NewHydrogen, Inc.

CONDENSED NOTES TO FINANCIAL STATEMENTS – UNAUDITED

FOR THE THREE MONTHS ENDED MARCH 31, 2026 AND 2025

1. Basis of Presentation

The accompanying unaudited condensed financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all normal recurring adjustments considered necessary for a fair presentation have been included. Operating results for the three months ended March 31, 2026, are not necessarily indicative of the results that may be expected for the year ending December 31, 2026. For further information refer to the financial statements and footnotes thereto included in the Company’s Form 10-K for December 31, 2025.

Going Concern

The accompanying financial statements have been prepared assuming the Company will continue as a going concern. As shown in the accompanying financial statements, the Company has an accumulated deficit and had a working capital deficit as of March 31, 2026. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. In order to continue as a going concern, the Company will need, among other things, additional capital resources. The Company is significantly dependent upon its ability, and will continue to attempt, to secure additional equity and/or debt financing. There are no assurances that the Company will be successful in obtaining additional capital.

The financial statements do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts of and classification of liabilities that might be necessary in the event the Company cannot continue in existence.

As of the three months ended March 31, 2026, the Company had a loss of $822,996, which consisted of a non-cash amount of $140,675 for a net cash loss of $682,321. As of March 31, 2026, its accumulated deficit was $181,612,486. The Company has working capital to cover its’ operating expenses for the next three months.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

This summary of significant accounting policies of the Company is presented to assist in understanding the Company’s financial statements. The condensed unaudited financial statements and notes are representations of the Company’s management, which is responsible for their integrity and objectivity. These accounting policies conform to accounting principles generally accepted in the United States of America and have been consistently applied in the preparation of the financial statements.

Revenue Recognition

The Company will recognize revenue when services are performed, and at the time of shipment of products, provided that evidence of an arrangement exists, title and risk of loss have passed to the customer, fees are fixed or determinable, and collection of the related receivable is reasonably assured. The Company adopted Accounting Standards Codification (“ASC”) 606, whereby revenue will be recognized as performance obligations are satisfied, and customers obtain control of goods or services. However, in the event of a loss on a sale is foreseen, the Company will recognize the loss as it is determined. To date, the Company has not had significant revenues and is in the development stage.

Cash and Cash Equivalent

The Company considers all highly liquid investments with an original maturity of three months or less to be cash equivalents.

Concentration Risk

Cash includes amounts deposited in financial institutions in excess of insurable Federal Deposit Insurance Company (FDIC) limits. At times throughout the year, the Company may maintain cash balances in certain bank accounts in excess of FDIC limits. As of March 31, 2026, the cash balance in excess of the FDIC limits was $464,341. The Company has not experienced any losses in such accounts and believes it is not exposed to any significant credit risk in these accounts.

Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the accompanying financial statements. Significant estimates made in preparing these financial statements include the estimate of useful lives of property and equipment, the deferred tax valuation allowance, derivative liabilities and the fair value of stock options. Actual results could differ from those estimates.

Property and Equipment

Property and equipment are stated at cost, and are depreciated using straight line over its estimated useful lives:

Depreciation expense for the three months ended March 31, 2026 and 2025 were $65 and $65, respectively.

Intangible Assets

The Company has patent applications to protect the inventions and processes behind its proprietary bio-based back-sheet, a protective covering for the back of photovoltaic solar modules traditionally made from petroleum-based film. Intangible assets that have finite useful lives continue to be amortized over their useful lives (See Note 6).

Amortization expense for the three months ended March 31, 2026 and 2025, was $756 and $756, respectively.

Stock-Based Compensation

The Company measures the cost of employee services received in exchange for an equity award based on the grant-date fair value of the award. All grants under our stock-based compensation programs are accounted for at fair value and that cost is recognized over the period during which an employee, consultant, or director are required to provide service in exchange for the award (the vesting period). Compensation expense for options granted to employees and non-employees is determined in accordance with the standard as the fair value of the consideration received or the fair value of the equity instruments issued, whichever is more reliably measured. Compensation expense for awards granted is re-measured each period.

