CitroTech Inc. 10-Q

10-Q 1 citrotech_i10q-063026.htm FORM 10-Q FOR JUN 2026 CitroTech Inc. 10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

	For the quarterly period ended: June 30, 2026

☐	TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

	For the transition period from ___________ to ___________

Commission File Number: 001-42983

CitroTech Inc.

(Exact name of registrant as specified in its charter)

Wyoming		87-2765150
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

6400 S. Fiddlers Green Cir., Suite 300 Greenwood Village, Colorado		80111
(Address of principal executive offices)		(Zip Code)

(800) 401-4535

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
Common Stock, par value $0.0001 per share		CITR		NYSE American LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 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. ☒ Yes ☐ No

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 such files). ☒ Yes ☐ No

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	☐
Non-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 ☒ NO

As of August 7, 2026, 22,553,474 shares of the Company’s common stock were issued and outstanding.

TABLE OF CONTENTS

		Page

PART I - FINANCIAL INFORMATION		3

Item 1.	Financial Statements	3

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	30

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	41

Item 4.	Controls and Procedures	42

PART II - OTHER INFORMATION		43

Item 1.	Legal Proceedings	43

Item 1A.	Risk Factors	43

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	43

Item 3.	Defaults Upon Senior Securities	43

Item 4.	Mine Safety Disclosures	43

Item 5.	Other Information	43

Item 6.	Exhibits	44

SIGNATURES		45

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements.

CitroTech Inc.

(formerly General Enterprise Ventures, Inc.)

Index to Unaudited Interim Consolidated Financial Statements

June 30, 2026

Contents		Page

Consolidated Balance Sheets at June 30, 2026 and December 31, 2025		4

Consolidated Statements of Operations and Comprehensive Loss for the three and six months ended June 30, 2026 and 2025		5

Consolidated Statements of Changes in Stockholders’ Equity for the three and six months ended June 30, 2026 and 2025		6

Consolidated Statements of Cash Flows for the six months ended June 30, 2026 and 2025		8

Notes to Unaudited Interim Consolidated Financial Statements		9

CitroTech Inc.

(formerly General Enterprise Ventures, Inc.)

Consolidated Balance Sheets

(Unaudited)


	June 30,			December 31,
	2026			2025
Assets
Current Assets
Cash	$	2,519,302		$	6,268,591
Accounts receivable, net		165,436			209,047
Inventory		579,125			620,768
Prepaid expenses and other current assets		418,804			317,020
Total Current Assets		3,682,667			7,415,426

Non-Current Assets
Intangible assets, net		5,136,030			5,326,960
Operating lease right-of-use asset		675,802			753,363
Equipment, net		484,050			630,279
Security deposit		57,491			57,491
Total Non-Current Assets		6,353,373			6,768,093

Total Assets	$	10,036,040		$	14,183,519

Liabilities and Stockholders' Equity
Current liabilities
Accounts payable and accrued liabilities	$	221,820		$	316,321
Deferred revenue		21,394			3,000
Convertible notes, net of discount		–			219,321
Convertible notes, net of discount - related parties		–			1,285,400
Due to related parties		5,200			167,971
Financing loan - current portion		14,871			30,000
Operating lease liability - current portion		156,803			147,613
Total Current Liabilities		420,088			2,169,626

Non-Current Liabilities
Financing loan		66,242			133,381
Operating lease liability		536,848			617,598
Total Non-Current Liabilities		603,090			750,979

Total Liabilities		1,023,178			2,920,605

Stockholders' Equity
Preferred Stock, par value $0.0001, authorized 30,000,000 shares:
Series A Preferred Stock, par value $0.0001, designated 10,000,000 shares, 0 and 1,666,667 shares issued and outstanding, respectively		–			167
Series C Convertible Preferred Stock, par value $0.0001, designated 10,000,000 shares, 212,149 and 807,668 shares issued and outstanding, respectively		21			81
Common Stock, par value $0.0001, authorized 1,000,000,000 shares, 22,512,974 and 18,522,315 issued and outstanding, respectively		2,251			1,852
Additional paid-in capital		132,326,739			124,463,845
Accumulated deficit		(123,316,149	)		(113,203,031	)
Total Stockholders' Equity		9,012,862			11,262,914
Total Liabilities and Stockholders' Equity	$	10,036,040		$	14,183,519

The accompanying notes are an integral part of these unaudited interim consolidated financial statements.

CitroTech Inc.

(formerly General Enterprise Ventures, Inc.)

Consolidated Statements of Operations and Comprehensive Loss

(Unaudited)


	Three Months Ended						Six months ended
	June 30,						June 30,
	2026			2025			2026			2025

Revenue	$	280,666		$	687,638		$	625,581		$	1,657,020

Operating expenses
Cost of revenue, exclusive of amortization and depreciation shown separately below		271,628			371,392			497,205			928,362
Cost of revenue - related parties		–			–			–			60,290
Amortization and depreciation		123,850			77,107			249,534			151,646
General and administrative		218,290			270,227			628,246			473,398
Advertising and marketing		210,792			152,608			348,392			257,104
Payroll and management compensation		2,061,328			2,334,698			5,168,695			3,008,121
Professional fees		648,710			445,668			1,328,552			1,072,986
Professional fees - related parties		43,150			12,300			67,660			2,131,900
Research and development expense		197,067			41,276			278,592			49,307
Total operating expenses		3,774,815			3,705,276			8,566,876			8,133,114

Loss from operations		(3,494,149	)		(3,017,638	)		(7,941,295	)		(6,476,094	)

Other income (expense)
Interest expense		(3,569	)		(552,085	)		(168,402	)		(962,876	)
Interest expense - related party		(27,562	)		(212,787	)		(804,847	)		(274,843	)
Interest income		16,784			3,958			42,850			3,958
Financing expense		–			–			–			(6,167,334	)
Financing expense - related party		(361,801	)		(2,511,855	)		(361,801	)		(2,511,855	)
Loss on fair value of derivative liability		–			(2,973,000	)		–			(3,777,767	)
Loss on sales of assets		(32,257	)		–			(32,257	)		–
Loss on settlement of debt		–			(2,640,611	)		(847,366	)		(2,640,611	)
Total other expense		(408,405	)		(8,886,380	)		(2,171,823	)		(16,331,328	)

Loss before taxes		(3,902,554	)		(11,904,018	)		(10,113,118	)		(22,807,422	)

Provision for income taxes		–			–			–			–
Net loss	$	(3,902,554	)	$	(11,904,018	)	$	(10,113,118	)	$	(22,807,422	)

Comprehensive loss	$	(3,902,554	)	$	(11,904,018	)	$	(10,113,118	)	$	(22,807,422	)

Net loss per common share - basic and diluted	$	(0.18	)	$	(1.14	)	$	(0.50	)	$	(2.47	)
Basic and diluted weighted average number of common shares outstanding		21,754,514			10,455,720			20,301,861			9,225,515

The accompanying notes are an integral part of these unaudited interim consolidated financial statements.

CitroTech Inc.

(formerly General Enterprise Ventures, Inc.)

