NOTE 6 – CONSTRUCTION IN PROGRESS

On July 13, 2022 the Company entered into a manufacturing contract with Montrade S.p.A., (“Montrade”), an industry leading designer and manufacturer of machines for a wide range of products, including heated tobacco products (HTP), based in Bologna, Italy, for the manufacture and installation of our proprietary HTP consumables manufacturing equipment. The Company made an initial payment of $589,265. Throughout the construction we made 6 amendments to the initial contract. The equipment is completed and is in final assembly testing. On April 21, 2026 we paid $88,500 for work completed under this 2022 manufacturing contract as amended. On June 30, 2026, the balance owing for the construction, installation, travel and training is $291,470.

On June 3, 2025, CQENS entered into an agreement with Montrade for the development, manufacture, delivery and installation of a higher volume machine to manufacture consumables for the Company’s proprietary, patented and patent pending HnB system. We made an initial down payment of $1,016,531 on June 4, 2025. The design phase was completed in November 2025, and we paid the balance for this phase in December 2025 expensing a total of $302,299 for the design phase. On June 30, 2026, the balance remaining under the agreement is $1,839,348.