UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
| TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT |
For the transition period from ____________ to __________
Commission File Number:
| (Exact name of registrant as specified in its charter) |
|
(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) |
(Address of principal executive offices) (Zip Code)
(
Registrant’s telephone number, including area code
104-360 College Street Suite #251
Toronto, ONT M5T 1S6 Canada
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act
| Title of Each Class | Trading Symbol(s) | Name of each Exchange on which registered | ||
| N/A | N/A | N/A |
Indicate by check mark whether the issuer (1) filed
all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the preceding 12 months (or for such shorter period
that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒
Indicate by check mark whether the registrant has
submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (232.405 of this
chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit). ☒
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer | ☐ | ☒ | |
| Accelerated filer | ☐ | Smaller reporting company | |
| Emerging growth company |
If an emerging growth company, indicate by check mark
if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards
provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a
shell company (as defined in Rule 12b-2 of the Exchange Act). ☐
Yes
The number of shares outstanding of each of the issuer’s classes of common equity as of May 13, 2026, was shares of common stock.
TABLE OF CONTENTS
| 2 |
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Allied Energy, Inc.
Index to Financial Statements
| 3 |
Allied Energy, Inc. and Subsidiaries
Consolidated Balance Sheets
As of March 31, 2026 and December 31, 2025
| March 31, | December 31, | |||||||
| 2026 | 2025 | |||||||
| (Unaudited) | (Audited) | |||||||
| ASSETS | ||||||||
| Current Assets | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Accounts receivable, net | ||||||||
| Due from related parties | ||||||||
| Other current receivables and prepayments | ||||||||
| Total Current Assets | ||||||||
| Non-Current Assets | ||||||||
| Intangible assets, net | ||||||||
| Total Non-Current Assets | ||||||||
| Total Assets | $ | $ | ||||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
| Current Liabilities | ||||||||
| Accounts payable and accrued expenses | $ | $ | ||||||
| Accounts payable-related party | ||||||||
| Due to related parties | ||||||||
| Taxes payable | ||||||||
| Total Current Liabilities | ||||||||
| Non-Current Liabilities | ||||||||
| Total Liabilities | ||||||||
| Commitments and Contingencies | ||||||||
| Shareholders’ Equity | ||||||||
| Series B Preferred stock, par value $ per share; shares authorized; shares issued and outstanding at March 31, 2026 and December 31, 2025 | ||||||||
| Common Stock, par value $ per share; shares authorized; shares issued and outstanding at March 31, 2026 and December 31, 2025 | ||||||||
| Additional paid-in capital | ( | ) | ( | ) | ||||
| Accumulated loss | ( | ) | ( | ) | ||||
| Accumulated other comprehensive loss | ( | ) | ( | ) | ||||
| Total Shareholders’ Equity | ||||||||
| Total Liabilities and Shareholders’ Equity | $ | $ | ||||||
The accompanying notes are an integral part of these unaudited consolidated financial statements.
| 4 |
Allied Energy, Inc. and Subsidiaries
Consolidated Statements of Income and Comprehensive Income
For the Three months ended March 31, 2026 and 2025
(Unaudited)
| Three months ended | ||||||||
| March 31, | March 31, | |||||||
| 2026 | 2025 | |||||||
| Revenues, net | $ | $ | ||||||
| Cost of sales | ||||||||
| Gross Margin | ( | ) | ||||||
| Operating expenses: | ||||||||
| General and administrative expenses | ||||||||
| Total operating expenses | ||||||||
| Income (loss) from operations | ( | ) | ||||||
| Other income (expenses): | ||||||||
| Interest income | ||||||||
| Other income, net | ||||||||
| Interest expense | ( | ) | ||||||
| Total other (expenses) income | ||||||||
| Income (loss) before income tax | ( | ) | ||||||
| Income tax expense | ||||||||
| Net income (loss) | $ | $ | ( | ) | ||||
| Weighted average shares outstanding | ||||||||
| Basic and diluted | ||||||||
| Earnings (loss) per share | ||||||||
| Basic and diluted | $ | $ | ||||||
| Comprehensive income (loss): | ||||||||
| Net income (loss) | $ | $ | ( | ) | ||||
| Other comprehensive income (loss): | ||||||||
| Foreign currency translation adjustment | ( | ) | ( | ) | ||||
| Total comprehensive income (loss) | $ | $ | ( | ) | ||||
The accompanying notes are an integral part of these unaudited consolidated financial statements.
| 5 |
Allied Energy, Inc. and Subsidiaries
Consolidated Statements of Changes in Shareholders’ Equity
For the Three months ended March 31, 2026 and 2025
(Unaudited)
| Accumulated | ||||||||||||||||||||||||||||||||||
| Series B Preferred Stock | Common Stock | Additional | Shares | Other | ||||||||||||||||||||||||||||||
| Number of | Number of | Paid-in | Subscription | Accumulated | Comprehensive | |||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Capital | Receivables | Loss | Income | Total | ||||||||||||||||||||||||||
| Balance at December 31, 2024 | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | |||||||||||||||||||||||
| Preferred Shares converted to Common Shares | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||
| Net income | – | – | ( | ) | ( | ) | ||||||||||||||||||||||||||||
| Foreign currency translation adjustment | – | – | ( | ) | ( | ) | ||||||||||||||||||||||||||||
| Balance at March 31, 2025 | $ | $ | $ | ( | ) | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||||||||||||||||||
| Balance at December 31, 2025 | $ | $ | $ | ( | ) | $ | $ | ( | ) | $ | ( | ) | $ | |||||||||||||||||||||
| Net income | – | – | ||||||||||||||||||||||||||||||||
| Foreign currency translation adjustment | – | – | ( | ) | ( | ) | ||||||||||||||||||||||||||||
| Balance at March 31, 2026 | $ | $ | $ | ( | ) | $ | $ | ( | ) | $ | ( | ) | $ | |||||||||||||||||||||
The accompanying notes are an integral part of these unaudited consolidated financial statements.
