquidity needs and currently expects to obtain additional capital through equity financing. The Company’s future capital requirements will depend on a number of factors, including the timing and completion of the proposed merger transaction and the level of resources required to support planned operations. However, there can be no assurance that additional financing will be available on acceptable terms, or at all. If the Company is unable to obtain additional capital when needed, it may be required to delay, reduce, or eliminate certain operating activities and strategic initiatives.
As a result of the Company’s recurring operating losses, limited cash resources, and need for additional financing to fund its operations and capital requirements, substantial doubt exists regarding the Company’s ability to continue as a going concern through the twelve months from the date these financial statements are issued. Management’s plans to mitigate these conditions include raising additional capital and completing the proposed merger with EVTV; however, these plans have not alleviated the substantial doubt as there can be no assurance they will be successfully implemented or that sufficient funding will be obtained.
These financial statements do not include any adjustments relating to the recoverability or classification of assets or the amounts and classification of liabilities that may be necessary should the Company be unable to continue as a going concern.
Note 3 - Summary of Significant Accounting Policies
Basis of Presentation
The accompanying unaudited condensed financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”), expressed in U.S. dollars. The accompanying condensed financial statements reflect all adjustments including normal recurring adjustments, which, in the opinion of the Company’s management, are necessary to present fairly the financial position, results of operations, and cash flows for the period presented in accordance with U.S. GAAP. References to U.S. GAAP issued by the Financial Accounting Standards Board (“FASB”) in these accompanying notes to the financial statements are to the FASB Accounting Standards Codification (“ASC”). The condensed financial statements have been prepared assuming the Company will continue as a going concern.
AZIO AI CORPORATION
NOTES TO THE UNAUDITED CONDENSED FINANCIAL STATEMENTS
FOR THE PERIOD FROM JANUARY 1, 2026 TO JUNE 30, 2026
The accompanying unaudited condensed financial statements reflect adjustments (including normal, recurring adjustments) necessary to present fairly the financial position of the Company as of June 30, 2026, and December 31, 2025, its results of operations, changes in stockholders’ deficit, and cash flows for the six months ended June 30, 2026, in conformity with U.S. GAAP. The interim results for the six months ended June 30, 2026, are not necessarily indicative of the results to be expected for the year ending December 31, 2026, or for any future interim periods. These unaudited condensed financial statements should be read in conjunction with the audited financial statements and notes thereto for the period ended December 31, 2025. The significant accounting policies and estimates used in preparing these unaudited condensed financial statements were applied on a basis consistent with those reflected in the December 31, 2025, Financial Statements.
Forward stock split
The Company amended its Certificate of Incorporation to increase the authorized common shares from 10,000 to 100,000,000 and reduce the par value from $0.0001 to $0.00001 per share. The amendment also authorized 10,000,000 shares of preferred stock, which had not previously been authorized.
In connection with the amendment, on February 10, 2026, the Company effected a forward split of its issued and outstanding shares of common stock at a ratio of 1,000-for-1. As a result of the forward stock split, each issued and outstanding share of the Company’s common stock prior to the effective time of the forward stock split were split into 1,000 shares of common stock and the total number of issued and outstanding shares of common stock increased from 10,000 shares to 10,000,000 shares.
All common stock and preferred stock share quantities, per share amounts, and par values presented in these financial statements and accompanying notes have been retrospectively adjusted to reflect the effect of the par value change and forward stock split as if they had occurred at the beginning of the earliest period presented. Accordingly, an amount equal to the par value of the additional shares issued as a result of the par value change and forward stock split was reclassified from additional paid-in capital to common stock.
Use of Estimates
The preparation of financial statements in conformity with U.S. GAAP requires the Company’s management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements. Making estimates requires management to exercise significant judgment. Such estimates may be subject to change as more current information becomes available and accordingly the actual results could differ significantly from those estimates. It is at least reasonably possible that the estimate of the effect of a condition, situation or set of circumstances that existed at the date of the financial statements, which management considered in formulating its estimate, could change in the near term due to one or more future confirming events. The Company evaluates its estimates on an ongoing basis and makes revisions to these estimates.
Segment Information
The Company identifies operating segments as components of the enterprise for which discrete financial information is available and is regularly reviewed by the chief operating decision maker (“CODM”) to allocate resources and assess performance. The Company operates as a single operating and reportable segment. See Note 9 — Segment Information for further information.
Cash
The Company considers all short-term investments with an original maturity of three months or less when purchased to be cash equivalents. As of June 30, 2026, and December 31, 2025, there was a cash balance of $102,081 and $1,000, respectively. The Company did not have any cash equivalents as of June 30, 2026 or December 31, 2025.
AZIO AI CORPORATION
NOTES TO THE UNAUDITED CONDENSED FINANCIAL STATEMENTS
FOR THE PERIOD FROM JANUARY 1, 2026 TO JUNE 30, 2026
Prepaid Expenses
Prepaid expenses consist primarily of advance payments for professional services and advisory fees for which services had not yet been performed as of the balance sheet date. Such amounts are recognized as expense or capitalized, as applicable, when the related services are performed. As of June 30, 2026, and December 31, 2025, prepaid expenses totaled $40,000 and $0 respectively and primarily relate to advance payments related to anticipated legal and accounting services.
Inventories
Inventories are stated at the lower of cost and net realizable value. Cost is determined using the first-in, first-out (FIFO) method. Inventories are comprised of finished goods. Inventories consist primarily of finished goods, including Bitcoin mining hardware, related consumables, transformers, electrical power-distribution equipment, containerized mining systems, connectivity equipment, and other products purchased for resale.
Deferred Revenue
Contract liabilities, or deferred revenue, comprise amounts collected from customers for goods that have not yet been delivered and revenue that has not yet been earned. Contract liabilities primarily consist of customer deposits received in advance of the delivery of goods and are recognized as revenue when the Company satisfies its performance obligations and transfers control of the goods to the customer. The timing of revenue recognition, billing, and cash collections may result in deferred revenue balances on the balance sheet.
As of June 30, 2026, and December 31, 2025, the Company had deferred revenue of $4,033,230 and $0, respectively, representing customer deposits received for the future delivery of goods. The entire amount pertained to Envirotech Vehicles, Inc. which became the parent Company with effect from July 2026 (Refer Note 11). The Company expects to recognize the related revenue upon delivery of the goods to customers.
Credit Risk and Major Customers/Supplier Concentration
Financial instruments which potentially subject the Company to credit risk concentrations consist of cash. The Company maintains all its cash in commercial depository accounts, insured by the Federal Deposit Insurance Corporation. At times, cash deposits may exceed federally insured limits. Any loss incurred or lack of access to such funds could have an adverse impact on the Company’s financial condition, results of operations, and cash flows.
The Company had one customer whose revenue accounted for 100% of the Company’s total revenue for the six months ended June 30, 2026. The entire amount pertained to Envirotech Vehicles, Inc. which became the parent Company with effect from July 2026 (Refer Note 11).
During the six months ended June 30, 2026, two vendors accounted for substantially all of the Company's purchases. The Company is dependent on these vendors and may be adversely affected if either vendor is unable or unwilling to continue providing products or services on commercially reasonable terms.
Fair Value Measurements
The Company accounts for certain assets and liabilities at fair value in accordance with ASC 820, Fair Value Measurement. ASC 820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.
ASC 820 establishes a three-level hierarchy for fair value measurements based on the transparency of inputs used in the valuation of an asset or liability as of the measurement date. The three levels are defined as follows:
Level 1 — Quoted prices (unadjusted) in active markets for identical assets or liabilities.
AZIO AI CORPORATION
NOTES TO THE UNAUDITED CONDENSED FINANCIAL STATEMENTS
FOR THE PERIOD FROM JANUARY 1, 2026 TO JUNE 30, 2026
Level 2 — Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities in active markets or inputs that are observable for substantially the full term of the asset or liability.
Level 3 — Unobservable inputs supported by little or no market activity and reflecting the Company’s own assumptions about the assumptions market participants would use.
The carrying amounts of cash, accounts payable, and income tax payable approximate fair value due to their short-term nature. See Note 10—Fair Value Measurements of the financial statements for additional information on liabilities measured at fair value.
Revenue Recognition
The Company recognizes revenue in accordance with ASC Topic 606, Revenue from Contracts with Customers (“ASC 606”). Revenue will be recognized when control of promised goods or services is transferred to customers in an amount that reflects the consideration the Company receives in exchange for those goods or services.
The Company generates revenue from OEM server modules that consist of AI GPUs, immersion-cooled and hydro-cooled Bitcoin mining hardware and related consumables, transformers and electrical power-distribution equipment, containerized and modular systems, satellite connectivity equipment and services, and other supporting infrastructure solutions. The Company may also generate revenue from site preparation, installation coordination, testing and commissioning services, support services, and other managed infrastructure offerings.
In determining the appropriate revenue recognition treatment, the Company evaluates contracts with customers through the following five-step model:
| 1. | Identification of the contract with a customer. |
| 2. | Identification of the performance obligations in the contract. |
| 3. | Determination of the transaction price. |
| 4. | Allocation of the transaction price to the performance obligations in the contract. |
| 5. | Recognition of revenue when or as performance obligations are satisfied. |
Where the Company delivers a fully operational installation combining mining hardware, cooling, transformers, electrical and power-distribution work, installation, and commissioning, the goods and services are not separately identifiable and are accounted for as a single performance obligation recognized over time using a cost-to-cost input method, as the customer controls the asset as it is created (ASC 606-10-25-27(b)).
The Company acts as principal and recognizes revenue on a gross basis. Consideration received before performance is recorded as deferred revenue and recognized as obligations are satisfied.