On March 1, 2022, the Company issued 5,000,000 common stock purchase warrants through a securities purchase agreement for a purchase price of $1,000. The initial exercise date of the warrant is March 1, 2024, at an exercise price of $0.0255 per share, with a termination date of March 1, 2029. As of March 31, 2026, the 5,000,000 purchase warrants were outstanding.

On March 15, 2022, the Company granted 5,000,000 stock options to a consultant for advisory services. The options vest at a rate of 138,889 options per month for a thirty-six (36) month period during the term of the optionee’s consultancy with the Company and expire on March 15, 2032. The 5,000,000 stock options fully vested on March 15, 2025 and as of March 31, 2026 were outstanding.

On April 12, 2022, the Company granted an aggregate of 450,000,000 stock options to its employees for services, at an exercise price of $0.021. The options expire, and all rights to purchase the shares of common stock shall terminate seven (7) years from the date of grant or termination of employment. The 400,000,000 options are exercisable in the amount of 316,666,662 are exercisable upon grant, and the remaining 83,333,338 shares are exercisable in equal amounts over a ten (10) month period during the term of the optionee’s employment until the Option is 100% vested. The 50,000,000 options are exercisable in the amount of 19,444,446 are exercisable upon grant and the remaining 30,555,554 shares are exercisable in equal amounts over a twenty-two (22) month period during the term of the optionee’s employment until the Options is 100% vested. On March 11, 2023, one of the employees separated from the Company and 50,000,000 options were cancelled as of June 11, 2023. As of March 31, 2026, the remaining 400,000,000 stock options remain outstanding.

On March 20, 2023, the Company granted 50,000,000 stock options, to purchase shares of the Company’s common stock at an exercise price of $0.0137 per share. The options were granted pursuant to the terms of the Company’s 2022 Equity Incentive Plan. The options have a six-month cliff, whereby 8,333,333 shall become vested and exercisable on September 19, 2023, and the remaining 41,666,667 shall become exercisable in equal amounts over a thirty (30) month period during the term of the participant’s employment until fully vested. The unvested portion of the option will not be exercisable on or after the termination of continuous service. As of March 31, 2026, there were 36,057,287 options vested, with a remaining 13,942,713 options to vest. The options expire on March 19, 2030, and remain outstanding.

On May 9, 2023, the Company granted 5,000,000 stock options to a consultant, with an exercise price of $0.0126, and an expiration date of May 31, 2033. The options vest over a thirty-six (36) month period from June 1, 2023, with 833,360 options vesting on November 30, 2023, and 138,888 options vested at the end of each month from the end of the seventh month through May 31, 2026. As of March 31, 2026, there were 3,892,323 options vested, with a remaining 1,107,677 options to vest. The options expire on May 31, 2033. As of March 31, 2026,5,000,000 shares remain outstanding.

On June 15, 2023, the Company granted 100,000,000 shares of stock options to two employees of the Company, with an exercise price of $0.0121, and an expiration date of June 15, 2030. The options were granted pursuant to the terms of the Company’s 2022 Equity Incentive Plan. The grant of the options was made in consideration of services rendered and to be rendered by the employees to the Company. The 100,000,000 stock options vest and are exercisable in four (4) separate tranches based on performance as follows:(a) Tranche I -12,500,000 shares shall become vested and exercisable if the Company files an S-3 registration statement with the Securities and Exchange Commission (SEC) and it is declared effective by the SEC; (b) Tranche II – 12,500,000 shares shall become vested and exercisable if the Company’s shares are traded on a national securities exchange; (c) Tranche III – 12,500,000 shares shall become vested and exercisable if the average daily market value of the Company’s shares exceeds $100,000 per day over any 20 consecutive trade days; and (d) Tranche IV – 12,500,000 shares shall become vested and exercisable if the average daily market value of the Company’s shares exceed $200,000 per day over any 20 consecutive trade days. Prior to December 31, 2025, Tranche III of the performance milestones were met and the 25,000,000 options were vested. On February 20, 2026, the Company amended the above employee performance stock option. The amendment replaces performance vesting conditions of the unvested portion of the stock options to be vested over a fifteen (15) month period until remaining options are fully vested. During the period ended March 31, 2026,5,000,000 options vested, leaving 55.000,000 options not yet vested as of March 31, 2026. The options expire on June 15, 2030.