| 6 |
Allied Energy, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
For the Three months ended March 31, 2026 and 2025
(Unaudited)
| Three months ended | ||||||||
| March 31, | March 31, | |||||||
| 2026 | 2025 | |||||||
| Cash flows from operating activities | ||||||||
| Net income (loss) | $ | $ | ( | ) | ||||
| Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities | ||||||||
| Depreciation and amortization expense | ||||||||
| Shares issued for services or compensation | ||||||||
| Changes in assets and liabilities | ||||||||
| Decrease in accounts receivable | ||||||||
| (Increase) decrease in other current receivables and prepayments | ( | ) | ||||||
| Decrease in other receivables - related party | ( | ) | ||||||
| Increase in accounts payable and accrued expenses | ||||||||
| Decrease in bank overdraft | ( | ) | ||||||
| Increase in accounts payable - related party | ||||||||
| (Decrease) increase in accrued liabilities - related party | ( | ) | ||||||
| Increase (decrease) in taxes payable | ( | ) | ||||||
| Net cash provided by (used in) operating activities | ( | ) | ||||||
| Cash flows from financing activities | ||||||||
| (Repayment to) proceeds from related party advances | ( | ) | ||||||
| Net cash (used in) provided by financing activities | ( | ) | ||||||
| Net (decrease) increase of cash and cash equivalents | ( | ) | ( | ) | ||||
| Effect of foreign currency translation on cash and cash equivalents | ( | ) | ||||||
| Cash and cash equivalents – beginning | ||||||||
| Cash and cash equivalents – ending | $ | $ | ||||||
| Supplementary cash flow information: | ||||||||
| Interest paid | $ | $ | ||||||
| Income tax paid | $ | $ | ||||||
The accompanying notes are an integral part of these unaudited consolidated financial statements.
| 7 |
Allied Energy Inc. and Subsidiaries
Notes to Consolidated Financial Statements
As of and for the three months ended March 31, 2026 and 2025
(Unaudited)
NOTE 1 – ORGANIZATION AND BUSINESS
Allied Energy, Inc. (“AGGI or the “Company”) was incorporated under the laws of the State of Colorado in March 1998. Previously Technol Fuel Conditioners, Inc., the Company domesticated from Colorado to Florida in July 2006. On July 31, 2006, the Company changed its name to Allied Energy Group, Inc., and on December 21, 2007, the Company changed its name to Allied Energy, Inc.
BILI Inc. (“BILI”) was incorporated under the Canada Business Corporations Act on November 22, 2021.
On October 16, 2024, the Company entered into an Equity
Exchange Agreement (the “Agreement”) with Metamexx Corp (“Metamexx”), a wholly owned subsidiary of AGGI, BILI,
and the shareholders of BILI (the “BILI Shareholders”). Pursuant to the Agreement, the Company, through Metamexx, acquired
up to
The transaction was accounted for as a reverse acquisition under Accounting Standards Codification (“ASC”) 805, Business Combinations. For accounting purposes, BILI is considered the accounting acquirer and AGGI is considered the accounting acquiree. Accordingly, the historical financial statements of BILI are treated as the historical financial statements of the Company.
As a result of the reverse acquisition, the transaction has been accounted for as a recapitalization of BILI. The equity structure for all periods presented prior to the reverse acquisition has been retroactively restated to reflect the legal capital structure of the Company, including the issuance of Series B Preferred Stock to the BILI Shareholders. The par value of the outstanding shares and additional paid-in capital were also adjusted to reflect the recapitalization. All references to share and per share amounts in the accompanying consolidated financial statements and notes have been restated on this basis.
For the year ended 2025, all shares of the Company’s Series B Preferred Stock were converted into common stock at a rate of shares of common stock for each share of Series B Preferred Stock, resulting in the issuance of shares of common stock.
Following the transaction, the Company operates its business through BILI, its wholly owned subsidiary, which provides an AI-powered social commerce platform that facilitates connections between social media influencers and brands. The platform enables influencers to share and sell products they endorse while providing brands access to a broad network of influencers. The Company generates revenue primarily through two streams: (i) transaction fees on product sales through its BILI Base™ platform and (ii) fixed and premium service fees for managed influencer campaigns under BILI Boost™, BILI Boost™ AI-Enabled and BILI Boost+™.
| 8 |
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of presentation
The Company’s consolidated financial statements are prepared and presented in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”).
In the opinion of management, the unaudited interim condensed financial statements reflect all adjustments of a normal recurring nature that are necessary for a fair presentation of the results for the interim periods presented. However, the results of operations included in such financial statements may not necessary be indicative of annual results.
The Company uses the same accounting policies in preparing quarterly and annual financial statements. Certain information and footnote disclosures normally included in the annual financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) have been condensed or omitted. These unaudited condensed financial statements should be read in conjunction with the Company’s audited financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025 filed with the Securities and Exchange Commission (“SEC”).
Principles of consolidation
The Company’s consolidated financial statements include the financial statements of the Company, its subsidiaries. All inter-company transactions and balances among the Company, its subsidiaries have been eliminated upon consolidation.
Going Concern
In prior years, the Company had recurring losses from operations, an accumulated deficit, and negative working capital, which raised substantial doubt about its ability to continue as a going concern.
During the three months ended March 31, 2026, the
Company generated net income of $
Based on these improvements in operating results and financial condition, management has concluded that substantial doubt about the Company’s ability to continue as a going concern has been alleviated.
Use of estimates
The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the related disclosure of contingent assets and liabilities at the date of these consolidated financial statements, and the reported amounts of revenue and expenses during the reporting period. The Company continually evaluates these estimates and assumptions based on the most recently available information, historical experience and various other assumptions that the Company believes to be reasonable under the circumstances. Significant accounting estimates reflected in the Company’s consolidated financial statements include but are not limited to estimates and judgments applied in determination of allowance for doubtful receivables arising from current expected credit losses. Since the use of estimates is an integral component of the financial reporting process, actual results could differ from those estimates.
| 9 |
Foreign currency translation and transactions
The Company’s reporting currency is U.S. dollars (“US$”). The Company’s operations are principally conducted through subsidiaries located in Canada, where the Canadian dollar (“CAD”) is the functional currency.
Transactions denominated in foreign currencies are remeasured into the functional currency at the exchange rates prevailing at the transaction dates. Monetary assets and liabilities denominated in foreign currencies are remeasured at the exchange rates prevailing at the balance sheet date. Non-monetary items measured at historical cost are remeasured using the exchange rates at the dates of the initial transactions. Resulting exchange gains and losses from remeasurement are recognized in net income.
For entities whose functional currency is not the U.S. dollar, the financial statements are translated into U.S. dollars for reporting purposes. Assets and liabilities are translated at exchange rates in effect at the balance sheet date, revenues and expenses are translated at average exchange rates prevailing during the reporting period, and shareholders’ equity is translated at historical exchange rates. Translation adjustments resulting from this process are reported as a component of other comprehensive income (loss) and accumulated in shareholders’ equity under accumulated other comprehensive income (loss).
