Kinetic Seas Inc.

NOTES TO UNAUDITED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2026 AND 2025

NOTE 1 –ORGANIZATION AND DESCRIPTION OF BUSINESS

Nature of Operations

Kinetic Seas Incorporated (the “Company”) was formed on January 3, 2015, as a Colorado corporation with the name ONCO Merger Sub, Inc. On January 5, 2025, the Company merged with Oncology Med, Inc. as part of a holding company reorganization involving Oracle Nutraceuticals Company, under which the Company was the surviving entity in the merger. On January 18, 2015, the Company changed its name to Oncology Med, Inc. On September 16, 2016, the Company changed its name to Bellatora, Inc. On January 19, 2024, the Company changed its name to Kinetic Seas Incorporated.

The Company is an Artificial Intelligence (“AI”) consulting, research and development, infrastructure, and software company with a primary focus on GPU Cloud Hosting.

By a written consent dated December 14, 2023, the Board of Directors of the Company approved the appointment of Edward Honour, Jeffey Lozinski, Joseph Lehman, and Robert Jackson to the Board of Directors of the Company, and appointed Edward Honour as Chairman (the “New Directors”). At the same time, the Board of Directors approved the issuance of 21,600,000 shares of common stock at $0.001 per share to the New Directors and certain new employees, of which 19,950,000 were acquired by the New Directors. In addition, the Board of Directors also approved a private offering of 10,000,000 shares of common stock at $0.05 per share. An affiliate of a New Director purchased the initial 1,000,000 shares in this offering. As a result of both transactions, the New Directors and their affiliates acquired an aggregate of 20,950,000 Shares of common stock, which constituted approximately 84% of issued and outstanding common shares of the Company at the time.

The appointment of the New Directors to the Company’s board, and the sale to the New Directors of a controlling interest in the Company, were made to enable the Company to enter the business of artificial intelligence hosting, research & development, and consulting. Before the change in control to the New Directors, the Company was a shell company.

The Company’s accounting year-end is December 31.

NOTE 2 –SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The financial statements of the Company have been prepared in accordance with GAAP. This basis of accounting involves the application of accrual accounting and consequently, revenues and gains are recognized when earned, and expenses and losses or recognized when incurred.

Use of Estimates

The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of accrued liabilities and the reported amounts of revenues and expenses during the reporting period. The most significant estimates relate to revenue recognition, valuation of accounts receivable, and the allowance for doubtful accounts, inventories, and contingencies. The Company bases its estimates on historical experience, known or expected trends, and various other assumptions that are believed to be reasonable given the quality of information available as of the date of these financial statements. The results of these assumptions provide the basis for making estimates about the carrying amounts of assets and liabilities that are not readily apparent from other sources. Actual results could differ from these estimates.

Revenue Recognition and Cost of Consulting Labor

The Company adopted Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers (“ASC 606”), using the modified retrospective method applied to those contracts that were not completed as of January 1, 2018.

The Company will recognize revenue in accordance with Accounting Standards Codification No. 606, “Revenue from Contracts with Customers” (“ASC606”). ASC 606 directs entities to recognize revenue when the promised goods or services are transferred to the customer. The amount of revenue recognized should equal the total consideration an entity expects to receive in return for the goods or services. The Financial Accounting Standards Board (FASB) created a five-step approach that entities should apply when determining the amount and timing of revenue recognition:

Step 1: Identify the contract with a customer

Step 2: Identify the performance obligations in the contract

Step 3: Determine the transaction price

Step 4: Allocate the transaction price to the performance obligations in the contract

Step 5: Recognize revenue when (or as) the entity satisfies a performance obligation.

During the three months ended March 31, 2026, the Company generated consulting revenue of $25,895 and product sales revenue of $519,750, resulting in total revenue of $545,645, compared to consulting revenue of $67,871 during the three months ended March 31, 2025. Cost of consulting labor was $0 for the three months ended March 31, 2026, compared to $57,162 for the three months ended March 31, 2025. As a result, gross margin was $545,645 for the three months ended March 31, 2026, compared to $10,708 for the comparable prior-year period.