On December 9, 2024, the Company entered into an agreement with a consultant to provide advisory services in developing technology and products to produce green hydrogen. The Company granted 2,500,000 stock options, which vest starting January 1, 2025. The options vest at a rate of 69,444 options per month for thirty-five (35) months of consecutive service to the Company. The remaining 69,460 options will be vested at the end of the thirty-sixth (36th) month. The agreement will continue on a month-to-month basis until terminated at the earlier of: (i) 36 months from the date of the agreement, or (ii) any time by either party with a 5-day written notice from one party to the other. As of March 31, 2026, there were 624,998 options vested, and 1,875,002 options not yet vested. The options expire on December 1, 2027.

On May 1, 2025, the Company entered into an agreement with a consultant to provide technology services to the Company in developing technology and products to produce green hydrogen. The Company granted 2,500,000 common stock options, which vest starting May 1, 2025. The options vest at a rate of 69,444 options per month for thirty-five (35) months of consecutive service to the Company. The remaining 69,460 options will be vested at the end of the thirty-sixth (36th) month. The agreement will continue on a month-to-month basis until terminated at the earlier of: (i) 36 months from the date of the agreement, or (ii) any time by either party with a 5-day written notice from one party to the other. As of March 31, 2026, there were 349,315 options vested, and 2,150,685 options not yet vested. The options expire on May 1, 2035.

Determining the appropriate fair value of the stock-based compensation requires the input of subjective assumptions, including the expected life of the stock-based payment and stock price volatility. The Company used Black Scholes to value its stock option awards which incorporated the Company’s stock price, volatility, U.S. risk-free rate, dividend rate, and estimated life. The stock options terminate seven (7) years from the date of grant or upon termination of employment. As of March 31, 2026, the aggregate total of 565,000,000 stock options were outstanding. Stock compensation expense recognized for the period was $63,592.

Research and Development

Research and development costs are expensed as incurred. Total research and development costs were $331,513 and $101,518 for the three months ended March 31, 2026 and 2025, respectively.

Advertising and Marketing

The Company expenses the cost of advertising and promotional materials when incurred. The advertising and marketing costs were $93,569 and $106,479 for the three months ended March 31, 2026 and 2025, respectively.

Net Earnings (Loss) per Share Calculations

Net earnings (loss) per share dictates the calculation of basic earnings (loss) per share and diluted earnings per share. Basic earnings (loss) per share are computed by dividing by the weighted average number of common shares outstanding during the year. Diluted net earnings (loss) per share is computed similar to basic earnings (loss) per share except that the denominator is increased to include the effect of stock options and stock-based awards (Note 5).

For the three months ended March 31, 2026 and 2025, the Company has not included shares issuable from 565,000,000 stock options and 228,958,334 warrants, because their impact on the income per share is antidilutive.

Fair Value of Financial Instruments

Fair Value of Financial Instruments requires disclosure of the fair value information, whether recognized in the balance sheet, where it is practicable to estimate that value. As of March 31, 2026, the amounts reported for cash, inventory, prepaid expenses, accounts payable, and accrued expenses, approximate the fair value because of their short maturities.

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. ASC Topic 820 established a three-tier fair value hierarchy which prioritizes the inputs used in measuring fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurements) and the lowest priority to unobservable inputs (level 3 measurements). These tiers include:

We measure certain financial instruments at fair value on a recurring basis. As of March 31, 2026, there were no financial instruments to report.

Change in Stockholder’s Equity

A change in mezzanine was reclassified and accounted for in the shareholders’ deficit statement in the current period.