Consolidated Statements of Changes in Stockholders’ Equity

(Unaudited)

For the three and six months ended June 30, 2026


	Series A					Series C Convertible								Additional						Total
	Preferred stock					Preferred stock					Common Stock			Paid-In			Accumulated			Stockholders'
	Shares		Amount			Shares		Amount			Shares	Amount		Capital			Deficit			Equity

Balance - December 31, 2025	1,666,667		$	167		807,668		$	81		18,522,315	$	1,852	$	124,463,845		$	(113,203,031	)	$	11,262,914
Common stock issued for conversion of debt	–			–		–			–		171,878		17		1,259,849			–			1,259,866
Common stock issued for services	–			–		–			–		22,000		2		160,378			–			160,380
Common stock issued for cashless exercise of warrants	–			–		–			–		180,708		18		(18	)		–			–
Common stock issued for stock payable	–			–		–			–		220,000		22		(22	)		–			–
Management stock compensation	–			–		–			–		–		–		2,116,178			–			2,116,178
Contributed capital	–			–		–			–		–		–		96,258			–			96,258
Net loss	–			–		–			–		–		–		–			(6,210,564	)		(6,210,564	)
Balance - March 31, 2026	1,666,667		$	167		807,668		$	81		19,116,901	$	1,911	$	128,096,468		$	(119,413,595	)	$	8,685,032
Series A Preferred Stock exchanged for Series C Preferred Stock and Series C Preferred Stock payable	(1,666,667	)		(167	)	103,558			10		–		–		157			–			–
Common stock issued for conversion of Series C Preferred Stock	–			–		(699,077	)		(70	)	2,330,273		233		(163	)		–			–
Common stock issued for services	–			–		–			–		33,333		4		282,993			–			282,997
Common stock issued for conversion of debt	–			–		–			–		940,799		94		2,257,823			–			2,257,917
Common stock issued for exercise of warrants	–			–		–			–		8,334		1		25,001			–			25,002
Management stock compensation	–			–		–			–		83,334		8		1,302,659			–			1,302,667
Warrants issued for services	–			–		–			–		–		–		361,801			–			361,801
Net loss	–			–		–			–		–		–		–			(3,902,554	)		(3,902,554	)
Balance - June 30, 2026	–		$	–		212,149		$	21		22,512,974	$	2,251	$	132,326,739		$	(123,316,149	)	$	9,012,862

The accompanying notes are an integral part of these unaudited interim consolidated financial statements.

CitroTech Inc.

(formerly General Enterprise Ventures, Inc.)

Consolidated Statements of Changes in Stockholders’ Equity

(Unaudited)

For the three and six months ended June 30, 2025

	Series A			Convertible Series C								Additional						Total
	Preferred stock			Preferred stock					Common Stock			Paid-In			Accumulated			Stockholders'
	Shares	Amount		Shares		Amount			Shares	Amount		Capital			Deficit			Equity

Balance - December 31, 2024	1,666,667	$	167	3,001,969		$	300		6,140,264	$	614	$	79,680,114		$	(76,365,388	)	$	3,315,807

Series C Preferred Stock issued for cash	–		–	27,500			3		–		–		259,997			–			260,000
Series C Preferred Stock issued for services	–		–	167,500			17		–		–		2,349,003			–			2,349,020
Series C Preferred Stock issued for compensation	–		–	30,000			3		–		–		420,717			–			420,720
Common stock issued for conversion of Series C Preferred Stock	–		–	(776,831	)		(78	)	2,589,450		259		(181	)		–			–
Common stock warrants issued	–		–	–			–		–		–		8,649,503			–			8,649,503
Net loss	–		–	–			–		–		–		–			(10,903,404	)		(10,903,404	)
Balance - March 31, 2025	1,666,667		167	2,450,138			245		8,729,714		873		91,359,153			(87,268,792	)		4,091,646

Series C Preferred Stock issued for services	–		–	69,007			7		–		–		2,511,848			–			2,511,855
Series C Preferred Stock for compensation	–		–	50,000			5		–		–		1,099,995			–			1,100,000
Common stock issued for conversion of Series C Preferred Stock	–		–	(532,638	)		(53	)	1,775,466		178		(125	)		–			–
Common stock issued for services	–		–	–			–		1,667		–		19,000			–			19,000
Common stock issued for conversion of debts	–		–	–			–		507,661		51		5,604,391			–			5,604,442
Management stock compensation	–		–	–			–		–		–		767,669			–			767,669
Net loss	–		–	–			–		–		–		–			(11,904,018	)		(11,904,018	)
Balance - June 30, 2025	1,666,667	$	167	2,036,507		$	204		11,014,508	$	1,102	$	101,361,931		$	(99,172,810	)	$	2,190,594

The accompanying notes are an integral part of these unaudited interim consolidated financial statements.

CitroTech Inc.

(formerly General Enterprise Ventures, Inc.)

Consolidated Statements of Cash Flows

(Unaudited)


	Six months ended
	June 30,
	2026			2025
Cash Flows from Operating Activities:
Net loss	$	(10,113,118	)	$	(22,807,422	)
Adjustments to reconcile net loss to net cash used in operating activities:
Stock-based compensation		443,377			8,720,143
Stock-based compensation - related party		3,780,646			4,615,455
Bad debt expense recovery		(20,000	)		–
Non-cash lease expenses		77,561			86,052
Amortization and depreciation		249,534			151,646
Amortization of debt discount		892,279			1,000,390
Loss on settlement of debt		847,366			2,640,611
Loss on fair value of derivative liability		–			3,777,767
Loss on disposal of equipment		32,257			–
Changes in operating assets and liabilities:
Accounts receivable		63,611			(336,540	)
Inventory		41,643			(180,563	)
Prepaid expenses and other current assets		(101,784	)		(132,241	)
Security deposit		–			(36,991	)
Accounts payable and accrued liabilities		(56,080	)		443,354
Due to related parties		4,900			25,300
Accrued interest - related parties		68,246			95,447
Deferred revenue		18,394			94,860
Operating lease liabilities		(71,560	)		(82,803	)
Net Cash used in Operating Activities		(3,842,728	)		(1,925,535	)

Cash Flows from Investing Activities:
Purchase of equipment		(10,727	)		(167,744	)
Sale of equipment		12,500			–
Net Cash provided by (used in) Investing Activities		1,773			(167,744	)

Cash Flows from Financing Activities:
Proceeds from exercise of warrants		25,002			–
Proceeds from convertible notes and warrants		–			1,909,000
Proceeds from convertible note and warrants - related party		–			1,776,082
Payments of deferred offering costs		–			(59,223	)
Contributed capital		96,258			–
Repayment of loan - related party		–			(25,000	)
Proceeds from issuance of Series C Preferred Stock and warrants		–			260,000
Repayment of financing loan		(29,594	)		(215,625	)
Net Cash provided by Financing Activities		91,666			3,645,234

Change in cash		(3,749,289	)		1,551,955
Cash, beginning of period		6,268,591			775,133
Cash, end of period	$	2,519,302		$	2,327,088

Supplemental Disclosure Information:
Cash paid for interest	$	7,997		$	5,870
Cash paid for taxes	$	–		$	–

Non-Cash Financing Disclosure:
Series A Preferred Stock exchanged for Series C Preferred Stock and Series C Preferred Stock payable	$	157		$	–
Common stock issued upon conversion of Series C Preferred stock	$	–		$	2,618
Common stock issued for conversion and settlement of debt	$	1,259,866		$	5,604,442
Debt modification	$	200,000		$	–
Warrants issued in conjunction with convertible debts	$	2,222,000		$	882,000
Right-of-use assets obtained in exchange for new operating lease liabilities	$	–		$	865,218
Recognition of derivative liability as debt discount	$	–		$	1,027,000
Transfer from inventory to property and equipment	$	–		$	74,827
Acquisition of property and equipment as financing loan	$	–		$	118,776

The accompanying notes are an integral part of these unaudited interim consolidated financial statements.