Disaggregation of Revenue
The following table provides information about disaggregated revenue by timing of revenue recognition:
| | For the six months ended, | |
|
| | June 30, 2026 | |
|
Timing of revenue recognition | | | | |
Products and services transferred over time | | $ | 232,800 | |
Products and services transferred at a point in time | | | - | |
Total revenue | | $ | 232,800 | |
AZIO AI CORPORATION
NOTES TO THE UNAUDITED CONDENSED FINANCIAL STATEMENTS
FOR THE PERIOD FROM JANUARY 1, 2026 TO JUNE 30, 2026
Income Taxes
The Company follows the asset and liability method of accounting for income taxes under ASC Topic 740, Income Taxes (“ASC 740”), which requires an asset and liability approach to financial accounting and reporting for income taxes. Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that included the enactment date. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized.
ASC 740 prescribes a recognition threshold and a measurement attribute for the financial statement recognition and the measurement of tax positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more likely than not to be sustained upon examination by taxing authorities. The Company recognizes accrued interest and penalties related to unrecognized tax benefits as income tax expense. The Company is currently not aware of any issues under review that could result in significant payments, accruals, or material deviation from its position. The Company is subject to income tax examinations by major taxing authorities since inception.
Net Loss per Share
Basic net loss per share is computed by dividing net loss by the weighted average number of common shares outstanding during the reporting period. Diluted net loss per share is computed similar to basic net loss per share except that the denominator is increased to include the number of additional common stock that would have been outstanding if the potential common stock equivalents had been issued and if the additional common stock were dilutive. Potentially dilutive securities are excluded from the computation of diluted net loss per share if their effect is antidilutive.
| | For the six months ended, | |
|
| | June 30, 2026 | |
|
Net loss | | $ | (3,765,776 | ) |
Weighted-average number of common shares outstanding – Basic and diluted | | | 10,000,000 | |
Basic and diluted loss per share | | $ | (0.38 | ) |
The following potentially dilutive shares were excluded from the computation of diluted net loss per share for the periods presented because including them would have been antidilutive:
| | June 30, 2026 | |
|
February 2026 Convertible note | | | 222,584 | |
April 2026 Convertible note | | | 107,053 | |
Total | | | 329,637 | |
Recent Accounting Pronouncements:
Recent Accounting Pronouncements, not yet adopted:
ASU 2024-03, “Disaggregation of Income Statement Expenses (“DISE”)” (“ASU 2024-03”) requires disclosures about specific types of expenses included in the expense captions presented on the face of the income statement as well as disclosure about selling expenses. ASU 2024-03 is effective for fiscal years beginning after December 15, 2027, with early adoption permitted. The Company is currently evaluating the impact of this ASU on its financial statements and disclosures.
AZIO AI CORPORATION
NOTES TO THE UNAUDITED CONDENSED FINANCIAL STATEMENTS
FOR THE PERIOD FROM JANUARY 1, 2026 TO JUNE 30, 2026
There are no other new recently issued accounting standards that will have a material impact on the Company’s financial statements. As such Company does not believe other recently issued but not yet effective accounting standards, if currently adopted, would have a material effect on the Company’s financial statements.
Recent Accounting Standards Adopted by the Company
In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which requires entities to expand their existing income tax disclosures, specifically related to the rate reconciliation and income taxes paid. The standard is effective for the Company beginning in fiscal year 2025. The Company adopted the standard prospectively, as of January 1, 2025.
Note 4 - Related party transactions
Loans to related parties
During the six months ended June 30, 2026, the Company issued promissory notes with principal balances of $189,130 and $117,460 to two members of the Company's Board of Directors. The notes are non-interest-bearing prior to maturity and are due and payable on May 31, 2026. Amounts remaining unpaid after the maturity date bear interest at a rate of 8% per annum. The promissory notes were fully repaid during the period.
Loan from related party
During the period ended December 31, 2025, a member of the Company’s Board of Directors advanced $1,000 to the Company. The advance was non-interest bearing, unsecured, and due on demand. The advance was repaid in full during the six months ended June 30, 2026.
During the six months ended June 30, 2026, the Company received advances of $100,000 from an entity under common control with the Company. The advances are non-interest bearing, unsecured, and due on December 29, 2026. The advances remained outstanding as of June 30, 2026.
Due to related parties
During the period ended December 31, 2025, directors of the Company made payments on behalf of the Company totaling $23,723. During the six months ended June 30, 2026, the amount due to the related parties was fully repaid.
Accrued expenses, related party
As of June 30, 2026, and December 31, 2025, accrued expenses payable to related party was $0 and $8,867, respectively.
Note 5 - Convertible Notes, net
Below is the summary of the convertible notes outstanding as on June 30, 2026.
| | February 2026 Convertible Note | | | April 2026 Convertible Note | | | Total Convertible Notes, net | |
|||
Principal amount | | $ | 100,000 | | | $ | 50,000 | | | $ | 150,000 | |
Interest expense for the six months ended June 30, 2026 | | | 1,890 | | | | 418 | | | | 2,308 | |
Loss on fair value adjustment for the six months ended June 30, 2026 | | | 66,651 | | | | 30,643 | | | | 97,294 | |
Balance as of June 30, 2026 | | $ | 168,541 | | | $ | 81,061 | | | $ | 249,602 | |
AZIO AI CORPORATION
NOTES TO THE UNAUDITED CONDENSED FINANCIAL STATEMENTS
FOR THE PERIOD FROM JANUARY 1, 2026 TO JUNE 30, 2026
February 2026 Convertible Note
On February 12, 2026, the Company entered into a Note Purchase Agreement with Pegasus Technology LLC (“Pegasus”), pursuant to which the Company issued and sold to Pegasus a convertible promissory note in the principal amount of $100,000 (the “February 2026 Convertible Note”) for a purchase price of $100,000. The proceeds from the issuance of the February 2026 Convertible Note were used for general working capital purposes.
The February 2026 Convertible Note bears interest at 5% per annum, calculated on a simple, non-compounding basis, and matures on February 12, 2031, the fifth anniversary of the issuance date, unless earlier converted or prepaid in accordance with its terms. No payments of principal or interest are required prior to maturity, other than as specifically provided in the February 2026 Convertible Note. The Company may prepay all or any portion of the outstanding indebtedness at any time in cash prior to maturity.
Upon the occurrence of a Trigger Event, defined in the February 2026 Convertible Note as the occurrence of an initial public offering (“IPO”) of the Company’s common stock or a reverse takeover (“RTO”) transaction involving the Company, whichever is first, the February 2026 Convertible Note may be converted, in whole or in part, only beginning on the sixth trading day following such Trigger Event. In the event of an IPO, the February 2026 Convertible Note is convertible into shares of the Company’s common stock. In the event of an RTO or similar transaction, the February 2026 Convertible Note is convertible into shares of common stock of the acquiror, successor, or resulting public company, as applicable, into which the Company’s common stock is exchanged or converted in connection with such transaction. The holder may elect to convert all or any portion of the outstanding indebtedness, and the Company may elect to convert all or any portion of the outstanding indebtedness. The conversion price is equal to 50% of VWAP, where VWAP is calculated based on the volume-weighted average price of the applicable issuer’s common stock for the five trading days immediately preceding the applicable conversion date, subject to the calculation mechanics specified in the February 2026 Convertible Note. If the applicable issuer’s common stock is not listed or quoted on a trading market, the February 2026 Convertible Note provides for alternative market price or fair value determinations, as applicable. The VWAP calculation is subject to equitable adjustment for stock dividends, stock splits, combinations, recapitalizations, and similar transactions.
The February 2026 Convertible Note is subject to certain conversion limitations, including a 9.99% beneficial ownership limitation and a 19.99% exchange cap, unless the required stockholder approval is obtained or such approval is not required under applicable stock exchange rules.
Events of default include, among other matters, failure to pay amounts when due, subject to applicable cure periods, and certain bankruptcy, insolvency, or similar events. Upon an event of default, Pegasus may declare the outstanding indebtedness immediately due and payable, and the interest rate increases to 10% per annum during the continuance of the default.
In connection with the Note Purchase Agreement, Pegasus was granted certain piggyback registration rights with respect to shares issuable upon conversion of the February 2026 Convertible Note, including shares of the applicable acquiror, successor, or resulting public company issuable upon conversion in connection with an RTO, subject to the terms and limitations set forth in the Note Purchase Agreement.
The February 2026 Convertible Note represents share-settled debt that requires or may require the Company to settle the debt instrument by delivering a variable number of shares determined based on the amount of indebtedness being converted, including accrued and unpaid interest, at a conversion price equal to 50% of the applicable VWAP. The Company elected to apply the fair value option under ASC 825-10 at inception of the note and the liability will be re-measured at fair value at each reporting period with the changes in the fair value of the liability recognized in earnings.
AZIO AI CORPORATION
NOTES TO THE UNAUDITED CONDENSED FINANCIAL STATEMENTS
FOR THE PERIOD FROM JANUARY 1, 2026 TO JUNE 30, 2026
As of June 30, 2026, the fair value of the February 2026 Convertible Note was $168,541.
For the six months ending June 30, 2026, the Company recorded interest expense of $1,890 and a loss on the fair value adjustment of convertible debt of $66,651 related to the February 2026 Convertible Note.
April 2026 Convertible Note
On April 30, 2026, the Company entered into a Note Purchase Agreement with AKJ Capital LLC (“AKJ”) pursuant to which the Company issued and sold to AKJ a convertible promissory note in the principal amount of $50,000 (the “April 2026 Convertible Note”) for a purchase price of $50,000. The proceeds from the issuance of the April 2026 Convertible Note were used for general working capital purposes.
The April 2026 Convertible Note bears interest at 5% per annum, calculated on a simple, non-compounding basis, and matures on April 30, 2031, the fifth anniversary of the issuance date, unless earlier converted or prepaid in accordance with its terms. No payments of principal or interest are required prior to maturity, other than as specifically provided in the Convertible Note. The Company may prepay all or any portion of the outstanding indebtedness at any time prior to maturity.
