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NOTE 1 - NATURE OF BUSINESS AND SUMMARY OF BASIS OF PRESENTATION Nature of Business CQENS Technologies, Inc. (“we”, “our”, the “Company”, “CQENS”) is a technology company with a proprietary method of heating consumable formulations that produce an aerosol that lead to the effective and efficient inhalation of the active ingredients. This is accomplished at a high temperature but without the accompanying constituents of combustion. Our system of heating is a high temperature, non-combustion system. Our Heated Tobacco Product (HTP) system is a patented method of heating consumables for inhalation that we believe is superior to other methods of ingestion, smoking, vaping, or via topical application. On December 20, 2023, we entered into a Shareholder Agreement with Asahi Corporation Limited (“Asahi”) to establish CQENS Electronics (Hong Kong) Limited (“CEL”), a Hong Kong company, for design, development and manufacture of our heat-not-burn device (“Device”). CQENS acquired <span id="xdx_905_eus-gaap--MinorityInterestOwnershipPercentageByParent_iI_pid_dp_uPure_c20231220__srt--OwnershipAxis__custom--CQENSElectronicsHongKongLimitedMember_zf8bMyrs1vtd" title="Ownership percentage acquired">50% membership of CEL and holds majority of board seats including the chair. Pursuant to the establishment of CEL, CQENS entered into an exclusive, worldwide License Agreement with CEL for designing and manufacturing a consumer device consistent with our intellectual property. CEL activities are included in our unaudited consolidated financial statements. In January 2026, we established a wholly owned foreign entity, Shenzhen CQENS Technology Co. Ltd. (“Shenzhen CQENS”), in China for research and development activities in concert with our US-based research and development team to move prototypes through the design for manufacturability process and working closely with CEL. In the first 6-months of 2026, we made an investment of $400,000 in Shenzhen CQENS. This investment will be used to fund operations in Shenzhen. We are dependent upon joint ventures and third-party marketing and distribution companies, including Firebird Manufacturing, LLC (“Firebird”) for the manufacturing of our future products. We believe that our business opportunities are global and may include partnerships in the USA, UK, the EU and Asia, including the People’s Republic of China. We may face challenges entering into further strategic partnerships. The COVID-19 pandemic, global conflicts, government shutdowns, and inflationary conditions have caused certain delays in the development of our HTP products. Our product development and commercialization timelines have been reset but are moving forward and we expect to adhere to our schedule over the next 12 months. Key milestones for us over these next 12 months include completion of the Premarket Tobacco Product Application (PMTA) process, securing a strategic partner, raising capital for commercialization of products, finalizing the joint venture with Firebird for manufacturing of our consumable and distribution of our devices and consumables in the United States. Any prolonged inflationary pressures on the capital markets will make it more difficult for small, pre-revenue companies such as our company to raise capital. We continue to assess the impact of any inflationary conditions on our company, and at this time, we are unable to predict all possible impacts on our company, our operations and our prospects. Basis of Presentation Basis of Presentation - The following unaudited interim consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Accordingly, such interim consolidated financial statements do not include all the information and footnotes required by accounting principles generally accepted in the United States (“GAAP”) for complete annual consolidated financial statements. The information furnished reflects all adjustments, consisting only of normal recurring items which are, in the opinion of management, necessary to make the consolidated financial statements not misleading. The results of operations for the interim periods are not necessarily indicative of the results to be expected for the full year. The balance sheet as of June 30, 2026, has been derived from the Company’s annual consolidated financial statements that were audited by our independent registered public accounting firm but does not include all of the information and footnotes required for complete annual consolidated financial statements. These consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto which are included in our Annual Report on Form 10-K for the year ended December 31, 2025, and filed with the SEC on April 15, 2026, for a broader discussion of our business and the risks inherent in such business. The consolidated financial statements include the accounts of the Company and its subsidiaries in which the Company has a controlling financial interest. All intercompany balances and transactions have been eliminated in consolidation. The Company consolidates variable interest entities for which it is the primary beneficiary in accordance with ASC 810. Segment Information - 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,” which introduced new guidance for improving disclosures about a public entity’s reporting segments to provide, when applicable, more detailed information about a reportable segment’s expenses. This standard was effective for the Company as of January 1, 2024. The senior management team consisting of the CEO, CFO and COO collectively are identified as the Chief Operating Decision Maker (CODM). The CODM, for the Company, has determined, consistent with the guidance in ASC 280 paragraph 280-10-50-1, that CQENS Technologies, its subsidiary, CQENS Electronics (Hong Kong) Limited (“CEL”) and Shenzhen CQENS are a single operating and reporting segment. The CODM has chosen to organize the Company around differences in products and services. CQENS, CEL and Shenzhen CQENS are focused on research and development of our HnB technology and on production and commercialization of this same technology. The CODM evaluates the Company’s financial information and resources and assesses the performance of these resources on a consolidated and aggregate basis. Accordingly, the Company has determined that it operates in one operating and reportable segment. The Company internally reports the following segment financial information, on a consolidated basis, to the CODM: research and development expenses and professional fees, are the key contributors used to measure the reported losses used by the CODM to assess performance and allocate resources and is presented on the consolidated statements of operations and comprehensive loss. There are no segment operating expenses that require disclosure beyond the expense categories presented on the consolidated statements of operations and comprehensive loss. The measure of segment assets is reported on the consolidated balance sheets as total assets. As a result, there are no additional disclosures required and no impact to our financial statements at adoption. Variable Interest Entity (“VIE”) - The Financial Accounting Standards Board (“FASB”) provides guidance in ASC 810, Consolidation (“ASC 810”) for determining whether an entity is a VIE. VIE’s are defined as entities in which equity investors of the entity do not have the characteristics of a controlling financial interest or do not have sufficient equity at risk for the entity to finance its activities without additional subordinated financial support. A VIE is required to be consolidated by its primary beneficiary, which is the party that (i) has the power to control the activities that most significantly impact the VIE’s economic performance and (ii) has the obligation to absorb losses, or the right to receive benefits, of the VIE that could potentially be significant to the VIE. The Company enters business relationships and regularly assesses them under the requirements of ASC 810 to determine whether such relationships should be accounted for under the VIE model and if so, whether the Company is the primary beneficiary of the VIE. The Company concluded it has a variable interest in CEL that results in the Company being the primary beneficiary. This conclusion was based on the following: <table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; margin-top: 0; margin-bottom: 0"><tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top"> <td style="font: 10pt Times New Roman, Times, Serif; width: 0.25in"></td><td style="font: 10pt Times New Roman, Times, Serif; width: 0.25in">●</td><td style="font: 10pt Times New Roman, Times, Serif; text-align: justify">The Company inherently has the power to direct the activities of CEL as its sole customer.</td></tr></table> <table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; margin-top: 0; margin-bottom: 0"><tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top"> <td style="font: 10pt Times New Roman, Times, Serif; width: 0.25in"></td><td style="font: 10pt Times New Roman, Times, Serif; width: 0.25in">●</td><td style="font: 10pt Times New Roman, Times, Serif; text-align: justify">Without the business of the Company, CEL would not be able to sustain their operations.</td></tr></table> The following table summarizes the carrying amount of the assets and liabilities of CEL included in the Company’s Consolidated Balance Sheets as of June 30, 2026. SCHEDULE OF CONSOLIDATED BALANCE SHEETS <table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%"> <tr style="vertical-align: bottom"> <td style="text-align: left"> </td><td style="padding-bottom: 1pt"> </td> <td colspan="2" id="xdx_492_20260630__srt--OwnershipAxis__custom--CELMember_zhtr0eoU1byi" style="border-bottom: Black 1pt solid; text-align: center">June 30, 2026</td><td style="padding-bottom: 1pt"> </td></tr> <tr id="xdx_400_eus-gaap--CashAndCashEquivalentsAtCarryingValue_iI_zXDUwW0rbCZi" style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="width: 84%; text-align: left">Cash and cash equivalents</td><td style="width: 2%"> </td> <td style="width: 1%; text-align: left">$</td><td style="width: 12%; text-align: right">1,146,214</td><td style="width: 1%; text-align: left"> </td></tr> <tr id="xdx_40C_eus-gaap--PrepaidExpenseCurrent_iI_zzqRVWTUEPUe" style="vertical-align: bottom; background-color: White"> <td style="text-align: left; padding-bottom: 1pt">Prepaid Expenses</td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left">$</td><td style="border-bottom: Black 1pt solid; text-align: right">173,178</td><td style="padding-bottom: 1pt; text-align: left"> </td></tr> <tr id="xdx_401_eus-gaap--Assets_iI_zVwNj5317INe" style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="text-align: left; padding-bottom: 2.5pt">Total Assets</td><td style="padding-bottom: 2.5pt"> </td> <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">1,319,392</td><td style="padding-bottom: 2.5pt; text-align: left"> </td></tr> <tr style="vertical-align: bottom; background-color: White"> <td style="text-align: left"> </td><td style="padding-bottom: 2.5pt"> </td> <td style="padding-bottom: 2.5pt; text-align: left"> </td><td style="padding-bottom: 2.5pt; text-align: right"> </td><td style="padding-bottom: 2.5pt; text-align: left"> </td></tr> <tr id="xdx_404_eus-gaap--LoansPayableCurrent_iI_zYRpimmpI3Il" style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="text-align: left">Related party loan</td><td> </td> <td style="text-align: left">$</td><td style="text-align: right">276,344</td><td style="text-align: left"> </td></tr> <tr id="xdx_403_ecustom--PrepaymentForFutureProduct_iI_zDFPKxQqy6Yg" style="vertical-align: bottom; background-color: White"> <td style="text-align: left">CQENS prepayment for future product</td><td> </td> <td style="text-align: left">$</td><td style="text-align: right">172,930</td><td style="text-align: left"> </td></tr> <tr id="xdx_404_eus-gaap--LongTermLoansPayable_iI_zCACbQLaZmEi" style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="padding-bottom: 1pt; text-align: left">Other payables</td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left">$</td><td style="border-bottom: Black 1pt solid; text-align: right">2,355</td><td style="padding-bottom: 1pt; text-align: left"> </td></tr> <tr id="xdx_406_eus-gaap--Liabilities_iI_ziETUNtbL4Dl" style="vertical-align: bottom; background-color: White"> <td style="padding-bottom: 2.5pt; text-align: left">Total Liabilities</td><td style="padding-bottom: 2.5pt"> </td> <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">451,629</td><td style="padding-bottom: 2.5pt; text-align: left"> </td></tr> </table> The results of operations of CEL are included in the Company’s consolidated financial statements. Recent Accounting Pronouncements – On November 4, 2024, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2024-03 with an update 2025-01 issued in January 2025 which issues new guidance requiring disclosure of the disaggregation of income statement expenses (DISE) by public business entities (PBE’s) and is effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods after December 15, 2027. Early adoption is permitted. The Company is currently evaluating the impact of adopting the standard. The Company does not believe that any other recently issued effective pronouncements, or pronouncements issued but not yet effective, if adopted, would have a material effect on the accompanying consolidated financial statements.