Recently Issued Accounting Pronouncements

Management does not believe that any recently issued, but not yet effective, accounting standards if currently adopted would have a material effect on the accompanying condensed financial statements.

3. PREFERRED STOCK

Preferred Stock March 31, 2026 and 2025

As of March 31, 2026, the Company had a total of 34,853 shares of Series C Preferred Stock outstanding with a fair value of $3,485,313, and a stated face value of one hundred dollars ($100) per share which are convertible into shares of fully paid and non-assessable shares of common stock of the Company. The holder of the Series C preferred stocks is entitled to receive dividends pari passu with the holders of common stock, except upon liquidation, dissolution and winding up of the Corporation. The holder has the right, at any time, at its election, to convert shares of Series C Preferred Stock into common stock at a conversion price of $0.0014 and has no voting rights.

The preferred shares have been classified under mezzanine financing, a hybrid of debt and equity financing that gives a lender the right to convert debt to an equity interest in a company in case of default, generally, after venture capital companies and other senior lenders are paid.

4. COMMON STOCK

Common Stock March 31, 2026

As of March 31, 2026, the Company did not issue any common stocks during the period.

5. STOCK OPTIONS AND WARRANTS

Stock Options

During the three months ended March 31,2026 no stock options were granted by the Company. Also, during the three months ended March 31, 2026, no stock options expired.

The weighted average remaining contractual life of options outstanding as of March 31, 2026 and 2025 were as follows:

The Company adopted ASC 718 to account for stock-based awards measured at fair value, using the Black Scholes Model. The fair value compensation expense is based on the grant date of the stock options and warrants which is the date the Company and employee reach a mutual agreement on the terms of the award. The cost is then recognized as an expense over the requisite service period and the recipient performs the required services.

The reliability of the grant-date fair value relies heavily on the quality and reasonableness of certain input assumptions. A significant input is the expected volatility of the Company’s stock over the option’s expected term. The expected term represents the period the Company anticipates the employee will hold the option before exercising it. The Black Scholes model requires the use of these assumptions to determine the fair value of the stock-based awards. The Company uses management’s best estimates, which include the awards expected term, the fair value of the common stock, the expected volatility of the price of the common stock, the risk-free interest rate, and the expected dividend yield of the common stock. The expected term represents the period that the Company’s stock-based awards are expected to be outstanding. The Company has based its expected term on the simplified method available under U.S. GAAP.

The stock options terminate between seven (7) and (10) years from the date of grant or upon termination of employment. As of March 31, 2026, the aggregate total of 565,000,000 stock options were outstanding.

The stock-based compensation expense recognized in the statement of operations during the three months ended March 31, 2026 and 2025, were $140,675 and $55,376, respectively.

As of March 31, 2026, there wasno intrinsic value with regards to the outstanding options.

Warrants

During the three months ended March 31, 2026, the Company issuedno common stock purchase warrants.

As of March 31, 2026 and 2025, the outstanding common stock purchase warrants were as follows:

The weighted average remaining contractual life of the warrants outstanding as of March 31, 2026 was as follows:

There wasno warrant compensation recognized as of March 31, 2026.

6. EQUITY FINANCING AGREEMENT

On May 2, 2025, the Company entered into an equity financing agreement with GHS pursuant to which GHS has agreed to provide up to three million dollars ($3,000,000) upon effectiveness of a registration statement on Form S-1. Following effectiveness of the registration statement, the Company shall have the right to deliver puts to GHS and GHS will be obligated to purchase shares of our common stock based on the investment amount specified in each put notice. The maximum amount that the Company shall be entitled to put to GHS in each put notice will not exceed two hundred percent (200%) of the average of the daily trading dollar volume of the Company’s common stock during the ten (10) trading days preceding the put, so long as such amount does not exceed 4.99% of the outstanding shares of the Company. Pursuant to the Financing Agreement, GHS and its affiliates will not be permitted to purchase, and the Company may not put shares of the Company’s common stock to GHS that would result in GHS’s beneficial ownership equaling more than 4.99% of the Company’s outstanding common stock. The price of each put share shall be equal to ninety-two- and one-half percent (92.5%) of the lowest traded price of the Company’s common stock for the ten (10) consecutive trading days preceding the date on which the applicable put is delivered to GHS and one hundred twelve and one-half percent (112.5%) of the put amount shall be delivered in shares in each particular put. No put will be made in an amount greater than $500,000. Puts may be delivered by the Company to GHS until the earlier of twenty-four (24) months after the effectiveness of the registration statement on Form S-1 or the date on which GHS has purchased an aggregate of $3,000,000 worth of put shares. The Company filed the registration statement with the SEC on May 19, 2025, which was declared effective on May 30, 2025.