Upon the occurrence of a Trigger Event, defined in the April 2026 Convertible Note as the occurrence of an initial public offering (“IPO”) of the Company’s common stock or a reverse takeover (“RTO”) transaction involving the company, whichever is first, the April 2026 Convertible Note may be converted, in whole or in part, only beginning on the sixth trading day following such Trigger Event. In the event of an IPO, the April 2026 Convertible Note is convertible into shares of the Company’s common stock. In the event of an RTO or similar transaction, the April 2026 Convertible Note is convertible into shares of common stock of the acquiror, successor, or resulting public company, as applicable, into which the Company’s common stock is exchanged or converted in connection with such transaction. The holder may elect to convert all or any portion of the outstanding indebtedness, and the Company may elect to convert all or any portion of the outstanding indebtedness. The conversion price is equal to 50% of VWAP, where VWAP is calculated based on the volume-weighted average price of the applicable issuer’s common stock for the five trading days immediately preceding the applicable conversion date, subject to the calculation mechanics specified in the April 2026 Convertible Note. If the applicable issuer’s common stock is not listed or quoted on a trading market, the April 2026 Convertible Note provides for alternative market price or fair value determinations, as applicable. The VWAP calculation is subject to equitable adjustment for stock dividends, stock splits, combinations, recapitalizations and similar transactions.
The April 2026 Convertible Note is subject to certain conversion limitations, including a 9.99% beneficial ownership limitation and a 19.99% exchange cap, unless the required stockholder approval is obtained or such approval is not required under applicable stock exchange rules.
Events of default include, among other matters, failure to pay amounts when due, subject to applicable cure periods, and certain bankruptcy, insolvency, or similar events. Upon an event of default, AKJ may declare the outstanding indebtedness immediately due and payable, and the interest rate increases to 10% per annum during the continuance of the default.
In connection with the Note Purchase Agreement, AKJ was granted certain piggyback registration rights with respect to shares issuable upon conversion of the April 2026 Convertible Note, including shares of the applicable acquiror, successor, or resulting public company issuable upon conversion in connection with an RTO, subject to the terms and limitations set forth in the Note Purchase Agreement.
AZIO AI CORPORATION
NOTES TO THE UNAUDITED CONDENSED FINANCIAL STATEMENTS
FOR THE PERIOD FROM JANUARY 1, 2026 TO JUNE 30, 2026
The April 2026 Convertible Note represents share-settled debt that requires or may require the Company to settle the debt instrument by delivering a variable number of shares upon conversion determined based on the amount of indebtedness being converted, including accrued and unpaid interest, at a conversion price equal to 50% of the applicable VWAP. The Company elected to apply the fair value option under ASC 825-10 at inception of the note and the liability will be remeasured at fair value at each reporting period with changes in the fair value of the liability recognized in earnings.
As of June 30, 2026, the fair value of the April 2026 Convertible Note was approximately $81,061.
For the six months ending June 30, 2026, the Company recorded interest expense of $418 and a loss on the fair value adjustment of convertible debt of $30,643 related to the April 2026 Convertible Note.
Note 6 – Other income
During the quarter ended March 31, 2026, the Company recognized $25,000 of other income related to a transaction deposit received from EVTV under the Letter of Intent (“LOI”). The deposit became non-refundable upon the occurrence of a contractual trigger related to EVTV’s common stock trading below $1.00 per share for five consecutive trading days during the due diligence period. The acquisition transaction was not terminated as a result of this event. During the six months ended June 30, 2026, the Company recognized the $25,000 deposit as acquisition-related income within other income. Other income for the six months ended June 30, 2026, was $25,000.
Note 7 - Equity
Common Stock
The Company is authorized to issue 100,000,000 shares of common stock at par value $0.00001 each.
On February 10, 2026, the Company effected a 1,000-for-1 forward stock split, increasing its issued and outstanding common shares from 10,000 to 10,000,000 shares. All share amounts, per-share amounts, and par values presented herein have been retrospectively adjusted to reflect the forward stock split and par value change for all periods presented.
As of June 30, 2026, and December 31, 2025, there were 10,000,000 shares of common stock issued and outstanding.
Preferred Stock
In connection with the February 12, 2026, amendment to the Certificate of Incorporation, the Company is authorized to issue 10,000,000 shares of preferred stock at par value $0.00001 each. As of June 30, 2026, and December 31, 2025, there were no shares of preferred stock issued and outstanding.
Note 8 - Commitments and Contingencies
From time to time, the Company may become involved in various lawsuits and legal proceedings, which arise in the ordinary course of business. Litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm business. Management is currently not aware of any such legal proceedings or claims that could have, individually or in the aggregate, a material adverse effect on our business, financial condition, or operating results.
Note 9 - Segment Information
The Company operates as a single operating segment. The Company’s CODM is the chief executive officer, who has ultimate responsibility for the operating performance of the Company and the allocation of resources. The CODM uses net loss as the primary measure to manage the business. The Company has recently commenced its operations, and the CODM reviews revenue, cost of revenue, general and administrative and sales and marketing expenses as a key component of operating results and cash usage to manage and forecast cash to ensure enough capital is available to achieve its business plan over the short-term period (i.e. less than a year). The CODM does not segment the business for internal reporting or decision making.
AZIO AI CORPORATION
NOTES TO THE UNAUDITED CONDENSED FINANCIAL STATEMENTS
FOR THE PERIOD FROM JANUARY 1, 2026 TO JUNE 30, 2026
Net loss is also used to monitor budget versus actual results, and actual results compared against budget are used in assessing segment performance and establishing management compensation.
Significant segment expenses that are regularly provided to the CODM and included within the reported measure of segment profit or loss are sales and marketing and general and administrative expenses. The statement of operations reflects these significant segment expenses and other segment items for the six months ended June 30, 2026.
The measure of segment assets is total assets, as reported on the condensed balance sheets as of June 30, 2026.
The Company currently operates exclusively within the United States.
Note 10 – Fair Value Measurements
The following tables present fair value information as of June 30, 2026. The Company’s financial liabilities that were accounted for at fair value on a recurring basis indicate the fair value hierarchy of the valuation techniques the Company utilized to determine such fair value:
June 30, 2026 | | Fair Value | | | (Level 1) | | | (Level 2) | | | (Level 3) | |
||||
Liabilities: | | | | | | | | | | | | | | | | |
February 2026 Convertible Note | | $ | 168,541 | | | $ | - | | | $ | - | | | $ | 168,541 | |
April 2026 Convertible Note | | | 81,061 | | | | - | | | | - | | | | 81,061 | |
Balance as on June 30, 2026 | | $ | 249,602 | | | $ | - | | | $ | - | | | $ | 249,602 | |
Measurement
February 2026 Convertible Note
The Company established the initial fair value for the February 2026 Convertible Note as of February 12, 2026, which was the date the February 2026 Convertible Note was funded. As of June 30, 2026, the fair value was remeasured using a Monte Carlo Simulation Model ("MCM") to estimate the fair value of the debt instrument. The MCM was used to estimate the fair value of the February 2026 Convertible Note as of June 30, 2026 and for subsequent measurement periods. The change in fair value between February 12, 2026, and June 30, 2026, was recognized in the statement of operations under change in fair value of financial instruments.
The February 2026 Convertible Note was classified within Level 3 of the fair value hierarchy as of June 30, 2026, due to the use of unobservable inputs. The key inputs into the Monte Carlo Simulation Model for the February 2026 Convertible Note were as follows at June 30, 2026:
| | June 30, 2026 | |
|
Risk-free interest rate | | | 3.90 | % |
Expected term (years) | | | 4.62 | |
Volatility | | | 128.80 | % |
Stock Price | | $ | 1.67 | |
April 2026 Convertible Note
The Company established the initial fair value for the April 2026 Convertible Note as of April 30, 2026, which was the date the April 2026 Convertible Note was funded. As of June 30, 2026, the fair value was remeasured using a Monte Carlo Simulation Model ("MCM") that fair values the debt. The MCM was used to estimate the fair value of the April 2026 Convertible Note as of June 30, 2026 and for subsequent measurement periods.
AZIO AI CORPORATION
NOTES TO THE UNAUDITED CONDENSED FINANCIAL STATEMENTS
FOR THE PERIOD FROM JANUARY 1, 2026 TO JUNE 30, 2026
The April 2026 Convertible Note was classified within Level 3 of the fair value hierarchy as of June 30, 2026, due to the use of unobservable inputs.
| | June 30, 2026 | |
|
Risk-free interest rate | | | 3.90 | % |
Expected term (years) | | | 4.83 | |
Volatility | | | 128.80 | % |
Stock Price | | $ | 1.67 | |
Level 3 Changes in Fair Value
The change in the fair value of the Level 3 financial liabilities for the period from December 31, 2025, to June 30, 2026, is summarized as follows:
| | February 2026 Convertible Note | | | April 2026 Convertible Note | | | Total | |
|||
Fair value as of December 31, 2025 | | $ | - | | | $ | - | | | $ | - | |
Initial fair value at issuance | | | 100,000 | | | | 50,000 | | | | 150,000 | |
Interest expense | | | 1,890 | | | | 418 | | | | 2,308 | |
Change in fair value | | | 66,651 | | | | 30,643 | | | | 97,294 | |
Fair value as of June 30, 2026 | | $ | 168,541 | | | $ | 81,061 | | | $ | 249,602 | |
Transfers to/from Levels 1, 2 and 3 are recognized at the end of the reporting period in which a change in valuation technique or methodology occurs. There were no transfers to or from the various levels for the six months ended June 30, 2026.
Note 11 - Subsequent Events
The Company evaluated subsequent events and transactions that occurred after the balance sheet date and through September 15, 2026, the date that the financial statements were available to be issued. Based upon this review, other than as described below and elsewhere in these financial statements, the Company did not identify any other subsequent events that would have required adjustment or disclosure in the financial statements.
Merger with Envirotech Vehicles
In July 2026, Azio AI entered into a merger agreement with Envirotech Vehicles, Inc. (“EVTV”), pursuant to which the companies combined through a two-step merger transaction. Upon completion of the transaction, Azio AI became a wholly owned subsidiary of EVTV, and EVTV remained the publicly traded parent company of the combined organization. As consideration, holders of Azio AI common stock received an aggregate of 2,460,351 shares of EVTV common stock, subject to certain adjustments and limitations, and 973,450 shares of EVTV Series A Non-Voting Convertible preferred stock. Each preferred share is convertible into 100 shares of EVTV common stock, subject to stockholder approval and other applicable requirements. As a result, Azio AI stockholders received a minority voting interest at closing through the issuance of EVTV common stock, with a significant portion of the economic consideration represented by the non-voting convertible preferred stock.
