BIOXYTRAN, INC

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

AS AT MARCH 31, 2026 AND 2025

NOTE 1 –BACKGROUND AND ORGANIZATION

Business Operations

Bioxytran, Inc. (“Bioxytran”, or the “Company”) is a clinical stage pharmaceutical company developing platform technologies in the fields of Glycovirology, Hypoxia and Degenerative Diseases to eliminate viruses and prolong lifespan using carbohydrate drug design.

Bioxytran uses Galectin inhibitors to combat the virus, SARS-CoV-2. The technology is built on the lifetime work of company’s founder, David Platt, PhD. Dr. Platt expressed, and named, the Human Galectin-3 protein coded by a single gene, LGALS3, located on chromosome 14. Galectin inhibitors block the binding of galectins to carbohydrate structures, present in numerous disease indications by reducing the inflammatory feedback loop associated with the chronic diseases. The galectin inhibitors also have the capability to neutralize the spike proteins of a number of viruses which reduces their capability to replicate. Dr. Platt has over the years used this knowledge to create a significant number of sustainable therapeutic solutions. Bioxytran is also developing treatments for hypoxic conditions, necrosis, and degenerative diseases that utilize the carrying of oxygen to affected areas for stroke, wound, and brain damage treatment.

Pharmalectin, Inc. (“Pharmalectin”) is a wholly owned subsidiary focused on the development, manufacture and commercialization of therapeutic drugs designed to address conditions related to viral diseases.

NDPD Pharma, Inc. (“NDPD”) is a wholly owned subsidiary focused on prototyping and development of specialized equipment for pharmaceutical manufacturing, and in the development of carbohydrate molecules deriving from partially hydrolyzed guar gum (“PHGG”).

Our wholly owned Subsidiary, Pharmalectin (BVI), Inc. (“Pharmalectin BVI”) is the owner and custodian of the Company’s Copyrights, Trade Marks and Patents.

Our majority owned subsidiary, Pharmalectin India Pvt Ltd. (“Pharmalectin India”) is managing the Company’s local clinical research and trials, and holds the local rights to commercialization.

Organization

Bioxytran, Inc. was organized on October 5, 2017, as a Delaware corporation, with a taxing structure for U.S. federal and state income tax as a C-Corporation with 95,000,000 authorized Common shares with a par value of $0.0001, and 5,000,000 Preferred shares with a par value of $0.0001. On September 21, 2018, the Company went under a reorganization in the form of a reverse merger and is currently registered as a Nevada corporation with a taxing structure for U.S. federal and state income tax as a C-Corporation with 400,000,000 authorized Common shares with a par value of $0.001, and 50,000,000 Preferred shares with a par value of $0.001. Our Convertible Preferred Stock has a par value of $0.001 per share. The Preferred shares can at any time be converted into shares of Common Stock at a 1:5 basis, and carry a voting-power of an “as if converted” basis multiplied by a factor of two.

Pharmalectin was organized on October 5, 2017, as a Delaware corporation, with a taxing structure for U.S. federal and state income tax as a C-Corporation with 95,000,000 authorized Common shares with a par value of $0.0001, and 5,000,000 Preferred shares with a par value of $0.0001. Pharmalectin was founded under the name of Bioxytran “Bioxytran (DE)”. On April 29, 2021, the name was changed to Pharmalectin, Inc. On August 19, 2024, the Company acquired the minority interest of Pharmalectin from officers of the Company. As at March 31, 2026, there are 15,000,000 shares of Common Stock issued and outstanding.

NDPD Pharma was organized on October 5, 2017, as a Delaware corporation, with a taxing structure for U.S. federal and state income tax as a C-Corporation with 95,000,000 authorized shares of Common Stock with a par value of $0.0001, and 5,000,000 shares of Preferred Stock with a par value of $0.0001. On October 25, 2024, the Company acquired 100% of NDPD’s shares of Common Stock, the beneficial ownership of which included Company officers. As at March 31, 2026, there are 15,000,000 shares of Common Stock issued and outstanding.

Pharmalectin BVI was organized on March 17, 2022 as a British Virgin Islands (BVI) Business Corporation with a BVI corporate taxing structure with 50,000 authorized shares with a par value of $1.00. There are currently 50,000 outstanding shares held by the Company.