As of March 31, 2026, the Company had 63,431,529 shares of common stock outstanding, with purchase prices between $0.0195689 –0.031080 for a fair value of $1,355,807, less the $30,000 commitment fee.

The Agreement is accounted for under ASC 815-40 standard for equity instruments, including common shares issued through an equity finance agreement. This standard provides guidance on the recognition and measurement of equity instruments, including the accounting for equity finance cost.

On May 2, 2025, the Company issued 803,536 shares of common stock to GHS in connection with its equity financing at a price of $0.037335 per share for a total of $30,000 in consideration. The equity financing cost is accounted for as a deduction from equity to the extent it is incremental costs directly attributable to the equity transaction that otherwise would have been avoided. This accounting treatment recognizes that these costs provide future economic benefits to the Company.

On July 17, 2025, the Company issued 11,616,962 shares of common stock through its equity financing agreement and received $298,770 less legal and clearing fees of $15,482 for a total of $314,252.

On August 6, 2025, the Company issued 4,770,259 shares of common stock through its equity financing agreement and received $145,604 less clearing fees of $2,656 for a total of $148,260.

On September 3, 2025, the Company issued 5,499,766 shares of common stock through its equity financing agreement and received $108,546 less clearing fees of $2,244 for a total of $110,709.

On September 18, 2025, the Company issued 3,358,693 shares of common stock through its equity financing agreement and received $62,861 less clearing fees of $2,865 for a total of $65,726.

On October 8, 2025, the Company issued 6,034,628 shares of common stock through its equity financing agreement and received $96,226 less clearing fees of $3,010 for a total of $99,236.

On October 29, 2025, the Company issued 22,535,036 shares of common stock through its equity financing agreement and received $434,402 less clearing fees of $1,025 for a total of $435,427.

On November 14, 2025, the Company issued 8,812,649 shares of common stock through its equity financing agreement and received $179,399 less clearing fees of $1,025 for a total of $180,424.

7. SEGMENT INFORMATION

The Company operates as asingle reporting segment engaged in developing a technology that uses water and heat rather than electricity to produce the lowest cost green hydrogen.

The accounting policies of the operating segment are the same as those described in the summary of significant accounting policies. The Chief Operating Decision Makers are the Company’s Chief Executive officer and its President, who together (the “CODM”), evaluate company performance based on Net income (loss), determined in accordance with U.S. GAAP, and Adjusted EBDITA, a non-GAAP measure.

The Company defines Adjusted EBITDA as income from operations, determined in accordance with GAAP, excluding the following:

7. SEGMENT INFORMATION (Continue)

The CODM uses these measures to assess profitability and guide resource allocations, and believes that Adjusted EBITA, when reviewed in conjunction with Net income (loss), is a useful measure to assess the Company’s performance and liquidity, as it provides meaningful operating results by excluding the effects of expenses that are not reflective of the Company’s operating business performance. In addition, the CODM uses Adjusted EBITA to understand and compare operating results across accounting periods, and for financial and operational decision-making and resource allocation. The presentation of Adjusted EBITA is not intended to be considered in isolation or as a substitute for the financial information prepared in accordance with GAAP.

The CODM conducts quarterly financial reviews, focusing on research expenditures, operational efficiency, investment decisions, including capital expenditures for new research activities, are made based on expected return on investment and regulatory environment in which the Company operates.