During the six months ended June 30, 2026, the Company recognized approximately $232,800 of revenue from Envirotech Vehicles, Inc. related to sales of the units. As of June 30, 2026, Envirotech Vehicles, Inc. was not a related party of the Company.
On July 2, 2026, in connection with merger agreement, Envirotech Vehicles, Inc. became the parent company of the Company. Accordingly, transactions with Envirotech Vehicles, Inc. subsequent to July 2, 2026 are considered related-party transactions. The transaction did not result in an adjustment to revenue recognized during the six months ended June 30, 2026.
Loan from related party
Subsequent to June 30, 2026, and through the date that these financial statements were available to be issued, the Company received additional advances of $550,000 in addition to the existing balance received from an entity under common control with the Company.
Exhibit 99.3
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION
Introduction
The following unaudited pro forma condensed combined financial information presents the combination of the historical financial information of Azio AI Holdings, Inc., a Delaware corporation formerly known as “Envirotech Vehicles, Inc.” (“Azio AI,” or the “Company”), and Azio AI Corporation, a Delaware corporation (“Legacy Azio AI”), adjusted to give effect to the merger and related transactions described below (collectively, the “Transactions”).
The unaudited pro forma condensed combined financial information has been prepared in accordance with Article 11 of Regulation S-X, as amended by the final rule, Release No. 33-10786, Amendments to Financial Disclosures about Acquired and Disposed Businesses, and reflects only Transaction Accounting Adjustments (as defined in Article 11). The Company has not reflected (and has elected not to present) adjustments for reasonably estimable synergies, dis-synergies, or other non-accounting transaction effects.
The unaudited pro forma condensed combined financial information was prepared using the acquisition method of accounting under generally accepted accounting principles in the United States and is based on the historical financial statements of the Company and Legacy Azio AI.
The acquisition of Legacy Azio AI was accounted for under the acquisition method of accounting in accordance with Financial Accounting Standards Board Accounting Standards Codification (ASC) Topic 805, Business Combinations, and the Company was determined to be the acquirer for accounting purposes and has therefore estimated the fair value of Legacy Azio AI’s assets acquired and liabilities assumed which uses the fair value concepts defined in ASC 820, Fair Value Measurement. Under the acquisition method of accounting, the assets acquired and liabilities assumed are recorded, as of the completion of the acquisition, primarily at their respective fair values, with the excess of the purchase consideration over the fair value of Legacy Azio AI’s net assets allocated to goodwill, if any, and added to those of the Company.
Financial statements and reported results of operations of the Company issued after the Closing will reflect these values and will not be retroactively restated to reflect the historical financial position or results of operations of Legacy Azio AI. The pro forma allocation of the purchase price reflected in the unaudited pro forma condensed combined financial information is preliminary and thus subject to adjustment and may vary materially from the final purchase price allocation that will be completed within the measurement period, but in no event later than one year following the Closing.
The unaudited pro forma condensed combined financial information is presented for illustrative purposes only and does not necessarily reflect what the Company’s financial position or results of operations would have been had the Transactions been completed on the dates assumed, nor is it necessarily indicative of the Company’s future financial condition or results of operations. The Company’s actual results may differ from the pro forma amounts presented.
Pro Forma Financial Information Included
The unaudited pro forma condensed combined financial information includes:
Unaudited pro forma condensed combined balance sheet as of June 30, 2026
This balance sheet combines (i) the historical unaudited condensed consolidated balance sheet of the Company as of June 30, 2026, and (ii) the historical unaudited condensed balance sheet of Legacy Azio AI as of June 30, 2026, giving pro forma effect to the Transactions as if they had occurred on June 30, 2026.
Unaudited pro forma condensed combined statement of operations for the year ended December 31, 2025
This statement combines (i) the historical audited consolidated statement of operations of the Company for the year ended December 31, 2025, and (ii) the historical audited statement of operations of Legacy Azio AI for the period from October 7, 2025 (inception) to December 31, 2025, giving pro forma effect to the Transactions as if they had occurred on January 1, 2025, the beginning of the earliest period presented.
Unaudited pro forma condensed combined statement of operations for the six months ended June 30, 2026
This statement combines (i) the historical unaudited condensed consolidated statement of operations of the Company for the six months ended June 30, 2026, and (ii) the historical unaudited condensed statement of operations of Legacy Azio AI for the six months ended June 30, 2026, giving pro forma effect to the Transactions as if they had occurred on January 1, 2025, the beginning of the earliest period presented.
The accompanying notes are an integral part of the pro forma condensed combined financial information. Such notes describe the assumptions and estimates related to the unaudited adjustments to the pro forma condensed combined financial information.
Sources of Historical Financial Information
The unaudited pro forma condensed combined financial information has been derived from:
| ● | the historical audited consolidated financial statements of the Company as of and for the year ended December 31, 2025, and the related notes thereto, included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025; |
| ● | the historical unaudited condensed consolidated financial statements of the Company as of and for the six months ended June 30, 2026, and the related notes thereto, included in the Company’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2026; |
| ● | the historical audited financial statements of Legacy Azio AI as of and for the period from October 7, 2025 (inception) to December 31, 2025, and the related notes thereto, included in Exhibit 99.1 to the Current Report on Form 8-K/A; and |
| ● | the historical unaudited condensed financial statements of Legacy Azio AI as of and for the six months ended June 30, 2026, and the related notes thereto, included in Exhibit 99.2 to the Current Report on Form 8-K/A. |
Description of the Transactions
Agreement and Plan of Merger
On July 2, 2026, the Company completed its previously announced acquisition of Legacy Azio AI, pursuant to that certain Amended and Restated Agreement and Plan of Merger, dated July 2, 2026 (the “Merger Agreement”), by and among (i) Legacy Azio AI, (ii) the Company, (iii) EV-AZ Merger Sub, Inc., a Delaware corporation and a wholly owned subsidiary of the Company (“First Merger Sub”), and (iv) Azio AI, LLC, a Delaware limited liability company and a wholly owned subsidiary of the Company (“Second Merger Sub”).
Pursuant to the Merger Agreement, (i) First Merger Sub merged with and into Legacy Azio AI, pursuant to which Legacy Azio AI was the surviving corporation and became a wholly owned subsidiary of the Company (the “First Merger”) and (ii) immediately following the effective time of the First Merger (the “First Effective Time”), the surviving corporation of the First Merger merged with and into Second Merger Sub, pursuant to which Second Merger Sub was the surviving entity (the “Surviving Entity”) and became a wholly owned subsidiary of the Company (the “Second Merger” and, together with the First Merger, the “Mergers” and such effective time of the Second Merger, the “Second Effective Time”).
Under the terms of the Merger Agreement, in connection with the closing of the transactions contemplated by the Merger Agreement (the “Closing”) and as of the First Effective Time, the Company issued to the holders of shares of Legacy Azio AI common stock issued and outstanding immediately prior to the First Effective Time (the “Legacy Azio AI Stockholders”) (other than shares held in treasury or held by Legacy Azio AI) (i) 2,460,351 shares of the Company’s common stock, par value $0.00001 per share (the “Common Stock”), which such number of shares represented a number of shares equal to no more than (a) 19.9% (the “Exchange Cap”) of the outstanding shares of Common Stock immediately prior to the First Effective Time, minus (b) 194,807 shares of Common Stock issuable upon conversion of the $150,000 aggregate principal amount of outstanding convertible notes of Legacy Azio AI being assumed by the Company as of the Closing (the “Convertible Notes”), and (ii) 973,450 shares of the Company’s Series A Non-Voting Convertible Preferred Stock, par value $0.00001 per share (the “Series A Preferred Stock”) (such aggregate shares in (i) and (ii) collectively, the “Merger Consideration”).
The Convertible Notes remained outstanding after the First Effective Time and, thereafter, will be convertible into shares of Common Stock.
No fractional shares of Common Stock and Series A Preferred Stock were issued in connection with the First Merger. Any fractional shares that a Legacy Azio AI Stockholder would otherwise be entitled to receive were aggregated and any remaining fractional shares were rounded up to the nearest whole share.
Each share of Series A Preferred Stock will be convertible into 100 shares of Common Stock upon approval by the Company’s stockholders of the Conversion Proposal (as defined below).
The Company and Legacy Azio AI acknowledge that, under the rules of The Nasdaq Stock Market LLC (“Nasdaq”), the Common Stock and the Series A Preferred Stock issued as Merger Consideration will not be entitled to vote on the Conversion Proposal (as defined below).
Pursuant to the Merger Agreement, the Company will use reasonable best efforts to call and hold, as soon as practicable after the execution of the Merger Agreement, a meeting of its stockholders (the “Stockholders Meeting”) for the purpose of seeking: (i) the approval of the conversion of the Series A Preferred Stock into shares of Common Stock in accordance with Nasdaq Listing Rule 5635 (the “Conversion Proposal”), (ii) approval of the adoption by the Company of the Azio AI Holdings, Inc. 2026 Equity Incentive Plan, and (iii) approval of the Amended and Restated Certificate of Incorporation of the Company (the proposals in (i) through (iii) above, the “Transaction Proposals”).
The Merger Agreement provides that the parties thereto shall take all necessary action so that immediately after the Closing:
| (i) | the Company’s board of directors (the “Board”) is comprised of four members, with (i) one person determined by Legacy Azio AI who is Chris Young, (ii) one person determined by the Board who is Jason Maddox, and (iii) two persons jointly agreed between Legacy Azio AI and the Company who shall each meet the requirements of being an “independent director” for purposes of Nasdaq and applicable U.S. Securities and Exchange Commission rules and regulations and applicable securities laws; and |
| (ii) | the following persons are appointed to the positions of officers of the Company to serve in such positions effective as of the Closing until successors are duly appointed and qualified in accordance with applicable Law: (i) Chris Young as the Chief Executive Officer, (ii) Simon Yu as President, (iii) Jason Maddox as Chief Financial Officer, (iv) Elgin Tracy as Chief Operating Officer, (v) David Shiue as Chief Business Development Officer, (vi) Gary Chen as Chief Product Officer, (vii) Jenny Yang as Chief Administrative Officer, and (viii) Merrick Alpert as Chief Communications Officer. |
As of the Closing, all directors and officers of the Company who are not to continue as directors or officers of the Company following the Closing shall resign from such positions effective as of the Closing.