Pharmalectin India was organized on August 30, 2022 as an Indian Business Corporation with an India corporate taxing structure with 50,000 authorized shares with a par value of 10 Rupees. There are currently 41,020 outstanding shares, whereof 41,000 (99.95%) are held by the Company.

Basis of Presentation

The summary of significant accounting policies presented below is designed to assist in understanding the Company’s consolidated financial statements. Such financial statements and accompanying notes are the representations of the Company’s management, who are responsible for their integrity and objectivity. These accounting policies conform to accounting principles generally accepted in the United States of America (“U.S. GAAP”) in all material respects and have been consistently applied in preparing the accompanying consolidated financial statements. The Company has not earned any revenue from operations since inception. The Company chose December 31 st as its fiscal year end.

Principles of Consolidation

The accompanying consolidated financial statements include the accounts of Bioxytran, Inc. a Nevada Corporation, its majority owned subsidiary, Pharmalectin, Inc. of Delaware (collectively, the “Company”), as well as its wholly owned subsidiaries, Pharmalectin (BVI), Inc of British Virgin Islands and Pharmalectin India Pvt Ltd. All intercompany accounts have been eliminated upon consolidation.

NOTE 2 -SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

A summary of the significant accounting policies applied in the preparation of the accompanying financial statements follows.

Cash

For purposes of the Statement of Cash Flows, the Company considers all highly liquid debt instruments purchased with a maturity date of three months or less to be cash equivalents.

At March 31, 2026, the Company held cash balances totaling approximately $463,047, spread over 5 accounts. Deposits are insured by the FDIC up to $250,000 per institution. The Company’s cash balances periodically exceed this limit, resulting in uninsured deposits of approximately $188,464 at quarter-end. While management monitors the creditworthiness of its banks, a failure of any institution could result in the loss of uninsured amounts. No such losses have occurred to date.

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, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of expenses during the reporting period. Significant estimates include the fair value of the Company’s stock, stock-based compensation and the valuation allowance related to deferred tax assets. Actual results may differ from these estimates.

Net Loss per Common Share, basic and diluted

The Company computes earnings (loss) per share under Accounting Standards Codification subtopic 260-10, Earnings Per Share (“ASC 260-10”). Net loss per common share is computed by dividing net loss by the weighted average number of shares of Common Stock outstanding during the year. Diluted earnings per share, if presented, would include the dilution that would occur upon the exercise or conversion of all potentially dilutive securities into Common Stock using the “treasury stock” and/or “if converted” methods as applicable.

At March 31, 2026, we would, based on the market price of $0.0449/share, be obligated to issue approximately 29,532,338 shares of Common Stock upon conversion of the convertible note we issued in 2021 (the “2021 Note”) and 21,042,031 shares upon exercise of warrants, currently outstanding. For the 2021 Note, the amount of shares are based on $1,118,685 of principal and accrued interest currently outstanding.

The 2021 Note issued on May 3, 2021, with its maturity date extended through March 1, 2025, carries an interest rate of 10%, with a default rate of 18%, and is convertible at the lower of (i) a fixed price of $0.08, or (ii) if the market price at the date of conversion is below $0.08, the conversion price will be reduced by 120% of the difference between the conversion price and the market price. The 2021 Note has been in default since March 1, 2025, with a default interest of 18%.

Stock Based Compensation

The Company measures the cost of services received from employees and non-employees in exchange for an award of equity instruments based on the fair value of the award on the grant date, defined as the bid price at the market closing on the prior day, pursuant ASC 718. Stock-based compensation expense is recorded by the Company in the same expense classifications in the statements of operations, as if such amounts were paid in cash.

Research and Development

The Company accounts for research and development costs in accordance with Accounting Standards Codification subtopic 730-10, Research and Development (“ASC 730-10”). Under ASC 730-10, all research and development costs must be charged to expense as incurred. Accordingly, internal research and development costs are expensed as incurred. Third-party research and development costs are expensed when the contracted work has been performed or as milestone results have been achieved as defined under the applicable agreement. Company-sponsored research and development costs related to both present and future products are expensed in the period incurred. During the quarter ended March 31, 2026 the Company incurred $225,479 in research and development expenses, due to lack of funding, while during the quarter ended March 31, 2025 the Company incurred $349,500.