The table below provides the Company’s Net loss, Operating Expenses, Other Income, and a reconciliation of Income/Loss to Adjusted EBITDA for the three months ended March 31, 2026 and 2025:

8. COMMITMENTS AND CONTINGENCIES

Office Rental

The Company rents office space on a month-to-month basis with a monthly rent payment in the amount of $550.

Consultant Agreement

On May 30, 2023, the Company entered into an amendment (the “May 2023 Amendment”) to an advisory agreement dated March 15, 2022 entered into with a consultant for general business consulting services to the Company, including but not limited to technology, business development, and product development services. In connection with the advisory agreement, the Company granted the consultant 5,000,000 stock options, vesting at a rate of 138,889 options per month for thirty-six (36) months of consecutive service to the Company. The May 2023 Agreement provided for cash compensation based on an hourly rate of $200 for the services specifically requested by the Company in lieu of a fixed monthly fee. The May 2023 Amendment became effective on June 15, 2023, and will continue on a month-to-month basis until terminated at the earlier of March 15, 2025, or at any time by either party upon a 5-day written notice to the other party. On March 15, 2025, the parties entered into a second amendment to extend the term of the advisory agreement to March 15, 2028. Except for the amendments described above, the provisions of the advisory agreement dated March 15, 2022, shall remain effective.

On December 17, 2024, the Company entered into an agreement with a consultant to provide laboratory support for the development of technology for the production of green hydrogen. The Company agreed to pay Consultant cash compensation of $175 per hour for providing the service. The Agreement will continue until terminated at the earlier of: (i) conclusion of the work or (ii) any time by either party with a 5-day written notice from one party to the other.

On April 15, 2025, the Company entered into an agreement with a consultant to provide general business services to the Company, including but not limited to technology development and business development services as the Company’s Chief Technology Officer. The consultant will be paid $10,000 per month.

On May 1, 2025, the Company entered into an agreement with a consultant, to perform research that would benefit the Company at a monthly compensation of $3,000. The Company also granted stock options to the consultant to purchase 2,500,000 shares of common stock of the Company which will vest over a thirty-six (36) month period.

On May 1, 2025, the Company entered into an option agreement with the Regents of the University of California (the “Regents”), to obtain an exclusive option to utilize certain patent rights and solely for the purpose of providing the Company with additional time to evaluate certain inventions to determine its interest in pursuing an exclusive license to the Regents’ interest in certain patent rights. The option expires on July 31, 2026. As partial consideration for the option, the Company paid the Regents an option execution fee of $20,000

Research Agreement

On August 1, 2023, the Company entered into an agreement with the Regents of the University of California, to perform research that would benefit both the University and the Company, as Sponsor, and that is consistent with the research and educational objectives of the University. The cost to the Company for the University’s performance shall not exceed $716,326. The agreement shall be performed on a cost-reimbursement basis. When expenditures reach the above amount, the Company will not be required to fund, and the University will not be required to perform additional work thereunder unless by mutual agreement of both parties. As of September 30, 2025, the Company paid an aggregate of $716,326 to the University which is the maximum payment under the Agreement. .

Legal

In the normal course of business, the Company may be involved in legal proceedings, claims and assessments arising. Such matters are subject to many uncertainties, and outcomes are not predictable with assurance. In the opinion of management, the ultimate disposition of these matters will not have a material adverse effect on the Company’s financial position or results of operations.

As of March 31, 2026, there wereno legal proceedings against the Company.

9. SUBSEQUENT EVENT

Management has evaluated subsequent events according to the requirements of ASC TOPIC 855 and has no subsequent events to report.

On April 1, 2026, the Company amended an existing agreement with a consultant to grant 2,500,000 common stock options, which vest starting April 1, 2026. The options vest at a rate of 69,444 options per month for thirty-five (35) months of consecutive service to the Company. The remaining 69,460 options will be vested at the end of the thirty-sixth (36th) month.

On April 30, 2026, the Company issued 21,523,187 shares of common stock through its equity financing agreement and received $344,387 less clearing fees of $2,471 for a total of $346,858.