Balance Labs, Inc.

BALANCE LABS, INC. AND SUBSIDIARIES

Notes to Unaudited Condensed Consolidated Financial Statements

June 30, 2026

Note 1 —Business Organization and Nature of Operations

Balance Labs, Inc. (“Balance Labs” or the “Company”) was incorporated on June 5, 2014, under the laws of the State of Delaware. The Company is a digital asset advisory firm providing consulting services to institutions navigating the digital asset economy. Its advisory services include strategic guidance on digital asset adoption, treasury strategy, and related operational and market considerations, and are delivered through both retainer-based and project-based engagements. The Company also intends to establish a rules-based digital asset corporate treasury, subject to the availability of sufficient capital.

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, such statements include all adjustments (consisting only of normal recurring items) which are considered necessary for a fair presentation of the unaudited condensed consolidated financial position of Balance Labs as of June 30, 2026, the unaudited consolidated results of its operations for the three and six months then ended, and its cash flows for the six months then ended. The unaudited consolidated results of operations for the three and six months ended June 30, 2026, are not necessarily indicative of the operating results for the full year. It is recommended that these unaudited consolidated financial statements be read in conjunction with the audited financial statements and related disclosures of the Company for the year ended December 31, 2025, which were filed with the Securities and Exchange Commission on April 10, 2026.

Note 2 —Going Concern

The consolidated financial statements have been prepared assuming the Company will continue as a going concern. The Company used $241,510 of cash in operating activities during the six months ended June 30, 2026, and had $117,465 in cash as of June 30, 2026. The Company incurred a net loss of $236,841 for the three months ended June 30, 2026 and a net loss of $59,038 for the six months ended June 30, 2026, and a loss from operations of $988,644 for the six months ended June 30, 2026. Additionally, at June 30, 2026, the Company had an accumulated deficit of $37,710,684 and a working capital deficit of $2,773,414.

The Company’s results for the six months ended June 30, 2026 include significant non-cash items, comprising a net gain of $982,505 on remeasurement of the derivative liability and $661,963 of stock-based compensation expense. The reported net loss of $59,038 for the six months is therefore substantially smaller than the loss from operations of $988,644 and is not indicative of the Company’s operating performance or its cash requirements. In addition, the Company’s two promissory notes payable to The Farkas Group, Inc., a related party, in the aggregate principal amount of $500,000, reached their stated maturities on May 3, 2026 and May 11, 2026 and were not repaid at maturity, as such they are in default. The principal, together with accrued interest, remains outstanding as of June 30, 2026, and the lender retains the contractual right to demand payment. See Note 6.

There is substantial doubt about the Company’s ability to continue as a going concern for a period of twelve months from the date these financial statements were available to be issued. Without additional sources of debt or equity capital, the Company would potentially need to cease operations. Management plans to seek to raise additional capital within the next twelve months which, if obtained, management believes would support the Company’s operations for the next year. No assurance can be given that any future financing will be available or, if available, that it will be on terms that are satisfactory to the Company. Even if the Company is able to obtain additional financing, it may contain restrictions on our operations, in the case of debt financing, or cause substantial dilution for our stockholders, in the case of equity financing. In addition, the Company expects to begin a marketing campaign to market and sell its services. There can be no assurance that such a plan will be successful.

The accompanying condensed consolidated financial statements do not include any adjustments that might be necessary should the Company be unable to continue as a going concern.

Note 3 —Summary of Significant Accounting Policies

Cash and Cash Equivalents

The Company considers all highly liquid temporary cash investments with an original maturity of 90 days or less to be cash equivalents. At June 30, 2026 and December 31, 2025, the Company had $117,465 and $358,975, respectively, in cash and cash equivalents.

Use of Estimates

The preparation of the consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Estimates may include those pertaining to the fair value of the derivative liability, stock-based compensation, depreciable lives of fixed assets, and deferred tax assets. Actual results could materially differ from those estimates.

Accounts Receivable

The Company provides an allowance for doubtful accounts equal to the estimated uncollectible amounts pursuant to the guidance of Accounting Standards Update (ASU) 2016-13, Financial Instruments – Credit Losses (Topic 326) as codified in Accounting Standards Codification (ASC) 326, Financial Instruments – Credit Losses. Under ASC 326, the Company utilizes a current and expected credit loss (CECL) impairment model. The Company’s estimate is based on historical collection experience and a review of the current status of trade accounts receivable. Accounts receivable are presented net of an allowance for doubtful accounts of $0 and $0 at June 30, 2026 and December 31, 2025, respectively. The unbilled receivable of $32,667 recognized at March 31, 2026 was invoiced during the three months ended June 30, 2026 and collected in full. There wasno unbilled receivable andno accounts receivable outstanding at June 30, 2026.