Intangibles – Goodwill and Other

Valuation of intangibles are in accordance with ASC 350. Costs associated with the application and award of patents in the U.S. and various other countries are capitalized and amortized on a straight-line basis over the term of the patents as determined at award date, which varies depending on the pendency period of the application, generally approximating seventeen years. Capitalized patent costs, also referred to as patent prosecution costs, include internal legal labor, professional legal fees, government filing fees and translation fees related to expanding the Company’s patent portfolio. Costs associated with the maintenance and annuity fees of patents are accounted for as prepaid assets at the time of payment and amortized over the shorter of the maintenance period or remaining life of the related patent.

Accrued Expenses

As part of the process of preparing our consolidated financial statements, we are required to estimate accrued expenses. This process involves identifying services that third parties have performed on our behalf and estimating the level of service performed and the associated cost incurred on these services as at each balance sheet date in our consolidated financial statements. Examples of estimated accrued expenses include professional service fees, such as those arising from the services of attorneys and accountants and accrued payroll expenses. In connection with these service fees, our estimates are most affected by our understanding of the status and timing of services provided relative to the actual services incurred by the service providers. In the event that we do not identify certain costs that have been incurred or we under- or over-estimate the level of services or costs of such services, our reported expenses for a reporting period could be understated or overstated. The date on which certain services commence, the level of services performed on or before a given date, and the cost of services are often subject to our judgment. We make these judgments based upon the facts and circumstances known to us in accordance with accounting principles generally accepted in the U.S.

Reclassification

Certain prior year amounts have been reclassified to conform to the current year presentation. These reclassifications had no impact on previously reported income or equity.

Convertible Debt

The Company accounts for convertible debt that does not meet the criteria for equity treatment in accordance with the guidance contained in ASU 2020-06,Debt—Debt with Conversion and Other Options (Subtopic 470-20) andDerivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity. Accordingly, the Company elected to classify the convertible debt as a liability at amortized cost using the effective interest method. The Company classifies convertible debt based on the re-payment terms and conditions. Any discounts on the convertible debt and costs incurred upon issuance of the convertible debt are amortized to interest expense over the terms of the related convertible debt. Convertible debt is also analyzed for the existence of embedded derivatives, which may require bifurcation from the convertible debt and separate accounting treatment. Refer to Note 9 for information regarding convertible debt.

Embedded Derivatives

The Company accounts for embedded derivatives in accordance with ASC 815-15, which requires separation of certain derivative-like features embedded in host contracts (such as convertible debt) when:

The Company uses this method for calculations of Convertible debt with price-adjusted conversion features (e.g., reset provisions based on stock price declines) are bifurcated and measured at fair value through earnings, by applying a 100-step binomial lattice model incorporating stock price volatility, risk-free rates, and contractual adjustment terms.

Changes in fair value of bifurcated derivatives are recognized in earnings each reporting period.

Warrants

The Company determines the accounting classification of warrants it issues as either liability or equity classified by first assessing whether the warrants meet liability classification in accordance with ASC 480-10,Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity(“ASC 480”), then in accordance with ASC 815-40 (“ASC 815”),Accounting for Derivative Financial Instruments Indexed to, and Potentially Settled in, a Company’s Own Stock. Under ASC 480, warrants are considered liability classified if the warrants are mandatorily redeemable, obligate the Company to settle the warrants or the underlying shares by paying cash or other assets, or warrants that must or may require settlement by issuing variable number of shares. If warrants do not meet liability classification under ASC 480, the Company assesses the requirements under ASC 815, which states that contracts that require or may require the issuer to settle the contract for cash are liabilities recorded at fair value, irrespective of the likelihood of the transaction occurring that triggers the net cash settlement feature. If the warrants do not require liability classification under ASC 815, and in order to conclude equity classification, the Company also assesses whether the warrants are indexed to its Common Stock and whether the warrants are classified as equity under ASC 815 or other applicable GAAP. After all relevant assessments, the Company concludes whether the warrants are classified as liability or equity. Liability classified warrants require fair value accounting at issuance and subsequent to initial issuance with all changes in fair value after the issuance date recorded in the statements of operations. Equity classified warrants only require fair value accounting at issuance with no changes recognized subsequent to the issuance date.