0.50

400000

Basis of Presentation Basis of Presentation - The following unaudited interim consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Accordingly, such interim consolidated financial statements do not include all the information and footnotes required by accounting principles generally accepted in the United States (“GAAP”) for complete annual consolidated financial statements. The information furnished reflects all adjustments, consisting only of normal recurring items which are, in the opinion of management, necessary to make the consolidated financial statements not misleading. The results of operations for the interim periods are not necessarily indicative of the results to be expected for the full year. The balance sheet as of June 30, 2026, has been derived from the Company’s annual consolidated financial statements that were audited by our independent registered public accounting firm but does not include all of the information and footnotes required for complete annual consolidated financial statements. These consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto which are included in our Annual Report on Form 10-K for the year ended December 31, 2025, and filed with the SEC on April 15, 2026, for a broader discussion of our business and the risks inherent in such business. The consolidated financial statements include the accounts of the Company and its subsidiaries in which the Company has a controlling financial interest. All intercompany balances and transactions have been eliminated in consolidation. The Company consolidates variable interest entities for which it is the primary beneficiary in accordance with ASC 810.

Segment Information - 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,” which introduced new guidance for improving disclosures about a public entity’s reporting segments to provide, when applicable, more detailed information about a reportable segment’s expenses. This standard was effective for the Company as of January 1, 2024. The senior management team consisting of the CEO, CFO and COO collectively are identified as the Chief Operating Decision Maker (CODM). The CODM, for the Company, has determined, consistent with the guidance in ASC 280 paragraph 280-10-50-1, that CQENS Technologies, its subsidiary, CQENS Electronics (Hong Kong) Limited (“CEL”) and Shenzhen CQENS are a single operating and reporting segment. The CODM has chosen to organize the Company around differences in products and services. CQENS, CEL and Shenzhen CQENS are focused on research and development of our HnB technology and on production and commercialization of this same technology. The CODM evaluates the Company’s financial information and resources and assesses the performance of these resources on a consolidated and aggregate basis. Accordingly, the Company has determined that it operates in one operating and reportable segment. The Company internally reports the following segment financial information, on a consolidated basis, to the CODM: research and development expenses and professional fees, are the key contributors used to measure the reported losses used by the CODM to assess performance and allocate resources and is presented on the consolidated statements of operations and comprehensive loss. There are no segment operating expenses that require disclosure beyond the expense categories presented on the consolidated statements of operations and comprehensive loss. The measure of segment assets is reported on the consolidated balance sheets as total assets. As a result, there are no additional disclosures required and no impact to our financial statements at adoption.

Variable Interest Entity (“VIE”) - The Financial Accounting Standards Board (“FASB”) provides guidance in ASC 810, Consolidation (“ASC 810”) for determining whether an entity is a VIE. VIE’s are defined as entities in which equity investors of the entity do not have the characteristics of a controlling financial interest or do not have sufficient equity at risk for the entity to finance its activities without additional subordinated financial support. A VIE is required to be consolidated by its primary beneficiary, which is the party that (i) has the power to control the activities that most significantly impact the VIE’s economic performance and (ii) has the obligation to absorb losses, or the right to receive benefits, of the VIE that could potentially be significant to the VIE. The Company enters business relationships and regularly assesses them under the requirements of ASC 810 to determine whether such relationships should be accounted for under the VIE model and if so, whether the Company is the primary beneficiary of the VIE. The Company concluded it has a variable interest in CEL that results in the Company being the primary beneficiary. This conclusion was based on the following: <table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; margin-top: 0; margin-bottom: 0"><tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top"> <td style="font: 10pt Times New Roman, Times, Serif; width: 0.25in"></td><td style="font: 10pt Times New Roman, Times, Serif; width: 0.25in">●</td><td style="font: 10pt Times New Roman, Times, Serif; text-align: justify">The Company inherently has the power to direct the activities of CEL as its sole customer.</td></tr></table> <table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; margin-top: 0; margin-bottom: 0"><tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top"> <td style="font: 10pt Times New Roman, Times, Serif; width: 0.25in"></td><td style="font: 10pt Times New Roman, Times, Serif; width: 0.25in">●</td><td style="font: 10pt Times New Roman, Times, Serif; text-align: justify">Without the business of the Company, CEL would not be able to sustain their operations.</td></tr></table> The following table summarizes the carrying amount of the assets and liabilities of CEL included in the Company’s Consolidated Balance Sheets as of June 30, 2026. SCHEDULE OF CONSOLIDATED BALANCE SHEETS <table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%"> <tr style="vertical-align: bottom"> <td style="text-align: left"> </td><td style="padding-bottom: 1pt"> </td> <td colspan="2" id="xdx_492_20260630__srt--OwnershipAxis__custom--CELMember_zhtr0eoU1byi" style="border-bottom: Black 1pt solid; text-align: center">June 30, 2026</td><td style="padding-bottom: 1pt"> </td></tr> <tr id="xdx_400_eus-gaap--CashAndCashEquivalentsAtCarryingValue_iI_zXDUwW0rbCZi" style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="width: 84%; text-align: left">Cash and cash equivalents</td><td style="width: 2%"> </td> <td style="width: 1%; text-align: left">$</td><td style="width: 12%; text-align: right">1,146,214</td><td style="width: 1%; text-align: left"> </td></tr> <tr id="xdx_40C_eus-gaap--PrepaidExpenseCurrent_iI_zzqRVWTUEPUe" style="vertical-align: bottom; background-color: White"> <td style="text-align: left; padding-bottom: 1pt">Prepaid Expenses</td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left">$</td><td style="border-bottom: Black 1pt solid; text-align: right">173,178</td><td style="padding-bottom: 1pt; text-align: left"> </td></tr> <tr id="xdx_401_eus-gaap--Assets_iI_zVwNj5317INe" style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="text-align: left; padding-bottom: 2.5pt">Total Assets</td><td style="padding-bottom: 2.5pt"> </td> <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">1,319,392</td><td style="padding-bottom: 2.5pt; text-align: left"> </td></tr> <tr style="vertical-align: bottom; background-color: White"> <td style="text-align: left"> </td><td style="padding-bottom: 2.5pt"> </td> <td style="padding-bottom: 2.5pt; text-align: left"> </td><td style="padding-bottom: 2.5pt; text-align: right"> </td><td style="padding-bottom: 2.5pt; text-align: left"> </td></tr> <tr id="xdx_404_eus-gaap--LoansPayableCurrent_iI_zYRpimmpI3Il" style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="text-align: left">Related party loan</td><td> </td> <td style="text-align: left">$</td><td style="text-align: right">276,344</td><td style="text-align: left"> </td></tr> <tr id="xdx_403_ecustom--PrepaymentForFutureProduct_iI_zDFPKxQqy6Yg" style="vertical-align: bottom; background-color: White"> <td style="text-align: left">CQENS prepayment for future product</td><td> </td> <td style="text-align: left">$</td><td style="text-align: right">172,930</td><td style="text-align: left"> </td></tr> <tr id="xdx_404_eus-gaap--LongTermLoansPayable_iI_zCACbQLaZmEi" style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="padding-bottom: 1pt; text-align: left">Other payables</td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left">$</td><td style="border-bottom: Black 1pt solid; text-align: right">2,355</td><td style="padding-bottom: 1pt; text-align: left"> </td></tr> <tr id="xdx_406_eus-gaap--Liabilities_iI_ziETUNtbL4Dl" style="vertical-align: bottom; background-color: White"> <td style="padding-bottom: 2.5pt; text-align: left">Total Liabilities</td><td style="padding-bottom: 2.5pt"> </td> <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">451,629</td><td style="padding-bottom: 2.5pt; text-align: left"> </td></tr> </table> The results of operations of CEL are included in the Company’s consolidated financial statements.