CitroTech Inc.

(formerly General Enterprise Ventures, Inc.)

Notes to Unaudited Interim Consolidated Financial Statements

June 30, 2026

Note 1 – Organization, Business and Going Concern

CitroTech Inc. was originally incorporated under the laws of the State of Nevada on March 14, 1990 and on June 3, 2021 was redomiciled to the State of Wyoming. Effective on January 22, 2026, the Company changed its name from General Enterprise Ventures, Inc. to CitroTech Inc. When used in these notes, the terms “CITR,” “Company,” “we,” “us” and “our” mean CitroTech Inc. and all entities included in our unaudited interim consolidated financial statements.

Business

We develop and manufacture environmentally sustainable, non-toxic, long-term fire-inhibiting products for use in industrial and wildfire defense applications. The Company’s proprietary formulation, CitroTech®, is derived from food-grade, renewable materials and is designed to provide an alternative to legacy conventional chemical fire retardants. CitroTech is used in the manufacturing of fire-resilient lumber and building materials, enabling integration of flame-inhibiting properties during production or applied in the field to new homes. In addition, it is utilized by fire departments, municipalities, and other public and private sector entities in connection with ground-based wildfire defense and stationary application systems intended to help render vegetation non-flammable, reduce ignition risk and enhance structural protection.

The Company continues to evaluate and develop additional formulations and product treatments to expand the range of potential commercial applications for its technology.

Liquidity and Going Concern

The accompanying unaudited interim consolidated financial statements of the Company have been prepared assuming the Company will continue as a going concern and in accordance with generally accepted accounting principles in the United States of America. The going concern basis of presentation assumes that the Company will continue in operation one year after the date these financial statements are issued and will be able to realize its assets and discharge its liabilities and commitments in the normal course of business.

At June 30, 2026, the Company had cash of approximately $2.5 million, working capital of $3.3 million, and an accumulated deficit of $123.3 million. For the six months ended June 30, 2026, the Company incurred a net loss of $10.1 million and used approximately $3.8 million of cash in operating activities. The Company's ability to continue as a going concern depends on its ability to scale commercial sales. Management believes that current cash is not sufficient to fund commercial-scale production and the related working capital requirements for the next twelve months. These conditions raise substantial doubt about the Company's ability to continue as a going concern for a period of one year following the issuance date of these unaudited interim consolidated financial statements.

To alleviate these conditions, management is currently evaluating various funding alternatives and may seek to raise additional funds through the issuance of equity or debt securities. As we seek additional sources of financing, there can be no assurance that such financing would be available to us on favorable terms or at all. Our ability to obtain additional financing in the capital markets is subject to several factors, including market and economic conditions, our performance and investor sentiment with respect to us and our industry.

Note 2 – Summary of Significant Accounting Policies

Basis of Presentation

Our unaudited interim consolidated financial statements and accompanying notes are prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Regulation S-X. Accordingly, the unaudited interim consolidated financial statements do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. However, except as disclosed herein, there has been no material change in the information disclosed in the Notes to Consolidated Financial Statements included in the Annual Report on Form 10-K of CitroTech Inc. for the year ended December 31, 2025.

In the opinion of management, the accompanying unaudited interim consolidated financial statements contain all adjustments, consisting of only normal recurring adjustments, necessary for a fair statement of its financial position as of June 30, 2026 and its results of operations for the three and six months ended June 30, 2026 and 2025, and cash flows for the six months ended June 30, 2026 and 2025. The balance sheet at December 31, 2025, was derived from audited annual financial statements but does not contain all of the footnote disclosures from the annual financial statements.

The accompanying unaudited interim consolidated financial statements should be read in conjunction with the audited consolidated financial statements and related notes included in the Company’s Annual Report on Form 10-K, for the year ended December 31, 2025, as filed with the SEC on March 30, 2026.

Principles of Consolidation

The consolidated financial statements include the accounts of CitroTech Inc., and its wholly owned subsidiaries. Intercompany transactions and balances have been eliminated.

Reclassification

Certain amounts have been reclassified to improve the clarity and comparability of the financial statements. These reclassifications had no impact on previously reported total assets, liabilities, equity, net income (loss), or cash flows for any periods presented.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements. The estimates and judgments will also affect the reported amounts for certain expenses during the reporting period. Actual results could differ from these good faith estimates and judgments.

Cash and Cash Equivalents

For purposes of balance sheet presentation and reporting of cash flows, the Company considers all unrestricted demand deposits, money market funds and highly liquid debt instruments with an original maturity of less than 90 days to be cash and cash equivalents. The Company did not have any cash equivalents at June 30, 2026 and December 31, 2025. The Company had cash of $2.5 million and $6.3 million at June 30, 2026 and December 31, 2025, respectively.

Periodically, the Company may carry cash balances at financial institutions more than the federally insured limit of $250,000 per institution. The amount in excess of the FDIC insurance as of June 30, 2026, was approximately $1.9 million. The Company has not experienced losses on account balances and management believes, based upon the quality of the financial institutions, that the credit risk with regard to these deposits is not significant.

Accounts Receivable

Trade accounts receivable are recorded at the invoiced amount and do not bear interest. This value includes an appropriate allowance for estimated uncollectible accounts to reflect any expected loss on the trade accounts receivable balances and charged to the provision for credit loss. The Company maintains allowances for credit loss for estimated losses resulting from the inability of its customers to make the required payments for services. Accounts with known financial issues are first reviewed and specific estimates are recorded. The remaining accounts receivable balances are then grouped in categories by the number of days the balance is past due, and the estimated loss is calculated as a percentage of the total category based upon past history. Account balances are charged against the allowance when it is probable that the receivable will not be recovered.

During the three months ended June 30, 2026, the Company recovered $20,000 of previously reserved accounts receivable. Accordingly, the Company reversed the related allowance for credit losses, which was recorded as a reduction of general and administrative expenses. As of June 30, 2026, the Company determined that the remaining reserved accounts receivable balance was uncollectible and wrote it off against the existing allowance for credit losses. The allowance for credit losses was $0 and $340,950 as of June 30, 2026 and December 31, 2025, respectively.