Revenue Recognition

The Company accounts for its revenues under FASB ASC 606, which requires revenue to be recognized in a manner to depict the transfer of goods or services to a customer at an amount that reflects the consideration expected to be received in exchange for those goods or services. The Company considers revenue realized or realizable and earned when all of the following five criteria are met: (1) Identify the Contract with a Customer; (2) Identify the Performance Obligations in the Contract; (3) Determine the Transaction Price; (4) Allocate the Transaction Price to the Performance Obligations in the Contract; and (5) Recognize Revenue When (or As) the Entity Satisfies a Performance Obligation. The Company recognizes consulting income when the services are performed and performance obligations are satisfied over time or at a point in time.

During the three and six months ended June 30, 2026, the Company recognized $7,333 and $40,000, respectively, of consulting revenue from advisory services provided to an institutional client under a fixed-fee engagement letter pursuant to which the Company furnished strategic guidance on the client’s digital asset adoption, treasury strategy, and related operational and market considerations. The Company identified the engagement as a single performance obligation comprising a series of distinct advisory services that the client simultaneously received and consumed as the Company performed, and revenue was recognized over time on a straight-line basis over the contractual service period. The engagement concluded during the three months ended June 30, 2026, was invoiced in full in April 2026, and was collected in May 2026. The Company did not generate revenue during the three or six months ended June 30, 2025.

For the three and six months ended June 30, 2026, one customer accounted for 100% of the Company’s revenue. The Company had no other customers or revenue arrangements during the periods presented.

Income Taxes

The Company recognizes deferred tax assets and liabilities for the expected future tax consequences of items that have been included or excluded in the financial statements or tax returns. Deferred tax assets and liabilities are determined on the basis of the difference between the tax basis of assets and liabilities and their respective financial reporting amounts (“temporary differences”) at enacted tax rates in effect for the years in which the temporary differences are expected to reverse. The Company adopted the provisions of ASC Topic 740-10, which prescribes a recognition threshold and measurement process for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. Management has evaluated and concluded that there are no material tax positions requiring recognition in the Company’s unaudited condensed consolidated financial statements as of June 30, 2026. The Company does not expect any significant changes in its unrecognized tax benefits within twelve months of the reporting date. The Company’s 2022, 2023, 2024, and 2025 tax returns remain open for audit for Federal and State taxing authorities. The Company’s policy is to classify assessments, if any, for tax related interest as interest expense and penalties as general and administrative expenses in the statement of operations.

Marketable Securities

The Company accounts for marketable equity securities under ASU 2016-01, Financial Instruments – Overall: Recognition and Measurement of Financial Assets and Financial Liabilities. Under this guidance, equity investments (except those accounted for under the equity method of accounting or those that result in consolidation of the investee) are measured at fair value, with changes in fair value recognized in net income. NextNRG Inc. is a related party because Michael Farkas, the Company’s Chairman, beneficially owns approximately 48% of its outstanding common stock. The Company accounts for its investment in NextNRG Inc. (formerly known as EZFill Holdings, Inc.) as an equity security measured at fair value. Accordingly, unrealized gains and losses on this investment for the three and six months ended June 30, 2026 and 2025 have been recognized in Other Income (Expense). At June 30, 2026, the Company owned 26,573 shares of NextNRG Inc. with a fair value of $9,306 (approximately $0.35 per share), reported on the balance sheet as Marketable securities — related party. The Company recognized unrealized losses of $1,324 and $29,225 on this investment during the three and six months ended June 30, 2026, respectively.

Investments — Related Parties

When the fair value of an investment is indeterminable, the Company accounts for its investments that are under 20% of the total equity outstanding using the cost method. For investments in which the Company holds between 20–50% equity and is non-controlling, the investments are accounted for using the equity method. For any investments in which the Company holds over 50% of the outstanding stock, the Company consolidates those entities into its consolidated financial statements herein. The Company holds one investment as of June 30, 2026 and one investment as of December 31, 2025.

Concentration of Credit Risk

Financial instruments that potentially subject the Company to concentrations of credit risk primarily consist of cash, cash equivalents and marketable securities. As of June 30, 2026 and December 31, 2025, the carrying value of marketable securities was $9,306 and $38,531, respectively. The securities are included in Marketable securities — related party on the consolidated balance sheets and consist of common shares held in one (1) investment which is listed on the Nasdaq Capital Market under the symbol NXXT.

