NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 – ORGANIZATION AND PRINCIPAL ACTIVITIES

Wenyuan Group Corp. (the “Company”) was originally incorporated as Expertelligence, Inc in the State of California on March 31, 1980 and reincorporated in the State of Nevada on November 17, 2005. On January 23, 2017 the Company amended its Articles of Incorporation (“Charter Amendment”) to affect its name change of Longwen Group Corp with trading symbol of “LWLW”. On April 23, 2024, pursuant to the Company’s majority shareholder consent and board approval dated on April 5, 2024, the Company amended its Article of Incorporation with Nevada State and changed its name to Wenyuan Group Corp. On January 21, 2025, pursuant to a review by the Financial Industry Regulatory Authority (“FINRA”), the Company’s name was officially changed to Wenyuan Group Corp. with the OTC Markets, and the Company’s stock symbol was changed to “WYGC” on the same date.

On February 23, 2022, the Company entered into an Acquisition Agreement with a third-party individual to acquire the 100% ownership of Hangzhou Wenyuan Enterprise Management Co., Ltd. (“Hangzhou Wenyuan”) (FKA: Hangzhou Longwen Enterprise Management Co., Ltd or “Hangzhou Longwen”), a wholly foreign-owned enterprise (“WOFE”) in Hangzhou, the People’s Republic of China (the “PRC”), for a total cash consideration of $1,000. As a result of the acquisition, Hangzhou Wenyuan became the Company’s wholly owned subsidiary in the PRC. Hangzhou Wenyuan was originally registered on January 4, 2012 and has minimum operations since its inception. The Company recognize $993 goodwill upon consummated the acquisition. On February 27, 2024, Hangzhou Longwen Enterprise Management Co., Ltd changed its name to Hangzhou Wenyuan Enterprise Management Co., Ltd. through Hangzhou Market Supervision and Administration Bureau in China.

On October 11, 2022, the Company and its subsidiary, Hangzhou Wenyuan entered into an Acquisition Agreement with a third-party individual to acquire 100% ownership of Hangzhou Wenyuan Art and Culture Co., Ltd. (“HWAC”) (FKA: Hangzhou Yusu Trading Co., Ltd. or “Hangzhou Yushu”), a limited liability company in Hangzhou, the People’s Republic of China (the “PRC”), for a total cash consideration of RMB 1,000 or about USD $141. Upon consummated HWAC became Hangzhou Wenyuan’s wholly owned subsidiary in the PRC. HWAC was originally registered on April 20, 2020 and has minimum operations since its inception. The Company recognize goodwill of $139 upon consummated the acquisition. On April 10, 2024, Hangzhou Yusu was renamed to Hangzhou Wenyuan Art and Culture Co., Ltd (“HWAC”).

On March 3, 2023, Hangzhou Wenyuan established a new subsidiary, Hangzhou Wenyuan Internet Technology Co., Ltd. (“HWIT”) (FKA: Huzhou Wohong Fishery Co., Ltd. or “HWF”), to operate the aquacultural breeding, wholesale and retail of aquaculture products and etc. Due to the change in the economic situation and lower-than-expected sales of aquacultural products, our management decided to change the HWF’s operations and on March 27, 2024, HWF entered into an agreement with a counterparty to sell certain assets and liabilities of HWF. HWF was identified as discontinued operations with aquacultural products sales. Such assets and liabilities are classified as assets and liabilities held for sale, and the sale was closed on March 27, 2024.

WENYUAN GROUP CORP. AND SUBSIDIARIES

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 2 – GOING CONCERN

The Company’s condensed consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and settlement of liabilities and commitments in the normal course of business. During the nine months ended September 30, 2025, the Company incurred a net loss of $239,602. The Company had an accumulated deficit of $21,465,393 as of September, 2025. These factors, among others, raise substantial doubt about the Company’s ability to continue as a going concern.

The Company’s future success is dependent upon its ability to acquire and achieve business with profitable operations, generate cash from operating activities and obtain additional financing. The Company intends to raise funds from the issuance of equity and/or debt securities, but there is no assurance that additional funds from the issuance of equity will be available for the Company to finance its operations on acceptable terms, or at all. These financial statements do not include any adjustments that might result from the outcome of this uncertainty.