Fair Value of Financial Instruments

The Company uses a three-tier fair value hierarchy to classify and disclose all assets and liabilities measured at fair value on a recurring basis, as well as assets and liabilities measured at fair value on a non-recurring basis, in periods subsequent to their initial measurement. The hierarchy requires the Company to use observable inputs when available, and to minimize the use of unobservable inputs, when determining fair value. The three tiers are defined as follows:

	Level 1—Observable inputs that reflect quoted market prices (unadjusted) for identical assets or liabilities in active markets;

	Level 2—Observable inputs other than quoted prices in active markets that are observable either directly or indirectly in the marketplace for identical or similar assets and liabilities; and

	Level 3—Unobservable inputs that are supported by little or no market data, which require the Company to develop its own assumptions.

Financial instruments measured at fair value are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires the Company to make judgments and consider factors specific to the asset or liability. The use of different assumptions and/or estimation methodologies may have a material effect on estimated fair values. Accordingly, the fair value estimates disclosed, or initial amounts recorded, may not be indicative of the amount that the Company or holders of the instruments could realize in a current market exchange.

The Company’s financial instruments, including cash, accounts receivable, prepaid expenses, accounts payable and accrued liabilities, deferred revenue and loans payable, are carried at historical cost. As of June 30, 2026 and December 31, 2025, the carrying amounts of these instruments approximated their fair values because of the short-term nature of these instruments.

Convertible Notes

The Company bifurcates conversion options from their host instruments and accounts for them as free-standing derivative financial instruments if certain criteria are met. The criteria include circumstances in which (a) the economic characteristics and risks of the embedded derivative instrument are not clearly and closely related to the economic characteristics and risks of the host contract, (b) the hybrid instrument that embodies both the embedded derivative instrument and the host contract is not re-measured at fair value under otherwise applicable generally accepted accounting principles with changes in fair value reported in earnings as they occur and (c) a separate instrument with the same terms as the embedded derivative instrument would be considered a derivative instrument.

Related Parties

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

Revenue

The Company recognizes revenue from its contracts with customers in accordance with ASC 606 – Revenue from Contracts with Customers. The Company recognizes revenues when satisfying the performance obligation of the associated contract that reflects the consideration expected to be received based on the terms of the contract.

Revenue related to contracts with customers is evaluated utilizing the following steps:

	i.	Identify the contract, or contracts, with a customer;
	ii.	Identify the performance obligations in the contract;
	iii.	Determine the transaction price;
	iv.	Allocate the transaction price to the performance obligations in the contract;
	v.	Recognize revenue when the Company satisfies a performance obligation.

For the six months ended June 30, 2026, our revenues currently consist of a sale of product used for lumber products for fire prevention and on installation of self-contained sprinkler systems. Revenue is recognized at a point in time when the risks and rewards of ownership of the product transfer from the Company to the customer.

Deferred revenue

Deferred revenue consists of advanced payments for our service that have not been rendered. Revenue is recognized when service is rendered. As of June 30, 2026 and December 31, 2025, total deferred revenue was $21,394 and $3,000, respectively. Deferred revenue is expected to be recognized as revenue within the third and fourth quarters of 2026.

Cost of Revenue

For the three and six months ended June 30, 2026 and 2025, cost of revenue consisted of:

Schedule of cost of revenue
	Three Months Ended				Six months ended
	June 30,				June 30,
	2026		2025		2026		2025
Cost of inventory	$	207,418	$	304,791	$	372,848	$	821,234
Freight and shipping		5,629		5,899		8,090		6,059
Consulting and advisory-related party		–		–		–		4,000
Royalty and sales commission-related party		–		–		–		56,290
Rent expense		58,581		60,702		116,267		101,069
Total cost of revenue	$	271,628	$	371,392	$	497,205	$	988,652

Basic and Diluted Net Loss Per Common Share

Net loss per share of common stock requires presentation of basic and diluted earnings per common share on the face of the Statements of Operations for all entities with complex capital structures and requires a reconciliation of the numerator and denominator of the basic earnings per share computation to diluted earnings per share. In the accompanying financial statements, basic net loss per share is computed by dividing net loss by the weighted average number of shares of common stock outstanding during the period. Diluted net loss per share is computed by dividing net loss by the weighted average number of shares of common stock and potentially dilutive outstanding shares of common stock during the period to reflect the potential dilution that could occur from common shares issuable through contingent share arrangements and warrants unless the result would be antidilutive.

The dilutive effect of share-based payment awards is calculated using the “treasury stock method,” which assumes that the “proceeds” from the exercise of these instruments are used to purchase common shares at the average market price for the period. The dilutive effect of convertible securities is calculated using the “if-converted method.” Under the if-converted method, securities are assumed to be converted at the beginning of the period, and the resulting shares of common stock are included in the denominator of the diluted calculation for the entire period being presented.

For the six months ended June 30, 2026 and 2025, the following common stock equivalents were excluded from the computation of diluted net loss per share as the result of the computation was anti-dilutive.

Schedule of antidilutive securities
	June 30,		June 30,
	2026		2025
	Shares		Shares
Convertible notes		–		2,037,821
Common Stock warrants		2,754,641		1,897,521
Series C Convertible Preferred Stock		707,163		6,788,357
		3,461,804		10,723,699

Stock-Based Compensation

The Company accounts for employee and non-employee stock awards under ASC 718, Compensation – Stock Compensation, whereby equity instruments issued to employees for services are recorded based on the fair value of the instrument issued and those issued to nonemployees are recorded based on the fair value of the consideration received or the fair value of the equity instrument, whichever is more reliably measurable. Equity grants are amortized on a straight-line basis over the requisite service periods, which is generally the vesting period. If an award is granted, but vesting does not occur, any previously recognized compensation cost is reversed in the period related to the termination of service.

During the three and six months ended June 30, 2026 and 2025, stock-based compensation was recognized as follows:

Schedule of stock-based compensation
	Three Months Ended				Six months ended
	June 30,				June 30,
	2026		2025		2026		2025
Management compensation	$	1,302,667	$	1,867,669	$	3,418,845	$	2,288,389
Professional fees		282,997		19,000		443,377		264,420
Professional fees - related party		–		–		–		2,103,600
Financing expense		–		–		–		6,167,334
Financing expense - related party		361,801		2,511,855		361,801		2,511,855
Stock-based compensation	$	1,947,465	$	4,398,524	$	4,224,023	$	13,335,598

Compensation cost for stock awards, which include common shares, Series C Convertible Preferred Stock, warrants and performance stock units (“PSUs”), is measured at the fair value on the grant date and recognized as expense, net of estimated forfeitures, over the related service or performance period. The fair value of stock awards is based on the quoted price of our common stock on the grant date and Series C Convertible Preferred stock as if converted to common stock. We measure the fair value of PSUs using a Monte Carlo valuation model and warrants using a Black Scholes valuation model. Compensation cost for PSUs are recognized using the derived service period and accelerated if the condition is satisfied at an earlier date.

Recently Issued Accounting Pronouncements

In November 2024, the FASB issued ASU 2024-03, Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses, requiring public entities to disclose additional information about specific expense categories in the notes to the financial statements on an interim and annual basis. ASU 2024-03 is effective for fiscal years beginning after December 15, 2026, and for interim periods beginning after December 15, 2027, with early adoption permitted. The Company is currently evaluating the impact of this standard on our disclosures.