SCHEDULE OF CONSOLIDATED BALANCE SHEETS <table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%"> <tr style="vertical-align: bottom"> <td style="text-align: left"> </td><td style="padding-bottom: 1pt"> </td> <td colspan="2" id="xdx_492_20260630__srt--OwnershipAxis__custom--CELMember_zhtr0eoU1byi" style="border-bottom: Black 1pt solid; text-align: center">June 30, 2026</td><td style="padding-bottom: 1pt"> </td></tr> <tr id="xdx_400_eus-gaap--CashAndCashEquivalentsAtCarryingValue_iI_zXDUwW0rbCZi" style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="width: 84%; text-align: left">Cash and cash equivalents</td><td style="width: 2%"> </td> <td style="width: 1%; text-align: left">$</td><td style="width: 12%; text-align: right">1,146,214</td><td style="width: 1%; text-align: left"> </td></tr> <tr id="xdx_40C_eus-gaap--PrepaidExpenseCurrent_iI_zzqRVWTUEPUe" style="vertical-align: bottom; background-color: White"> <td style="text-align: left; padding-bottom: 1pt">Prepaid Expenses</td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left">$</td><td style="border-bottom: Black 1pt solid; text-align: right">173,178</td><td style="padding-bottom: 1pt; text-align: left"> </td></tr> <tr id="xdx_401_eus-gaap--Assets_iI_zVwNj5317INe" style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="text-align: left; padding-bottom: 2.5pt">Total Assets</td><td style="padding-bottom: 2.5pt"> </td> <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">1,319,392</td><td style="padding-bottom: 2.5pt; text-align: left"> </td></tr> <tr style="vertical-align: bottom; background-color: White"> <td style="text-align: left"> </td><td style="padding-bottom: 2.5pt"> </td> <td style="padding-bottom: 2.5pt; text-align: left"> </td><td style="padding-bottom: 2.5pt; text-align: right"> </td><td style="padding-bottom: 2.5pt; text-align: left"> </td></tr> <tr id="xdx_404_eus-gaap--LoansPayableCurrent_iI_zYRpimmpI3Il" style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="text-align: left">Related party loan</td><td> </td> <td style="text-align: left">$</td><td style="text-align: right">276,344</td><td style="text-align: left"> </td></tr> <tr id="xdx_403_ecustom--PrepaymentForFutureProduct_iI_zDFPKxQqy6Yg" style="vertical-align: bottom; background-color: White"> <td style="text-align: left">CQENS prepayment for future product</td><td> </td> <td style="text-align: left">$</td><td style="text-align: right">172,930</td><td style="text-align: left"> </td></tr> <tr id="xdx_404_eus-gaap--LongTermLoansPayable_iI_zCACbQLaZmEi" style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="padding-bottom: 1pt; text-align: left">Other payables</td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left">$</td><td style="border-bottom: Black 1pt solid; text-align: right">2,355</td><td style="padding-bottom: 1pt; text-align: left"> </td></tr> <tr id="xdx_406_eus-gaap--Liabilities_iI_ziETUNtbL4Dl" style="vertical-align: bottom; background-color: White"> <td style="padding-bottom: 2.5pt; text-align: left">Total Liabilities</td><td style="padding-bottom: 2.5pt"> </td> <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">451,629</td><td style="padding-bottom: 2.5pt; text-align: left"> </td></tr> </table>

1146214

173178

1319392

276344

172930

2355

451629

Recent Accounting Pronouncements – On November 4, 2024, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2024-03 with an update 2025-01 issued in January 2025 which issues new guidance requiring disclosure of the disaggregation of income statement expenses (DISE) by public business entities (PBE’s) and is effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods after December 15, 2027. Early adoption is permitted. The Company is currently evaluating the impact of adopting the standard. The Company does not believe that any other recently issued effective pronouncements, or pronouncements issued but not yet effective, if adopted, would have a material effect on the accompanying consolidated financial statements.

NOTE 2 – GOING CONCERN The Company’s consolidated financial statements are prepared in accordance with GAAP applicable to a going concern. This contemplates the realization of assets and the liquidation of liabilities in the normal course of business. The Company has recurring losses, continued research and development efforts, no source of revenue and limited cash that may be insufficient to cover its operations. Our focus on the PMTA process will encompass the next 12 months. In the event of any unforeseen costs to complete the PMTA process, we will be unable to meet our current obligations. These factors may not allow us to continue as a going concern. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. The Company will be dependent upon the raising of additional capital. The consolidated financial statements do not include any adjustment that might result from the outcome of this uncertainty.