However, the Company filed a Current Report on Form 8-K on August 28, 2026, whereby four of the Azio AI Officers (including Simon Yu, David Shiue, Gary Chen, and Jenny Yang) were removed as officers of the Company by the board of directors of the Company effective as of August 27, 2026, pending stockholder approval and approval of the Company’s Nasdaq initial listing application. Chris Young from Azio AI would still continue to serve as the Chief Executive Officer of the Company.
Parent Support Agreements
In connection with the execution of the Merger Agreement, the Company and Legacy Azio AI entered into a support agreement, dated as of July 2, 2026 (the “Support Agreement”), with the Company’s officers and directors as of immediately prior to the First Effective Time. Subject to the terms and conditions set forth therein, the Support Agreement provides that, among other things, each of the officers and directors party thereto has agreed to vote or cause to be voted all of the shares of Common Stock owned by such stockholder in favor of the Transaction Proposals at the Stockholders Meeting.
The Company covenants that at all times after receipt of the approval of the Transaction Proposals obtained at the Stockholders Meeting, for as long as any shares of Series A Preferred Stock remain outstanding, the Company shall at all times reserve and keep available, free from preemptive rights, out of its authorized but unissued Common Stock or shares of Common Stock held in treasury by the Company, for the purpose of effecting the conversion of the Series A Preferred Stock, the full number of shares of Common Stock then issuable upon the conversion of all shares of Series A Preferred Stock then outstanding.
After giving effect to the Transactions, pursuant to the terms and conditions of the Merger Agreement,
| (i) | the Azio AI Stockholders immediately prior to the First Effective Time own approximately 14.4% of the outstanding shares of Common Stock immediately following the Closing assuming the exercise of 1,000,000 outstanding warrants of the Company to acquire shares of Common Stock with an exercise price of $0.01 per share and 87.2% of the outstanding shares of Common Stock on a diluted basis assuming the Series A Preferred Stock is converted at a ratio of 100:1 (following stockholder approval of the Conversion Proposal); and |
| (ii) | the holders of outstanding shares of Common Stock immediately prior to the First Effective Time own approximately 85.6% of outstanding shares of Common Stock immediately following the Closing assuming the exercise of 1,000,000 outstanding warrants of the Company to acquire shares of Common Stock with an exercise price of $0.01 per share and 12.8% of the outstanding shares of Common Stock on a diluted basis assuming the Series A Preferred Stock is converted at a ratio of 100:1 (following stockholder approval of the Conversion Proposal). |
Series A Preferred Stock
Conversion Rights
Each share of Series A Preferred Stock is convertible into 100 shares of Common Stock (the “Conversion Shares”), subject to the terms and conditions set forth in the Certificate of Designation of Preferences, Rights and Limitations of the Series A Preferred Stock filed with the Secretary of State of the State of Delaware on July 2, 2026 (the “Certificate of Designation”). The Series A Preferred Stock is convertible, at the option of the holder, at any time and from time to time following 5:00 p.m. Eastern Time on the date that the Company’s stockholders approve the conversion of the Series A Preferred Stock into shares of Common Stock (the “Stockholder Approval”).
Until the Stockholder Approval is obtained, no shares of Series A Preferred Stock may be converted into shares of Common Stock.
Stockholder Approval
Pursuant to the Merger Agreement and the Certificate of Designation, the issuance of shares of Common Stock upon conversion of the Series A Preferred Stock is subject to and contingent upon approval by the Company’s stockholders in accordance with applicable Nasdaq rules. The Series A Preferred Stock is not convertible into Common Stock until the Stockholder Approval has been obtained.
Dividend Rights
Holders of Series A Preferred Stock are entitled to receive dividends on an as-if-converted-to-common-stock basis equal to and in the same form and manner as dividends actually paid on Common Stock. Other than such rights, no additional dividends are payable on the Series A Preferred Stock.
Voting Rights
Except as otherwise required by Delaware law or expressly provided in the Certificate of Designation, the Series A Preferred Stock has no voting rights.
However, for so long as any shares of Series A Preferred Stock remain outstanding, the affirmative vote of the holders of a majority of the outstanding shares of Series A Preferred Stock is required for certain actions, including: (i) altering or adversely changing the powers, preferences, or rights of the Series A Preferred Stock, and (ii) increasing or decreasing the number of authorized shares of Series A Preferred Stock (other than by conversion).
Liquidation
The Series A Preferred Stock ranks on parity with Common Stock with respect to distributions upon liquidation, dissolution, or winding up of the Company. Upon any liquidation, holders of Series A Preferred Stock are entitled to receive the same amount that would have been received had such shares been converted into Common Stock immediately prior to the liquidation event, together with any declared but unpaid dividends.
UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET
AS OF JUNE 30, 2026
| | (1) | | | (2) | | | Transaction | | Note 5 | | Pro Forma | |
||||
Assets | | | | | | | | | | | | | | | | | |
Current assets | | | | | | | | | | | | | | | | | |
Cash and cash equivalents | | $ | 141,955 | | | $ | 102,081 | | | $ | — | | | | $ | 244,036 | |
Receivable from related party | | | 2,356,946 | | | | — | | | | — | | | | | 2,356,946 | |
EPA fulfillment asset | | | 1,342,966 | | | | — | | | | — | | | | | 1,342,966 | |
Inventory | | | — | | | | 291,498 | | | | — | | | | | 291,498 | |
Prepaid expenses | | | 202,399 | | | | 40,000 | | | | — | | | | | 242,399 | |
Other current assets | | | 72,460 | | | | 232,500 | | | | — | | | | | 304,960 | |
Total current assets | | | 4,116,726 | | | | 666,079 | | | | — | | | | | 4,782,805 | |
| | | | | | | | | | | | | | | | | |
Property and equipment, net | | | 9,225,389 | | | | — | | | | (23,005 | ) | (a) | | | 5,169,154 | |
| | | | | | | | | | | (4,033,230 | ) | (b) | | | | |
Operating right of use assets | | | 1,994,787 | | | | — | | | | — | | | | | 1,994,787 | |
Intangibles | | | — | | | | — | | | | 19,010,000 | | (c) | | | 19,010,000 | |
Goodwill | | | — | | | | — | | | | 6,502,107 | | (d) | | | 6,502,107 | |
Other non-current assets | | | 221,995 | | | | — | | | | — | | | | | 221,995 | |
Total assets | | $ | 15,558,897 | | | $ | 666,079 | | | $ | 21,455,872 | | | | $ | 37,680,848 | |
| | | | | | | | | | | | | | | | | |
Liabilities and stockholders’ equity (deficit) | | | | | | | | | | | | | | | | | |
Current liabilities: | | | | | | | | | | | | | | | | | |
Accounts payable | | $ | 8,254,898 | | | $ | 102,268 | | | $ | — | | | | $ | 8,357,166 | |
Deferred revenue | | | 1,544,000 | | | | 4,033,230 | | | | (4,033,230 | ) | (b) | | | 1,544,000 | |
EPA contract liability | | | 5,146,066 | | | | — | | | | — | | | | | 5,146,066 | |
Accrued liabilities | | | 2,027,076 | | | | — | | | | — | | | | | 2,027,076 | |
Operating lease liabilities, current | | | 681,155 | | | | — | | | | — | | | | | 681,155 | |
Loan from related party | | | | | | | 100,000 | | | | — | | | | | 100,000 | |
Short-term debt | | | 9,267,852 | | | | — | | | | — | | | | | 9,267,852 | |
Other current liabilities | | | — | | | | 1,200 | | | | — | | | | | 1,200 | |
Total current liabilities | | | 26,921,047 | | | | 4,236,698 | | | | (4,033,230 | ) | | | | 27,124,515 | |
| | | | | | | | | | | | | | | | | |
Operating lease liabilities, noncurrent | | | 1,020,844 | | | | — | | | | — | | | | | 1,020,844 | |
Deferred tax liability | | | — | | | | — | | | | 3,992,100 | | (e) | | | 3,992,100 | |
Convertible Notes | | | — | | | | 249,602 | | | | — | | | | | 249,602 | |
Total liabilities | | | 27,941,891 | | | | 4,486,300 | | | | (41,130 | ) | | | | 32,387,061 | |
| | | | | | | | | | | | | | | | | |
Commitments and contingencies | | | — | | | | — | | | | — | | | | | — | |
| | | | | | | | | | | | | | | | | |
Stockholders’ equity (deficit) | | | | | | | | | | | | | | | | | |
Series A Preferred Stock, $0.00001 par value per share |
|
| — |
|
|
| — |
|
|
| 10 |
| (f) |
|
| 10 |
|
Company common stock, $0.00001 par value per share | | | 137 | | | | — | | | | 24 | | (g) | | | 161 | |
UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET
AS OF JUNE 30, 2026
(CONTINUED)
| | (1) | | | (2) | | | Transaction | | Note 5 | | Pro Forma | |
||||
Legacy Azio AI preferred shares, $0.00001 par value per share | | | — | | | | — | | | | — | | (h) | | | — | |
Legacy Azio AI common shares, $0.00001 par value per share | | | — | | | | 100 | | | | (100 | ) | (h) | | | — | |
Additional paid-in capital | | | 110,829,668 | | | | — | | | | 13,590,990 | | (f) | | | 128,529,420 | |
|
|
|
|
|
|
|
|
|
|
| 4,108,762 |
| (g) |
|
|
|
|
Accumulated deficit | | | (123,212,799 | ) | | | (3,820,321 | ) | | | 3,820,321 | | (h) | | | (123,235,804 | ) |
| | | | | | | | | | | (23,005 | ) | (a) | | | | |
Total stockholders’ equity (deficit) | | | (12,382,994 | ) | | | (3,820,221 | ) | | | 21,497,002 | | | | | 5,293,787 |
|
Total liabilities and stockholders’ equity (deficit) | | $ | 15,558,897 | | | $ | 666,079 | | | $ | 21,455,872 | | | | $ | 37,680,848 | |
See accompanying notes to the unaudited pro forma condensed combined financial information.