In December 2025, the FASB issued ASU 2025-11, Interim Reporting (Topic 270): Narrow-Scope Improvements, which clarifies the guidance in Topic 270 to improve the consistency of interim financial reporting. The ASU provides a comprehensive list of required interim disclosures and introduces a disclosure principle requiring entities to disclose events since the end of the last annual reporting period that have a material impact on the entity. ASU 2025-11 is effective for fiscal years beginning after December 15, 2027, including interim periods within those fiscal years, with early adoption permitted. The Company is currently evaluating the impact of adopting ASU 2025-11.

In December 2025, the FASB issued ASU No. 2025-12, Codification Improvements. The ASU addresses thirty-three items, representing the changes to the Codification that (1) clarify, (2) correct errors, or (3) make minor improvements. Generally, the amendments in this Update are not intended to result in significant changes for most entities. The ASU is effective for interim reporting periods within annual reporting periods beginning after December 15, 2026. The adoption method of this ASU may vary, on an issue-by-issue basis. Early adoption is permitted. We are currently evaluating the provisions of this ASU and do not expect this ASU to have a material impact on our consolidated financial statements.

The Company has considered all other recently issued accounting pronouncements and does not believe the adoption of such pronouncements will have a material impact on its financial statements.

Recently adopted accounting pronouncement

In July 2025, the FASB issued ASU No. 2025-05, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets. The amendments in this update provide a practical expedient permitting an entity to assume that conditions at the balance sheet date remain unchanged over the life of the asset when estimating expected credit losses for current classified accounts receivable and contract assets. This update is effective for annual periods beginning after December 15, 2025, including interim periods within those fiscal years. The Company adopted ASU 2025-05, as of January 1, 2026, and applied the new disclosure requirements prospectively to the current annual period. The adoption of this ASU did not have an impact on our consolidated financial statements.

Note 3 – Inventory

As of June 30, 2026 and December 31, 2025, inventory consisted of the following:

Schedule of inventory
	June 30,		December 31,
	2026		2025
Finished goods	$	75,076	$	185,310
Raw materials		504,049		435,458
Inventory	$	579,125	$	620,768

The Company did not write-off any inventories as unsalable for the six months ended June 30, 2026 and 2025.

Note 4 – Prepaid expenses

As of June 30, 2026 and December 31, 2025, prepaid expenses consisted of the following:

Schedule of prepaid expenses
	June 30,		December 31,
	2026		2025
Insurance	$	115,369	$	180,970
Legal retainer		5,000		–
Research and development expense		112,290		–
Advertising and marketing		42,000		18,345
Other prepaid operating expenses		131,219		94,705
Deposit on purchase of inventories		12,926		23,000
Prepaid expenses	$	418,804	$	317,020

Note 5 – Equipment, net

As of June 30, 2026 and December 31, 2025, equipment consisted of the following:


	June 30,			December 31,
	2026			2025
Cost:
Equipment	$	52,625		$	43,396
Vehicles		574,069			686,434
Equipment gross		626,694			729,830
Less: accumulated depreciation		(142,644	)		(99,551	)
Equipment, net	$	484,050		$	630,279

During the three and six months ended June 30, 2026 and 2025, the Company recorded depreciation as follows.

Schedule of depreciation
	Three Months Ended				Six months ended
	June 30,				June 30,
	2026		2025		2026		2025
Depreciation	$	28,385	$	15,124	$	58,604	$	27,680

During the six months ended June 30, 2026, the Company purchased equipment for $10,727. During the six months ended June 30, 2025, the Company purchased vehicles and equipment for $381,817, of which $118,776 were purchased with a financing loan, and transferred vehicles from inventory of $74,827 due to a change of use in 2025.

During the six months ended June 30, 2026, the Company sold and disposed of vehicles and equipment with a net book value of $98,353. In connection with these dispositions, the Company received cash from sale of equipment of $12,500, settled the related finance loan of $67,725 and paid $15,051 for settlement of finance loan, and settled other current liability of $922, resulting in a loss on disposal of $32,257.

Financing loan

The Company had a financing loan for the purchase of vehicle in September 2025. The loan repayment is $2,021 per month for 60 months, beginning October 2025, with an interest rate of 11.33%.

The Company had a financing loan for the purchase of vehicle in September 2025. The loan repayment is $2,083 per month for 48 months, beginning October 2025, with an interest rate of 11.90%. In June 2026, the Company sold the vehicle with a net book value of $83,489 and paid $15,051 to settle finance loan of $67,725. As a result, the Company recorded loss on disposal of $30,815.

During the three and six months ended June 30, 2026 and 2025, the Company recorded interest expense as follows:

Schedule of interest expense
	Three Months Ended				Six months ended
	June 30,				June 30,
	2026		2025		2026		2025
Interest expense	$	3,569	$	–	$	7,997	$	4,427

As of June 30, 2026 and December 31, 2025, the Company had a financing loan of $81,113 and $163,381, respectively.

Note 6 – Intangible Assets, net

In 2022, the Company acquired the intellectual property of Mighty Fire Breaker LLC (“MFB California”), 19 patents centered around its MFB Technology for the prevention and spread of wildfires. The granted patents include MFB California’s main chemistry and applications. MFB California had 21 trademarks and various copyrights. Internally generated patents, trademarks and copyrights, are expensed as incurred.

In December 2025, the Company entered into an Intellectual Property Purchase Agreement to protect our existing patents. The purchase price is $100,000 in cash and 220,000 shares of Common stock valued at $1,775,400, which shall be issued within 30 days of the closing date. The common stock was issued in January 2026.

As of June 30, 2026 and December 31, 2025, finite lived intangible assets consisted of the following:


	June 30,			December 31,
	2026			2025
Acquired patents (19)	$	4,195,353		$	4,195,353
Patent and technology assets		1,243,000			1,243,000
Non-compete agreements		632,400			632,400
Accumulated amortization		(934,723	)		(743,793	)
Intangible assets, net	$	5,136,030		$	5,326,960

Estimated future amortization expense for finite lived intangibles are as follows:


Year ending December 31,
2026 (remaining six months)	$	190,958
2027		381,888
2028		381,888
2029		381,888
2030		381,888
Thereafter		3,417,520
Intangible assets, net	$	5,136,030

As of June 30, 2026, the weighted-average useful life is 13.59 years.

During the three and six months ended June 30, 2026 and 2025, the amortization expense was as follows:

Schedule of amortization expense
	Three Months Ended				Six months ended
	June 30,				June 30,
	2026		2025		2026		2025
Amortization	$	95,465	$	61,983	$	190,930	$	123,966

Note 7 – Lease

In March 2022, the Company entered into an operating lease for a warehouse, with a term of eighteen (18) months. In July 2023, the Company amended the contract and extended the lease term to July 2025. In May 2025, the Company terminated this lease and wrote off the right-of-use asset and lease liability.

In January 2025, the Company entered into an operating lease for our office and warehouse. The commencement date was April 1, 2025, and the termination date is March 31, 2030. The Company recorded a security deposit of $36,991.