NOTE 3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation

The accompanying unaudited condensed consolidated financial statements include the accounts of the Company, and its subsidiaries as described in Note 1. All significant intercompany transactions and balances have been eliminated in the consolidation.

Basis of Presentation

The unaudited condensed consolidated financial statements presented herein have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information and in accordance with the instructions to Regulation S-X. Accordingly, the financial statements do not include all of the information and notes required by GAAP for complete financial statements. In the opinion of management, all adjustments, including normal recurring adjustments, considered necessary for a fair statement of the financial statements have been included. Operating results for the nine months ended September 30, 2025 are not necessarily indicative of the results that may be expected for the year ending December 31, 2025.

Use of Estimates

The preparation of the Company’s condensed consolidated financial statements in conformity with GAAP requires management to make estimates, judgments and assumptions that affect the amounts reported in the financial statements and footnotes thereto. Actual results may differ from those estimates and assumptions.

Foreign Currency Transactions

The Company’s condensed consolidated financial statements are presented in U.S. dollars ($), which is the Company’s reporting and functional currency. The functional currencies of the Company’s subsidiaries including Hangzhou Wenyuan, HWAC and HWF, are RMB. The resulting translation adjustments are reported under other comprehensive loss in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 220 (“ASC 220”), “Reporting Comprehensive Income”. Gains and losses resulting from the translation of foreign currency transactions are reflected in the consolidated statements of operations and other comprehensive income. Monetary assets and liabilities denominated in foreign currency are translated at the functional currency using the rate of exchange prevailing at the balance sheet date. Any differences are taken to profit or loss as a gain or loss on foreign currency translation in the consolidated statements of operations and other comprehensive income.

The Company translates the assets and liabilities into U.S. dollars using the rate of exchange prevailing at the balance sheet date and the statements of operations and cash flows are translated at an average rate during the reporting period. Adjustments resulting from the translation from RMB into U.S. dollars are recorded in shareholders’ equity as part of accumulated other comprehensive loss. The exchange rate used for financial statements are as follows:

WENYUAN GROUP CORP. AND SUBSIDIARIES

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Inventories

Inventories consist of finished products and are stated at the lower of cost or net realizable value. Cost is calculated by applying the weighted average cost method. The Company regularly reviews inventory quantities on hand and writes down to its net realizable value any inventory that it believes to be impaired. Management considers forecast demand in relation to the inventory on hand, competitiveness of product offerings, market conditions and product life cycles when determining excess and obsolescence and net realizable value adjustments. Once inventory is written down and a new cost basis is established, it is not written back up if demand increases.

Property and equipment

Depreciation on property and equipment is recognized on a straight-line basis over the estimated useful lives of the assets, for which the remaining term of the legal title (27 years) for the office property an 3 or 5 years for office equipment.

Impairment of Long-Lived Assets

The Company evaluates property and equipment and finite-lived intangible assets for impairment whenever events or circumstances indicate that the carrying amounts of such assets may not be recoverable. Recoverability is measured by comparing the carrying amount of an asset or an asset group to estimated undiscounted future net cash flows expected to be generated. If the carrying amount of the long–lived asset or asset group is not recoverable on an undiscounted cash flow basis, an impairment is recognized to the extent that the carrying amount exceeds its fair value. Fair value is determined through various valuation techniques including discounted cash flow models, quoted market values, and third–party independent appraisals, as considered necessary.

Nonmonetary Exchange

The Company accounts for nonmonetary exchanges in accordance with ASC 845, Nonmonetary Transactions. A nonmonetary exchange is recognized when the transaction has commercial substance and the fair value of the assets exchanged can be reliably measured. The Company measures the exchanged assets at fair value, with any resulting gain or loss recognized in earnings. If the transaction lacks commercial substance or fair value is not determinable, the asset received is recorded at the carrying amount of the asset surrendered. Gains or losses are not recognized in such cases. The Company evaluates each transaction individually to determine the appropriate accounting treatment.

Revenue Recognition

The Company recognizes revenue when a customer obtains control of promised products or services, in an amount that reflects the consideration expected to be received in exchange for those products or services. The Company follows the five-step model prescribed under Topic 606: (i) identify the contract(s) with a customer; (ii) identify the performance obligation(s) in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligation(s) in the contract; and (v) recognize revenue when (or as) the Company satisfies each performance obligation. Revenues are presented net of any sales or value added taxes collected from customers and remitted to the government.