Principles of Consolidation

The consolidated financial statements include the Company and its wholly owned subsidiary, Balance Labs LLC. All intercompany balances and transactions have been eliminated in consolidation.

Net Loss Per Common Share

Basic loss per common share is computed by dividing net loss by the weighted average number of common shares outstanding during the period. Diluted loss per common share is computed by dividing net loss by the weighted average number of common shares outstanding plus dilutive common share equivalents during the period. Because the Company reported a net loss for the three and six months ended June 30, 2026, all potentially dilutive securities were anti-dilutive and were excluded from the computation of diluted loss per share, including 157,496 shares issuable under the Chase Mortgage convertible note and all unvested equity awards subject to service-based vesting. For the three and six months ended June 30, 2025, potentially dilutive securities consisted of 4,334,470 shares from convertible notes payable, which were excluded from the computation of diluted loss per share because their effect would have been anti-dilutive. Diluted loss per share equals basic loss per share for all periods presented.

Stock-Based Compensation

The Company measures the cost of services received in exchange for an award of equity instruments based on the fair value of the award. For employees, the fair value of the award is measured on the grant date; for non-employees, the fair value of the award is generally re-measured on vesting dates and financial reporting dates until the service period is complete. The fair value amount is then recognized over the period during which services are required to be provided in exchange for the award, usually the vesting period. Awards granted to directors are treated on the same basis as awards granted to employees.

Derivative Liability

The Company accounts for the anti-dilution provision contained in the Chief Executive Officer’s August 2025 employment agreement as a derivative liability under ASC 815, Derivatives and Hedging. The derivative liability is initially recognized at fair value and is remeasured to fair value at each reporting date, with changes in fair value recorded in earnings as a gain or loss on remeasurement of derivative liability. Fair value is estimated using a Monte Carlo simulation model. As of June 30, 2026 and December 31, 2025, the derivative liability was $962,301 and $1,944,806, respectively, resulting in a gain on remeasurement of $276,449 for the three months ended June 30, 2026 and a net gain on remeasurement of $982,505 for the six months ended June 30, 2026. See Note 9.

Fair Value of Financial Instruments

The Company measures its financial assets and liabilities in accordance with GAAP. For certain of our financial instruments, including cash, accounts payable, and the short-term portion of long-term debt, the carrying amounts approximate fair value due to their short maturities. We adopted accounting guidance for financial and non-financial assets and liabilities (ASC 820). This standard defines fair value, provides guidance for measuring fair value and requires certain disclosures. The guidance utilizes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three broad levels:

Level 1: Observable inputs such as quoted prices (unadjusted) in active markets for identical assets or liabilities.

Level 2: Inputs other than quoted prices that are observable, either directly or indirectly. These include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active.

Level 3: Unobservable inputs in which little or no market data exists, therefore developed using estimates and assumptions developed by us, which reflect those that a market participant would use.

The following table presents the assets and liabilities of the Company measured and recorded at fair value on a recurring basis and their level within the fair value hierarchy as of June 30, 2026:

The following table presents the assets and liabilities of the Company measured and recorded at fair value on a recurring basis and their level within the fair value hierarchy as of December 31, 2025:

Property and Equipment

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

Depreciation expense for the three and six months ended June 30, 2026 and 2025 totaled $0. The fixed assets are fully depreciated.

Business Segments

The Company’s Chief Executive Officer, who serves as the Chief Operating Decision Maker, evaluates the Company’s financial performance and allocates resources based on a consolidated view of the business. Consequently, the Company operates as a single reportable segment under ASC 280, Segment Reporting. The Chief Operating Decision Maker classifies this segment as Consulting. The Company’s operations are managed centrally, and financial performance is assessed using revenue, operating loss and the significant expense categories presented on the face of the Consolidated Statements of Operations, being salaries and wages, professional fees and general and administrative expenses. There was no intersegment activity and the Company had no long-lived assets during the periods presented.

Recently Issued Accounting Pronouncements

The Company has evaluated all new accounting standards that are in effect and may impact its unaudited condensed consolidated financial statements and does not believe that there are any other new accounting standards that have been issued that might have a material impact on its financial position or results of operations.

In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures (“ASU 2023-07”). ASU 2023-07 aims to improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses. The Company adopted ASU 2023-07 effective January 1, 2024. The adoption of ASU 2023-07 did not have a material impact on the Company’s consolidated financial statements.