The Company didnot record any direct software development costs in cost of sales during the three months ended March 31, 2026. Software development expenditures are included within Selling, General and Administrative expenses because the underlying software, code base, technology components, and intellectual property are developed for use across multiple current and prospective customer engagements and future commercial opportunities. Management believes these costs cannot be reasonably allocated to any specific product sale, customer contract, or revenue stream, as the developed technologies may be utilized in numerous current and future projects, some of which may ultimately result in customer product sales while others may not. Accordingly, all software development costs are classified as general and administrative expenses rather than direct costs of revenue.

Cash and Cash Equivalents

The Company considers all highly liquid temporary cash investments with an original maturity of three months or less when purchased to be cash equivalents. As of March 31, 2026 and December 31, 2025, the Company had cash and cash equivalents of $205,667 and $7,767, respectively.

Stock-based Compensation

The Company accounts for stock-based compensation using the fair value method following the guidance outlined in Section 718-10 of the FASB Accounting Standards Codification for disclosure about Stock-Based Compensation. This section requires a public entity to measure the cost of employee services received in exchange for an award of equity instruments based on the grant-date fair value of the award (with limited exceptions). That cost will be recognized over the period during which an employee is required to provide service in exchange for the award- the requisite service period (usually the vesting period). No compensation cost is recognized for equity instruments for which employees do not render the requisite service.

Income taxes

The Company accounts for income taxes under FASB ASC 740,“Accounting for Income Taxes”. Under FASB ASC 740, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Under FASB ASC 740, the effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. FASB ASC 740-10-05,“Accounting for Uncertainty in Income Taxes” prescribes a recognition threshold and a measurement attribute for the financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more-likely-than-not to be sustained upon examination by taxing authorities.

The amount recognized is measured as the largest amount of benefit that is greater than 50 percent likely of being realized upon ultimate settlement. The Company assesses the validity of its conclusions regarding uncertain tax positions quarterly to determine if facts or circumstances have arisen that might cause it to change its judgment regarding the likelihood of a tax position’s sustainability under audit.

On Dec. 18, 2019, the Financial Accounting Standards Board (FASB) released Accounting Standards Update (ASU) 2019-12, which affects general principles within Topic 740, Income Taxes. The amendments of ASU 2019-12 are meant to simplify and reduce the cost of accounting for income taxes. The FASB has stated that the ASU is being issued as part of its Simplification Initiative, which is meant to reduce complexity in accounting standards by improving certain areas of generally accepted accounting principles (GAAP) without compromising information provided to users of financial statements. The Company adopted this guidance on January 1, 2021, which had no impact on the Company’s financial statements.

Net Loss per Share

Net loss per common share is computed by dividing net loss by the weighted average common shares outstanding during the period as defined by Financial Accounting Standards, ASC Topic 260, “Earnings per Share.” Basic earnings per common share (“EPS”) calculations are determined by dividing net income by the weighted average number of shares of common stock outstanding during the year. Diluted earnings per common share calculations are determined by dividing net income by the weighted average number of common shares and dilutive common share equivalents outstanding.

Recent Accounting Pronouncements

There have been no new or material changes to the significant accounting policies discussed in the Company’s audited financial statements in its Annual Report on Form 10-K for the fiscal year ended December 31, 2025 as filed with the SEC on May 29, 2026, that are of significance, or potential significance, to the Company.

NOTE 3 –GOING CONCERN

The accompanying financial statements have been prepared assuming the Company will continue as a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business for the twelve months following the date of these financial statements.

The Company has incurred significant operating losses since inception. As of March 31, 2026, the Company had an accumulated deficit of approximately $7.63 million and a working capital deficit of approximately $2.03 million. In addition, the Company reported a net loss of $1,375,608 for the three months ended March 31, 2026.

The Company does not currently expect that cash generated from operations will be sufficient to fund its anticipated operating requirements. These conditions raise substantial doubt about the Company's ability to continue as a going concern within one year after the date that these financial statements are issued.