The Company’s consulting service income consists of the delivery of focused insights and recommendations that assist customers with their challenges in developing and executing strategies around their trade business and financial reporting processes. The consulting services provided are fixed-fee arrangements that are generally in one-year term. The Company has concluded that each contract represents a single performance obligation as each is a single promise to deliver a customized engagement and deliverable. For the majority of these services, either practically or contractually, the work performed and delivered to the customer has no alternative use to the Company. Additionally, the Company maintains an enforceable right to payment at all times throughout the contract.

The Company’s online product sales consists of selling products to end customers through online channel, such as apps embedded in Wechat. Revenue is recognized at a point in time when the product is delivered to and accepted by end customers.

The Company’s aquaculture product sales consist of selling aquacultural products to customers through offline channel. Revenue is recognized at a point in time when the products are delivered to and accepted by end customers. The Company concludes the presentation of revenue generated from selling of aquaculture products is at a gross basis as the Company acts as a principal by controlling sales transactions provided to their customers. Due to the change of the economic situation and the sales of aquacultural products was not as expected, the management intended to change the Company’s operations and on March 27, 2024, the Company entered into an agreement with a counterparty to sell certain assets and liabilities of HWF. HWF was identified as discontinued operations with aquacultural products.

Concentration

During the nine months ended September 30, 2024, the Company generated 25%, and 10% of revenues from the top two customers, including a related party and one third party, respectively. The Company’s cost of revenues consisted of 95% and 94% purchases from one top vendor for the three and nine months ended September 30, 2024, respectively.

WENYUAN GROUP CORP. AND SUBSIDIARIES

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Share-based Compensation

The Company accounts for stock options and other equity-based compensation issued in accordance with ASC 718 “Stock Compensation”, which requires the measurement and recognition of compensation expense related to the fair value of equity-based compensation awards that are ultimately expected to vest. Stock-based compensation expense recognized includes the compensation cost for all share-based compensation payments granted to employees and nonemployees, net of estimated forfeitures, over the employees’ requisite service period or the non-employee performance period based on the grant date fair value estimated in accordance with the provisions of ASC 718. ASC 718 is also applied to awards modified, repurchased, or cancelled during the periods reported.

Income Taxes

The Company accounts for income taxes under ASC 740, “Income Taxes.” Under the asset and liability method of ASC 740, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the condensed consolidated financial statements 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 the enactment occurs. A valuation allowance is provided for certain deferred tax assets if it is more likely than not that the Company will not realize tax assets through future operations.

Related Parties

The Company follows ASC 850, Related Party Disclosures, for the identification of related parties and disclosure of related party transactions.

Fair Value Measurements

Fair value accounting establishes a framework for measuring fair value and expands disclosure about fair value measurements. Fair value, which is defined 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 framework provides a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three levels as follows:

As of September 30, 2025 and December 31, 2024, the Company did not have any assets or liabilities that were required to be measured at fair value on a recurring basis or on a non-recurring basis. The carrying value of the Company’s cash, shareholder loans and accounts payable and accrued liabilities approximates the fair value due to the short-term maturity.

Segment Reporting

The Company adopted ASU 2023-07, Segment Reporting: Improvements to Reportable Segment Disclosures (“ASU 2023-07”) on January 1, 2024 retrospectively, which focuses on improving reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses. The Company reports segment information based on the “management” approach. The management approach designates the internal reporting used by management for making decisions and assessing performance as the source of the Company’s reportable segments. During the three and nine months ended September 30, 2025 and 2024, the Company had one single segment based on management structure located in Hangzhou, PRC. Because substantially all of the Company’s long-lived assets and revenues are located in and derived from the PRC, the Company does not distinguish between markets for the purpose of internal reporting, and therefore, geographical segments are not presented. The measure of segment assets is reported on the consolidated balance sheets as total consolidated assets. Since the Company operates in one segment, segment revenue, profit or loss required by “Segment Reporting” is disclosed in the consolidated statements of operations and other comprehensive income. The Company determines that selling, general and administrative expenses (“SG&A”) are the significant segment expenses. SG&A expenses for the three months ended September 30, 2025 and 2024 were $56,727 and $46,491, respectively. SG&A expenses for the nine months ended September 30, 2025 and 2024 were $191,104 and $215,150, respectively. Other segment items, representing the aggregated residual amount reconciling from segment revenue, significant segment expense and segment profit or loss, mainly professional fees and personnel compensation expenses.