The fair value of warrants is determined using the Black-Scholes option-pricing model using assumptions regarding volatility of our common share price, remaining life of the warrant, and risk-free interest rates at each period end.

However, according to ASC 718-10-55-42 an exception would be if the fair value of one of the equity instruments (e.g., the share) is readily determinable and the other (e.g., the warrant) is not, the fair value of the instrument that is not readily determinable shall be measured using the residual method.

Fair Value

Accounting Standards Codification subtopic 825-10, Financial Instruments (“ASC 825-10”) requires disclosure of the fair value of certain financial instruments. The carrying value of cash and cash equivalents, accounts payable and accrued liabilities, and short-term borrowings, as reflected in the balance sheets, approximate fair value because of the short-term maturity of these instruments. All other significant financial assets, financial liabilities and equity instruments of the Company are either recognized or disclosed in the financial statements together with other information relevant for making a reasonable assessment of future cash flows, interest rate risk and credit risk. Where practicable the fair values of financial assets and financial liabilities have been determined and disclosed; otherwise only available information pertinent to fair value has been disclosed.

The Company follows Accounting Standards Codification subtopic 820-10, Fair Value Measurements and Disclosures (“ASC 820-10”) and Accounting Standards Codification subtopic 825-10, Financial Instruments (“ASC 825-10”), which permits entities to choose to measure many financial instruments and certain other items at fair value.

Under U.S. GAAP (specifically ASC 820, Fair Value Measurement), the fair value hierarchy prioritizes the inputs used in valuation techniques into three levels. Level 1 inputs have the highest priority and require the least disclosure, while Level 3 inputs have the lowest priority and require the most disclosure.

Level 1 (Quoted Prices in Active Markets)

Inputs: Unadjusted quoted prices for identical assets or liabilities in active markets (e.g., NYSE, NASDAQ) that the entity can access at the measurement date.

Level 2 (Observable Inputs Other Than Quoted Prices)

Inputs: Observable directly or indirectly for the asset/liability, but not quoted prices for identical items in active markets.

Level 3 (Unobservable Inputs)

Inputs: Unobservable inputs based on the entity’s own assumptions about what market participants would use (including risk assumptions). Used when observable inputs are not available.

The valuation of shares issued under an exemption from registration, such as under Rule 3(a)(9) of the Securities Act, typically relates to ASC 820 (Fair Value Measurement) under U.S. Generally Accepted Accounting Principles (GAAP). This accounting standard provides guidance on how to measure fair value when required for financial reporting purposes. Among other notable considerations the Company highlights;

When valuing shares in an exchange under Rule 3(a)(9), the conversion terms and the value of the securities being exchanged (debt, other equity, etc.) must be considered. If the company is offering a premium or discount as part of the exchange, this would impact the fair value measurement;

Based on Empirical Evidence and Studies, for restricted stock in public companies, the liquidity discount averages around 20%–30%, based on, but not limited to, the following data;

In accordance with the guidance of ASC 820 concerning for Lack of Registration Premium, shares that are restricted for nine months under SEC Rule 144 generally see a 20%–30% discount on market price. The Company has opted for a 25% discount to the market price at the date of issuance based on the Company’s elevated volatility, and to the illiquidity of the large number of shares generally issued in these transactions.

In contrary, shares issued under the registration requirements of the Securities Act for the Compensatory Benefit Plan pursuant to Rule 701 of the Securities Act where ASC 718 (Compensation—Stock Compensation), are valued at market price at the grant date, based on the limited number of shares awarded, and its predictable repetitiveness. Under ASC 718, the grant date is typically the measurement date for share-based compensation, the Company has interpreted this as the closing bid price on the market on the day preceding the grant, or award. This is the date when both parties (employer and employee) have a mutual understanding of the terms of the award, and it is used to determine the fair value of the stock-based award for accounting purposes. The fair value measured at the grant date is not adjusted for subsequent changes in stock price.

Further, for derivatives under ASC 815, fair value is critical because these financial instruments (e.g., convertible note with a variable conversion rate) must be recorded at fair value on the balance sheet, with changes typically flowing through earnings. For the calculation of the derivative debt, the Company is using the Binomial Option Pricing model by Cox, Ross and Rubinstein.