Management's plans to alleviate this substantial doubt include continued efforts to raise capital through private placements of equity securities, debt financing arrangements, strategic partnerships, and other financing alternatives. The Company has historically been successful in obtaining funding from investors and lenders and continues to evaluate additional sources of capital to support operations, product development, commercialization efforts, and working capital requirements. However, there can be no assurance that such financing will be available on acceptable terms, if at all.

The accompanying financial statements have been prepared assuming the Company will continue as a going concern and do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

NOTE 4 –ACCRUED LIABILITIES

As of March 31, 2026 and December 31, 2025, the Company had accrued liabilities of $(10) and $540, respectively.

The decrease in accrued liabilities during the three months ended March 31, 2026 reflects the settlement, adjustment, and reclassification of accrued obligations recorded in prior periods. As of March 31, 2026, substantially all accrued liabilities had been satisfied, resulting in an immaterial net debit balance.

The Company also maintains a liability related to certain historical cash receipts associated with cigar sales recorded during the year ended December 31, 2021. Because the Company was unable to substantiate revenue recognition for these receipts in accordance with Accounting Standards Codification ("ASC") 606, Revenue from Contracts with Customers, the amounts were recorded as a liability rather than recognized as revenue. This liability will remain on the Company's balance sheet until management determines that the obligation has been resolved or the applicable statute of limitations has expired.

NOTE 5 –RELATED PARTY TRANSACTIONS

On September 18, 2021, the Company entered into a $30,000 Promissory Note Agreement at 24% interest with Coral Investment Partners (“CIP”). CIP’s managing director is Erik Nelson who was formerly the CEO of the Company. On June 30, 2022, CIP increased its Promissory Note to $50,000 by funding another $20,000 loan to the Company. Subsequently, CIP made an additional loan of $40,000 on September 15, 2022, to bring the total loan balance to $90,000 plus $21,674 in accrued interest. During the fiscal year ended December 31, 2023, CIP made additional loan amounts of $5,000 on February 15, 2023, $22,000 on March 29, 2023, $11,000 on June 30, 2023, $10,000 on May 10, 2023, $4,000 on June 29, 2023, $10,000 on July 5, 2023, $15,000 on August 21, 2023 and $15,000 on November 6, 2023.

On December 14, 2023, the Company and CIP agreed to convert $50,000 of indebtedness under the Promissory Note into 1,000,000 shares of the Company’s common stock at $0.05 per share. Also after December 14, 2023, the interest rate was reduced to 12% for the period from December 14, 2023, through December 31, 2023. Effective January 1, 2024, the interest rate became 10%.

The conversion of debt into stock reduced the balance owed on the Promissory Note to $182,000 of principal and $11,098 of interest as of December 31, 2023.

During the three months ended March 31, 2026, the Company entered into additional financing arrangements that increased outstanding notes payable by approximately $451,964. In addition, the Company settled certain outstanding debt obligations through the transfer of investment securities and the issuance of common stock, resulting in a reduction of both principal and accrued interest balances. As a result of these transactions, notes payable from related party decreased from $315,000 at December 31, 2025 to Nil at March 31, 2026 and accrued interest from related party decreased from $22,753 at December 31, 2025 to Nil at March 31, 2026. As of December 31, 2025, the Company had notes payable of $315,000 and accrued interest of $22,853 from related party.

Interest expense of $53,702 was recognized during the three months ended March 31, 2026 in accordance with the terms of the Company's financing agreements. The Company continues to rely on a combination of debt financing, equity issuances, and strategic financing arrangements to support its operations and growth initiatives.

On September 20, 2024, Lisa Lozinski, the spouse of a Company director, loaned the Company $50,000 pursuant to a promissory note bearing interest at 18% per annum. The note required monthly interest payments and included certain equity-related provisions. During the three months ended March 31, 2026, the Company continued to make required interest payments under the agreement. As of March 31, 2026, no amounts were classified as notes payable to related parties on the Company's balance sheet.