NOTE 3 – STOCKHOLDERS’ EQUITY In the first half of 2026, we sold 9,000 shares of our common stock for $180,000 in private transactions. We did not pay commissions or finder’s fees and are using proceeds for working capital. In the first half of 2025, we sold 518,500 shares of our common stock for $10,370,000 in private transactions. We did not pay commissions or finder’s fees and are using the proceeds for working capital. In the first half of 2025, we issued 60,169 shares of our common stock to unrelated third parties as compensation for their consulting services. The stock was valued at $1,203,380. As of June 30, 2026, the Company had 27,582,752 shares of common stock issued and outstanding. On May 28, 2026, the Company granted stock options to employees of our subsidiary, Shenzhen CQENS Technology Company Limited to purchase a maximum of 202,000 shares at $20.00 per share. The grants were made in amounts and with exercise price and vesting conditions consistent with our corporate development objectives. <span id="xdx_90D_eus-gaap--ShareBasedCompensationArrangementByShareBasedPaymentAwardAwardVestingRights_pid_c20260528__20260528_zB5M5qkS6STk" title="Share-based payment award, award vesting rights, description">The stock options granted vest as follows: 10% in 18 months from grant; 15% in 36 months from grant; 20% in 54 months from grant; 25% in 72 months from grant; and, 30% in 90 months from grant date. The options expire <span id="xdx_903_eus-gaap--SharebasedCompensationArrangementBySharebasedPaymentAwardExpirationPeriod_pid_dtY_c20260528__20260528_zoR0LlJuwQi8" title="Share-based payment award, award vesting rights, expiration period">10 years from grant date. The fair market value of the options at grant date was determined to be $3,720,990, of which $84,381 was expensed in the second quarter of 2026. The options were valued using the Black Sholes option pricing model with the following assumptions: 1) a current stock price per share of $20.00, based on the price of recent offerings: 2) expected term of 10 years: 3) computed volatility of <span id="xdx_90D_eus-gaap--ShareBasedCompensationArrangementByShareBasedPaymentAwardFairValueAssumptionsWeightedAverageVolatilityRate_pid_dp_uPure_c20260528__20260528_zEHCFZEs3Xz3" title="Expected volatility rate">104.34%; and 4) the risk-free rate of return of 4.45%. The exercise period of the options terminates May 28, 2036. On June 16, 2025, the Company granted stock options under the Company’s 2019 Equity Compensation Plan to a third party for services to purchase <span id="xdx_908_eus-gaap--ShareBasedCompensationArrangementByShareBasedPaymentAwardOptionsGrantsInPeriodGross_c20250616__20250616__us-gaap--PlanNameAxis__custom--TwoThousandNineteenEquityCompensationPlanMember_zfH3EhXPck65" title="Options garanted">20,000 shares at $20.00 per share. These options were exercisable immediately. The fair market value of the options at the grant date was determined to be $<span id="xdx_901_eus-gaap--StockGrantedDuringPeriodValueSharebasedCompensationGross_c20250101__20250630__us-gaap--PlanNameAxis__custom--TwoThousandNineteenEquityCompensationPlanMember_zjemgLMfNxhi" title="Fair market value grant">255,303, which was expensed in the second quarter of 2025. The options were valued using the Black Scholes option pricing model with the following assumptions: 1) a current stock price per share of $20.00, based on the price of recent offerings; 2) expected term of <span id="xdx_905_eus-gaap--SharebasedCompensationArrangementBySharebasedPaymentAwardFairValueAssumptionsExpectedTerm1_dtY_c20250616__20250616__us-gaap--PlanNameAxis__custom--TwoThousandNineteenEquityCompensationPlanMember_zB3Dw65xpqKi" title="Expected term">5 years; 3) computed volatility of <span id="xdx_90C_eus-gaap--ShareBasedCompensationArrangementByShareBasedPaymentAwardFairValueAssumptionsWeightedAverageVolatilityRate_pid_dp_uPure_c20250616__20250616__us-gaap--PlanNameAxis__custom--TwoThousandNineteenEquityCompensationPlanMember_zxes0OBabQf9" title="Expected volatility rate">75.10%; and 4) the risk-free rate of return of <span id="xdx_900_eus-gaap--ShareBasedCompensationArrangementByShareBasedPaymentAwardFairValueAssumptionsRiskFreeInterestRate_pid_dp_uPure_c20250616__20250616__us-gaap--PlanNameAxis__custom--TwoThousandNineteenEquityCompensationPlanMember_zrcpAvAJFHs4" title="Risk free rate of return">4.04%. The exercise period of the options terminates on <span id="xdx_90F_eus-gaap--ShareBasedCompensationArrangementByShareBasedPaymentAwardExpirationDate_dd_c20250616__20250616__us-gaap--PlanNameAxis__custom--TwoThousandNineteenEquityCompensationPlanMember_zHurLBARQ9Di" title="Options terminates date">June 16, 2030. The following table represents option activity for the six months ended June 30, 2026: SCHEDULE OF OPTION ACTIVITY <table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%"> <tr style="vertical-align: bottom"> <td> </td><td style="padding-bottom: 1pt"> </td> <td colspan="2" style="border-bottom: Black 1pt solid; text-align: center">Number of Options</td><td style="padding-bottom: 1pt"> </td><td style="padding-bottom: 1pt"> </td> <td colspan="2" style="border-bottom: Black 1pt solid; text-align: center">Weighted Average Exercise Price</td><td style="padding-bottom: 1pt"> </td><td style="padding-bottom: 1pt"> </td> <td colspan="2" style="border-bottom: Black 1pt solid; text-align: center">Weighted Average Remaining Contractual Life in Years</td><td style="padding-bottom: 1pt"> </td><td style="padding-bottom: 1pt"> </td> <td colspan="2" style="border-bottom: Black 1pt solid; text-align: center">Aggregate Intrinsic Value</td><td style="padding-bottom: 1pt"> </td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="width: 44%; padding-bottom: 1pt">Outstanding – December 31, 2025</td><td style="width: 2%; padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; width: 1%; text-align: left"> </td><td id="xdx_985_eus-gaap--ShareBasedCompensationArrangementByShareBasedPaymentAwardOptionsOutstandingNumber_iS_c20260101__20260630__us-gaap--PlanNameAxis__custom--StockOptionPlanMember_znGXInDLkDEe" style="border-bottom: Black 1pt solid; width: 10%; text-align: right" title="Number of Options, Outstanding, Beginning">2,011,024</td><td style="width: 1%; padding-bottom: 1pt; text-align: left"> </td><td style="width: 2%; padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; width: 1%; text-align: left">$</td><td id="xdx_989_eus-gaap--ShareBasedCompensationArrangementByShareBasedPaymentAwardOptionsOutstandingWeightedAverageExercisePrice_iS_c20260101__20260630__us-gaap--PlanNameAxis__custom--StockOptionPlanMember_zgKqQ8uvnNr7" style="border-bottom: Black 1pt solid; width: 10%; text-align: right" title="Weighted Average Exercise Price, Outstanding, Beginning">12.45</td><td style="width: 1%; padding-bottom: 1pt; text-align: left"> </td><td style="width: 2%; padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; width: 1%; text-align: left"> </td><td id="xdx_98C_eus-gaap--SharebasedCompensationArrangementBySharebasedPaymentAwardOptionsOutstandingWeightedAverageRemainingContractualTerm2_dtY_c20250101__20251231__us-gaap--PlanNameAxis__custom--StockOptionPlanMember_zqvdLyDwMae8" style="border-bottom: Black 1pt solid; width: 10%; text-align: right" title="Weighted Average Remaining Contractual Life in Years, Outstanding">3.34</td><td style="width: 1%; padding-bottom: 1pt; text-align: left"> </td><td style="width: 2%; padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; width: 1%; text-align: left">$</td><td id="xdx_986_eus-gaap--ShareBasedCompensationArrangementByShareBasedPaymentAwardOptionsOutstandingIntrinsicValue_iS_c20260101__20260630__us-gaap--PlanNameAxis__custom--StockOptionPlanMember_zXW6cByRMSh2" style="border-bottom: Black 1pt solid; width: 10%; text-align: right" title="Aggregate Intrinsic Value, Outstanding, Beginning">15,178,592</td><td style="width: 1%; padding-bottom: 1pt; text-align: left"> </td></tr> <tr style="vertical-align: bottom; background-color: White"> <td>Exercisable – December 31, 2025</td><td> </td> <td style="text-align: left"> </td><td