For the three and six months ended June 30, 2026 and 2025, the components of lease expense were as follows:


	Three Months Ended				Six months ended
	June 30,				June 30,
	2026		2025		2026		2025

Operating lease cost	$	51,379	$	65,811	$	102,758	$	87,309
Short-term lease cost		11,768		4,553		19,541		34,146
Variable lease cost		2,128		10,472		19,497		13,204
Total lease cost	$	65,275	$	80,836	$	141,796	$	134,659

Supplemental cash flow information related to leases was as follows:


	Six months ended
	June 30,
	2026		2025
Cash paid for operating cash flows from operating leases	$	96,757	$	106,164
Right-of-use asset obtained in exchange for new operating lease liabilities	$	–	$	865,218

Weighted-average remaining lease term - operating leases (year)		3.75		4.75
Weighted-average discount rate — operating leases		7.00%		7.00%

The following table outlines maturities of our lease liabilities as of June 30, 2026:


Year ending December 31,
2026 (remaining six months)	$	98,654
2027		203,228
2028		211,357
2029		219,812
2030		55,486
		788,537
Less: Imputed interest		(94,886	)
Operating lease liabilities	$	693,651

Note 8 – Convertible Notes

The components of convertible notes as of June 30, 2026 and December 31, 2025, were as follows:


	Principal			Effective Interest	Stated Interest	June 30,		December 31,
Payment date	Amount		Maturity date	Rate	Rate	2026		2025
February 15, 2025	$	575,000	February 15, 2026	510%	10%	$	–	$	375,000
Total Convertible notes							–		375,000
Less: Unamortized debt discount							–		(155,679	)
							–		219,321
Less: Current portion							–		(219,321	)
Long-term portion						$	–	$	–

During the three and six months ended June 30, 2026 and 2025, the Company recognized interest expense and amortization of debt discount as follows:


	Three Months Ended				Six months ended
	June 30,				June 30,
	2026		2025		2026		2025
Interest expense	$	–	$	76,673	$	4,726	$	136,931
Amortization of debt discount	$	–	$	475,166	$	155,679	$	820,994

As of June 30, 2026 and December 31, 2025, the Company recorded accrued interest of $0 and $32,773, respectively.

Conversion

In February 2026, seven (7) note holders converted convertible notes issued in February 2025 of $375,000 and accrued interest of $37,500 into 171,878 shares of common stock with a conversion price of $2.40. As a result, the Company settled convertible notes and accrued interest of $412,500, and recorded loss on settlement of debt of $847,366.

Note 9 – Accounts payable and accrued liabilities

As of June 30, 2026 and December 31, 2025, accounts payable and accrued liabilities consisted of the following:


	June 30,		December 31,
	2026		2025
Accounts payable	$	198,361	$	169,278
Accrued interest		–		32,773
Credit card		7,467		19,953
Sales tax payable		3,072		27,675
Other liabilities		1,374		53,280
Payroll liability		11,546		13,362
	$	221,820	$	316,321

Note 10 – Related Party Transactions

The related parties that had material transactions for the six months ended June 30, 2026 and 2025, consist of the following:

Related Party		Nature of Relationship to the Company
A		An Ohio Corporation - a significant shareholder
B		Owner of A and our Chairman of the Board
C		A California Corporation owned by a related party D
D		Significant shareholder and our Chief Technology Officer through March 31, 2026
E		Former Director and Chief Executive Officer of GEVI Insurance Holdings Inc.
F		A Delaware limited liability company controlled by a Director and significant shareholder
G		A company controlled by our Chief Financial Officer

As of June 30, 2026 and December 31, 2025, amounts owing to related parties consists as follows:


	June 30,		December 31,
Related Party	2026		2025		Nature of transaction
A	$	300	$	300	Operating expenses paid on behalf of the Company
F		–		167,671	Accrued interest related to convertible note related party
G		4,900		–	Consulting fees
	$	5,200	$	167,971

For the three and six months ended June 30, 2026 and 2025, expenses to related parties and their nature consists of:

	Three Months Ended
	June 30
Related Party	2026		2025		Nature of transaction	Financial Statement Line Item
A	$	–	$	25,300	Payment of operating expenses on behalf of the Company	Due to related party
A	$	–	$	25,000	Repayment of loan	Due to related party
C	$	–	$	5,600	Cash paid for consulting fees	Professional fees - related party
D	$	–	$	35,000	Cash paid for royalty and sales commissions	Cost of revenue - related party
D	$	30,000	$	–	Cash paid for consulting fees	Professional fees - related party
F	$	–	$	2,511,855	69,007 Series C preferred stock for services	Financing expense
G	$	13,150	$	–	Professional service - accounting	Professional fees - related party

	Six Months Ended
	June 30
Related Party	2026		2025		Nature of transaction	Financial Statement Line Item
A	$	–	$	2,103,600	150,000 Series C preferred stock for consulting fee	Professional fees - related party
A	$	–	$	25,300	Payment of operating expenses on behalf of the Company	Operating expenses
A	$	–	$	25,000	Repayment of loan	Due to related party
C	$	–	$	21,600	Cash paid for consulting fees	Professional fees - related party
C	$	–	$	4,000	Cash paid for consulting and advisory fees	Cost of revenue - related party
D	$	–	$	91,290	Cash paid for royalty and sales commissions	Cost of revenue - related party
D	$	30,000	$	–	Cash paid for consulting fees	Professional fees - related party
E	$	–	$	420,720	30,000 Series C preferred stock for management compensation	Management compensation
E	$	–	$	–	20,000 shares of Series C preferred stock for advisory fee	Professional fees - related party
F	$	–	$	2,511,855	69,007 Series C preferred stock for services	Financing expense
G	$	5,505	$	–	Edgar filing expense	General and administrative
G	$	37,660	$	–	Professional service - accounting	Professional fees - related party

Contributed Capital

In February 2026, the Company received payments from related party B, totaling $96,258 related to disgorgement of short-swing profits under Section 16(b) of the Securities Exchange Act of 1934, as amended. The Company recognized these proceeds as a capital contribution and the amounts were recorded as an increase to additional paid-in capital on the unaudited interim consolidated balance sheets.

Convertible note – related party

The components of convertible notes as of June 30, 2026 and December 31, 2025, were as follows:


				Effective	Stated
	Principal			Interest	Interest	June 30,		December 31,
Payment date	Amount		Maturity date	Rate	Rate	2026		2025
February 2025	$	2,222,000	April 28, 2026	16.25%	10%	$	–	$	2,000,000
Total Convertible notes						$	–	$	2,000,000
Less: Unamortized debt discount							–		(714,600	)
							–		1,285,400
Less: Current portion							–		(1,285,400	)
Long-term portion						$	–	$	–

In February 2025, the Company entered into one (1) subscription agreement for convertible note ($2,000,000) and warrants (416,667 shares of common stock) with related party F. The convertible note has a term of twelve (12) months, at an interest rate of 10% per annum and warrants are with a term of five (5) years, at exercise price of $3.00 per share. The outstanding principal amount of convertible note and unpaid interest is convertible at a fixed conversion price of $2.40. The obligations of the Company under the convertible note are secured by a pledge of the Company’s membership interests in MFB Ohio. In the event of a default, related party F could proceed against the equity of MFB Ohio pledged to collateralize the convertible note. MFB Ohio owns the Company’s intellectual property portfolio. On February 27, 2026, related party F extended their convertible promissory note until April 28, 2026. Pursuant to the extension, they charged a 1% amendment fee and agreed to release their security pledge against certain intangible assets of the Company. As a result, the principal amount became $2,222,000, including accrued interest of $200,000 and 1% fee of $22,000.