During the three months ended March 31, 2026, Jeffrey Lozinski, an officer of the Company, continued to provide operational support to the Company. As of March 31, 2026, the Company hadno balance recorded as notes payable to related parties.

As of March 31, 2026 and December 31, 2025, the Company had 500 shares of Series A Convertible Preferred Stock issued and outstanding.

As of March 31, 2026 and December 31, 2025, the Company had 4,917 and 11,917 shares of Series B Preferred Stock issued and outstanding, respectively. The decrease in Series B Preferred Stock during the three months ended March 31, 2026 resulted from the conversion of 7,000 shares of Series B Preferred Stock into 2,600,000 shares of the Company's common stock in accordance with the terms of the Series B Preferred Stock.

NOTE 6 –EQUITY

The Company is authorized to issue 200,000,000 shares of common stock, par value $0.00001 per share, and 10,000,000 shares of preferred stock, par value $0.00001 per share.

As of March 31, 2026, the Company had 57,145,926 shares of common stock issued and outstanding, compared to 52,789,000 shares outstanding as of December 31, 2025.

During the three months ended March 31, 2026, the Company issued an aggregate of 4,356,926 shares of common stock. The issuances were primarily related to capital raising activities, debt conversions, financing fees, and other corporate purposes. All shares were issued pursuant to applicable exemptions from registration under the Securities Act of 1933, as amended.

Issuance of Common Stock

On December 14, 2023, the Board of Directors approved an offering of up to 10,000,000 shares of common stock in a private offering to accredited investors for $0.05 per share. Prior to the year-end, the Company issued 1,000,000 shares in an offering for an investment of $50,000. During the six months ended June 30, the Company completed the private placement by issuing 9,000,000 shares at $0.05 per share which generated $450,000 in proceeds.

On March 19, 2024, the Board of Directors approved an offering of up to 6,000,000 shares of common stock in a private offering to accredited investors for $0.05 per share. During the three months ended June 30, 2024, the Company issued 4,104,000 shares in the offering and raised $205,200 proceeds. The offering of 6,000,000 shares continued until July 14, 2024. During the period from July 1, 2024, through July 14, 2024, the Company sold 197,000 common shares in the offering and raised $9,850 in proceeds.

During the six months ended June 30, 2024, the Company also issued 40,000 shares for services rendered valued at $2,000.

On July 15, 2024, the Company commenced a new offering of 2,000,000 shares at a price of $0.50 per share. During the period from July 15, 2024, to March 31, 2025, the Company sold 242,000 common shares in the offering and raised $121,000 in proceeds.

During the three months ended March 31, 2025, holders of Series A and Series B Preferred Stock converted all outstanding preferred shares into an aggregate of 26,600,000 shares of the Company's common stock. In addition, one shareholder exchanged 500,000 shares of common stock for 500 shares of Series A Preferred Stock. During the same period, the Company issued 2,125,000 shares of common stock to two investor relations firms for services rendered.

As of March 31, 2026, the Company had 500 shares of Series A Preferred Stock outstanding and 4,917 shares of Series B Preferred Stock outstanding. As of March 31, 2026, the Company had 57,145,926 shares of common stock issued and outstanding, compared to 52,789,000 shares outstanding as of December 31, 2025.

During the three months ended March 31, 2026, the Company issued shares of common stock in connection with the conversion of Series B Preferred Stock, the settlement of interest obligations, compensation for services, financing fees, and other corporate financing activities. The Company also issued common stock in connection with previously approved financing and capital formation transactions.

The decrease in Series B Preferred Stock during the quarter resulted from the conversion of 7,000 shares of Series B Preferred Stock into 2,600,000 shares of common stock in accordance with the terms of the Company's Certificate of Designation. These transactions, together with other equity issuances completed during the period, increased the Company's issued and outstanding common shares to 57,145,926 as of March 31, 2026.

Conversions completed in prior periods remain reflected in the Company's capital structure and stockholders' equity accounts as of March 31, 2026.