WENYUAN GROUP CORP. AND SUBSIDIARIES

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Commitments and Contingencies

In the normal course of business, the Company is subject to contingencies, such as legal proceedings and claims arising out of its business, that might cover a wide range of matters. Liabilities for the contingencies are recorded when it is probable that a liability has been incurred and the amount of the liability can be reasonably estimated. Certain conditions may exist as of the date the condensed consolidated financial statements are issued, which may result in a loss to the Company, but which will only be resolved when one or more future events occur or fail to occur. The Company assesses these contingent liabilities, which inherently involves judgment. In assessing loss contingencies related to legal proceedings that are pending against the Company or unasserted claims that may result in legal proceedings, the Company, in consultation with its legal counsel, evaluates the perceived merits of any legal proceedings or unasserted claims as well as the perceived merits of the amount of relief sought or expected to be sought therein. If the assessment of a contingency indicates that it is probable that a material loss has been incurred and the amount of the liability can be estimated, the estimated liability would be accrued in the condensed consolidated financial statements. If the assessment indicates that a potentially material loss contingency is not probable, or is probable but cannot be estimated, the nature of the contingent liability, together with an estimate of the range of the reasonably possible loss, if determinable and material, would be disclosed. Loss contingencies considered remote are generally not disclosed unless they involve guarantees, in which case the nature of the guarantee would be disclosed.

Accounting Standards Issued Recently Adopted

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. The amended guidance enhances income tax disclosures primarily related to the effective tax rate reconciliation and income taxes paid information. This guidance requires disclosure of specific categories in the effective tax rate reconciliation and further information on reconciling items meeting a quantitative threshold. In addition, the amended guidance requires disaggregating income taxes paid (net of refunds received) by federal, state, and foreign taxes. It also requires disaggregating individual jurisdictions in which income taxes paid (net of refunds received) is equal to or greater than 5 percent of total income taxes paid (net of refunds received). The amended guidance is effective for fiscal years beginning after December 15, 2024. The guidance can be applied either prospectively or retrospectively. The Company adopted this amended guidance and has evaluated the impact on the footnotes to our condensed consolidated financial statements is not material.

Accounting Standards Issued but Not Yet Adopted

In November 2024, the FASB issued ASU No. 2024-03, Disaggregation of Income Statement Expenses (“ASU 2024 03”), and in January 2025, the FASB issued ASU No. 2025-01, Clarifying the Effective Date (“ASU 2025-01”). The amendments are intended to enhance disclosures regarding an entity’s costs and expenses by requiring additional disaggregated information disclosures about certain income statement expense line items. The amendments, as clarified by ASU 2025-01, are effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027. Early adoption is permitted. The Company is currently in the process of evaluating the impact this amended guidance may have on the footnotes to our condensed consolidated financial statements.

There were also other updates recently issued and the management does not believe that other than those disclosed above, accounting pronouncements recently issued but not yet adopted will have a material impact on its financial position results of operations or cash flows.

NOTE 4 – PROPERTY AND EQUIPMENT, NET

As of September 30, 2025 and December 31, 2024, property and equipment consisted of the following:

On September 28, 2022, the Company consummated an office suite purchase agreement with a third party. Pursuant to the agreement, the Company issued 2,651,780 shares of common stock of the Company to purchase a 118-square-meter office suite located in Hangzhou City, Zhejiang Province, China. The cost of the office suite was measured at the fair value of the issued common stocks on the closing date of $265,178 less value-added tax of $2,108. The difference of $226 between the addition of $263,070 and the cost as of September 30, 2025 is due to the fluctuation of foreign exchange rate. The office space is intended for internal use.

Depreciation expenses were $13,082 and $9,933 for the nine months ended September 30, 2025 and 2024, respectively. For the three months ended September 30, 2025 and 2024, the depreciation expenses were $4,259 and $3,512, respectively. The difference with the change in accumulated depreciation was due to exchange difference.