Cash and cash equivalents
Cash and cash equivalents include cash on hand, deposits with banks, and highly liquid investments with original maturities of three months or less at the time of purchase. Cash equivalents also include investments in money market mutual funds held which are available for withdrawal on demand without fees or restrictions.
Cash and cash equivalents consisted of the following:
March 31, 2026 | December 31, 2025 | |||||||
| Cash at banks | $ | $ | ||||||
| Money market mutual funds | ||||||||
| Total | $ | $ | ||||||
Accounts receivable, net
The Company records accounts receivable at net realizable
value, consisting of the carrying amount less an allowance for credit losses. An estimate for the allowance for credit losses is discussed
below in “Credit Losses on Financial Instruments.” Account balances are charged off against the allowance after all means
of collection have been exhausted and the potential for recovery is considered remote, which is generally when accounts are more than
one year past due. As of March 31, 2026 and December 31, 2025,
Intangible assets
The Company’s capitalized assets consist primarily of application development costs related to its internal-use software platform. Intangible assets are carried at cost, net of accumulated amortization. Costs incurred during the preliminary project and post-implementation stages are expensed as incurred, while costs incurred during the application development stage are capitalized in accordance with ASC 350-40, Internal-Use Software. Expenditures that enhance the functionality or extend the useful life of the intangible asset are capitalized. When intangible assets are retired or otherwise disposed of, the related gain or loss is included in operating income.
| 10 |
Intangible assets with finite useful lives are amortized on a straight-line basis over their estimated useful lives. The Company reviews intangible assets for impairment whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. Recoverability is assessed by comparing the carrying amount of the asset to the estimated undiscounted future cash flows expected to be generated by the asset. If the carrying amount exceeds the estimated undiscounted cash flows, an impairment loss is recognized in an amount equal to the excess of the carrying amount over fair value.
Intangible assets are amortized on a straight-line basis over the following periods:
| Software |
Current Expected Credit Losses on Financial Instruments
The Company uses the Current Expected Credit Losses (CECL) model to estimate credit losses on financial assets measured at amortized cost, as well as certain off-balance sheet credit exposures. When similar risk characteristics exist, the Company assesses collectability and measure expected credit losses on a collective basis for a pool of assets, whereas if similar risk characteristics do not exist, the Company assesses collectability and measures expected credit losses on an individual asset basis.
Under the CECL model, the estimation of credit losses involves significant judgment and estimation uncertainty. Management exercises its judgment based on historical loss experience, the age of the accounts receivable, current economic conditions, and reasonable and supportable forecasts that may affect the customer’s ability to pay. Changes in these factors could have a material impact on the estimated credit losses.
Fair value of financial instruments
The Company measures 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, and establishes a three-level hierarchy for inputs used in measuring fair value:
| · | Level 1 – Quoted prices 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; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. | |
| · | Level 3 – Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. |
The Company’s financial instruments primarily consist of cash and cash equivalents, accounts receivable, net, other receivables, due from related party, accounts payable, other payables and accrued expenses and due to a related party. The carrying values of these financial instruments’ approximate fair values due to their short maturities.
A financial instrument’s level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. Account balances measured at fair value on a recurring basis include the following as of the dates presented:
March 31, 2026 | December 31, 2025 | |||||||||||||||||||||||
| Level 1 | Level 2 | Level 3 | Level 1 | Level 2 | Level 3 | |||||||||||||||||||
| Cash equivalents: | ||||||||||||||||||||||||
| Money market funds | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
| 11 |
As of as of March 31, 2026 and December 31, 2025,
the Company’s cash and cash equivalents totaled $
Determining which category an asset or liability falls within the hierarchy requires significant judgment. The Company evaluates its hierarchy disclosures on a recurring basis which involves reassessing the appropriateness of the chosen hierarchy level as new information or market conditions become available.
Revenue recognition
The Company recognizes revenue in accordance with ASC 606, Revenue from Contracts with Customers. Revenue is recognized when control of promised goods or services is transferred to customers, in an amount that reflects the consideration the Company expects to receive. The Company determines revenue recognition through the following steps:
| 1. | Identification of the contract(s) 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; and | |
| 5. | Recognition of revenue when, or as, the Company satisfies a performance obligation. |
The Company’s revenues are derived from two primary sources: BILI Base™ and BILI Boost™.
BILI Base
Revenues are generated from the sale of brand products through the Company’s social commerce platform. The Company acts as the principal in these transactions. Revenue is recognized at a point in time, generally upon shipment or delivery of the product to the customer, which represents the transfer of control. Payments to brands and creators, together with transaction processing fees, are reflected in cost of revenues.
BILI Boost
Revenues are generated from fees charged to clients for influencer marketing campaigns, which encompass strategy development, content creation, and social media posting. The Company integrates these elements to deliver a cohesive social media campaign, which represents a single, combined performance obligation. Revenue is recognized over time, typically on a straight-line basis over the contracted campaign duration, as the customer simultaneously receives and consumes the benefits of the Company’s services as the campaign is executed. Direct creator fees and production costs are recorded in cost of revenues as incurred.
BILI Boost AI-Enabled
Revenues are generated from fees charged to clients for creator marketing and content programs, which encompass program planning, creator sourcing, the provision of AI-generated sample materials, and ongoing program management. The Company integrates these elements to deliver a cohesive marketing program, which represents a single, combined performance obligation. Revenue is recognized over time, typically on a straight-line basis over the contracted program duration, as the customer simultaneously receives and consumes the benefits of the Company’s services. The Company acts as the principal in its arrangements with third-party creators; accordingly, revenue is recognized on a gross basis. Direct creator fees and program costs are recorded in cost of revenues as incurred.
The Company does not have significant variable considerations, contract assets, or contract liabilities. Payments are generally collected at or near the time products are delivered or services are performed.
| 12 |
Income taxes
The Company follows the guidance of ASC Topic 740 “Income taxes” and uses liability method to account for income taxes. Under this method, deferred tax assets and liabilities are determined based on the difference between the financial reporting and tax bases of assets and liabilities using enacted tax rates that will be in effect in the period in which the differences are expected to be reversed. The Company records a valuation allowance to offset deferred tax assets, if based on the weight of available evidence, it is more-likely-than-not that some portion, or all, of the deferred tax assets will not be realized. The effect on deferred taxes of a change in tax rates is recognized in consolidated statements of comprehensive income in the period that includes the enactment date.
The Company uses a more likely than not threshold for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. As a result, the impact of an uncertain income tax position is recognized at the largest amount that is more-likely-than-not to be sustained upon audit by the relevant tax authority. An uncertain income tax position will not be recognized if it has less than a 50% likelihood of being sustained.
