NOTE 3 – BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES

The unaudited interim condensed consolidated financial statements include the financial statements of the Company and the following subsidiary companies from the date of their formation or incorporation:

SCHEDULE OF COMPANY AND ITS SUBSIDIARIES

All significant intercompany balances and transactions have been eliminated in consolidation.

Reclassification

Certain prior period amounts have been reclassified to conform to the current period presentation. Such reclassifications are for presentation purposes only and have no effect on the Company’s net income or financial position in any of the periods presented.

Interim Financial Statements

The accompanying unaudited condensed consolidated financial statements of the Company have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Pursuant to these rules and regulations, certain information and note disclosures, normally included in financial statements prepared in accordance with GAAP, have been condensed or omitted. In the opinion of management, all adjustments (consisting of normal recurring items) considered necessary for a fair presentation have been included in the financial position, results of operations and cashflows for all periods presented. Operating results for the interim periods presented are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 2026. The balance sheet information as of December 31, 2025 has been derived from the audited financial statements at that date but does not include all the information and footnotes required by GAAP for complete financial statements. Certain information and footnote disclosures normally included in the annual consolidated financial statements prepared in accordance with GAAP have been condensed or omitted. These unaudited interim condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2025.

Common Control Acquisition

The company accounts for transfers of net assets between entities under common control in accordance with ASC 805-50, Transactions Between Entities Under Common Control. Assets and liabilities acquired in a common-control transaction are recognized at the historical carrying amounts of the transferring entity as of the date of transfer. No new basis of accounting is established, and no goodwill or bargain purchase gain is recognized as a result of the transaction. To the extent that such transactions require prior periods to be retrospectively adjusted, historical net equity amounts prior to the transaction date are reflected in “Net Parent Investment within equity. Upon the transfer of a business under common control, the Company records the transferred assets at their historical carrying values. In the unaudited condensed consolidated financial statements, any investment recorded by the receiving entity is eliminated in consolidation. To the extent consideration transferred exceeds the historical carrying value of the net assets acquired, the excess is accounted for as a distribution to parent and is reflected within equity. In the accompanying unaudited condensed consolidated statement of cashflows, cash consideration up to the carrying value of net assets acquired is presented as an investing activity and cash consideration in excess of the carrying value of net assets acquired is presented as a financing.

Revenue Recognition

As discussed in Note 4, Common Control Transactions, the Company acquired RPD in a transaction between entities under common control. As a result, RPD has been included in the Company’s consolidated financial statements from that date forward, and its revenues and expenses are reflected in the accompanying consolidated statements of operations beginning on April 16, 2025. The common control transaction has been accounted for in a manner consistent with the applicable guidance, and the inclusion of RPD’s results reflects the retrospective combination of entities under common control, as further described in Note 4.

Nature of Revenue RPD

The Company generates substantially all its revenue from providing engineering, pilot plant operations, testing, process development, and related technical services to customers. These services are primarily performed utilizing the Company’s pilot plant and demonstration equipment and related infrastructure. In certain arrangements, the Company also designs, manufactures, and transfers pilot units or components of pilot units to customers as part of its project deliverables. Revenue is recognized in accordance with ASC Topic 606, Revenue from Contracts with Customers, when control of the promised goods or service is transferred to customers in an amount that reflects the consideration the Company expects to be entitled to in exchange for those services or goods.

The Company evaluates its contracts to identify performance obligations, which represent promises to transfer distinct goods or services to customers. In most arrangements, the Company provides a series of highly integrated services, including engineering, design, construction, commissioning, operations, testing, analytics, and reporting, that together represent a single performance obligation because the individual services are not separately identifiable within the context of the contract. In certain arrangements, contracts may include distinct goods or services, such as standalone consulting services, reports, or equipment transfers, which are accounted for as separate performance obligations.

The transaction price is determined based on the consideration specified in the contract and may include fixed fees, time-based service charges, reimbursable costs, materials, and approved contract modifications. Certain contracts contain variable consideration, including usage-based fees, reimbursable costs, and change orders. Variable consideration is estimated and included in the transaction price to the extent that it is probable that a significant reversal of cumulative revenue recognized will not occur when the uncertainty is subsequently resolved. The Company’s contracts generally have payment terms of one year or less and do not contain a significant financing component. When a contract contains multiple performance obligations, the Company allocates the transaction price to each performance obligation based on relative standalone selling prices. Standalone selling prices are based on observable prices when available and otherwise estimated using methods such as expected cost plus margin or other reasonable approaches that maximize observable inputs.

The company recognizes revenue when it satisfies the performance obligation by transferring a product or service to the customer. Revenue is recognized either over time or at a point in time depending on the nature of the Company’s performance obligations. The majority of the Company’s revenue is recognized over time as services are performed because the customer simultaneously receives and consumes the benefits of the Company’s performance. Progress toward completion is measured using methods that best depict the transfer of control to the customer, project progress, costs incurred, or other measures of performance, depending on the nature of the arrangement. Revenue associated with distinct goods or services that do not qualify for over-time recognition is recognized at a point in time when control transfers to the customer.

Contract Balances

The timing of revenue recognition may differ from the timing of invoicing and cash collections. Accounts receivable are recorded when the Company has an unconditional right to consideration. Contract assets are recognized when revenue is recognized prior to the Company’s right to invoice the customer, and deferred revenues are recognized when consideration is received or billed in advance of the transfer of goods or services.