Recent Accounting Pronouncements

There were various updates recently issued, most of which represented technical corrections to the accounting literature or application to specific industries and are not expected to a have a material impact on the Company’s financial position, results of operations or cash flows.

NOTE 3 –GOING CONCERN AND MANAGEMENT’S LIQUIDITY PLANS

As at March 31, 2026, the Company had cash of $463,047 and a negative working capital of $4,547,075. As at March 31, 2026, the Company has not yet generated any revenues from operations, and has incurred an accumulated deficit of $23,113,235. These conditions raise substantial doubt about the Company’s ability to continue as a going concern.

During the quarter ended March 31, 2026, the Company raised a total of $241,040 through private placements consisting of $145,701 in stock and $95,339 in warrants to purchase Common Stock. During the same period in 2025, the Company raised $166,532 in short-term loans from affiliates. The Company is aware that its current cash on hand will not be sufficient to fund its projected operating requirements through the month of September 2026 and is pursuing alternative opportunities to funding.

The Company intends to raise additional capital through private placements of debt and/or equity securities, but there can be no assurance that these funds will be available on terms acceptable to the Company, or will be sufficient to enable the Company to fully complete its development activities or sustain operations. If the Company is unable to raise sufficient additional funds, it will have to develop and implement a plan to further extend payables, reduce overhead, or scale back its current business plan until sufficient additional capital is raised to support further operations. There can be no assurance that such a plan will be successful.

Accordingly, the accompanying consolidated financial statements have been prepared in conformity with U.S. GAAP, which contemplates continuation of the Company as a going concern and the realization of assets and satisfaction of liabilities in the normal course of business. The carrying amounts of assets and liabilities presented in the financial statements do not necessarily purport to represent realizable or settlement values. The consolidated financial statements do not include any adjustment that might result from the outcome of this uncertainty.

NOTE 4: SINGLE SEGMENT DISCLOSURE

For the quarter ended March 31, 2026

In accordance with Accounting Standards Codification ASC 218, Segment Reporting, the Company has determined that it operates as a single operating segment. The Company’s Chief Operating Decision Maker (“CODM”), which is its Chief Executive Officer, reviews the Company’s financial performance and allocates resources on a consolidated basis. The Company’s operations focus solely on pharmaceutical research and development activities, and it does not manage the business using multiple segments or by product lines.

Conclusion: The Company has concluded that it qualifies as a single reportable segment under ASC 218 based on the nature of its operations, the way it is managed, and the financial information reviewed by the CODM. As such, no additional segment disclosures are required in the consolidated financial statements.

Forward-Looking Statements: This disclosure may contain forward-looking statements regarding future financial performance, business operations, and regulatory approvals. Actual results may differ materially from those projected due to various risks and uncertainties, including but not limited to regulatory approvals, market conditions, and the success of clinical trials.

NOTE 5 -AFFILIATES TRANSACTIONS

On January 30, 2026, the Company granted 6,000,000 shares of the Company’s Convertible Preferred Stock to Dr. Platt as a performance grant in recognition of his role in executing the Company’s first commercial distribution agreement and advancing capital funding initiatives. The shares are not yet issued.

The Company holds a License Agreement (the “License” or “Agreement”) for a medical device (license obtained in 2019) with an affiliated company in which Company officers hold a majority interest. The device was developed prior to the establishment of Bioxytran. The annual maintenance cost for the license amounts to $5,000.

NOTE 6 -INTANGIBLES

Intangible assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. No impairment charges were recorded at March 31, 2026, and December 31, 2025.

Amortization of capitalized patent costs associated with the application and award of patents in the U.S. and various other countries are capitalized and amortized on a straight-line basis over the term of the patents as determined at the award date, which varies depending on the pendency period of the application, generally approximating seventeen years. The current patent application is still in process, and is therefore not yet amortized.

NOTE 7 –ACCOUNTS PAYABLES AND ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

On March 31, 2026, there was $787,500 due in form of accrued liabilities and accounts payable. Further there was a short-term loan from affiliates of $355,598 and $45,379 in accrued interest. On December 31, 2025, there was $577,500 in form of accrued liabilities and accounts payable while the short-term loan amounted to $395,668 and the accrued interest $52,459.