Issuance of Preferred A Stock

In February 2023, the Board of Directors approved the issuance of one series of preferred stock, the Series A Convertible Preferred Stock (the “Series A Preferred”), for 100,000,000 shares, of which 19,250 shares were issued on May 31, 2024, in exchange for 19,250,000 shares of common stock. During the three months ended September 30, 2024, the Company issued 150 shares of Series A Preferred as a financing fee. On November 18, 2024,1,700,000 common shares were converted to 1,700 Series A Preferred. As of December 31, 2024, there were 21,100 shares of Series A Preferred outstanding.

During the three months ended March 31, 2025, the 21,100 shares of Series A Preferred Stock then outstanding were converted into 21,100,000 shares of the Company's common stock. In addition,500,000 shares of common stock were exchanged for 500 shares of Series A Preferred Stock. As a result,500 shares of Series A Preferred Stock were outstanding as of March 31, 2025.

No additional conversions of Series A Preferred Stock occurred during the three months ended March 31, 2026. Accordingly, as of March 31, 2026 and December 31, 2025, the Company had 500 shares of Series A Preferred Stock issued and outstanding.

The Series A Preferred has the following rights:

Dividends: Each share of Series A Preferred is entitled to receive non-cumulative dividends equal to the amount of dividends that the holder of such share would have received if such share of Series A Preferred were converted into shares of common stock immediately prior to the record date of the dividend declared on the common stock.

Liquidation Preference: The Series A Preferred Stock is entitled to receive, prior to any distribution to any junior class of securities, an amount equal to $0.01 per share, plus any accrued but unpaid dividends, as a liquidation preference before any distribution may be made to the holders of any junior security, including the common stock.

Voting Rights: Each holder of Series A Preferred Stock shall vote with holders of the common stock upon any matter submitted to a vote of shareholders, in which event it shall have the number of votes equal to the number of shares of common stock into which such share of Series A Preferred Stock would be convertible on the record date for the vote or consent of shareholders.

Voluntary Conversion Rights: Each share of Series A Preferred Stock is convertible into 1,000 shares of common stock.

Mandatory Conversion Rights: The Company may convert all outstanding shares of Series A Preferred Stock into common stock, at the same ratio as the voluntary conversion rights held by the holders, at any time that there are less than 200,000 shares of Series A Preferred Stock outstanding.

Rank: The Series A Preferred ranks senior to the common stock and any other class or series of preferred stock that may be authorized and which is designated as junior to the Series A Preferred Stock.

Issuance of Preferred B Stock

On July 13, 2024, the Board of Directors approved the issuance of a second series of preferred stock, the Series B Convertible Preferred Stock (the “Series B Preferred”), for 10,000,000 shares. During the three months ended March 31, 2025, the Company issued 4,000 shares of Series B Preferred for cash consideration of $200,000, and 1,500 shares of Series B Preferred for consulting services valued at $750,000. As of December 31, 2024 there were 5,500 shares of Series B Preferred outstanding.

During the three months ended March 31, 2025, the 5,500 shares of Series B Preferred Stock then outstanding were converted into 5,500,000 shares of the Company's common stock. As a result, no shares of Series B Preferred Stock were outstanding as of March 31, 2025.

Subsequent to those conversions, the Company issued additional shares of Series B Preferred Stock. As of March 31, 2026 and December 31, 2025, the Company had 4,917 and 11,917 shares of Series B Preferred Stock issued and outstanding, respectively.

The Series B Preferred has the following rights:

Dividends: Each share of Series B Preferred is entitled to receive non-cumulative dividends equal to the amount of dividends that the holder of such share would have received if such share of Series B Preferred were converted into shares of common stock immediately prior to the record date of the dividend declared on the common stock.

Liquidation Preference: The Series B Preferred Stock is entitled to receive, prior to any distribution to any junior class of securities, an amount equal to $0.01 per share, plus any accrued but unpaid dividends, as a liquidation preference before any distribution may be made to the holders of any junior security, including the common stock.