| (1) | Derived from the historical unaudited condensed consolidated balance sheet of the Company as of June 30, 2026. |
| (2) | Derived from the historical unaudited condensed balance sheet of Legacy Azio AI as of June 30, 2026. |
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2025
| | (1) | | | (2) | | | Transaction | | Note 6 | | Pro Forma | |
||||
Sales, net | | $ | 5,939,008 | | | $ | — | | | $ | — | | | | $ | 5,939,008 | |
Cost of sales | | | 19,137,380 | | | | — | | | | 422,200 | | (aa) | | | 19,559,580 | |
Gross loss | | | (13,198,372 | ) | | | — | | | | (422,200 | ) | | | | (13,620,572 | ) |
| | | | | | | | | | | | | | | | | |
Operating expenses | | | | | | | | | | | | | | | | | |
General and administrative expenses | | | 11,071,013 | | | | 48,034 | | | | 1,689,900 | | (bb) | | | 12,808,947 | |
Consulting expenses | | | 65,261 | | | | — | | | | — | | | | | 65,261 | |
Research and development expenses | | | 731,808 | | | | — | | | | — | | | | | 731,808 | |
Sales and marketing expenses | | | 210,876 | | | | 5,611 | | | | — | | | | | 216,487 | |
Goodwill impairment | | | 10,103,048 | | | | — | | | | — | | | | | 10,103,048 | |
Impairment of intangible assets | | | 3,300,801 | | | | — | | | | — | | | | | 3,300,801 | |
Total operating expenses | | | 25,482,807 | | | | 53,645 | | | | 1,689,900 | | | | | 27,226,352 | |
| | | | | | | | | | | | | | | | | |
Loss from operations | | | (38,681,179 | ) | | | (53,645 | ) | | | (2,112,100 | ) | | | | (40,846,924 | ) |
| | | | | | | | | | | | | | | | | |
Other income (expense) | | | | | | | | | | | | | | | | | |
Interest income, net | | | 33,320 | | | | — | | | | — | | | | | 33,320 | |
Loss on conversions and changes in fair value of Company convertible notes | | | (461,019 | ) | | | — | | | | — | | | | | (461,019 | ) |
Other expense | | | (18,108 | ) | | | — | | | | — | | | | | (18,108 | ) |
Total other expense, net | | | (445,807 | ) | | | — | | | | — | | | | | (445,807 | ) |
| | | | | | | | | | | | | | | | | |
Loss before income taxes | | | (39,126,986 | ) | | | (53,645 | ) | | | (2,112,100 | ) | | | | (41,292,731 | ) |
| | | | | | | | | | | | | | | | | |
Income tax (expense)/benefit | | | — | | | | (800 | ) | | | 443,541 | | (cc) | | | 442,741 | |
| | | | | | | | | | | | | | | | | |
Net loss | | $ | (39,126,986 | ) | | $ | (54,445 | ) | | $ | (1,668,559 | ) | | | $ | (40,849,990 | ) |
| | | | | | | | | | | | | | | | | |
Net loss per share, basic and diluted | | | (11.54 | ) | | | (0.01 | ) | | | | | (dd) | | | (6.98 | ) |
Weighted-average number of shares used to compute net loss per share, basic and diluted | | | 3,391,670 | | | | 10,000,000 | | | | | | | | | 5,852,021 | |
See accompanying notes to the unaudited pro forma condensed combined financial information.
| (1) | Derived from the historical audited consolidated statement of operations of the Company for the year ended December 31, 2025. |
| (2) | Derived from the historical audited statement of operations of Legacy Azio AI for the period from October 7, 2025 (inception) to December 31, 2025. |
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 2026
| | (1) | | | (2) | | | Transaction | | Note 7 | | Pro Forma | |
||||
Sales, net | | $ | 4,911,508 | | | $ | 232,800 | | | $ | (232,800 | ) | (aaa) | | $ | 4,911,508 | |
Cost of sales | | | 5,028,791 | | | | 210,817 | | | | (209,795 | ) | (aaa) | | | 5,240,913 | |
| | | | | | | | | | | 211,100 | | (bbb) | | | | |
Gross profit (loss) | | | (117,283 | ) | | | 21,983 | | | | (234,105 | ) | | | | (329,405 | ) |
| | | | | | | | | | | | | | | | | |
Operating expenses | | | | | | | | | | | | | | | | | |
General and administrative expenses | | | 9,338,866 | | | | 3,657,797 | | | | 844,950 | | (ccc) | | | 13,841,613 | |
Research and development expenses | | | 22,000 | | | | — | | | | — | | | | | 22,000 | |
Sales and marketing expenses | | | 30,000 | | | | 54,960 | | | | — | | | | | 84,960 | |
Total operating expenses | | | 9,390,866 | | | | 3,712,757 | | | | 844,950 | | | | | 13,948,573 | |
| | | | | | | | | | | | | | | | | |
Loss from operations | | | (9,508,149 | ) | | | (3,690,774 | ) | | | (1,079,055 | ) | | | | (14,277,978 | ) |
| | | | | | | | | | | | | | | | | |
Other income (expense) | | | | | | | | | | | | | | | | | |
Interest income (expense), net | | | 50 | | | | (2,308 | ) | | | — | | | | | (2,258 | ) |
Loss on fair value adjustment of Convertible Notes | | | — | | | | (97,294 | ) | | | — | | | | | (97,294 | ) |
Loss on conversions and changes in fair value of Company convertible notes | | | (1,000,627 | ) | | | — | | | | — | | | | | (1,000,627 | ) |
Other (expense)/income | | | (115,613 | ) | | | 25,000 | | | | — | | | | | (90,613 | ) |
Total other expense, net | | | (1,116,190 | ) | | | (74,602 | ) | | | — | | | | | (1,190,792 | ) |
| | | | | | | | | | | | | | | | | |
Loss before income taxes | | | (10,624,339 | ) | | | (3,765,376 | ) | | | (1,079,055 | ) | | | | (15,468,770 | ) |
| | | | | | | | | | | | | | | | | |
Income tax (expense)/benefit | | | — | | | | (400 | ) | | | 221,771 | | (ddd) | | | 221,371 | |
| | | | | | | | | | | | | | | | | |
Net loss | | $ | (10,624,339 | ) | | $ | (3,765,776 | ) | | $ | (857,284 | ) | | | $ | (15,247,399 | ) |
| | | | | | | | | | | | | | | | | |
Net loss per share, basic and diluted | | | (0.78 | ) | | | (0.38 | ) | | | | | (eee) | | | (0.95 | ) |
Weighted-average number of shares used to compute net loss per share, basic and diluted | | | 13,644,579 | | | | 10,000,000 | | | | | | | | | 16,104,930 | |
See accompanying notes to the unaudited pro forma condensed combined financial information.
| (1) | Derived from the historical unaudited condensed consolidated statement of operations of the Company for the six months ended June 30, 2026. |
| (2) | Derived from the historical unaudited condensed statement of operations of Legacy Azio AI for the six months ended June 30, 2026. |
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION
Note 1 — Description of the Transactions and the Merger Agreement
On July 2, 2026, the Company completed its previously announced acquisition of Legacy Azio AI, pursuant to that certain Amended and Restated Agreement and Plan of Merger (the “Merger Agreement”), by and among (i) Legacy Azio AI, (ii) the Company, (iii) EV-AZ Merger Sub, Inc., a Delaware corporation and a wholly owned subsidiary of the Company (“First Merger Sub”), and (iv) Azio AI, LLC, a Delaware limited liability company and a wholly owned subsidiary of the Company (“Second Merger Sub”).
Pursuant to the Merger Agreement, (i) First Merger Sub merged with and into Legacy Azio AI, pursuant to which Legacy Azio AI was the surviving corporation and became a wholly owned subsidiary of the Company (the “First Merger”) and (ii) immediately following the effective time of the First Merger (the “First Effective Time”), the surviving corporation of the First Merger merged with and into Second Merger Sub, pursuant to which Second Merger Sub was the surviving entity (the “Surviving Entity”) and became a wholly owned subsidiary of the Company (the “Second Merger” and, together with the First Merger, the “Mergers” and such effective time, the “Second Effective Time”).
At the closing of the transactions contemplated by the Merger Agreement (the “Transactions” and such closing, the “Closing”), all outstanding shares of Legacy Azio AI common stock were exchanged for consideration consisting of shares of the Company’s common stock, par value $0.00001 per share (the “Common Stock”) and the Company’s Series A Non-Voting Convertible Preferred Stock, par value $0.00001 per share (the “Series A Preferred Stock”). As a result of the Mergers, Legacy Azio AI became a wholly owned subsidiary of the Company.
Effective as of July 9, 2026, the Company filed an amendment to its Amended and Restated Certificate of Incorporation to change its name to “Azio AI Holdings, Inc.” and its Common Stock began trading under the symbol “AZIO” on the Nasdaq Capital Market effective as of July 13, 2026.
Note 2 — Basis of Presentation and Accounting Policies
The unaudited pro forma condensed combined financial information has been prepared in accordance with Article 11 of Regulation S-X, as amended by the final rule, Release No. 33-10786, Amendments to Financial Disclosures about Acquired and Disposed Businesses. Release No. 33-10786 replaces the prior pro forma adjustment criteria with simplified requirements to depict the accounting for the transaction (“Transaction Accounting Adjustments”) and to present reasonably estimable synergies and other transaction effects (“Management’s Adjustments”). The Company has elected not to present Management’s Adjustments and has included only Transaction Accounting Adjustments in the unaudited pro forma condensed combined financial information.