Remaining Performance Obligations

The Company has elected the practical expedient under ASC 606 not to disclose information about remaining performance obligations for contracts with an original expected duration of one year or less. Substantially all of the Company’s contracts qualify for this practical expedient.

Fair Value Option and Convertible Note

In April 2026, the Company issued a senior secured convertible promissory note (the “RPD Convertible Note”) to Abundia Financial in connection with the acquisition of RPD Technologies Americas, LLC. The RPD Convertible Note has a principal balance of $4,040,000, bears interest at a stated rate of 10%, and matures approximately 14 months from the issuance date. The RPD Convertible Note is convertible into shares of the Company’s common stock at the option of the holder based on a defined conversion formula, or may be settled in cash at maturity or upon conversion in accordance with the terms of the agreement.

The Company has elected the fair value option in accordance with ASC Topic 825, Financial Instruments, for the RPD Convertible Note. Under the fair value option, the note is initially recognized at fair value and subsequently remeasured at fair value at each reporting date, with changes in fair value recognized in earnings.

The Company elected the fair value option to simplify the accounting for the RPD Convertible Note, which contains embedded conversion features that would otherwise require evaluation and potential bifurcation under ASC Topic 815, Derivatives and Hedging.

The Convertible Note is presented as “Convertible note payable measured at fair value” within liabilities on the unaudited condensed consolidated balance sheets. Changes in the fair value of the Convertible Note are presented in “Change in fair value of convertible note” within the unaudited condensed consolidated statements of operations. The portion of the change in fair value attributable to instrument-specific credit risk is recorded in other comprehensive income (loss). Any issuance costs and fees incurred in connection with the Convertible Note are recorded within general and administrative expenses in the unaudited condensed consolidated statements of operations as incurred and are not deferred or capitalized.

Because the RPD Convertible Note was issued in a related-party transaction, the Company evaluated whether the transaction price represented fair value at issuance. The Company determined the initial fair value using valuation techniques that incorporate market participant assumptions, including credit risk and the contractual features of the instrument. Any difference between the transaction price and the estimated fair value at issuance was recorded as an equity contribution or distribution, as appropriate.

Recent Accounting Pronouncements

Adopted Standards

In July 2025, the FASB issued ASU 2025-05, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets. The amendments in this ASU provide that in developing reasonable and supportable forecasts as part of estimating expected credit losses for current accounts receivable and current contract assets all entities may elect a practical expedient that assumes that current conditions as of the balance sheet date do not change for the remaining life of the asset. The amendments in this ASU are effective for all entities for annual reporting periods beginning after December 15, 2025, and interim reporting periods within those annual reporting periods with updates to be applied on a prospective basis. The Company adopted ASU 2025-05 as of January 1, 2026. The adoption of ASU 2025-05 did not have a material impact on the Company’s financial statements.

Not Yet Adopted Standards

In November 2024, the FASB issued ASU 2024-03, Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses (“ASU 2024-03”). ASU 2024-03 requires additional disclosure of specific types of expenses included in the expense captions presented on the face of the income statement as well as disclosures about selling expenses. ASU 2024-03 is effective for fiscal years beginning after December 15, 2026, and interim periods beginning after December 15, 2027, with early adoption permitted. ASU 2024-03 may be applied prospectively with the option for retrospective application for all prior periods presented. The Company is currently evaluating the impact of adopting this guidance on the Company’s current financial position, results of operations, or financial statement disclosures.

In May 2025, the FASB issued ASU 2025-04, Compensation—Stock Compensation (Topic 718) and Revenues from Contracts with Customers (Topic 606)—Clarifications to Share-Based Consideration Payable to a Customer. The amendments in this ASU revise the master glossary definition of the term performance condition for share-based consideration payable to a customer. Further, the amendments in this ASU clarify that share-based consideration encompasses the same instruments as share-based payment arrangements, but the grantee does not need to be a supplier of goods or services to the grantor. Finally, the amendments in this ASU clarify that a grantor should not apply the guidance in Topic 606 on constraining estimates of variable consideration to share-based consideration payable to a customer. The amendments in this ASU are effective for all entities for annual reporting periods (including interim reporting periods within annual reporting periods) beginning after December 15, 2026, with updates to be applied on a retrospective or modified retrospective basis Early adoption is permitted for all entities. The Company is currently evaluating the impact of ASU 2025-04 on its consolidated financial statements.

In December 2025, the FASB issued ASU No. 2025-10, Government Grants (Topic 832): Accounting for Government Grants Received by Business Entities. The ASU establishes authoritative guidance in GAAP about accounting for government grants received by business entities, clarifies the appropriate accounting, in an effort to reduce diversity in practice, and increase consistency of application across business entities. The ASU is effective for annual reporting periods beginning after December 15, 2028, and interim reporting periods within those annual reporting periods. Adoption of this ASU may be applied on a modified prospective approach, a modified retrospective approach, or a retrospective approach. Early adoption is permitted. The Company is currently evaluating the provisions of this ASU and does not expect this ASU to have a material impact on our consolidated financial statements.

In December 2025, the FASB issued ASU No. 2025-11, Interim Reporting (Topic 270): Narrow-Scope Improvements. The ASU clarifies interim disclosure requirements and the applicability of Topic 270. The objective of the amendments is to provide further clarity about the current interim disclosure requirements. The ASU is effective for interim reporting periods within annual reporting periods beginning after December 15, 2027. Adoption of this ASU can be applied by either a prospective or a retrospective approach. Early adoption is permitted. The Company is currently evaluating the provisions of this ASU and does not expect this ASU to have a material impact on our consolidated financial statements.

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