The following table represents the major components of accounts payable and accrued expenses and other current liabilities at March 31, 2026, and December 31, 2025:

NOTE 8 –CONVERTIBLE NOTES PAYABLE

Around May 3, 2021, we entered into four (4) Securities Purchase Agreements (the “2021 SPA’s”), under which we agreed to sell convertible promissory notes (the “2021 Notes”), in an aggregate principal amount of $2,165,000 with 6% interest.

At any time after the issue date of the 2021 Notes, the Holders of the 2012 Notes, (the “2021 Holders”), have the option to convert all or any part of the outstanding and unpaid principal amount and accrued and unpaid interest of the 2021 Notes into shares of our Common Stock at the Conversion Price. The “Conversion Price” will be the lesser of (i) $.13 per share or (ii) if the market price at the date of conversion is below $0.13, the conversion price will be reduced by 120% of the difference between the conversion price and the market price.

If the 2021 Notes are converted prior to us paying off such note, it would lead to substantial dilution to our shareholders as a result of the conversion discounted applicable to the 2021 Notes. There can be no assurance that there will be any funds available to pay off the 2021 Notes. If we fail to obtain such additional financing on a timely basis, the 2021 Holders may convert the 2021 Notes and sell the underlying shares, which may result in significant dilution to shareholders due to the conversion discount, as well as a significant decrease in our stock price.

On May 5, 2023, three (3) of the Notes were renegotiated; the interest was set to 10% (default rate 18%), a prepayment at 120% was included and the Notes extended until April 30, 2024. Two of the notes were fully converted and on July 15, 2024, a debt discount of $105,000 was added to the remaining notes principal and the Base Conversion Price was reset to $0.08. The last outstanding note issued in 2021 has been in default since March 1, 2025, with a default interest of 18%.

At March 31, 2026, and December 31, 2025, the outstanding convertible notes were as follows:

NOTE 9 –EMBEDDED DERIVATIVE IN CONVERTIBLE NOTE

Convertible Note Terms

The Company has outstanding convertible debt with the following key terms:

Embedded Derivative Classification

The price adjustment feature meets the criteria for bifurcation as an embedded derivative under ASC 815-15-25-1 because:

Valuation Technique

The company has used a 100-step binomial lattice model for its valuations. The binomial model captures:

Fair Value Measurement of Embedded Derivative

The fair value measurement of the derivative is classified within Level 3 of the fair value hierarchy established by ASC 820-10-35-37 through ASC 820-10-35-54A, as the valuation inputs include unobservable inputs (expected volatility) that are significant to the overall measurement.

The derivative liability on the note was at March 31, 2026, valued at $476,489, while principal amount was $1,118,685 (including accrued interest). On December 31, 2025, the notes principal amount was $1,082,956 (including accrued interest), the derivative liability was valued at $403,353. The following key inputs were used in the derivative debt calculation:

For the quarter ended March 31, 2026, the increase of the estimated fair value for was derivative of $73,136.

Sensitivity and Risks

NOTE 10 –ALLOCATION OF FAIR VALUE IN PRIVATE PLACEMENT

Unit Offering

During the period from October 30, 2025, to January 23, 2026, the Company proposed a private placement offering investors to purchase shares and warrants issued together as a unit; however, each warrant is detachable and separately exercisable to purchase one share of Common Stock. The average price was $0.051 per unit, less a broker (Member FINRA / SIPC) fee consisting of 8% cash commission and 8% bonus shares. The Company raised a total of $958,640 (after$83,360 cash commission) and issued 21,467,392 shares of Common Stock (after 1,717,391 bonus shares), as well as 19,750,001 5-year warrants exercisable to buy Common Stock at $0.12 per share. The net received by the Company was $0.047 per unit.

In the period ended on March 31, 2026, raised net cash proceeds of $241,040 (after payment of $20,960 in commission) the fair value of the Common Stock was determined based on the quoted market price of $0.051 per unit on the issuance date. The fair value of the warrants was estimated using the Black-Scholes option-pricing model, resulting in a fair value of $0.042 per warrant.

In accordance with ASC 505-10-30-6 (Relative Fair Value Allocation), the total proceeds were allocated to the Common Stock and the warrants based on their relative fair values on the date of issuance.