WENYUAN GROUP CORP. AND SUBSIDIARIES

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 5 – STOCKHOLDERS’ EQUITY

Common Stocks

As of September 30, 2025 and December 31, 2024, the Company had 81,231,312 and 80,884,279 shares of common stock issued and outstanding, respectively.

During the three months ended March 31, 2024, the Company sold 621,648 shares of common stock to fifteen non-U.S. investors at $0.30 per share, with total proceeds of $186,494 received in cash. Additionally, at the end of March 2024, the Company received cash proceeds of $62,184 from investors for the purchase of common stocks of the Company. These stocks were subsequently issued on April 3, 2024, at a price of $0.60 per share. The Company relied upon Regulation S of the Securities Act of 1933, as amended, for the sale of these securities. No commissions were paid regarding the share issuance and the share certificates were issued with a Rule 144 restrictive legend.

On February 18, 2024, the Company entered into a debt settlement agreement with the third party. Pursuant to the agreement, the Company issued 279,490 common stocks with total fair value of $83,847 to settlement the total loan principal and interest payable of $83,847 (RMB 603,000), which resulted in no gain or loss. The change in value as of transaction date was due to the fluctuation in foreign exchange rates.

During the three months ended June 30, 2025, the Company issued 160,923 shares of common stock to two individual non-U.S. investors at $0.30 per share, with total proceeds of $48,277 received in cash.

During the three months ended September 30, 2025, the Company issued 186,110 shares of common stock to certain individual non-U.S. investors at $0.30 per share, with total proceeds of $55,833 received in cash.

WENYUAN GROUP CORP. AND SUBSIDIARIES

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 5 – STOCKHOLDERS’ EQUITY (continued)

2022 Equity Incentive Plan

On November 7, 2022, the Board adopted an equity incentive plan to increase stockholder value and to advance the interests of the Company by furnishing a variety of economic incentives (“Incentives”) designed to attract, retain and motivate employees, certain key consultants and directors of the Company (the “2022 Equity Incentive Plan”). Under the 2022 Equity Incentive Plan, the Company can issue up to 10,000,000 shares of common stock of the Company. Incentives may be granted in any one or a combination of: (a) incentive stock options and non-statutory stock options; (b) stock appreciation rights; (c) stock awards; (d) restricted stock; and (e) performance shares. Such incentives may be subject to vesting conditions determined by the Board of Directors at grant. The maximum term of options or other stock-based award granted is ten years or such lesser time as determined by the Board of Directors at the time of grant.

During the three months ended March 31, 2024, the Company granted 1,200,000 shares of common stocks of the Company which vested immediately, to two employees pursuant to the Company’s 2022 Equity Incentive Plan. The fair value of the shares totaled $360,000 on the grant dates. During the three months ended June 30, 2024, the Company granted 350,000 shares of common stocks of the Company which vested immediately, to two employees pursuant to the Company’s 2022 Equity Incentive Plan. The fair value of the shares totaled $210,000 on the grant dates. The total fair value of the shares issued during the nine months ended September 30, 2024 was charged to share-based compensation of $501,346 and other loss of $68,654, on the consolidated statements of operations and other comprehensive loss.

As of September 30, 2025 and December 31, 2024, the Company’s common shares issuable under the 2022 Equity Incentive Plan totaled 1,220,000 and 1,220,000, respectively.

2023 Equity Incentive Plan

As of September 30, 2025 and December 31, 2024, no shares have been issued under the Company’s 2023 Equity Incentive Plan, and the Company’s common shares issuable under the 2023 Equity Incentive Plan totaled 5,000,000 and 5,000,000, respectively.

A summary of equity incentive activities is as follows:

The total fair value of shares issued for incentive that vested was $0.57 million and $0.57 million during the three and nine months ended September 30, 2024, respectively.

WENYUAN GROUP CORP. AND SUBSIDIARIES

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 6 – RELATED PARTY TRANSACTIONS

From time to time, the Company borrows from the President of the Company and his wife for its normal business operations. The borrowing bear is unsecured, non-interest-bearing and due on demand. As of December 31, 2023, the balance of the loan due to our President was $71,165. During the nine months ended September 30, 2024, the Company repaid $64,770 (RMB 465,544) to the President. As of December 31, 2024, the balance of the loan due to our President was $5,575, with difference of $820 due to the fluctuation in foreign exchange. During the nine months ended September 30, 2025, the President paid $663 in expenses on behalf of the Company, and the Company repaid the $663 back to the President. As of September 30, 2025, the balance of the loan due to our President was $5,575.