Note 4 —Stockholders’ Deficit

Authorized Capital

The Company is authorized to issue 500,000,000 shares of common stock, with a par value of $0.0001, and 50,000,000 shares of preferred stock, with a par value of $0.0001. As of June 30, 2026, the Company had 46,852,319 shares of common stock outstanding and 0 shares of preferred stock outstanding. There wereno outstanding warrants as of June 30, 2026.

2025 Equity Issuances

On August 22, 2025, the Company issued 780,264 shares of common stock to Alan Campbell pursuant to his employment agreement in connection with his appointment as Chief Executive Officer.

In November 2025, the Company issued an aggregate of 16,667,788 shares of common stock upon the conversion of approximately $4,167,005 of outstanding principal and accrued interest under certain promissory notes and debentures. Because the fair market value of the Company’s common stock on the conversion date was $1.57 per share, the Company recognized a non-cash loss on settlement of debt of $16,595,746 in the year ended December 31, 2025, representing the difference between the fair value of the shares issued and the carrying value of the debt extinguished.

In November 2025, the Company also issued an aggregate of 7,730,267 shares of common stock to certain employees, executive officers, directors and consultants for services rendered and equity awards, including 906,420 additional shares granted to Alan Campbell pursuant to the anti-dilution provision in his employment agreement. Total stock-based compensation expense recognized in 2025 was $12,700,399.

Six Months Ended June 30, 2026

There were no issuances or repurchases of common stock during the three or six months ended June 30, 2026. As of June 30, 2026,46,852,319 shares of common stock were outstanding, unchanged from December 31, 2025. During the three and six months ended June 30, 2026, the Company recognized $332,810 and $661,963, respectively, of stock-based compensation expense, with a corresponding increase to additional paid-in capital, related to the vesting of equity awards. See Note 10.

Note 5 —Related Party Transactions

CEO Compensation

Alan Campbell serves as the Company’s Chief Executive Officer pursuant to an employment agreement entered into in August 2025. The agreement provides for an annual salary of $350,000 and an initial equity grant of 780,264 shares of common stock that vest over three years. The agreement also contains an anti-dilution provision (see Note 9 — Derivative Liability).

Office Space

The Company’s premises at 407 Lincoln Road, Suite 9F, Miami Beach, FL 33139 are provided by The Farkas Group, Inc., a related party, at no cost to the Company.

Accounts Payable — Related Party

Accounts payable — related party was $926,659 as of June 30, 2026 and December 31, 2025. During the six months ended June 30, 2026 there were no changes.

Related Party Notes and Advances

The following table summarizes related party notes and advances outstanding as of June 30, 2026:

Related Party Interest Expense

The following related party notes recognized interest expense for the periods presented:

Note 6 —Convertible Notes and Notes Payable

Convertible Note Payable — Chase Mortgage

On December 23, 2015, the Company issued a convertible note payable to Chase Mortgage, Inc., not a related party, for $25,000, at an interest rate of 8%, due on March 23, 2016. The note also included 100,000 warrants at an exercise price of $1 per share, which expired on December 23, 2020. The note is convertible at the holder’s discretion into the Company’s common stock at a price of $0.50 per share. The note has matured and is in default, which triggered an increased interest rate of 18%. The accrued interest balance on this note as of June 30, 2026 is $7,503 at the original 8% rate, plus an additional $46,245 of interest accrued at the 18% default rate. The note is recorded under convertible note payable in the liabilities section of the balance sheet at $25,000 and is in default.

Notes Payable — Related Party

On November 3, 2025 and November 11, 2025, The Farkas Group, Inc., an entity controlled by the Company’s Chairman, Michael D. Farkas, made loans to the Company in the amount of $250,000 each (totaling $500,000), each bearing interest at 8% per annum and maturing on May 3, 2026 and May 11, 2026, respectively. Both notes reached their stated maturity during the three months ended June 30, 2026 and were not repaid at maturity. As of June 30, 2026, the principal balance of $500,000, together with accrued interest of $25,753, remains outstanding.

Under the terms of the notes, upon the Company’s failure to tender payment on the maturity date, the lender has the right, upon notice to the Company, to declare all outstanding principal and accrued interest immediately due and payable. As of the date these financial statements were available to be issued, the lender has not delivered a notice of acceleration or a demand for payment. Given the related-party nature of the notes, the Company anticipates that it will either repay the notes or negotiate an extension of the maturity dates with the lender; however, no agreement has been reached and the lender retains its contractual right to demand payment at any time.

Short-term Advances — Related Party

On October 14, 2025, Michael Farkas, the Company’s Chairman, advanced $18,000 to the Company at an interest rate of 18% per annum, maturing on October 14, 2026. As of June 30, 2026, accrued interest of $2,299 has been recorded on this advance. This advance has not yet reached maturity.