The unaudited pro forma condensed combined financial information is presented for illustrative purposes only and does not necessarily reflect what the Company’s financial position or results of operations would have been had the Transactions been completed on the dates assumed, nor is it necessarily indicative of the Company’s future financial condition or results of operations. The Company’s actual results may differ from the pro forma amounts presented.
The unaudited pro forma condensed combined financial information is based on the assumptions and adjustments made by the Company that are described in the accompanying notes. Accordingly, the pro forma adjustments are preliminary, subject to further revision as additional information becomes available and additional analyses are performed and have been made solely for the purpose of providing unaudited pro forma condensed combined financial information.
During preparation of the unaudited pro forma condensed combined financial information, the Company performed a preliminary analysis of Legacy Azio AI’s accounting policies and is not aware of any material differences between Legacy Azio AI’s accounting policies and the Company’s accounting policies, and accordingly, this unaudited pro forma condensed combined financial information assumes no material differences in accounting policies.
The unaudited pro forma condensed combined balance sheet as of June 30, 2026, gives effect to the Mergers and related Transactions as if they had occurred on June 30, 2026. The unaudited pro forma condensed combined statements of operations for the year ended December 31, 2025, and six months ended June 30, 2026, give effect to the Mergers and related Transactions as if they had occurred on January 1, 2025, the beginning of the earliest period presented.
The unaudited pro forma condensed combined financial information has been derived from, and should be read in conjunction with, the historical financial statements and related notes of the Company and Legacy Azio AI included elsewhere. The historical financial statements of the Company and Legacy Azio AI have been prepared in accordance with U.S. generally accepted accounting principles.
Series A Preferred Stock
The Series A Preferred Stock includes a provision that, in the event of a tender or exchange offer by a third party in which the holders of more than 50% of the Common Stock not held by the Company or such third party receive cash or other assets in exchange for or conversion of such Common Stock, allows holders of Series A Preferred Stock, upon any subsequent conversion subject to stockholder approval, to convert their shares for the same form of consideration (“Alternate Consideration”). The Company concluded that because this right to receive Alternate Consideration may be triggered by an event outside the Company’s control and could result in settlement in cash, the Series A Preferred Stock is classified as temporary equity. As of the current reporting date, a tender offer is not probable, and the Series A Preferred Stock is not deemed probable of becoming convertible for such Alternate Consideration. Because such conversion for Alternate Consideration is not considered probable, the Series A Preferred Stock is not subsequently remeasured to such value.
Note 3 — Accounting for the Business Combination
The unaudited pro forma condensed combined financial information was prepared using the acquisition method of accounting and is based on the historical financial statements of the Company and Legacy Azio AI.
The acquisition of Legacy Azio AI was accounted for under the acquisition method of accounting in accordance with Financial Accounting Standards Board Accounting Standards Codification (ASC) Topic 805, Business Combinations (“ASC 805”) and the Company was determined to be the acquirer for accounting purposes and has therefore estimated the fair value of Legacy Azio AI’s assets acquired and liabilities assumed which uses the fair value concepts defined in ASC 820, Fair Value Measurement (“ASC 820”).
The Company determined that the Company was the acquirer of Legacy Azio AI under ASC 805 due to the following:
| ● | Relative voting rights at the Closing: Legacy Azio AI stockholders are expected to hold approximately 14.4% of the outstanding shares of Common Stock immediately following the Closing, while the Company stockholders, including vested and exercisable warrants, are expected to hold approximately 85.6% of the outstanding shares of Common Stock immediately following the Closing. Accordingly, the Company stockholders retain a substantial majority of the voting rights immediately following the Closing, favoring the Company as the accounting acquirer. |
| ● | Relative size and operational scale: The Company reported approximately $15.6 million of total assets and $4.9 million of revenue for the six months ended June 30, 2026, compared to $0.7 million of total assets and $0.2 million of revenue for Legacy Azio AI for the six months ended June 30, 2026. Similarly, the Company reported approximately $5.9 million of revenue for the year ended December 31, 2025, compared to no revenue for Legacy Azio AI for the period from October 7, 2025 (inception) to December 31, 2025, as Legacy Azio AI was newly incorporated on October 7, 2025. Accordingly, the Company was significantly larger based on assets, revenues, and operating scale, favoring the Company as the accounting acquirer. |
| ● | Although the Merger Agreement provides for the appointment of five additional executive officers, only one of which would replace an existing executive officer in the position of CEO, Legacy Azio AI was only entitled to appoint one director to the Company’s board of directors, consisting of four current directors immediately prior to the Closing. Therefore, immediately following the Closing, the Company’s board of directors was comprised of a majority of incumbent directors, and the stockholders of the Company have the authority to remove or appoint directors at and post-Closing. |
| ● | However, the Company filed a Current Report on Form 8-K on August 28, 2026, whereby four of the Azio AI Officers (including Simon Yu, David Shiue, Gary Chen, and Jenny Yang) were removed as officers of the Company by the board of directors of the Company effective as of August 27, 2026, pending stockholder approval and approval of the Company’s Nasdaq initial listing application. Chris Young from Azio AI would still continue to serve as the Chief Executive Officer of the Company. |
| ● | Other factors, including the Company remaining the legal acquirer, the Nasdaq-listed public company, and the U.S. Securities and Exchange Commission registrant. |
The Company determined that the future conversion of the Series A Preferred Stock, if approved by the Company’s stockholders, was an independent event based on it being outside of the control of the Company and therefore substantive. The stockholders required to vote for the conversion of the Series A Preferred Stock under the terms of the support agreements signed by the officers and directors of the Company at the Closing do not hold a majority of the Common Stock and own approximately 1.9% of the outstanding shares of Common Stock immediately before the Closing and hence cannot unilaterally approve the conversion of the Series A Preferred Stock. The Legacy Azio AI stockholders who will become stockholders of the Company after the Closing do not have the right to vote on the stockholder approval required for conversion of the Series A Preferred Stock.
The Company evaluates acquisitions of assets and other similar transactions to assess whether or not the transaction should be accounted for as a business combination or asset acquisition by first applying a screen test to determine whether substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or group of similar identifiable assets. If so, the transaction is accounted for as an asset acquisition. If not, further determination is required as to whether or not the Company has acquired inputs and processes that have the ability to create outputs, which would meet the definition of a business. Significant judgment is required in the application of the screen test to determine whether an acquisition is a business combination or an acquisition of assets.
The Company concluded that the arrangement meets the definition of a business combination, as substantially all of the fair value of the gross assets acquired is not concentrated in a single identifiable asset and Legacy Azio AI meets the definition of business as the set includes inputs and processes that have the ability to create outputs.
ASC 805 requires, among other things, that most assets acquired and liabilities assumed be recognized at their fair values as of the acquisition date. In addition, ASC 805 requires that the consideration transferred be measured at the date the acquisition is completed at the then-current fair value.
ASC 820 defines the term “fair value,” sets forth the valuation requirements for any asset or liability measured at fair value, expands related disclosure requirements, and specifies a hierarchy of valuation techniques based on the nature of the inputs used to develop the fair value measures. Fair value is defined in ASC 820 as “the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.” This is an exit price concept for the valuation of the asset or liability. In addition, market participants are assumed to be buyers and sellers in the principal (or the most advantageous) market for the asset or liability. Fair value measurements for an asset assume the highest and best use by these market participants. As a result of these standards, the Company may be required to value assets at fair value measures that do not reflect the Company’s intended use of those assets. Many of these fair value measurements can be highly subjective, and it is possible that other professionals, applying reasonable judgment to the same facts and circumstances, could develop and support a range of alternative estimated amounts.
Under the acquisition method of accounting, the assets acquired and liabilities assumed are recorded, as of the completion of the acquisition, primarily at their respective fair values, with the excess of the purchase consideration over the fair value of Legacy Azio AI’s net assets allocated to goodwill, if any, and added to those of the Company.
Financial statements and reported results of operations of the Company issued after the Closing will reflect these values and will not be retroactively restated to reflect the historical financial position or results of operations of Legacy Azio AI. The pro forma allocation of the purchase price reflected in the unaudited pro forma condensed combined financial information is preliminary and thus subject to adjustment and may vary materially from the final purchase price allocation that will be completed within the measurement period, but in no event later than one year following the Closing.
Under ASC 805, acquisition-related transaction costs (e.g., advisory, legal, and other professional fees) are not included as a component of consideration transferred but are accounted for as expenses in the periods in which such costs are incurred.
Note 4 — Estimated Consideration and Preliminary Purchase Price Allocation
Estimated Consideration
The preliminary fair value of the total consideration is comprised of the following components:
Common Stock consideration, 2,460,351 shares issued at a fair value of $1.67 per share | | $ | 4,108,786 | |
Series A Preferred Stock consideration, 973,450 shares issued | | | 13,591,000 | |
Deferred revenue representing a deposit paid by the Company | | | 4,033,230 | |
Total consideration | | $ | 21,733,016 | |
The preliminary fair value of the consideration transferred was calculated based on the following assumptions:
| ● | Common Stock consideration (the “Common Stock Consideration”): Issuance of 2,460,351 shares of Common Stock to the equity holders of Legacy Azio AI and the closing stock price of the Common Stock on the Nasdaq Capital Market on July 2, 2026, which was $1.67 per share. |
| ● | Series A Preferred Stock consideration (the “Preferred Stock Consideration”): Issuance of 973,450 shares of Series A Preferred Stock to the equity holders of Legacy Azio AI. Each share of Series A Preferred Stock issued as consideration is convertible into 100 shares of Common Stock, subject to stockholder approval. As management does not hold sufficient voting power to unilaterally influence the outcome of the stockholder approval process, the Company has adopted a probabilistic approach for determining the fair value of the Series A Preferred Stock that considers both conversion and non-conversion scenarios. |
Under the scenario wherein the affirmative approval from stockholders is received, each share of Series A Preferred Stock is assumed to be converted into 100 shares of Common Stock. The fair value of the Preferred Stock Consideration is determined based on the diluted, per-share value of the Common Stock equal to $0.19, reflecting the increased number of shares outstanding following conversion. The probability assigned to an affirmative approval from stockholders is 70%.