During the nine months ended September 30, 2024, the Company received advances of $21,315 from and made repayments of $146,862 to the wife of the President of the Company. During the nine months ended September 30, 2025, the Company received advances of $60,099 and made repayments of $58,063. As of September 30, 2025 and December 31, 2024, the amount owed to this related party by the Company totaled $2,065 and $Nil, respectively. The difference of $29 is due to the fluctuation of foreign exchange. The amount due to this related party is unsecured, non-interest-bearing and due on demand.

During the nine months ended September 30, 2025 and 2024, the Company recognized employee compensation expenses of $37,893 and $22,454, respectively, to the related parties including the President, his wife and daughter. During the three months ended September 30, 2025 and 2024, the Company recognized employee compensation expenses of $12,743 and $12,672. As of September 30, 2025 and December 31, 2024, the compensation payable to these related parties totaled $24,167 and $14,193, respectively, which was included in accounts payable and accrued liabilities on the consolidated balance sheet.

The Company conducted offline product sales to a closed relative of the President’s wife, totaling $16,710 for the three months ending March 31, 2024. As of December 31, 2024, the entire sales transaction was paid off by the related party. The Company conducted offline product sales to a related party, totaling $365 for the three months ending June 30, 2024. As of December 31, 2024, the entire sales transaction was paid off by the related party.

As of September 30, 2025 and December 31, 2024, the amount payable to Hangzhou Wenyuan Yiyun Media Co., Ltd. (FKA: Hangzhou Longwen Culture Media Ltd.) (“HZWY”)”), an entity under the control by the daughter of the President of the Company, totaled $2,572 and $6,850, respectively, which was included in accounts payable and accrued liabilities on the consolidated balance sheet. The amount payable was due to the purchase of inventory from HZWY from prior year.

NOTE 7 – DISCONTINUED OPERATIONS

Management intended to change its operation focus and entered into an agreement with a counterparty to sell certain assets and liabilities of HWF as of March 31, 2024 for consideration of $nil on March 27, 2024, which was closed on March 31, 2024. By selling off these assets and liabilities, management was signaling a shift away from aquaculture trading, which met the criteria to be reported as a discontinued operation and HWF as identified as discontinued operations as a result.

For the nine months ended September 30, 2025 and 2024, the net income from discontinued operations were $nil and $6,532 (including a disposal gain of $3,404), respectively.

WENYUAN GROUP CORP. AND SUBSIDIARIES

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 8 – CONTINGENCY

On September 28, 2022, the Company consummated an office suite purchase agreement with a third party (the “Seller”). Pursuant to the agreement, the Company issued 2,651,780 shares common stock of the Company to purchase a 118-square-meter office suite located in Hangzhou City, Zhejiang Province, China. Upon closing of the office suite purchase agreement as described above, Hangzhou Wenyuan agreed to act as a guarantor for the liability owing by the Seller to a creditor in the amount of $264,071 (RMB 1,900,000) associated with the office suite. During the year ended December 31, 2024, the Company was sued by the creditor due to the default by the Seller. On October 22, 2024, The Shangcheng District People’s Court of Hangzhou City, Zhejiang Province, China, ruled that Hangzhou Wenyuan is required to pay the creditor a total amount of approximately $264,071 (RMB 1,900,000). At the same time, the Seller is jointly liable for repayment. After the company’s management team evaluated the situation and considering the possible outcome of the lawsuit, the Company recognized a reserve for litigation loss of $264,071 since the management believe it’s probable. As of September 30, 2025 and December 31, 2024, the Company recorded $266,869 and $260,299, respectively, included in accounts payable and accrued expenses on the consolidated balance sheet. The difference is due to the fluctuation in foreign exchange. During the nine months ended September 30, 2025, the Company was notified that the office suite had been subjected to two online judicial auctions as a result of the defendants’ failure to comply with court orders. Both auctions were unsuccessful. As of the date of this report, Hangzhou Wenyuan is in the process of preparing legal materials to initial lawsuits against both the creditor and the Seller. Concurrently, we are also preparing to file a lawsuit in Nevada State to seek the recovery of shares previously issued as part of the purchase consideration.