Voting Rights: The Series B Preferred Stock does not have the right to vote on any matter submitted to a vote of shareholders, but is entitled to notice of any shareholder meeting or any action proposed to be taken by shareholders in lieu of a meeting.

Voluntary Conversion Rights: Each share of Series B Preferred is convertible into 1,000 shares of common stock, provided that no holder of Series B Preferred may convert its shares into common stock to the extent the holder would be the beneficial owner of more than 4.99% of the Company’s common stock immediately after the conversion, and further provided that the holder has the right to waive this limitation on at least 61 days prior notice to the Company.

Mandatory Conversion Rights: The Company may convert all outstanding shares of Series B Preferred Stock into common stock, at the same ratio as the voluntary conversion rights held by the holders, at any time that there are less than 200,000 shares of Series B Preferred Stock outstanding.

Rank: The Series B Preferred ranks senior to the common stock and any other class or series of preferred stock that may be authorized and which is designated as junior to the Series B Preferred. The Series B Preferred ranks junior to the Series A Preferred.

On July 24, 2024, the Company changed its Articles of Incorporation and filed a Certificate of Designation to create 10,000,000 shares of Series B Convertible Preferred Stock. The Series B preferred shares are junior to Series B Preferred Stock and have the same rights as Series A Preferred with one exception. Series B preferred holders cannot hold in excess of 4.99% of the number of shares of Common Stock outstanding immediately after giving effect to the conversion.

Warrants

The Company has outstanding 500,000 Class A Warrants and 500,000 Class B Warrants. The Class A Warrants are exercisable at $1.00 per share until June 20, 2026, and the Class B Warrants are exercisable at $2.50 per share until June 20, 2026. The Class A and B Warrants are exercisable at any time by the holder on a cash or cashless basis, provided that the holder may not exercise the warrants if the holder would own more than 4.99% of the Company immediately following the exercise, provided that the holder has the right to increase such percentage to no more than 9.99% upon at least 61 days prior written notice to the Company.

Reverse Stock Split

On June 5, 2023, the Company effected a 1 for 50,000 reverse split immediately followed by a 500 to 1 forward split. The net impact was areverse split of 1 for 100. At that time the split was declared the Company had 140,790,867 shares outstanding. Post split there were 3,046,000 shares outstanding. As a result of FINRA policies regarding beneficial ownership of odd lot holders, the Company issued approximately 1,000,000 in excess of the amounts anticipated by the split. This split has been retroactively applied in the financial statement to all prior periods, and all reference to share counts in this report reflect post-split amounts unless specifically stated otherwise.

NOTE 7 –NOTES PAYABLE

As of March 31, 2026, the Company had notes payable totaling $602,564, bearing interest rates ranging from 8% to 20%, net of a discount of $35,936, along with accrued interest of $12,623. During the three-month period ended March 31, 2026, the Company secured additional financing, increasing its outstanding notes payable by approximately $451,964. The Company also settled certain debt obligations by transferring investment securities and issuing common stock, which reduced both the principal and accrued interest balances. Accrued interest rose from $7,322 at December 31, 2025 to $12,623 as of March 31, 2026.

As of March 31, 2025, the Company had a total of $295,138 in short-term notes payable to ten different noteholders at interest rates varying from 10% to 36%. Approximately, $110,000 of these notes were past due and continue to accrue interest.

NOTE 8 –LEASES

During 2024, the Company entered into a non-cancellable four year lease for which it recorded a right-of-use asset and liability based on the present value of the lease payments in the amount of $82,897 using a term of 47 months and a discount rate of 12.00%.

The weighted average remaining lease term is 24 months and the weighted average discount rate is 12%. Operating lease expense for the three months ended March 31, 2026 was approximately $6,680.

Total lease payments under our non-cancellable leases as of March 31, 2026 were as follows:

NOTE 9 –SUBSEQUENT EVENTS

In accordance with ASC 855-10 the Company has performed an evaluation of subsequent events from March 31, 2026 through June 24, 2026, the date the financial statements were issued. Based on the evaluation, the Company did not identify and subsequent events that would have required adjustment or disclosure in the financial statements.