The Company evaluated the modification of terms under ASC 470-50, “Debt - Modification and Extinguishment”, and concluded that the extension of the maturity dates did not result in a substantial change and consequential changes to the economic substance of the debt and thus resulted in a modification of the debt and not extinguishment of the debt. Accordingly, no gain or loss on debt extinguishment was recorded.

During the three and six months ended June 30, 2026 and 2025, the Company recognized interest expense and amortization of debt discount as follows:


	Three Months Ended				Six months ended
	June 30,				June 30,
	2026		2025		2026		2025
Interest expense - related party	$	17,046	$	64,241	$	68,246	$	95,447
Amortization of debt discount - related party	$	10,516	$	148,546	$	736,600	$	179,396

Conversion

In April 2026, related party F converted a convertible note with accrued interest of $35,917 into 940,799 shares of common stock with a conversion price of $2.40.

As of June 30, 2026 and December 31, 2025, the Company recorded accrued interest of $0 and $167,671, respectively.

Note 11 – Stockholders’ Equity

Preferred Stock

Shares Outstanding

The Company is authorized to issue up to 30,000,000 shares of Preferred Stock, par value $0.0001 per share.

Series A Preferred Stock

The Company designated 10,000,000 shares of its Preferred Stock as Series A Preferred Stock, par value $0.0001, with the following rights and privileges.

Dividends. Holders of shares of Series A Preferred Stock are not entitled to receive dividends.

Voting Rights. Each share of Series A Preferred Stock is entitled to 1,000 votes on all matters submitted to a vote of the holders of Common Stock, voting together with the holders of Common Stock as a single class. Holders of shares of Series A Preferred Stock do not have cumulative voting rights. This means a holder of a single share of Series A Preferred Stock cannot cast more than one vote for each position to be filled on the Board of Directors.

Other Rights. Shares of Series A Preferred Stock are not entitled to a liquidation preference. The holders of the Series A Preferred Stock may not be redeemed without the consent of the holders of the Series A Preferred Stock. The holders of the Series A Preferred Stock are not entitled to pre-emptive rights or subscription rights.

Share exchange

On May 28, 2026, the Company entered into Stock Exchange and Stockholders Agreements (the “Exchange Agreements”) with the holders (the “Holders”) of the Company’s outstanding Series A Preferred Stock. Pursuant to the Exchange Agreements, the Company reacquired an aggregate of 1,666,667 shares of Series A Preferred Stock. At closing, the Company issued 103,558 shares of Series C Convertible Preferred Stock to BoltRock Holdings, LLC (“BRH”), and agreed to issue 467,012 shares of Series C Preferred Stock to TC Special Investments LLC (“TCSI”) on the date that is 18 months after closing, unless issued earlier in connection with a change of control of the Company which, under the TCSI Exchange Agreement, includes the appointment of Theodore S. Ralston to the Company’s board of directors (collectively, the “Exchange Shares”). As a result, the Company recorded the 103,558 shares of Series C Preferred Stock issued to BRH, and the Series C Preferred Stock payable representing the 467,012 shares to be issued to TCSI, as additional paid-in capital.

As of June 30, 2026 and December 31, 2025, there were 0 and 1,666,667, respectively, shares of Series A Preferred stock issued and outstanding.

Series C Convertible Preferred Stock

The Company has designated 10,000,000 shares of its Preferred Stock as Series C Convertible Preferred Stock with the following rights and privileges.

Dividends. Holders of shares of Series C Convertible Preferred Stock are not entitled to receive dividends.

Voting Rights. The holders of the Series C Convertible Preferred Stock are not entitled to vote.

Conversion Rights. Each share of Series C Convertible Preferred Stock outstanding shall be convertible, at the option of the holder thereof, at any time and from time to time, and without the payment of additional consideration by the holder thereof, into 3.3333 shares of the Common Stock of the Company (the “Conversion Ratio”). Such Conversion Ratio, and the rate at which shares of Series C Convertible Preferred Stock may be converted into shares of Common Stock, shall be subject to adjustment.

Other Rights. The holders of the Series C Convertible Preferred Stock are not entitled to a liquidation preference. The holders of the Series C Convertible Preferred Stock may not be redeemed without the consent of the holders of the Series C Convertible Preferred Stock. The holders of the Series C Convertible Preferred Stock are not entitled to pre-emptive rights or subscription rights.

During the six months ended June 30, 2026, the Company issued 103,558 shares of Series C Convertible Preferred Stock to BRH and 467,012 shares to be issued to TCSI.

During the six months ended June 30, 2025, the Company issued 344,007 shares of Series C Convertible Preferred Stock as follows:

	·	27,500 shares for purchase subscriptions of $260,000, at prices of $4.00 or $6.00 per share
	·	236,507 shares for services, valued at $4,860,875 at market price on issuance dates.
	·	80,000 shares for compensation, valued at $1,520,720 at market price on issuance dates.

During the six months ended June 30, 2026, the holders of the Convertible Series C Preferred Stock converted 699,077 shares of the Company’s Convertible Series C Preferred Stock into 2,330,273 shares of the Company’s common stock, respectively.

As of June 30, 2026 and December 31, 2025, there were 212,149 and 807,668 shares of the Company’s Series C Convertible Preferred Stock issued and outstanding, respectively.

Common Stock

The Company has authorized 1,000,000,000 shares of common stock with a par value of $0.0001. Each share of common stock entitles the holder to one vote, in person or proxy, on any matter on which action of the stockholders of the corporation is sought.

During the six months ended June 30, 2026, the Company issued 3,990,659 shares of Common Stock as follows:

	·	2,330,273 shares for conversion of 699,077 shares of Series C Preferred Stock
	·	1,112,677 shares for conversion of debt of $3,517,783
	·	55,333 shares for service, valued at $443,377
	·	189,042 shares for cash and cashless exercise of warrants, for cash proceeds of $25,002
	·	220,000 shares for stock payable for acquisition of IP, valued at $1,775,400, which was recorded as additional paid in capital as of December 31, 2025.
	·	83,334 shares for management compensation valued at $566,672

During the six months ended June 30, 2025, the Company issued 29,245,272 shares of common stock as follows:

	·	26,189,380 shares for conversion of Series C Preferred Stock.
	·	3,045,892 shares for conversion of debt of $5,604,442.
	·	10,000 shares for services, valued at $19,000.

As of June 30, 2026 and December 31, 2025, there were 22,512,974 and 18,522,315 shares of the Company’s common stock issued and outstanding, respectively.