id="xdx_98A_eus-gaap--ShareBasedCompensationArrangementByShareBasedPaymentAwardOptionsExercisableNumber_iS_c20260101__20260630__us-gaap--PlanNameAxis__custom--StockOptionPlanMember_zHbqUWiTquIk" style="text-align: right" title="Number of Options, Exercisable, Beginning">1,679,224</td><td style="text-align: left"> </td><td> </td> <td style="text-align: left">$</td><td id="xdx_989_eus-gaap--ShareBasedCompensationArrangementByShareBasedPaymentAwardOptionsExercisableWeightedAverageExercisePrice_iS_c20260101__20260630__us-gaap--PlanNameAxis__custom--StockOptionPlanMember_zaZuI2RvxZX" style="text-align: right" title="Weighted Average Exercise Price, Exercisable, Beginning">12.38</td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td id="xdx_982_eus-gaap--SharebasedCompensationArrangementBySharebasedPaymentAwardOptionsExercisableWeightedAverageRemainingContractualTerm1_dtY_c20250101__20251231__us-gaap--PlanNameAxis__custom--StockOptionPlanMember_zu73Y2bmI8tl" style="text-align: right" title="Weighted Average Remaining Contractual Life in Years, Exercisable">2.92</td><td style="text-align: left"> </td><td> </td> <td style="text-align: left">$</td><td id="xdx_981_eus-gaap--SharebasedCompensationArrangementBySharebasedPaymentAwardOptionsExercisableIntrinsicValue1_iS_c20260101__20260128__us-gaap--PlanNameAxis__custom--StockOptionPlanMember_zfji5o0xZFvh" style="text-align: right" title="Aggregate Intrinsic Value, Exercisable, Beginning">12,788,592</td><td style="text-align: left"> </td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="padding-bottom: 1pt">Granted</td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left"> </td><td id="xdx_98A_eus-gaap--ShareBasedCompensationArrangementByShareBasedPaymentAwardOptionsGrantsInPeriodGross_c20260101__20260630__us-gaap--PlanNameAxis__custom--StockOptionPlanMember_zau2BsACzNm1" style="border-bottom: Black 1pt solid; text-align: right" title="Number of Options, Granted">202,000</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left">$</td><td id="xdx_98C_eus-gaap--ShareBasedCompensationArrangementsByShareBasedPaymentAwardOptionsGrantsInPeriodWeightedAverageExercisePrice_c20260101__20260630__us-gaap--PlanNameAxis__custom--StockOptionPlanMember_zOQXZRGf6Dr4" style="border-bottom: Black 1pt solid; text-align: right" title="Weighted Average Exercise Price, Granted">20.00</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td> <td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt; text-align: right"> </td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td> <td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt; text-align: right"> </td><td style="padding-bottom: 1pt; text-align: left"> </td></tr> <tr style="vertical-align: bottom; background-color: White"> <td style="padding-bottom: 2.5pt">Forfeited</td><td style="padding-bottom: 2.5pt"> </td> <td style="border-bottom: Black 2.5pt double; text-align: left"> </td><td id="xdx_980_eus-gaap--ShareBasedCompensationArrangementByShareBasedPaymentAwardOptionsForfeituresInPeriod_c20260101__20260630__us-gaap--PlanNameAxis__custom--StockOptionPlanMember_zb7IePyBR2t3" style="border-bottom: Black 2.5pt double; text-align: right" title="Number of Options, Forfeited">200,000</td><td style="padding-bottom: 2.5pt; text-align: left"> </td><td style="padding-bottom: 2.5pt"> </td> <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td id="xdx_986_eus-gaap--ShareBasedCompensationArrangementsByShareBasedPaymentAwardOptionsForfeituresInPeriodWeightedAverageExercisePrice_c20260101__20260630__us-gaap--PlanNameAxis__custom--StockOptionPlanMember_zY8punHMucpb" style="border-bottom: Black 2.5pt double; text-align: right" title="Weighted Average Exercise Price, Forfeited">7.00</td><td style="padding-bottom: 2.5pt; text-align: left"> </td><td style="padding-bottom: 2.5pt"> </td> <td style="padding-bottom: 2.5pt; text-align: left"> </td><td style="padding-bottom: 2.5pt; text-align: right"> </td><td style="padding-bottom: 2.5pt; text-align: left"> </td><td style="padding-bottom: 2.5pt"> </td> <td style="padding-bottom: 2.5pt; text-align: left"> </td><td style="padding-bottom: 2.5pt; text-align: right"> </td><td style="padding-bottom: 2.5pt; text-align: left"> </td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr> <tr style="vertical-align: bottom; background-color: White"> <td style="padding-bottom: 1pt">Vested</td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left"> </td><td id="xdx_98F_eus-gaap--SharebasedCompensationArrangementBySharebasedPaymentAwardOptionsVestedNumberOfShares_c20260101__20260630__us-gaap--PlanNameAxis__custom--StockOptionPlanMember_zfsb4SROQGe9" style="border-bottom: Black 1pt solid; text-align: right" title="Number of Options, Vested">1,479,224</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td> <td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt; text-align: right"> </td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td> <td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt; text-align: right"> </td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td> <td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt; text-align: right"> </td><td style="padding-bottom: 1pt; text-align: left"> </td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="padding-bottom: 2.5pt">Outstanding – June 30, 2026</td><td style="padding-bottom: 2.5pt"> </td> <td style="border-bottom: Black 2.5pt double; text-align: left"> </td><td id="xdx_987_eus-gaap--ShareBasedCompensationArrangementByShareBasedPaymentAwardOptionsOutstandingNumber_iE_c20260101__20260630__us-gaap--PlanNameAxis__custom--StockOptionPlanMember_zrVleVhqEIn5" style="border-bottom: Black 2.5pt double; text-align: right" title="Number of Options, Outstanding, Ending">2,013,024</td><td style="padding-bottom: 2.5pt; text-align: left"> </td><td style="padding-bottom: 2.5pt"> </td> <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td id="xdx_983_eus-gaap--ShareBasedCompensationArrangementByShareBasedPaymentAwardOptionsOutstandingWeightedAverageExercisePrice_iE_c20260101__20260630__us-gaap--PlanNameAxis__custom--StockOptionPlanMember_zOUKU6rjHrDi" style="border-bottom: Black 2.5pt double; text-align: right" title="Weighted Average Exercise Price, Outstanding, Ending">13.75</td><td style="padding-bottom: 2.5pt; text-align: left"> </td><td style="padding-bottom: 2.5pt"> </td> <td style="border-bottom: Black 2.5pt double; text-align: left"> </td><td id="xdx_984_eus-gaap--SharebasedCompensationArrangementBySharebasedPaymentAwardOptionsOutstandingWeightedAverageRemainingContractualTerm2_dtY_c20260101__20260630__us-gaap--PlanNameAxis__custom--StockOptionPlanMember_z4ZMBK6HScYc" style="border-bottom: Black 2.5pt double; text-align: right" title="Weighted Average Remaining Contractual Life in Years, Outstanding">3.87</td><td style="padding-bottom: 2.5pt; text-align: left"> </td><td style="padding-bottom: 2.5pt"> </td> <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td id="xdx_987_eus-gaap--ShareBasedCompensationArrangementByShareBasedPaymentAwardOptionsOutstandingIntrinsicValue_iE_c20260101__20260630__us-gaap--PlanNameAxis__custom--StockOptionPlanMember_zeUQIW0Tm7Ik" style="border-bottom: Black 2.5pt double; text-align: right" title="Aggregate Intrinsic Value, Outstanding, Ending">12,578,592</td><td style="padding-bottom: 2.5pt; text-align: left"> </td></tr> <tr style="vertical-align: bottom; background-color: White"> <td style="padding-bottom: 2.5pt">Exercisable – June 30, 2026</td><td style="padding-bottom: 2.5pt"> </td> <td style="border-bottom: Black 2.5pt double; text-align: left"> </td><td id="xdx_98E_eus-gaap--ShareBasedCompensationArrangementByShareBasedPaymentAwardOptionsExercisableNumber_iE_c20260101__20260630__us-gaap--PlanNameAxis__custom--StockOptionPlanMember_zsuOqegshXI8" style="border-bottom: Black 2.5pt double; text-align: right" title="Number of Options, Exercisable, Ending">1,479,224</td><td style="padding-bottom: 2.5pt; text-align: left"> </td><td style="padding-bottom: 2.5pt"> </td> <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td id="xdx_981_eus-gaap--ShareBasedCompensationArrangementByShareBasedPaymentAwardOptionsExercisableWeightedAverageExercisePrice_iE_c20260101__20260630__us-gaap--PlanNameAxis__custom--StockOptionPlanMember_zhpFZE9iGerk" style="border-bottom: Black 2.5pt double; text-align: right" title="Weighted Average Exercise Price, Exercisable, Ending">13.11</td><td style="padding-bottom: 2.5pt; text-align: left"> </td><td style="padding-bottom: 2.5pt"> </td> <td style="border-bottom: Black 2.5pt double; text-align: left"> </td><td id="xdx_98E_eus-gaap--SharebasedCompensationArrangementBySharebasedPaymentAwardOptionsExercisableWeightedAverageRemainingContractualTerm1_dtY_c20260101__20260630__us-gaap--PlanNameAxis__custom--StockOptionPlanMember_zZtSLvgZ9ZJa" style="border-bottom: Black 2.5pt double; text-align: right" title="Weighted Average Remaining Contractual Life in Years, Exercisable">2.80</td><td style="padding-bottom: 2.5pt; text-align: left"> </td><td style="padding-bottom: 2.5pt"> </td> <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td id="xdx_982_eus-gaap--SharebasedCompensationArrangementBySharebasedPaymentAwardOptionsExercisableIntrinsicValue1_iE_c20260101__20260630__us-gaap--PlanNameAxis__custom--StockOptionPlanMember_zGX9f5DBy051" style="border-bottom: Black 2.5pt double; text-align: right" title="Aggregate Intrinsic Value, Exercisable, Ending">10,188,592</td><td style="padding-bottom: 2.5pt; text-align: left"> </td></tr> </table> During the first half of 2026 we recorded $484,085 in stock option expenses compared to $1,164,408 in the first half of 2025. At June 30, 2026, the total unrecognized compensation cost for nonvested awards is $4,564,706. The weighted average period over which the cost is expected to be recognized is <span id="xdx_900_eus-gaap--EmployeeServiceShareBasedCompensationNonvestedAwardsTotalCompensationCostNotYetRecognizedPeriodForRecognition1_pid_dtY_c20260101__20260630_zOWAIraH6po6" title="Unrecognized compensation cost, period of recognition">5.48 years. On September 30, 2020, the Company entered into an Asset Purchase Agreement with Xten Capital Group, a common control entity, pursuant to which it acquired a portfolio of 29 U.S. and international patents and patent applications in the areas of devices and technologies for aerosolizing certain remedies and pharmaceutical preparations, as well as the solutions and preparation for inhaled delivery. As consideration for the acquisition, the Company issued to Xten, common stock purchase warrants exercisable for an aggregate of <span id="xdx_90F_eus-gaap--ShareBasedCompensationArrangementByShareBasedPaymentAwardNonOptionEquityInstrumentsExercised_c20200930__20200930__us-gaap--TypeOfArrangementAxis__custom--AssetPurchaseAgreementMember__dei--LegalEntityAxis__custom--XtenCapitalGroupIncMember__us-gaap--StatementEquityComponentsAxis__us-gaap--WarrantMember_zjJ0OyCLDtVb" title="Common stock purchase warrants exercisable">21,000,000 shares of its common stock at an exercise price of $<span id="xdx_908_eus-gaap--ClassOfWarrantOrRightExercisePriceOfWarrantsOrRights1_iI_pid_c20200930__us-gaap--TypeOfArrangementAxis__custom--AssetPurchaseAgreementMember__dei--LegalEntityAxis__custom--XtenCapitalGroupIncMember__us-gaap--StatementEquityComponentsAxis__us-gaap--WarrantMember_z0KSvcwSkkB4" title="Warrant exercise price">5.31 per share (the “Warrants”), including <span id="xdx_900_ecustom--ClassOfWarrantOrRightDescription_c20200930__20200930__us-gaap--TypeOfArrangementAxis__custom--AssetPurchaseAgreementMember__dei--LegalEntityAxis__custom--XtenCapitalGroupIncMember__us-gaap--StatementEquityComponentsAxis__us-gaap--WarrantMember_zj6G4YrElD9b" title="Warrant description">(i) a Series A Common Stock Purchase Warrant exercisable for <span id="xdx_902_eus-gaap--ShareBasedCompensationArrangementByShareBasedPaymentAwardNonOptionEquityInstrumentsExercised_c20200930__20200930__us-gaap--TypeOfArrangementAxis__custom--AssetPurchaseAgreementMember__dei--LegalEntityAxis__custom--XtenCapitalGroupIncMember__us-gaap--StatementEquityComponentsAxis__custom--SeriesACommonStockWarrantMember_zG1Vnctdsa45" title="Common stock purchase warrants exercisable">7,000,000 shares of common stock commencing on September 30, 2023 and expiring on September 30, 2026, (ii) a Series B Common Stock Purchase Warrant exercisable for <span id="xdx_90C_eus-gaap--ShareBasedCompensationArrangementByShareBasedPaymentAwardNonOptionEquityInstrumentsExercised_c20200930__20200930__us-gaap--TypeOfArrangementAxis__custom--AssetPurchaseAgreementMember__dei--LegalEntityAxis__custom--XtenCapitalGroupIncMember__us-gaap--StatementEquityComponentsAxis__custom--SeriesBCommonStockWarrantMember_zqnf3grt8oK2" title="Common stock purchase warrants exercisable">7,000,000 shares of common stock commencing on September 30, 2026 and expiring on September 30, 2029, and (iii) a Series C Common Stock Purchase Warrant exercisable for <span id="xdx_905_eus-gaap--ShareBasedCompensationArrangementByShareBasedPaymentAwardNonOptionEquityInstrumentsExercised_c20200930__20200930__us-gaap--TypeOfArrangementAxis__custom--AssetPurchaseAgreementMember__dei--LegalEntityAxis__custom--XtenCapitalGroupIncMember__us-gaap--StatementEquityComponentsAxis__custom--SeriesCCommonStockWarrantMember_zUEJ0qM7yab1" title="Common stock purchase warrants exercisable">7,000,000 shares of common stock commencing on September 30, 2029 and expiring on September 30, 2032. The Company has the right to accelerate or extend the exercise period of each series of Warrants at its discretion. In addition, the exercise period of each series of Warrants automatically accelerates in the event of a “change of control” (as defined in the Warrants) prior to such series of Warrants becoming exercisable by its respective terms. The IP Asset Purchase Agreement contained customary indemnification provisions. The warrants are valued at $<span id="xdx_90B_eus-gaap--ClassOfWarrantOrRightOutstanding_iI_c20200930__us-gaap--TypeOfArrangementAxis__custom--AssetPurchaseAgreementMember__dei--LegalEntityAxis__custom--XtenCapitalGroupIncMember__us-gaap--StatementEquityComponentsAxis__us-gaap--WarrantMember_zEfJxhUESRsd" title="Warrant outstanding">191,594 based on the carrying value of the assets acquired. There were no changes to the warrants, including no new issuances or exercises, during the first half of 2026. The outstanding warrants at June 30, 2026 have an aggregate intrinsic value of $<span id="xdx_90D_eus-gaap--SharebasedCompensationArrangementBySharebasedPaymentAwardEquityInstrumentsOtherThanOptionsAggregateIntrinsicValueOutstanding_iI_c20260630_zfsivlf4hp69" title="Outstanding warrants intrinsic value">308,490,000, a weighted average exercise price of $<span id="xdx_909_eus-gaap--ShareBasedCompensationArrangementByShareBasedPaymentAwardEquityInstrumentsOtherThanOptionsGrantsInPeriodWeightedAverageGrantDateFairValue_pid_c20260101__20260630_zRxOmudNjEPl" title="Weighted average exercise price">5.31 and a weighted average remaining contractual life of <span id="xdx_902_eus-gaap--SharebasedCompensationArrangementBySharebasedPaymentAwardOptionsOutstandingWeightedAverageRemainingContractualTerm2_dtY_c20260101__20260630_zBMS1xQsNM49" title="Weighted average remaining contractual life">3.25 years. The exercisable warrants at June 30, 2026 have an aggregate intrinsic value of $<span id="xdx_902_eus-gaap--ShareBasedCompensationArrangementByShareBasedPaymentAwardNonOptionEquityInstrumentsOutstandingNumber_iI_pid_c20260630_zMA41fGPwtq1" title="Exercisable warrants aggregate intrinsic value">102,830,000, a weighted average exercise price of $<span id="xdx_90D_ecustom--ShareBasedCompensationArrangementByShareBasedPaymentAwardNonOptionsOutstandingWeightedAverageExercisePrice_iI_pid_c20260630_zp8XuYryO6t4" title="Exercisable warrants weighted average exercise price">5.31 and a weighted average remaining contractual life of <span id="xdx_904_ecustom--SharebasedCompensationArrangementBySharebasedPaymentAwardNonOptionsOutstandingWeightedAverageRemainingContractualTerm_dtY_c20260101__20260630_zThAg5J2D8Fl" title="Exercisable warrants weighted average remaining contractual life">0.25 years. Potential common stock consisting of 21,000,000 warrants and 2,013,024 stock options were excluded from the computation of diluted net loss per share because their effect would have been antidilutive.