Segment reporting
The Company accounts for segment reporting in accordance with ASC 280, Segment Reporting. Operating segments are identified based on the manner in which financial information is reviewed by the chief operating decision maker (“CODM”) for purposes of allocating resources and assessing performance. The Company adopted ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, in the fourth quarter of 2024 and applied the amendments retrospectively to all prior periods presented. The adoption did not have a material impact on the Company’s consolidated financial statements.
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker (the “CODM”), which is comprised of the chief executive officer of the Company’s management team. Consequently, the Company has determined that it has only reportable operating segment.
The CODM allocates resources and assesses the performance of the Company’s single segment based on consolidated net income (loss). All significant segment expenses that are regularly provided to the CODM and included in the assessment of segment performance are presented on the face of the consolidated statements of operations and comprehensive income (loss).
Comprehensive income
The Company accounts for comprehensive income in accordance with ASC 220, Comprehensive Income. Comprehensive income (loss) for the periods presented consists of net income (loss) and foreign currency translation adjustments and is reported in the accompanying consolidated statements of comprehensive income. The cumulative balance of such items is presented in stockholders’ equity.
The Company computes earnings per share in accordance with ASC 260, Earnings Per Share. Basic earnings (loss) per share is calculated by dividing net income (loss) attributable to common shareholders by the weighted average number of common shares outstanding during the period. Diluted earnings (loss) per share is calculated by dividing net income (loss) attributable to common shareholders by the weighted average number of common shares outstanding plus the effect of potentially dilutive common share equivalents, if any.
Potentially dilutive common share equivalents consist of Series B Preferred Stock, each share of which is convertible into 150 shares of common stock. During the three months ended March 31, 2025, all outstanding shares of Series B Preferred Stock were converted into common stock; therefore, there were potentially dilutive share outstanding.
| 13 |
Commitments and contingencies
The Company accounts for contingencies in accordance with ASC 450, Contingencies. The Company accrues estimated losses from loss contingencies by a charge to income when information available before financial statements are issued or are available to be issued indicates that it is probable that an asset had been impaired, or a liability had been incurred at the date of the financial statements and the amount of the loss can be reasonably estimated. Legal expenses associated with the contingency are expensed as incurred. If a loss contingency is not probable or reasonably estimable, disclosure of the loss contingency is made in the financial statements when it is at least reasonably possible that a material loss could be incurred.
As of March 31, 2026 and December 31, 2025, there
were
Recent Accounting Pronouncements
Accounting Standards Update (“ASU”) 2025-06, Intangibles – Goodwill and Other – Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software modernizes the accounting for internal-use software by removing the requirement to identify discrete project development stages (such as the preliminary and application-development stages) and instead focuses on whether (1) management has authorized and committed to funding the project, (2) it is probable the project will be completed and the software will be used to perform its intended function, and (3) the entity has considered whether significant uncertainty exists in the development activities. The amendments are effective for fiscal years beginning after December 15, 2027, and for interim periods within those fiscal years. Early adoption is permitted. Entities may apply the amendments prospectively, retrospectively, or using a modified-prospective approach. The Company is currently evaluating the impact of ASU 2025-06 on its consolidated financial statements and related disclosures. The adoption is expected to primarily affect the timing of capitalizing certain software-development costs and may result in modifications to internal controls over capitalization judgments and related disclosures.
ASU 2025-05, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets introduces a practical expedient for measuring expected credit losses on current accounts receivable and current contract assets arising from contracts with customers under Topic 606. Under the expedient, entities may assume that conditions existing at the balance sheet date will remain unchanged over the asset’s remaining life when estimating expected credit losses. In addition, entities other than public business entities may elect, as an accounting policy, to consider subsequent cash collections that occur after the balance sheet date but before issuance of the financial statements when estimating expected credit losses. The amendments are effective for fiscal years beginning after December 15, 2025, and for interim periods within those fiscal years. Early adoption is permitted, and the guidance is to be applied prospectively. The Company is currently evaluating the impact of ASU 2025-05 and does not expect the adoption to have a material impact on its consolidated financial statements. The Company expects to apply the practical expedient for qualifying current receivables and contract assets upon adoption.
ASU 2025-03, Business Combinations (Topic 805) and Consolidation (Topic 810): Accounting Acquirer in a Business Combination Involving a Variable Interest Entity, clarifies that when a business that is a VIE is acquired primarily with equity interests, the determination of the accounting acquirer should follow ASC 805 rather than defaulting to the primary beneficiary under ASC 810. The standard is effective for fiscal years beginning after December 15, 2026, including interim periods within those fiscal years. Early adoption is permitted. The Company does not expect a material impact upon adoption.
Management does not believe that other recently issued but not yet adopted accounting pronouncements will have a material impact on the Company’s financial position, results of operations, or cash flows.
| 14 |
NOTE 4 – ACCOUNTS RECEIVABLES, NET
Accounts receivables, net consist of the following:
March 31, 2026 | December 31, 2025 | |||||||
| Accounts receivable | $ | $ | ||||||
| Allowance for credit losses | ||||||||
| Total, net | $ | $ | ||||||
For the three months ended March 31, 2026 and 2025,
NOTE 5 – INTANGIBLE ASSET, NET
Intangible asset, net consist of the following:
March 31, 2026 | December 31, 2025 | |||||||
| At Cost: | ||||||||
| Software | $ | $ | ||||||
| Total cost | ||||||||
| Less: Accumulated amortization | ( | ) | ( | ) | ||||
| Total, net | $ | $ | ||||||
Amortization expense for the three months ended March 31, 2026 and 2025
was $
The amortization expenses for the succeeding five years as follows:
| For the year ending December 31, | ||||
| 2026 (9 months remaining) | $ | |||
| 2027 | ||||
| 2028 | ||||
| 2029 | ||||
| 2030 | ||||
| Total | $ | |||
| 15 |
NOTE 6 – RELATED PARTY TRANSACTIONS
Due to related parties consist of the following:
March 31, 2026 | December 31, 2025 | |||||||
| Interest on related party loan | $ | $ | ||||||
| Shareholder loan | ||||||||
| Advances for future issuance of shares | ||||||||
| Advances for operating expenses | ||||||||
| Total, net | $ | $ | ||||||
Advances from related parties
As of March 31, 2026 and December 31, 2025, the Company owed $ and $ to certain shareholders, officers, and directors of BILI Inc. (“BILI”), respectively. These balances represent advances made by these related parties to fund the Company’s operating expenses. The balances owed to shareholders of $nil and $7,293 were received as a subscription for future issuance of shares. These amounts are non-interest bearing, due on demand, and have no specified repayment schedule.