Restricted stock units (RSU)

On June 27, 2025 (the “Effective Date”), the Company entered into the employment agreement with our Chief Operating Officer (“COO”), commencing on July 21, 2025. Under this agreement, the Company issued 150,000 restricted shares of the Common Stock as stock bonus. Shares shall vest one-fourth each anniversary of the Effective Date. The grant date fair value of shares is $1,799,970.

On September 22, 2025, the Company entered into the employment agreement with our new Chief Executive Officer (“CEO”), commencing on October 1, 2025 (the “Effective Date”). Under this agreement, the Company issued 300,000 restricted shares of the Common Stock as stock bonus. Shares shall vest one-fourth on first anniversary of the Effective Date and the remaining three-fourths on monthly basis over the following 36 months. The grant date fair value of shares is $1,698,000.

During the three and six months ended June 30, 2026, the Company recorded compensation expense of $218,623 and $437,246, respectively. As of June 30, 2026, unrecognized compensation cost for unvested equity awards was $2,729,603.

Management stock compensation (PSU)

During 2025, the Company entered into employment and consulting agreements with our CEO, former CEO, COO and a Director. The stock compensation based on market capitalization condition is as follows:

Market capitalization for 30 consecutive days		Consulting agreement Former CEO and Chairman	Consulting agreement Chairman	Employment agreement COO	Employment agreement CEO
$	120,000,000	70,000 Series C Convertible Preferred Stock	70,000 Series C Convertible Preferred Stock	–	–
$	150,000,000	70,000 Series C Convertible Preferred Stock	70,000 Series C Convertible Preferred Stock	37,500 common stock	75,000 common stock
$	200,000,000	70,000 Series C Convertible Preferred Stock	70,000 Series C Convertible Preferred Stock	37,500 common stock	75,000 common stock
$	250,000,000	70,000 Series C Convertible Preferred Stock	70,000 Series C Convertible Preferred Stock	37,500 common stock	75,000 common stock
$	300,000,000	–	–	37,500 common stock	75,000 common stock

	Fair value ($)	1,932,000	3,165,000	1,740,000	1,580,000
	Forfeiture Protection	Vests upon completion of Initial Term; awards survive termination	Vests upon completion of Initial Term; awards survive termination	Forfeited if terminated for cause or resignation	Forfeited if terminated for cause or resignation

The Company used the Monte Carlo model to calculate the fair value of compensation and estimated a total of the grant date fair value of $8,417,000. The Company records compensation expense over the term of a derived service period unless the condition is satisfied at an earlier date. During the three and six months ended June 30, 2026, the Company recorded compensation expense of $517,372 and $2,414,927, respectively. As of June 30, 2026, unrecognized compensation cost for unvested equity awards was $192,671 which is expected to be recognized over a remaining weighted-average period of 0.24 years.

As of June 30, 2026, market capitalization performance conditions had been achieved with respect to certain outstanding equity incentive awards. Theodore Ralston, the Company’s former Chief Executive Officer, and BoltRock Holdings, LLC, a Company controlled by the Company’s Chairman, each became eligible to receive 140,000 shares of Series C Convertible Preferred Stock, but each has elected to defer receipt of such shares. In addition, Wesley Bolsen, the Company’s Chief Executive Officer, and Andrew Hotsko, the Company’s Chief Operating Officer, became eligible to receive 75,000 and 37,500 shares of common stock, respectively, subject to approval by the Compensation Committee. No shares underlying these awards had been issued as of June 30, 2026.

For the year ended December 31, 2025, the estimated fair values of the awards were measured using the following significant assumptions:

Schedule of significant assumptions
Derived service period		0.51 - 1.05 year
Risk-free interest rate		3.62% - 3.97%
Stock price at valuation date	$	5.66 - 12.00
Expected average volatility		108.5% - 151.0%
First Capitalization Threshold per share price	$	6.85 - 14.28
Second Capitalization Threshold per share price	$	8.56 - 19.02
Third Capitalization Threshold per share price	$	11.42 - 23.82
Fourth Capitalization Threshold per share price	$	14.27 - 28.56

Warrants

In April 2026, the Company issued 46,250 warrants to a related party F for services. The warrant is for a period of five years at an exercise price per share of $3.00. The Company recorded the warrants value of $361,801 to additional paid-in capital.

We evaluate all warrants issued to determine the appropriate classification under ASC 480 and ASC 815. In addition to determining classification, we evaluate these instruments to determine if such instruments meet the definition of a derivative. The classification of all outstanding warrants, including whether such instruments should be recorded as equity, is evaluated at the end of each reporting period.

The warrants are valued using a Black Scholes valuation model. The use of this valuation model requires the input of highly subjective assumptions. Any change to these inputs could produce significantly higher or lower fair value measurements.

The Company utilized the following assumptions:

Schedule of assumptions
	June 30,
	2026
Expected term		5.00 years
Expected average volatility		89%
Risk-free interest rate		3.95%
Expected dividend yield		–

A summary of activity of the warrants during the six months ended June 30, 2026 is as follows:

Schedule of activity of the warrants
	Warrants Outstanding
				Weighted Average		Weighted Average Remaining Contractual Life
	Shares			Exercise Price		(in years)

Outstanding, December 31, 2025		2,909,434		$	3.66		4.37
Granted		46,250			3.00		5.00
Exercised		(201,043	)		0.56		–
Outstanding, June 30, 2026		2,754,641		$	3.67		3.88

Exercisable, June 30, 2026		2,421,307		$	4.41		3.94

The intrinsic value of the warrants as of June 30, 2026 is approximately $5.0 million.

Note 12 – Disaggregated revenue and Concentration

During the three and six months ended June 30, 2026 and 2025, disaggregated revenue was as follows:

Schedule of disaggregated revenue
	Three Months Ended				Six months ended
	June 30,				June 30,
	2026		2025		2026		2025
Products sale	$	205,673	$	446,785	$	409,069	$	1,051,267
Product installation service		74,993		240,853		216,512		605,753
	$	280,666	$	687,638	$	625,581	$	1,657,020

During the three and six months ended June 30, 2026 and 2025, customer and supplier concentrations (more than 10%) were as follows:

Revenue and accounts receivable

Recurring customers do not represent a material percentage of our revenue for the three and six months ended June 30, 2026 and 2025 and accounts receivable as of June 30, 2026 and December 31, 2025.


	Three months ended				Six months ended
	June 30,				June 30,
	2026		2025		2026		2025
Number of customers (more than 10% of revenue)		3		3		3		1
Total revenue of top 5 customers		71.9%		78.4%		52.5%		40.7%

	June 30,		December 31,
	2026		2025
Number of customers (more than 10% of accounts receivable)		4		3
Total % of accounts receivable balance (more than 10%)		89.9%		61.1%

Purchase and accounts payable for Inventory


	Percentage of Purchases				Percentage of Purchases				Percentage of
	For three months ended				For six months ended				Accounts payable for purchase
	June 30,				June 30,				June 30,		December 31
	2026		2025		2026		2025		2026		2025
Supplier A		–		25.1%		73.0%		36.5%		–		98.8%
Supplier B		28.9%