9000

180000

518500

10370000

60169

1203380

27582752

202000

20.00

The stock options granted vest as follows: 10% in 18 months from grant; 15% in 36 months from grant; 20% in 54 months from grant; 25% in 72 months from grant; and, 30% in 90 months from grant date.

P10Y

3720990

84381

20.00

P10Y

1.0434

0.0445

2036-05-28

20000

20.00

255303

20.00

P5Y

0.7510

0.0404

2030-06-16

The following table represents option activity for the six months ended June 30, 2026: SCHEDULE OF OPTION ACTIVITY <table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%"> <tr style="vertical-align: bottom"> <td> </td><td style="padding-bottom: 1pt"> </td> <td colspan="2" style="border-bottom: Black 1pt solid; text-align: center">Number of Options</td><td style="padding-bottom: 1pt"> </td><td style="padding-bottom: 1pt"> </td> <td colspan="2" style="border-bottom: Black 1pt solid; text-align: center">Weighted Average Exercise Price</td><td style="padding-bottom: 1pt"> </td><td style="padding-bottom: 1pt"> </td> <td colspan="2" style="border-bottom: Black 1pt solid; text-align: center">Weighted Average Remaining Contractual Life in Years</td><td style="padding-bottom: 1pt"> </td><td style="padding-bottom: 1pt"> </td> <td colspan="2" style="border-bottom: Black 1pt solid; text-align: center">Aggregate Intrinsic Value</td><td style="padding-bottom: 1pt"> </td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="width: 44%; padding-bottom: 1pt">Outstanding – December 31, 2025</td><td style="width: 2%; padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; width: 1%; text-align: left"> </td><td id="xdx_985_eus-gaap--ShareBasedCompensationArrangementByShareBasedPaymentAwardOptionsOutstandingNumber_iS_c20260101__20260630__us-gaap--PlanNameAxis__custom--StockOptionPlanMember_znGXInDLkDEe" style="border-bottom: Black 1pt solid; width: 10%; text-align: right" title="Number of Options, Outstanding, Beginning">2,011,024</td><td style="width: 1%; padding-bottom: 1pt; text-align: left"> </td><td style="width: 2%; padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; width: 1%; text-align: left">$</td><td id="xdx_989_eus-gaap--ShareBasedCompensationArrangementByShareBasedPaymentAwardOptionsOutstandingWeightedAverageExercisePrice_iS_c20260101__20260630__us-gaap--PlanNameAxis__custom--StockOptionPlanMember_zgKqQ8uvnNr7" style="border-bottom: Black 1pt solid; width: 10%; text-align: right" title="Weighted Average Exercise Price, Outstanding, Beginning">12.45</td><td style="width: 1%; padding-bottom: 1pt; text-align: left"> </td><td style="width: 2%; padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; width: 1%; text-align: left"> </td><td id="xdx_98C_eus-gaap--SharebasedCompensationArrangementBySharebasedPaymentAwardOptionsOutstandingWeightedAverageRemainingContractualTerm2_dtY_c20250101__20251231__us-gaap--PlanNameAxis__custom--StockOptionPlanMember_zqvdLyDwMae8" style="border-bottom: Black 1pt solid; width: 10%; text-align: right" title="Weighted Average Remaining Contractual Life in Years, Outstanding">3.34</td><td style="width: 1%; padding-bottom: 1pt; text-align: left"> </td><td style="width: 2%; padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; width: 1%; text-align: left">$</td><td id="xdx_986_eus-gaap--ShareBasedCompensationArrangementByShareBasedPaymentAwardOptionsOutstandingIntrinsicValue_iS_c20260101__20260630__us-gaap--PlanNameAxis__custom--StockOptionPlanMember_zXW6cByRMSh2" style="border-bottom: Black 1pt solid; width: 10%; text-align: right" title="Aggregate Intrinsic Value, Outstanding, Beginning">15,178,592</td><td style="width: 1%; padding-bottom: 1pt; text-align: left"> </td></tr> <tr style="vertical-align: bottom; background-color: White"> <td>Exercisable – December 31, 2025</td><td> </td> <td style="text-align: left"> </td><td id="xdx_98A_eus-gaap--ShareBasedCompensationArrangementByShareBasedPaymentAwardOptionsExercisableNumber_iS_c20260101__20260630__us-gaap--PlanNameAxis__custom--StockOptionPlanMember_zHbqUWiTquIk" style="text-align: right" title="Number of Options, Exercisable, Beginning">1,679,224</td><td style="text-align: left"> </td><td> </td> <td style="text-align: left">$</td><td id="xdx_989_eus-gaap--ShareBasedCompensationArrangementByShareBasedPaymentAwardOptionsExercisableWeightedAverageExercisePrice_iS_c20260101__20260630__us-gaap--PlanNameAxis__custom--StockOptionPlanMember_zaZuI2RvxZX" style="text-align: right" title="Weighted Average Exercise Price, Exercisable, Beginning">12.38</td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td id="xdx_982_eus-gaap--SharebasedCompensationArrangementBySharebasedPaymentAwardOptionsExercisableWeightedAverageRemainingContractualTerm1_dtY_c20250101__20251231__us-gaap--PlanNameAxis__custom--StockOptionPlanMember_zu73Y2bmI8tl" style="text-align: right" title="Weighted Average Remaining Contractual Life in Years, Exercisable">2.92</td><td style="text-align: left"> </td><td> </td> <td style="text-align: left">$</td><td id="xdx_981_eus-gaap--SharebasedCompensationArrangementBySharebasedPaymentAwardOptionsExercisableIntrinsicValue1_iS_c20260101__20260128__us-gaap--PlanNameAxis__custom--StockOptionPlanMember_zfji5o0xZFvh" style="text-align: right" title="Aggregate Intrinsic Value, Exercisable, Beginning">12,788,592</td><td style="text-align: left"> </td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="padding-bottom: 1pt">Granted</td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left"> </td><td id="xdx_98A_eus-gaap--ShareBasedCompensationArrangementByShareBasedPaymentAwardOptionsGrantsInPeriodGross_c20260101__20260630__us-gaap--PlanNameAxis__custom--StockOptionPlanMember_zau2BsACzNm1" style="border-bottom: Black 1pt solid; text-align: right" title="Number of Options, Granted">202,000</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left">$</td><td id="xdx_98C_eus-gaap--ShareBasedCompensationArrangementsByShareBasedPaymentAwardOptionsGrantsInPeriodWeightedAverageExercisePrice_c20260101__20260630__us-gaap--PlanNameAxis__custom--StockOptionPlanMember_zOQXZRGf6Dr4" style="border-bottom: Black 1pt solid; text-align: right" title="Weighted Average Exercise Price, Granted">20.00</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td> <td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt; text-align: right"> </td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td> <td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt; text-align: right"> </td><td style="padding-bottom: 1pt; text-align: left"> </td></tr> <tr style="vertical-align: bottom; background-color: White"> <td style="padding-bottom: 2.5pt">Forfeited</td><td style="padding-bottom: 2.5pt"> </td> <td style="border-bottom: Black 2.5pt double; text-align: left"> </td><td id="xdx_980_eus-gaap--ShareBasedCompensationArrangementByShareBasedPaymentAwardOptionsForfeituresInPeriod_c20260101__20260630__us-gaap--PlanNameAxis__custom--StockOptionPlanMember_zb7IePyBR2t3" style="border-bottom: Black 2.5pt double; text-align: right" title="Number of Options, Forfeited">200,000</td><td style="padding-bottom: 2.5pt; text-align: left"> </td><td style="padding-bottom: 2.5pt"> </td> <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td id="xdx_986_eus-gaap--ShareBasedCompensationArrangementsByShareBasedPaymentAwardOptionsForfeituresInPeriodWeightedAverageExercisePrice_c20260101__20260630__us-gaap--PlanNameAxis__custom--StockOptionPlanMember_zY8punHMucpb" style="border-bottom: Black 2.5pt double; text-align: right" title="Weighted Average Exercise Price, Forfeited">7.00</td><td style="padding-bottom: 2.5pt; text-align: left"> </td><td style="padding-bottom: 2.5pt"> </td> <td style="padding-bottom: 2.5pt; text-align: left"> </td><td style="padding-bottom: 2.5pt; text-align: right"> </td><td style="padding-bottom: 2.5pt; text-align: left"> </td><td style="padding-bottom: 2.5pt"> </td> <td style="padding-bottom: 2.5pt; text-align: left"> </td><td style="padding-bottom: 2.5pt; text-align: right"> </td><td style="padding-bottom: 2.5pt; text-align: left"> </td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr> <tr style="vertical-align: bottom; background-color: White"> <td style="padding-bottom: 1pt">Vested</td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left"> </td><td id="xdx_98F_eus-gaap--SharebasedCompensationArrangementBySharebasedPaymentAwardOptionsVestedNumberOfShares_c20260101__20260630__us-gaap--PlanNameAxis__custom--StockOptionPlanMember_zfsb4SROQGe9" style="border-bottom: Black 1pt solid; text-align: right" title="Number of Options, Vested">1,479,224</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td> <td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt; text-align: right"> </td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td> <td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt; text-align: right"> </td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td> <td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt; text-align: right"> </td><td style="padding-bottom: 1pt; text-align: left"> </td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="padding-bottom: 2.5pt">Outstanding – June 30, 2026</td><td style="padding-bottom: 2.5pt"> </td> <td style="border-bottom: Black 2.5pt double; text-align: left"> </td><td id="xdx_987_eus-gaap--ShareBasedCompensationArrangementByShareBasedPaymentAwardOptionsOutstandingNumber_iE_c20260101__20260630__us-gaap--PlanNameAxis__custom--StockOptionPlanMember_zrVleVhqEIn5" style="border-bottom: Black 2.5pt double; text-align: right" title="Number of Options, Outstanding, Ending">2,013,024</td><td style="padding-bottom: 2.5pt; text-align: left"> </td><td style="padding-bottom: 2.5pt"> </td> <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td id="xdx_983_eus-gaap--ShareBasedCompensationArrangementByShareBasedPaymentAwardOptionsOutstandingWeightedAverageExercisePrice_iE_c20260101__20260630__us-gaap--PlanNameAxis__custom--StockOptionPlanMember_zOUKU6rjHrDi" style="border-bottom: Black 2.5pt double; text-align: right" title="Weighted Average Exercise Price, Outstanding, Ending">13.75</td><td style="padding-bottom: 2.5pt; text-align: left"> </td><td style="padding-bottom: 2.5pt"> </td> <td style="border-bottom: Black 2.5pt double; text-align: left"> </td><td id="xdx_984_eus-gaap--SharebasedCompensationArrangementBySharebasedPaymentAwardOptionsOutstandingWeightedAverageRemainingContractualTerm2_dtY_c20260101__20260630__us-gaap--PlanNameAxis__custom--StockOptionPlanMember_z4ZMBK6HScYc" style="border-bottom: Black 2.5pt double; text-align: right" title="Weighted Average Remaining Contractual Life in Years, Outstanding">3.87</td><td style="padding-bottom: 2.5pt; text-align: left"> </td><td style="padding-bottom: 2.5pt"> </td> <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td id="xdx_987_eus-gaap--ShareBasedCompensationArrangementByShareBasedPaymentAwardOptionsOutstandingIntrinsicValue_iE_c20260101__20260630__us-gaap--PlanNameAxis__custom--StockOptionPlanMember_zeUQIW0Tm7Ik" style="border-bottom: Black 2.5pt double; text-align: right" title="Aggregate Intrinsic Value, Outstanding, Ending">12,578,592</td><td style="padding-bottom: 2.5pt; text-align: left"> </td></tr> <tr style="vertical-align: bottom; background-color: White"> <td style="padding-bottom: 2.5pt">Exercisable – June 30, 2026</td><td style="padding-bottom: 2.5pt"> </td> <td style="border-bottom: Black 2.5pt double; text-align: left"> </td><td id="xdx_98E_eus-gaap--ShareBasedCompensationArrangementByShareBasedPaymentAwardOptionsExercisableNumber_iE_c20260101__20260630__us-gaap--PlanNameAxis__custom--StockOptionPlanMember_zsuOqegshXI8" style="border-bottom: Black 2.5pt double; text-align: right" title="Number of Options, Exercisable, Ending">1,479,224</td><td style="padding-bottom: 2.5pt; text-align: left"> </td><td style="padding-bottom: 2.5pt"> </td> <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td id="xdx_981_eus-gaap--ShareBasedCompensationArrangementByShareBasedPaymentAwardOptionsExercisableWeightedAverageExercisePrice_iE_c20260101__20260630__us-gaap--PlanNameAxis__custom--StockOptionPlanMember_zhpFZE9iGerk" style="border-bottom: Black 2.5pt double; text-align: right" title="Weighted Average Exercise Price, Exercisable, Ending">13.11</td><td style="padding-bottom: 2.5pt; text-align: left"> </td><td style="padding-bottom: 2.5pt"> </td> <td style="border-bottom: Black 2.5pt double; text-align: left"> </td><td id="xdx_98E_eus-gaap--SharebasedCompensationArrangementBySharebasedPaymentAwardOptionsExercisableWeightedAverageRemainingContractualTerm1_dtY_c20260101__20260630__us-gaap--PlanNameAxis__custom--StockOptionPlanMember_zZtSLvgZ9ZJa" style="border-bottom: Black 2.5pt double; text-align: right" title="Weighted Average Remaining Contractual Life in Years, Exercisable">2.80</td><td style="padding-bottom: 2.5pt; text-align: left"> </td><td style="padding-bottom: 2.5pt"> </td> <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td id="xdx_982_eus-gaap--SharebasedCompensationArrangementBySharebasedPaymentAwardOptionsExercisableIntrinsicValue1_iE_c20260101__20260630__us-gaap--PlanNameAxis__custom--StockOptionPlanMember_zGX9f5DBy051" style="border-bottom: Black 2.5pt double; text-align: right" title="Aggregate Intrinsic Value, Exercisable, Ending">10,188,592</td><td style="padding-bottom: 2.5pt; text-align: left"> </td></tr> </table>