Shareholder loan payable
As of March 31, 2026 and December 31, 2025, a shareholder of BILI Inc. (“BILI”) was owed $and $, respectively. The loan bears interest at 12% per annum, and matured on December 31, 2025. The obligations under this agreement are supported in part by designated trade receivables generated from specific commercial influencer and brand campaigns. The Company maintains the flexibility to manage this collateral pool by replacing the referenced contracts with materially similar or larger commercial agreements that may be executed during the term of the borrowing, provided notice is given to the shareholder. The outstanding principal was repaid during the three months ended March 31, 2026.
Interest expense on shareholder loans payable was $ and $ for the three months ended March 31, 2026 and 2025, respectively.
Interest payable on shareholder loans payable was $ and $ as of March 31, 2026 and December 31, 2025, respectively.
Due from related parties consist of the following:
March 31, 2026 | December 31, 2025 | |||||||
| Advances to cover operating expenses | $ | $ | | |||||
| Total, net | $ | $ | ||||||
Advances to related parties
As of March 31, 2026, and December 31, 2025, the Company had advanced $
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NOTE 7 – EQUITY
Common stock
The Company is authorized to issue shares of common stock, par value $ per share. The Company has shares of common stock issued and outstanding as of March 31, 2026 and December 31, 2025, respectively.
By written consent dated March 2, 2026, stockholders
holding approximately
For the year ended December 31, 2024, prior to the
reverse merger on October 16, 2024, BILI Inc. issued shares of common stock for total cash proceeds for the exercise of stock options
and subscription receivables of $
For the year ended 2025, all shares of the Company’s Series B Preferred Stock were converted into common stock at a rate of 150 shares of common stock for each share of Series B Preferred Stock, resulting in the issuance of shares of common stock.
Preferred Stock
The Company is authorized to issue shares of Preferred Stock and designated shares as Series B Preferred Stock, par value $ per share.
Series B Preferred Stock
Each share of Series B Preferred Stock is convertible into shares of Common Stock, entitles the holder to vote together with Common Stockholders on an as-converted basis, and entitles the holder to receive dividends and other distributions, if declared, on a pari-passu basis with Common Stock.
On October 16, 2024, the Company issued an aggregate of shares of Series B Preferred Stock to the BILI Shareholders as consideration pursuant to an Equity Exchange Agreement in connection with the acquisition of BILI Inc. The issuance of Series B Preferred Stock is accounted for as a recapitalization of the Company, with BILI Inc. deemed the accounting acquirer and AGGI the legal acquirer. Accordingly, the historical consolidated financial statements of BILI Inc. are treated as the continuing reporting entity, and the equity structure has been restated to reflect the recapitalization.
During 2025, all outstanding shares of Series B Preferred Stock were converted into common stock.
As of March 31, 2026 and December 31, 2025, the Company had shares of Series B Preferred Stock issued and outstanding respectively.
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NOTE 8 – INCOME TAXES
The U.S. and non-U.S. components of loss before income taxes were as follows:
Three months ended March 31, | ||||||||
| 2026 | 2025 | |||||||
| United States | $ | $ | ( | ) | ||||
| Canada | ( | ) | ( | ) | ||||
| Income (Loss) before income taxes | $ | $ | ( | ) | ||||
The Company recorded income tax expense of $
United States
The Company is subject to US federal corporate income tax rate of 21%.
At March 31, 2026, the Company had approximately $
In connection with the reverse acquisition completed on October 16, 2024, the Company (formerly AGGI Inc.) was determined to be the legal acquirer but the accounting acquiree under ASC 805-40, Reverse Acquisitions. For accounting purposes, the transaction is treated as a recapitalization of the accounting acquirer, whereby the net assets of the legal acquirer (AGGI Inc.) are stated at their historical carrying amounts, and no goodwill or intangible assets are recognized. The historical accumulated deficit of $12,360,713 of the legal acquirer was eliminated against Additional Paid-in Capital as part of this recapitalization, consistent with ASC 805-40-45-1, since the financial statements subsequent to the transaction represent a continuation of the accounting acquirer’s operations with a recapitalized capital structure.
The Company evaluated the potential tax benefits associated with the legal acquirer’s historical NOLs under ASC 740. Because the transaction resulted in a change of ownership under Internal Revenue Code 382 and the legal acquirer had no continuing operations, no deferred tax asset has been recognized for those NOLs. Utilization of such pre-acquisition losses, if any, would be limited and will be recognized in the period utilization becomes more likely than not.
Canada
The Company’s Canadian subsidiaries are subject
to a combined federal and provincial statutory income tax rate of
At March 31, 2026, the Canadian subsidiaries had approximately
$
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The components of deferred tax assets are summarized as follows:
March 31, 2026 | December 31, 2025 | |||||||
| Deferred tax assets – U.S. NOLs | $ | $ | ||||||
| Deferred tax assets – Canadian NOLs | ||||||||
| Gross deferred tax assets | ||||||||
| Less: Valuation allowance | ( | ) | ( | ) | ||||
| Deferred tax assets | $ | $ | ||||||
The reconciliation of the U.S. federal statutory income tax rate to the Company’s effective tax rate is as follows:
Three months ended March 31, | ||||||||
| 2026 | 2025 | |||||||
| U.S. federal statutory income tax rate | ||||||||
| Foreign rate differential | ( | ) | ||||||
| Tax on disallowed income | ||||||||
| Valuation allowance | ( | ) | ||||||
| Net operating loss applied | ||||||||
| Effective income tax rate | ||||||||
A reconciliation of the income tax expense, net determined at U.S. federal statutory income tax rate to the Company’s actual income tax expense is as follows:
Three months ended March 31, | ||||||||
| 2026 | 2025 | |||||||
| Income (loss) before income tax expense | $ | $ | ( | ) | ||||
| Statutory income tax rate | ||||||||
| Income tax expense (benefit) at statutory rate | ( | ) | ||||||
| Foreign tax differential | ( | ) | ( | ) | ||||
| Change in valuation allowance | ||||||||
| Net operating loss applied | ||||||||
| Income tax expenses | $ | $ | ||||||
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NOTE 9 – SEGMENT REPORTING
The Company adopted ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, and applied the amendments retrospectively to all prior periods presented.