Prior Period Conversions

Substantially all other previously outstanding convertible notes and notes payable, including the $500,000 convertible debenture originally issued to Newell Trading Group (subsequently held by 16th Avenue Associates), the convertible note payable from Balance Group LLC, and the convertible note payable from the CEO, were converted into common stock of the Company on November 5, 2025 as part of the Company’s debt-to-equity conversion. See Note 4.

Note 7 —Commitments and Contingencies

Litigation, Claims and Assessments

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. In the opinion of management, the ultimate disposition of these matters will not have a material adverse effect on the Company’s condensed consolidated financial position or results of operations.

Note 8 —Other Income — Settlement of Accounts Payable

There wasno gain on settlement of accounts payable recognized for the three or six months ended June 30, 2026, or for the three months ended June 30, 2025. During the six months ended June 30, 2025, the Company settled an outstanding accounts payable balance with a law firm that provided legal services to the Company between 2017 and 2020. The settlement resulted in a reduction of the payable balance of $127,579, and the amount settled was recognized as other income on the Company’s statements of operations for that period. That settlement occurred during the three months ended March 31, 2025.

Note 9 —Derivative Liability

In connection with the August 2025 employment agreement entered into with Alan Campbell, the Company’s Chief Executive Officer, the Company committed to issue additional shares of common stock pursuant to an anti-dilution provision in the event of certain dilutive issuances. This provision was determined to meet the definition of a derivative liability under ASC 815, Derivatives and Hedging, and is therefore measured at fair value, with changes in fair value recorded in earnings.

The fair value of the derivative liability is estimated using a Monte Carlo simulation model. The anti-dilution feature entitles Mr. Campbell to maintain a fixed ownership percentage of the Company’s common stock until the Company has raised an aggregate of $1 billion in total capital. Significant inputs to the model include the Company’s stock price, expected volatility, the risk-free interest rate, and the probability and expected timing of future financing events that would trigger the anti-dilution provision within its contractual term.

The following table presents the rollforward of the derivative liability:

The derivative liability is classified as a Level 3 fair value measurement due to the use of unobservable inputs. The Company recognized a gain of $276,449 on remeasurement of the derivative for the three months ended June 30, 2026 and a net gain of $982,505 for the six months ended June 30, 2026, in each case included in “Total other income (expense), net” on the Consolidated Statements of Operations.

Note 10 — Stock-Based Compensation

The Company recognized $332,810 and $661,963 of stock-based compensation expense for the three and six months ended June 30, 2026, respectively, related to the 780,264-share equity award granted to Alan Campbell, the Company’s Chief Executive Officer, in August 2025. The award has a grant-date fair value of $2.80 per share, or $2,184,739 in aggregate, and vests in three equal annual instalments over three years. The Company recognizes compensation expense under the graded vesting method, with each instalment expensed on a straight-line basis over its own requisite service period. Stock-based compensation expense is included within Salaries and wages on the Consolidated Statements of Operations.

The Company recognized $0 of stock-based compensation expense for the three and six months ended June 30, 2025.

As of June 30, 2026, cumulative stock-based compensation expense of $1,141,063 had been recognized on this award and unrecognized compensation cost was $1,043,676. That cost is expected to be recognized over the remaining vesting period of approximately 2.1 years. Because the award is expensed under the graded vesting method, recognition is weighted toward the earlier periods of the vesting term.

Note 11 —Subsequent Events

The Company has evaluated subsequent events through the date these unaudited condensed consolidated financial statements were issued.

On July 16, 2026, the Company entered into a Consultancy Agreement with Challenger Deep SAS (“Kaiko”), a société par actions simplifiée organized under the laws of France, which is not a related party of the Company. Under the agreement and the related statement of work, the Company provides strategic advisory and business development services in support of Kaiko’s commercial and strategic positioning. Fees are $20,000 per month, exclusive of applicable taxes, invoiced monthly in arrears. The agreement has an initial term of two months from the effective date and may be terminated by either party for convenience upon not less than thirty days’ prior written notice. The agreement is governed by the laws of England and Wales.

The agreement was entered into after June 30, 2026 and is a non-recognized subsequent event. Accordingly, no revenue, receivable or other amount related to this engagement is reflected in the accompanying unaudited condensed consolidated financial statements. Revenue will be recognized as the related services are performed in accordance with ASC 606 beginning in the three months ending September 30, 2026.

Other than as described above, the Company has determined that there are no subsequent events requiring disclosure.