The allocation was calculated as follows:

The allocated value per share is $0.031 ($145,701 ÷ 4,716,000 shares), and the allocated value per warrant is $0.022 ($95,339 ÷ 4,366,667 warrants), or a 48.58% discount to market.

When a company issues two or more equity instruments (e.g., Common Stock and warrants) in a single transaction for a lump-sum amount, the proceeds must be allocated to each instrument based on their relative fair values on the issuance date. No gain or loss is recognized on the initial recognition.

Warrant Terms

The warrants have an exercise price of $0.12 per share, are exercisable immediately, and expire between on 1/22/2031. Each warrant entitles the holder to purchase one share of Common Stock. As of March 31, 2026,21,042,031 warrants were outstanding.

In accordance with ASC 505-10-50-3, the following information is disclosed regarding the warrants:

Fair Value Measurement (ASC 820)

The fair value of the warrants was estimated using the Black-Scholes option-pricing model in accordance with ASC 820-10-35-2 (Fair Value Measurement Framework). The following significant inputs were used in the valuation:

The fair value measurement of the warrants is classified within Level 3 of the fair value hierarchy established by ASC 820-10-35-37 through ASC 820-10-35-54A, as the valuation inputs include unobservable inputs (expected volatility) that are significant to the overall measurement.

Warrant Activity

A summary of warrant activity for the quarter ended March 31, 2026 is as follows:

NOTE 11 –STOCKHOLDERS’ EQUITY

Preferred stock

The Company is authorized to issue 50,000,000 shares of Preferred Stock. Each share of Preferred Stock has the voting power of ten shares of Common Stock, and can at any time be converted into five (5), shares of Common Stock. The table below sets forth the number of shares of Preferred Stock issued and outstanding during the reporting period(s). There were 43,283,991 Preferred Stock outstanding on March 31, 2026:

Issuances of Preferred Stock in the period January 1 and March 31, 2025

There has been noissuance of Preferred Stock in the period January 1 and March 31, 2026

Common stock

The Company is authorized to issue 400,000,000 shares of Common Stock. There were 113,361,886 Common Stock outstanding on March 31, 2026:

Issuances of Common Stock in the period January 1 and March 31, 2025

Issuances of Common Stock in the period January 1 and March 31, 2026

Common Shares due, but not yet issued in accordance with service contract at March 31, 2026:

Common Stock Warrants

The fair value of Common Stock warrants granted for the three months ended March 31, 2026, and March 31, 2025 was calculated with the following assumptions:

For the three months ended March 31, 2026, the Company issued 4,366,667 warrants. For the three months ended March 31, 2025, the Company did not award any warrants.

The following table summarizes the Company’s Common Stock warrant activity for the three months ended March 31, 2026, and 2025:

The following table summarizes information about stock warrants that are vested or expected to vest at March 31, 2026, with a market price of $0.045 at March 31, 2026:

The weighted-average remaining contractual life for warrants exercisable at March 31, 2026, is 4.2 years. The aggregate intrinsic value for fully vested, exercisable warrants was $0 at March 31, 2026.

NOTE 12 –STOCK OPTION PLAN AND STOCK-BASED COMPENSATION

On January 15, 2021, the Company adopted a stock option plan entitled “The 2021 Employee, Director and Consultant Stock Plan” (the “2021 Plan”) under which the Company may grant Options to Purchase Stock, Stock Awards or Stock Appreciation Rights up to 15% of the then fully diluted number of shares of the Company’s Common Stock, automatically adjusted on January 1 each year. On January 1, 2026, the 2021 Plan was reset in accordance with its stipulations. After the reset on January 1, 2026, there were 51,787,524 shares of Common Stock awards available for grant.

Under the terms of the 2021 Plan, the Board of Directors shall specify the exercise price and vesting period of each stock option on the grant date. Vesting of the options is typically immediate and the options typically expire in five years. Stock Awards, which are fully and immediately vested upon issuance, may be directly issued under the Plan (without any intervening options).

Shares Awarded and Issued 2021 Plan:

As at March 31, 2026, there were 10,062,844 shares issued valued at a fair historic market value of $809,407 at the time of award and at March 31, 2025, there were 8,819,753 shares issued valued at a fair historic market value of $702,084 at the time of award.