The Company operates in a reportable segment managed by its Chief Executive Officer, who serves as the Chief Operating Decision Maker (“CODM”). The segment information, including significant segment expenses, regularly reviewed by the CODM is as follows:
Three months ended March 31, | ||||||||
| 2026 | 2025 | |||||||
| Total segment revenues, net | $ | $ | ||||||
| Significant Segment Expenses | ||||||||
| Cost of sales | ||||||||
| General and administrative expenses | ||||||||
| Other Segment Items | ||||||||
| Other income | ||||||||
| Income tax expense | ||||||||
| Total segment operating profit (loss) | $ | $ | ( | ) | ||||
March 31, 2026 | December 31, 2025 | |||||||
| Total segment assets | $ | $ | ||||||
As the Company operates in a single reportable segment, the segment totals for revenues, expenses, profit (loss), and assets are identical to the corresponding consolidated amounts reported in the Company’s financial statements.
NOTE 10 – RISKS AND UNCERTAINTIES
General Economic and Political Risks
The Company conducts a significant portion of its operations in Canada, which subjects it to various political, economic, and regulatory risks. These risks include, but are not limited to, general economic instability, changes in local tax laws, tariffs, trade policies, and fluctuations in foreign currency exchange rates. A material adverse change in the economic, regulatory, or political environment in Canada could negatively impact the Company’s financial condition and results of operations.
Furthermore, our operations are subject to broader global macroeconomic and geopolitical risks. Recent escalations in geopolitical tensions and armed conflicts in the Middle East, including those involving Iran, Israel, and the United States, have contributed to increased global economic instability. These conflicts have the potential to disrupt global supply chains and cause significant volatility in global energy markets and oil prices. Such disruptions and energy price increases could exacerbate inflationary pressures, influence central bank interest rate policies, and negatively impact the broader global economy. If these macroeconomic headwinds persist or worsen, they could result in increased operating costs and adversely affect our business, financial condition, and results of operations.
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Foreign Currency Risk
The Company is exposed to foreign currency exchange rate risk inherent in its foreign operations. The functional currency of the Company’s foreign subsidiaries is their respective local currency. Assets and liabilities are translated into U.S. dollars at period-end exchange rates, while revenues and expenses are translated at average exchange rates during the period. The resulting translation adjustments are recorded as a component of accumulated other comprehensive income (loss) within stockholders’ equity. Transaction gains and losses resulting from transactions denominated in currencies other than the functional currency are recognized in the consolidated statements of operations and have not been material to date.
Concentration of Credit Risk
Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash and cash equivalents and accounts receivable. The Company maintains its cash and cash equivalents with high-credit-quality financial institutions. At times, such balances may exceed federally insured limits. The Company has not experienced any losses in such accounts and believes it is not exposed to any significant credit risk on its cash and cash equivalents.
With respect to accounts receivable, the Company performs ongoing credit evaluations of its customers’ financial condition and generally does not require collateral.
Concentration of Suppliers
The Company relies on a limited number of third-party technology platforms, ad exchanges, and infrastructure providers to deliver its online advertising services. A significant disruption in services from the providers, or an inability to maintain these relationships on favorable terms, could have a material adverse effect on the Company’s financial condition and results of operations.
Liquidity Risk
The Company manages liquidity risk by maintaining adequate cash reserves and continuously monitoring actual and forecasted cash flows to ensure it has sufficient funds to meet its operational and capital obligations as they become due.
NOTE 11 – COMMITMENTS AND CONTINGENCIES
As of March 31, 2026 and December 31, 2025, the Company had no material commitments or contingent liabilities.
NOTE 12 – SUBSEQUENT EVENTS
Management has evaluated subsequent events in accordance with ASC 855, Subsequent Events, through the date the financial statements were issued. Other than the foregoing, no material subsequent events identified that require recognition or disclosure as of May 15, 2026.
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion relates to the historical operations and financial statements of Allied Energy, Inc. for the three months ended March 31, 2026.
Forward-Looking Statements
The following Management’s Discussion and Analysis should be read in conjunction with our financial statements and the related notes thereto included elsewhere in this quarterly report. The Management’s Discussion and Analysis contain forward-looking statements that involve risks and uncertainties, such as statements of our plans, objectives, expectations and intentions. Any statements that are not statements of historical fact are forward-looking statements. When used, the words “believe,” “plan,” “intend,” “anticipate,” “target,” “estimate,” “expect,” and the like, and/or future-tense or conditional constructions (“will,” “may,” “could,” “should,” etc.), or similar expressions, identify certain of these forward-looking statements. These forward-looking statements are subject to risks and uncertainties that could cause actual results or events to differ materially from those expressed or implied by the forward-looking statements in this quarterly report. Our actual results and the timing of events could differ materially from those anticipated in these forward-looking statements. Factors that could cause or contribute to such differences in results and outcomes include, without limitation, those specifically addressed under the heading “Risks Factors” in our various filings with the Securities and Exchange Commission. We do not undertake any obligation to update forward-looking statements to reflect events or circumstances occurring after the date of this quarterly report.
Overview
Allied Energy, Inc. (“Allied,” the “Company,” “we,” or “us”) operates through its indirect wholly owned subsidiary Bili Inc. (“BILI”). BILI is wholly owned by Metamexx, the Company’s direct wholly owned subsidiary. On October 16, 2024, the Company completed a reverse acquisition transaction in which BILI became the accounting acquirer. Accordingly, the consolidated financial statements reflect the operations of BILI for all periods presented. The Company generates revenue primarily from transaction fees on product sales through BILI Base™ and fixed or premium service fees from managed creator campaigns offered through BILI Boost™, BILI Boost™ AI-Enabled and BILI Boost+™.
Segment reporting
The Company accounts for segment reporting in accordance with ASC 280, Segment Reporting. Operating segments are identified based on the manner in which financial information is reviewed by the chief operating decision maker (“CODM”) for purposes of allocating resources and assessing performance. The Chief Executive Officer is the Company’s CODM. The CODM monitors the expense components of the various products and services we offer, but operations are managed and financial performance is evaluated on a corporation-wide basis in comparison to a business plan which is developed each year. Accordingly, all operations are considered by management to be one operating segment and one reportable segment as contained in the Consolidated Statements of Operations to the consolidated financial statements.
The CODM allocates resources and assesses the performance of the Company’s single segment based on consolidated net income (loss). All significant segment expenses that are regularly provided to the CODM and included in the assessment of segment performance are presented on the face of the consolidated statements of operations and comprehensive income (loss).
