NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation

Our unaudited condensed consolidated financial statements for the three and six months ended June 30, 2026 and 2025 include the accounts of the Company and its wholly owned subsidiary OCEES International Inc. (“OCEES”). Intercompany balances and transactions have been eliminated in consolidation.

Use of Estimates

In preparing financial statements in conformity with GAAP, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and revenues and expenses during the reported period. Actual results could differ from those estimates. Significant estimates include the assumptions used in the valuation of equity-based transactions, valuation of derivative liabilities, and valuation of deferred tax assets.

Accounts Receivable

Accounts receivable consist of amounts invoiced to customers but not yet collected by the Company. The Company records an allowance for doubtful accounts to allow for any amounts that may not be recoverable, which is based on an analysis of the Company’s prior collection experience, customer creditworthiness, expected future losses and current economic trends. Accounts are considered delinquent when payments have not been received within the contractual payment terms and are written off when management determines that collection is not probable. There were no doubtful accounts as of June 30, 2026 and December 31, 2025.

 Revenue recognition

The Company recognizes revenue in accordance with Accounting Standards Codification (ASC) Topic 606, Revenue from Contracts with Customers. The Company’s primary source of revenue is a long-term fixed-price contract to provide engineering and technical development services related to the design and delivery of a renewable energy system.

The contract includes a series of activities such as site-specific modeling, mechanical and structural integration, and engineering validation that are delivered as part of a single, combined project outcome. These services are highly interrelated and not separately identifiable within the context of the contract. Accordingly, the Company determined that the arrangement contains a single performance obligation.

Revenue is recognized over time using the cost-to-cost input method. This method compares actual costs incurred to total estimated costs to determine the percentage of completion and is used to calculate revenue earned to date. The cost-to-cost method reflects the Company’s progress toward satisfying its performance obligation and is consistent with how the project is managed internally.

Contract assets are recorded when revenue recognized exceeds billings to date (contract assets). Contract liabilities are recorded when billings exceed revenue recognized (contract liabilities). These amounts are presented separately on the condensed consolidated balance sheets. There were no contract assets at June 30, 2026 or December 31, 2025.

Business Segments

                The Company operates as a single operating and reportable segment. The Company's chief operating decision maker ("CODM") is its Chief Executive Officer, who assesses performance and allocates resources on a consolidated basis. Accordingly, the measure of segment profit or loss reviewed by the CODM is consolidated net income (loss), and segment assets are consolidated total assets, each as presented in the accompanying condensed consolidated financial statements; no reconciling differences exist.

The significant segment expense categories regularly provided to the CODM are those presented separately on the face of the condensed consolidated statements of operations. There have been no changes from the most recent annual report in the basis of segmentation or in the basis of measurement of segment profit or loss.

Loss per Share

Basic income (loss) per share is calculated by dividing our net loss available to common shareholders by the weighted average number of common shares outstanding during the period. Diluted loss per share is calculated by dividing our net loss by the diluted weighted average number of shares outstanding during the period. The diluted weighted average number of shares outstanding is the basic weighted number of shares adjusted for any potentially dilutive debt or equity.

The weighted average shares outstanding for the three and six month periods ending June 30, 2026 and 2025 includes weighted average subscribed shares as if those shares were issued during each respective period.

The following potentially dilutive securities have been excluded from the computation of diluted weighted average shares outstanding for the three months ended June 30, 2026 and 2025 and the six months ended June 30, 2025 as they would be anti-dilutive:

Diluted loss per share for the six months ended June 30, 2026 is calculated as follows:

Recent Accounting Pronouncements

In November 2024, the Financial Accounting Standards Board issued ASU No. 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures. The standard requires disclosure of certain prescribed costs and expenses within the notes to consolidated financial statements. ASU No. 2024-03 becomes effective for the Company’s 2027 Annual Report on Form 10-K. The standard only impacts required disclosures and will not impact the Company’s financial position, results of operations, or cash flows. The Company is currently evaluating the impact of ASU No. 2024-03 on its disclosures.

The Company currently believes there are no other issued and not yet effective accounting standards that are materially relevant to our condensed consolidated financial statements.