The following table summarizes the Company’s granted and issued stock awards in the three months ended March 31, 2026, and 2025:

Issuances under the 2021 Stock Plan in the period January 1 and March 31, 2025

There has been noissuance under the 2021 Stock Plan in the period January 1 and March 31, 2026

Shares awarded, butnot yet issued, under the 2021 Stock Plan at March 31, 2026:

For the three months ended March 31, 2026, the Company recorded stock-based compensation expense of $1,290,015 ($1,278,600 to affiliates) in connection with share-based payment awards. For the three months ended March 31, 2025, the Company recorded stock-based compensation expense of $26,998 ($10,747 to affiliates) in connection with share-based payment awards.

Stock options granted and vested 2021 Plan:

As at March 31, 2026 and 2025, there was no unrecognized compensation expense related to non-vested stock option awards.

As at March 31, 2026, the Company has 20,301,159 options or stock awards available for grant under the 2021 Plan.

NOTE 13 –COMMITMENTS AND CONTINGENCIES

Employment contracts

Our Executive Officers have entered into employment contracts and confidentiality, non-disclosure and assignment of invention agreements. The most substantial provisions include up to the following, subject to satisfying the terms and conditions for the agreements;

There are no other arrangements or plans in which we provide pension, retirement or similar benefits for any of Executive Officers or Directors.

Litigation

In the normal course of business, the Company may be involved in legal proceedings, claims and assessments arising in the ordinary course of business. Such matters are subject to many uncertainties, and outcomes are not predictable with assurance. Legal fees for such matters are expensed as incurred and we accrue for adverse outcomes as they become probable and estimable.

On December 29, 2025, the Company terminated an officer for cause. The officer has contested all allegations and has, so far, submitted a worker rights complaint with the state of Washington, which the Company has contested as having no foundation or basis in fact. At March 31, 2026, the Company had recorded reserves for contingent compensation claims of $157,500 and $11,000 relating to disputed compensation and expense reimbursement claims asserted by the former Chief Commercial Officer. These amounts reflect management’s reserve associated with a disputed matter and do not represent routine accrued payroll obligations incurred in the ordinary course.

NOTE 14 –SUBSEQUENT EVENTS

Litigation

On May 1, 2026, the Company was on informed that the investigation by the State of Washington Department of Labor and Industries (the “Department”) had determined that the worker rights complaint filed by a former officer was justified and assessed the Balance of Wages, Interest & NSF Fee Due to $170,887.50 with an interest accrual of 1% per month. The Company has contested the Departments decision as having no foundation or basis in fact and strongly believe it will be successful in its claim. Although, the Company’s recorded reserves of $168,500 should cover the assessed amount.

Unit Offering

During the period from October 30, 2025, to May 9, 2026, the Company proposed a private placement offering investors to purchase shares and warrants issued together as a unit; however, each warrant is detachable and separately exercisable to purchase one share of Common Stock. The average price was $0.053 per unit, less a broker (Member FINRA / SIPC) fee consisting of 8% cash commission and 8% bonus shares. The Company raised a total of $1,032,240 (after $89,760 cash commission) and issued 22,770,002 shares of Common Stock (after 1,686,667 bonus shares), as well as 21,083,335 5-year warrants exercisable to buy Common Stock at $0.12 per share. The net received by the Company was $0.047 per unit.

Subsequent to March 31, 2026, the Company raised net cash proceeds of $73,600 (after payment of $6,400 in commission) the fair value of the Common Stock was determined based on the quoted price of $0.051 per share on the issuance date. The fair value of the warrants was estimated using the Black-Scholes option-pricing model, resulting in a fair value of $0.042 per warrant.

In accordance with ASC 505-10-30-6 (Relative Fair Value Allocation), the total proceeds were allocated to the Common Stock and the warrants based on their relative fair values on the date of issuance.

The allocation was calculated as follows:

The allocated value per share is $0.032 ($45,453 ÷ 1,440,001 shares), and the allocated value per warrant is $0.021 ($28,147 ÷ 1,333,334 warrants), or a 20.1% discount to market.

Issuance ofCommon Stock subsequent to March 31, 2026

Issuances ofWarrants subsequent to March 31, 2026

Shares earned/paid, butnot yet issued, at March 31, 2026:

Warrants paid, but not yet issued, subsequent to March 31, 2026

Management sees no further subsequent events requiring disclosure.