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Results of Operations for the Three Months Ended March 31, 2026 and 2025
The following table sets forth key components of our results of operations for the three months ended March 31, 2026 and 2025.
| Three Months Ended | ||||||||||||||||
| March 31, | ||||||||||||||||
| 2026 | 2025 | $ Changed | % Changed | |||||||||||||
| Revenues, net | $ | 537,519 | $ | 2,820 | 534,699 | 18960.96% | ||||||||||
| Cost of sales | 131,586 | 24,823 | 106,763 | 430.10% | ||||||||||||
| Gross Margin | 405,933 | (22,003 | ) | 427,936 | (1944.90% | ) | ||||||||||
| Gross Margin % | 75.52% | (780.25% | ) | |||||||||||||
| Operating expenses: | ||||||||||||||||
| Selling, general and administrative | 303,858 | 155,645 | 148,213 | 95.23% | ||||||||||||
| Total operating expenses | 303,858 | 155,645 | 148,213 | 95.23% | ||||||||||||
| Total other (expenses) income | 159 | 1,406 | (1,247 | ) | (88.69% | ) | ||||||||||
| Income tax expenses (benefits) | 51,580 | – | 51,580 | 100% | ||||||||||||
| Net income (loss) | $ | 50,654 | $ | (176,242 | ) | 226,896 | (128.74% | ) | ||||||||
Revenues and cost of sales
We recorded revenues of $537,519 for the three months ended March 31, 2026, compared to $2,820 for the three months ended March 3, 2025. Cost of sales increased from $131,586 in 2025 to $24,823 in 2026 as the Company revenues increased. The gross margin percentage increased from (780.25)% for the three months ended March 31, 2025 to 75.52% for the three months ended March 31, 2026. Management attributes the improvement to greater adoption of the BILI Base™ platform and more managed campaigns under BILI Boost™ along with the introduction of BILI Boost™ AI-Enabled model.
Operating Expenses
We recorded operating expense of $303,858 for the three months ended March 31, 2026, compared to $155,645 for the three months ended March 31, 2025. The increase of operating expenses in 2026 was primarily attributable to payroll expenses and legal and professional expenses incurred for the expansion of our operations.
Other Income/Expenses
Other expense, net for the three months ended March 31, 2026 was $159 as compared to other income net of $1,406 for the three months ended March 31, 2026. The decrease in 2026 is the result of a decrease in interest income compared to 2025.
Net Income (Loss)
We recorded a net income of $50,654 for the three months ended March 31, 2026, compared to a net loss of $176,242 for the three months ended March 31, 2025. The shift from net loss to net income was primarily attributable to expansion of our business with the higher revenues generated and higher gross margin.
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Liquidity and Capital Resources for the Three Months Ended March 31, 2026 and 2025
| March 31, | December 31, | |||||||||||
| 2026 | 2025 | Change ($) | ||||||||||
| Current assets | $ | 1,281,584 | $ | 1,473,844 | $ | (192,260 | ) | |||||
| Current liabilities | 226,055 | 462,856 | (236,801 | ) | ||||||||
| Working capital (deficit) | $ | 1,055,529 | $ | 1,010,988 | $ | 44,541 | ||||||
As of March 31, 2026, our cash and cash equivalents were $276,832. We believe that our existing cash and cash equivalents, along with cash generated from operations, will be adequate to meet our requirements for the next 12 months and for the foreseeable future, including working capital needs and capital expenditures, and debt obligations. However, in order to pursue future growth opportunities, we may seek additional funding through equity or debt financing. Our financing objective is to maintain financial flexibility to meet the technological infrastructure and personnel needs to support our platform, and pursue our expansion and diversification objectives.
As of March 31, 2026, we had total current assets of $1,281,584 and total current liabilities of $226,055, resulting in working capital of $1,055,529 as of March 31, 2026. As of December 31, 2025, we had total current assets of $1,473,844 and total current liabilities of $462,856, resulting in working capital of $1,010,988 as of December 31, 2025. The increase in working capital was primarily driven by a significant increase in accounts receivable resulting from revenue growth during the year.
| Three Months Ended | ||||||||||||
| March 31, | ||||||||||||
| 2026 | 2025 | $ Changed | ||||||||||
| Net cash provided by (used in) operating activities | $ | 290,746 | $ | (162,949 | ) | $ | 453,695 | |||||
| Net cash used in investing activities | – | – | – | |||||||||
| Net cash (used in) provided by financing activities | $ | (309,326 | ) | $ | 76,624 | $ | (385,950 | ) | ||||
Net cash provided by operating activities was $290,746 for the three months ended March 31, 2026, as compared with net cash used in operating activities of $162,949 for the three months ended March 31, 2025. Our operating cash flow improved primarily due to achieving net profit three months ended March 31, 2026, as compared to our net losses in 2025. The net cash provided by operating activities resulted mainly from net profit generated from our business along with our accounts receivable decreased $179,973 for three months ended March 31, 2026, as compared to a net loss for the three months ended in 2025.
We recorded net cash used in financing activities of $309,326 three months ended March 31, 2026, compared to net cash provided by financing activities of $76,624 three months ended March 31, 2025. Cash outflows in 2026 consisted of net repayments of related party advances. Cash inflows in 2025 primarily consisted of net proceeds from related party advances.
Critical Accounting Estimates
Our management’s discussion and analysis of our financial condition and results of operations is based on our consolidated financial statements, which have been prepared in accordance with US GAAP. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues, and expenses.
While our significant accounting policies are more fully described in Note 2 to our consolidated financial statements, we believe that the following accounting estimates are the most critical to fully understanding and evaluating our financial condition and results of operations. These estimates require management’s most difficult, subjective, or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain.
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Income Taxes and Valuation Allowance
We use the asset and liability method to account for income taxes. A critical estimate within this process is the determination of whether a valuation allowance is required to reduce our deferred tax assets to the amount that is “more-likely-than-not” to be realized.
Assessing the realizability of deferred tax assets requires significant management judgment. We must project our future taxable income across different tax jurisdictions and assess the timing of when temporary differences will reverse. These projections rely on our internal business plans and macroeconomic conditions. If our actual future taxable income is lower than projected, or if market conditions deteriorate, we may be required to record a valuation allowance against our deferred tax assets, which would result in a corresponding non-cash charge to income tax expense in the period of determination.
Current Expected Credit Losses on Financial Instruments
The Company uses the Current Expected Credit Losses (CECL) model to estimate credit losses on financial assets measured at amortized cost, as well as certain off-balance sheet credit exposures. When similar risk characteristics exist, the Company assesses collectability and measure expected credit losses on a collective basis for a pool of assets, whereas if similar risk characteristics do not exist, the Company assesses collectability and measures expected credit losses on an individual asset basis.
Under the CECL model, the estimation of credit losses involves significant judgment and estimation uncertainty. Management exercises its judgment based on historical loss experience, the age of the accounts receivable, current economic conditions, and reasonable and supportable forecasts that may affect the customer’s ability to pay. Changes in these factors could have a material impact on the estimated credit losses.