Under the scenario wherein the affirmative approval from stockholders is not received, the shares of Series A Preferred Stock are assumed to remain outstanding in their existing form. Accordingly, the fair value of the Preferred Stock Consideration is determined by multiplying the number of shares of Series A Preferred Stock issued as of the valuation date by the per-share value of the Common Stock of $1.67 as of the valuation date, discounted for the lack of marketability at 20% and lack of voting rights at 3%, as these are the primary differences between the Series A Preferred Stock and the Common Stock under the Certificate of Designation of Preferences, Rights and Limitations of Series A Preferred Stock filed with the Secretary of State of the State of Delaware on July 2, 2026. The probability assigned to an affirmative approval not being received from stockholders is 30%.
| ● | Deferred revenue: As the deferred revenue represents a deposit paid by the Company, it has been added back to the purchase consideration in accordance with the accounting guidance on the settlement of pre-existing relationships in a business combination. |
Preliminary Purchase Price Allocation
The Company recorded the assets acquired and liabilities assumed as of the date of the Closing based on the information available at that date.
Consideration | | | | |
Common stock consideration | | $ | 4,108,786 | |
Preferred stock consideration | | | 13,591,000 | |
Deferred revenue representing a deposit paid by the Company | | | 4,033,230 | |
Fair value of total consideration transferred | | $ | 21,733,016 | |
| | | | |
Recognized amounts of identifiable assets acquired and liabilities assumed | | | | |
Cash and cash equivalents | | $ | 102,081 | |
Inventory | | | 291,498 | |
Intangibles | | | 19,010,000 | |
Other current assets | | | 232,500 | |
Prepaid expenses | | | 40,000 | |
Accounts payable | | | (102,268 | ) |
Deferred tax liability | | | (3,992,100 | ) |
Short-term debt | | | (100,000 | ) |
Other current liabilities | | | (1,200 | ) |
Convertible Notes | | | (249,602 | ) |
Total identifiable net assets | | | 15,230,909 | |
| | | | |
Goodwill | | $ | 6,502,107 | |
Working capital accounts were valued at their respective carrying amounts because the Company believes that these amounts approximate the current fair values. The preliminary estimate of the fair value of the identifiable intangible assets (customer contract and supplier relationship) was determined by the Company with the assistance of a third-party valuation expert.
The customer contract was preliminarily valued using the income approach, specifically the multi-period excess earnings method. The valuation was based on projected cash flows expected to be generated from the acquired customer agreement. Significant assumptions utilized in the valuation included projected contracted capacity deployment, expected revenue and operating margins, and a discount rate of approximately 29%. The customer contract intangible asset was assigned an estimated useful life of approximately 10 years based on the period over which the underlying contract is expected to generate economic benefits.
Supplier relationships were preliminarily valued using the income approach, specifically the with-and-without method. The valuation reflects the economic benefits derived from established relationships and reseller authorizations with key hardware suppliers that provide access to GPU servers and related AI infrastructure products. Significant assumptions utilized in the valuation included projected hardware distribution revenues, expected reseller margins, the anticipated decline in benefits from the existing supplier base over time, and a discount rate of approximately 32%. The supplier relationship intangible asset was assigned an estimated useful life of approximately five years based on the expected duration of the economic benefits associated with these relationships.
The above allocation of the purchase price is based upon certain valuations and other analyses that have not been completed as of the date of this filing. Any changes in the estimated fair values of the net assets recorded for the Transactions upon the finalization of more detailed analyses of the facts and circumstances that existed at the date of the Closing will change the allocation of the purchase price. As such, the purchase price allocation for the Transactions is a preliminary estimate, which is subject to change within the measurement period. Any increase or decrease in the fair value of Legacy Azio AI’s tangible and identifiable intangible assets and liabilities as compared with the information shown herein would also change the portion of the purchase price allocable to goodwill.
The goodwill recorded related to the Transactions is the excess of the fair value of consideration transferred by the Company over the fair value of the net identifiable assets and liabilities assumed at the date of the Closing.
Note 5 — Adjustments to Unaudited Pro Forma Condensed Combined Balance Sheet as of June 30, 2026
The pro forma adjustments, based on preliminary estimates that could change materially as additional information is obtained, are as follows:
| (a) | Represents elimination of profit included in property and equipment as a result of intercompany sales. This adjustment relates to cryptocurrency mining and related infrastructure equipment purchased by the Company from Legacy Azio AI prior to the Closing. Because Legacy Azio AI became a wholly owned subsidiary of the Company upon the Closing, the sale represents an intercompany transaction in the combined entity and must be eliminated in consolidation, including any intercompany profit included in the Company’s property and equipment. |
| (b) | Represents elimination of deferred revenue and property and equipment as a result of intercompany sales. This adjustment relates to elimination of an advance paid by the Company to Legacy Azio AI for cryptocurrency mining and related infrastructure equipment. Because Legacy Azio AI became a wholly owned subsidiary of the Company upon the Closing, the advance payment is an intercompany transaction for the combined entity and must be eliminated in consolidation, including the deferred revenue recognized by Legacy Azio AI and the construction in progress included in the Company’s property and equipment. |
| (c) | Represents adjustments to the assets acquired and liabilities assumed in accordance with the preliminary estimated purchase price described in Note 4, including an adjustment to intangible assets (customer contract and supplier relationship) that are expected to be recorded in connection with the Transactions. |
| (d) | Represents the recognition of goodwill on account of the Transactions. Goodwill represents the excess of the fair value of consideration transferred by the Company over the fair value of the net identifiable assets and liabilities assumed at the date of the Closing. |
| (e) | Represents tax adjustment for the preliminary assignment of the purchase price that resulted in the recognition of deferred tax liabilities primarily related to the fair value adjustments of acquired intangible assets. |
| (f) | Represents the issuance of 973,450 shares of Series A Preferred Stock upon the Closing. |
| (g) | Represents the issuance of 2,460,351 shares of Common Stock upon the Closing. |
| (h) | Represents the elimination of Legacy Azio AI’s historical equity balances. |
Note 6 — Adjustments to Unaudited Pro Forma Condensed Combined Statement of Operations for the Year Ended December 31, 2025
The pro forma adjustments, based on preliminary estimates that could change materially as additional information is obtained, are as follows:
| (aa) | Represents an adjustment for the amortization of supplier relationship intangible asset, calculated by using the straight-line method over a 5-year estimated useful life. |
| (bb) | Represents an adjustment for the amortization of customer contract intangible asset, calculated by using the straight-line method over a 10-year estimated useful life. |
| (cc) | Represents an adjustment for the reversal of the deferred tax liability related to the fair value adjustments of acquired intangible assets. |
| (dd) | Represents the basic and diluted pro forma net loss per share based on the weighted-average number of shares of Common Stock outstanding for the period presented. See Note 8 - Earnings per share. |
Note 7 — Adjustments to Unaudited Pro Forma Condensed Combined Statement of Operations for the Six months ended June 30, 2026
The pro forma adjustments, based on preliminary estimates that could change materially as additional information is obtained, are as follows:
| (aaa) | Represents elimination of intercompany sales and cost of sales. This adjustment relates to cryptocurrency mining and related infrastructure equipment purchased by the Company from Legacy Azio AI. Because Legacy Azio AI became a wholly owned subsidiary of the Company upon the Closing, the sale represents an intercompany transaction in the combined entity and must be eliminated in consolidation, including any related revenue and related cost of revenue. |
| (bbb) | Represents an adjustment for the amortization of supplier relationship intangible asset, calculated by using the straight-line method over a 5-year estimated useful life. |
| (ccc) | Represents an adjustment for the amortization of customer contract intangible asset, calculated by using the straight-line method over a 10-year estimated useful life. |
| (ddd) | Represents an adjustment for the reversal of the deferred tax liability related to the fair value adjustments of acquired intangible assets. |
| (eee) | Represents the basic and diluted pro forma net loss per share based on the weighted-average number of shares of Common Stock outstanding for the period presented. See Note 8 - Earnings per share. |
Note 8 — Earnings per share
For the unaudited pro forma condensed combined statements of operations, the Mergers and related Transactions are being reflected as if such transactions had occurred as of January 1, 2025. The weighted-average shares outstanding for the pro forma basic and diluted net loss per share assumes that the shares issuable relating to the Mergers and related Transactions have been outstanding for the entire year ended December 31, 2025, and six months ended June 30, 2026.
The pro forma net loss per share for the year ended December 31, 2025, and for the six months ended June 30, 2026, is as follows:
| | Year ended | | | Six months ended | |
||
Pro forma net loss | | $ | (40,849,990 | ) | | $ | (15,247,399 | ) |
Weighted-average number of shares outstanding used to compute pro forma net loss per share, basic and diluted | | | 5,852,021 | | | | 16,104,930 | |
Pro forma net loss per share, basic and diluted | | $ | (6.98 | ) | | $ | (0.95 | ) |
| | | | | | | | |
Weighted-average number of shares outstanding used to compute pro forma net loss per share, basic and diluted: | | | | | | | | |
Company historical weighted-average shares outstanding | | | 3,391,670 | | | | 13,644,579 | |
Shares issued in connection with the acquisition | | | 2,460,351 | | | | 2,460,351 | |
Total weighted-average shares outstanding used to compute pro forma net loss, basic and diluted | | | 5,852,021 | | | | 16,104,930 | |
The following outstanding shares of Common Stock equivalents were excluded from the computation of pro forma diluted net loss per share because including them would have had an anti-dilutive effect for the year ended December 31, 2025, and for the six months ended June 30, 2026:
| | Year ended | | | Six months ended | |
||
Series A Preferred Stock | | | 97,345,000 | | | | 97,345,000 | |
Convertible Notes | | | 329,637 | | | | 329,637 | |
Historical Company stock options | | | 977,250 | | | | 2,051,835 | |
Historical Company warrants | | | 147,039 | | | | 51,205 | |
Total | | | 98,798,926 | | | | 99,777,677 | |