Plan of Operation and Funding
We believe that our existing cash and cash equivalents, along with cash generated from operations, will be adequate to meet our requirements for the next 12 months and for the foreseeable future, including working capital needs and capital expenditures, and debt obligations. However, in order to pursue future growth opportunities, we may seek additional funding through equity or debt financing. Our financing objective is to maintain financial flexibility to meet the technological infrastructure and personnel needs to support our platform, and pursue our expansion and diversification objectives.
Existing working capital, further advances, together with anticipated capital raises are expected to be adequate to fund our operations over the next twelve months, but there is no guarantee that we will be successful in raising enough capital, or that we will receive the cash flow required to fund our operations. We have no lines of credit with banking institutions or other bank financing arrangements. Generally, we have financed operations to date through operations and loans from shareholders.
Additional issuances of equity or convertible debt securities will result in dilution to our current shareholders. Further, such securities might have rights, preferences, or privileges senior to our common stock. Additional financing may not be available on acceptable terms, or at all. If adequate funds are not available or are not available on acceptable terms, we may not be able to continue our operations.
Material Commitments
As of the date of this quarterly report, we have no commitments and contingencies, please see Note 11 - Commitments and Contingencies.
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Purchase of Significant Equipment
We do not intend to purchase any significant equipment during the next twelve months.
Off-Balance Sheet Arrangements
As of the date of this quarterly report, we do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Not applicable.
Item 4. Controls and Procedures
a) Evaluation of Disclosure Controls and Procedures
We conducted an evaluation under the supervision and with the participation of our management, of the effectiveness of the design and operation of our disclosure controls and procedures. The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Securities and Exchange Act of 1934, as amended (“Exchange Act”), means controls and other procedures of a company that are designed to ensure that information required to be disclosed by the company in the reports it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission’s rules and forms. Disclosure controls and procedures also include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company’s management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate, to allow timely decisions regarding required disclosure. Based on this evaluation, our principal executive and principal financial officers concluded as of March 31, 2026, that our disclosure controls and procedures were not effective at the reasonable assurance level due to the material weaknesses in our internal controls over financial reporting discussed immediately below.
Our internal controls are not effective for the following reasons: (1) lack of a functioning audit committee and lack of a majority of outside directors on the Company’s board of directors, resulting in ineffective oversight in the establishment and monitoring of required internal controls and procedures; (2) inadequate segregation of duties consistent with control objectives; (3) insufficient written policies and procedures for accounting and financial reporting with respect to the requirements and application of US GAAP and SEC disclosure requirements; and (4) ineffective controls over period end financial disclosure and reporting processes. The aforementioned material weaknesses were identified by the March 31, 2026 and communicated the matters to our management.
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(b) Management’s Report on Internal Control Over Financial Reporting.
Our management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934. Our internal control over financial reporting is a process designed by, or under the supervision of, our CEO and CFO, or persons performing similar functions, and effected by our board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America (GAAP). Our internal control over financial reporting includes those policies and procedures that: (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and disposition of the assets of the Company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP and that receipts and expenditures of the Company are being made only in accordance with authorization of management and directors of the Company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the Company’s assets that could have a material effect on the financial statements.
Management assessed the effectiveness of the Company’s internal control over financial reporting as of March 31, 2026. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission in the 2013 Internal Control-Integrated Framework. Based on its evaluation, management has concluded that the Company’s internal control over financial reporting was not effective as of March 31, 2026.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions or that the degree of compliance with the policies or procedures may deteriorate. A control system, no matter how well designed and operated can provide only reasonable, but not absolute, assurance that the control system’s objectives will be met. The design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their cost.
Management believes that the material weaknesses set forth in items (1), (2), (3) and (4) above did not have an effect on the Company’s financial results because the Company engaged external financial reporting consultants to assist management in the preparation and rigorous review of the period-end financial statements and disclosures. However, management believes that the lack of a functioning audit committee and lack of a majority of outside directors on the Company’s board of directors, resulting in ineffective oversight in the establishment and monitoring of required internal controls and procedures can result in the Company’s determination to its financial statements for the future years.
We are committed to improving our financial organization. As part of this commitment, we intend to create a position to segregate duties consistent with control objectives and will increase our personnel resources and technical accounting expertise within the accounting function when funds are available to the Company: i) Appointing one or more outside directors to our board of directors who shall be appointed to the audit committee of the Company resulting in a functioning audit committee who will undertake the oversight in the establishment and monitoring of required internal controls and procedures; and ii) Preparing and implementing sufficient written policies and checklists which will set forth procedures for accounting and financial reporting with respect to the requirements and application of US GAAP and SEC disclosure requirements.
c) Changes in Internal Control over Financial Reporting
There were no changes which were identified in connection with our management’s evaluation required by paragraph (d) of rules 13a-15 and 15d-15 under the Exchange Act, that materially affected, or is reasonably likely to have a materially affect, on our internal control over financial reporting.
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PART II - OTHER INFORMATION
Item 1. Legal Proceedings
From time to time the Company may be named in claims arising in the ordinary course of business. Currently, we are not aware of any legal proceedings contemplated by any governmental authority or any other party involving us or our properties. As of the date of this quarterly report, no director, officer, or affiliate is (i) a party adverse to us in any legal proceeding, or (ii) has an adverse interest to us in any legal proceedings. We are not aware of any other legal proceedings pending or that have been threatened against us or our property that, in the opinion of the management, could reasonably be expected to have a material adverse effect on its business and financial condition.
Item 1A. Risk Factors
We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
During the three months ended March 31, 2026, the Company did not sell any unregistered securities.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Mine Safety Disclosure
Not Applicable.
Item 5. Other Information
During the period ended March 31, 2026, no
director or officer
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Item 6. Exhibits
Exhibits:
|
† |
Management compensatory plan or contract. |
| * | The certifications attached as Exhibit 32.1 and Exhibit 32.2 are not deemed “filed” with the Securities and Exchange Commission and are not to be incorporated by reference into any filing of Allied Energy Inc. under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, whether made before or after the date of this Quarterly Report on Form 10-Q, irrespective of any general incorporation language contained in such filing. |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| Allied Energy, Inc. | ||
| Date: May 15, 2026 | By: | /s/ Adrian Capobianco |
| Adrian Capobianco | ||
Chief Executive Officer (Principal Executive Officer) | ||
Chief Financial Officer (Principal Financial and Principal Accounting Officer) | ||
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