2011024

12.45

P3Y4M2D

15178592

1679224

12.38

P2Y11M1D

12788592

202000

20.00

200000

7.00

1479224

2013024

13.75

P3Y10M13D

12578592

1479224

13.11

P2Y9M18D

10188592

484085

1164408

4564706

P5Y5M23D

21000000

5.31

(i) a Series A Common Stock Purchase Warrant exercisable for 7,000,000 shares of common stock commencing on September 30, 2023 and expiring on September 30, 2026, (ii) a Series B Common Stock Purchase Warrant exercisable for 7,000,000 shares of common stock commencing on September 30, 2026 and expiring on September 30, 2029, and (iii) a Series C Common Stock Purchase Warrant exercisable for 7,000,000 shares of common stock commencing on September 30, 2029 and expiring on September 30, 2032.

7000000

191594

308490000

5.31

P3Y3M

102830000

5.31 P0Y3M

21000000

2013024

NOTE 4 – RELATED PARTY TRANSACTIONS Prior to 2025 we borrowed $<span id="xdx_903_eus-gaap--ProceedsFromIssuanceOfDebt_c20250101__20251231__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--XtenCapitalGroupMember_zhSXFYWgfhp4" title="Related party loan fund operations">1,000,000 from Xten Capital Group, a common control entity and affiliate of Alexander Chong, the Company’s principal shareholder and Chief Executive Officer. In the first half of 2026 we repaid $50,000. In the first half of 2025 we repaid $50,000 and an additional $50,000 later in 2025. The balance of the loan on June 30, 2026, is $850,000. The loan agreement allows the Company to borrow up to $<span id="xdx_901_eus-gaap--RelatedPartyTransactionAmountsOfTransaction_c20260101__20260630__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--XtenCapitalGroupMember_zYEy8Y1uAekg" title="Borrowing amount">1,000,000 on an as needed basis. The loan is unsecured, non-interest bearing and due upon demand. In the first half of 2026, CQENS Electronics (Hong Kong) Limited (“CEL”), a subsidiary of CQENS, borrowed $<span id="xdx_90D_eus-gaap--ProceedsFromIssuanceOfDebt_c20260101__20260630__srt--TitleOfIndividualAxis__custom--AnnLiuMember__dei--LegalEntityAxis__custom--CQENSElectronicsHongKongLimitedMember_zQ428GkVaPEf" title="Related party loan fund operations">503 from Ann Liu, CEL’s managing director, while in the first half of 2025, CEL borrowed $<span id="xdx_909_eus-gaap--ProceedsFromIssuanceOfDebt_c20250101__20250630__srt--TitleOfIndividualAxis__custom--AnnLiuMember__dei--LegalEntityAxis__custom--CQENSElectronicsHongKongLimitedMember_z1bZK25VfXI7" title="Related party loan fund operations">59,924. The loan is for operations and is unsecured, non-interest bearing and due on demand. The loan balance due to Ann Liu at June 30, 2026 is $<span id="xdx_90F_eus-gaap--LoansPayable_iI_c20260630__srt--TitleOfIndividualAxis__custom--AnnLiuMember__dei--LegalEntityAxis__custom--CQENSElectronicsHongKongLimitedMember_zOYGFxbVpRU7" title="Loan balance">79,220. In the first six months of 2026 we borrowed $<span id="xdx_900_eus-gaap--ProceedsFromIssuanceOfDebt_c20260101__20260630__srt--TitleOfIndividualAxis__custom--AnnLiuMember__dei--LegalEntityAxis__custom--AsahiCorporationLimitedMember_zNWXC3h7ejGd" title="Related party loan fund operations">140,257 from Asahi Corporation Limited a common control entity of Ann Liu, and our joint venture partner of CEL. There was <span id="xdx_90D_eus-gaap--ProceedsFromIssuanceOfDebt_c20250101__20250630__srt--TitleOfIndividualAxis__custom--AnnLiuMember__dei--LegalEntityAxis__custom--AsahiCorporationLimitedMember_z3KUSwp6E0Hf" title="Related party loan fund operations">no borrowing in the first six months of 2025. The balance due to Asahi at June 30, 2026 is $197,124. The loan is unsecured, non-interest bearing and due on demand. In October 2025 we established operations in Shenzhen, China, organizing Shenzhen CQENS Technology Company Limited (“Shenzhen CQENS”) and in doing so we borrowed money from two individuals related to this start-up, Zhang Tianyang and Liu Xinjie. In the first half of 2026 we borrowed $88,314 from Mr. Zhang to fund operations. The balance owed to Mr. Zhang at June 30, 2026 is $306,765. The balance owed to Mr. Liu at June 30, 2026 is $7,828. The loans are unsecured, non-interest bearing and due on demand. Mr. Zhang is a consultant for CQENS. Mr. Liu is the office manager of Shenzhen CQENS. We engaged Plexus International and its subsidiary, Apparatus Global Solutions (Plexus), a common control entity owned by Alexander Chong, our CEO, to provide project management services, accounting support services and consulting services to assist in creating and implementing our Quality Management System (QMS). In the first half of 2026 the fees from Plexus were $40,304 while the fees and expenses in the first half of 2025 were $95,437.

1000000

50000

850000

1000000

503

59924

79220

140257

197124

88314

306765

7828

40304

95437

NOTE 5 – LEASES In March 2022 we entered into a three-year lease agreement commencing April 15, 2022 and continuing through April 30, 2025, for our research and development office located in Aptos, CA. In April 2025 we extended the lease for two additional years commencing May 1, 2025 and continuing through April 30, 2027. The annual rate for the initial term of the lease extension is $70,785 with installment payments of $5,555 in May 2025 and $5,930 each month thereafter. Annual increases are tied to the U.S. Consumer Price Index of the Bureau of Labor Statistics of the Department of Labor for all Urban Consumers for San Francisco-Oakland-San Jose area. Beginning May 1, 2026, the fixed common area costs which are part of the lease increased and the monthly payment of $5,930 increased to $6,020 per month for the balance of the lease that extends through April 30, 2027. In October 2025, we entered into a two-year lease agreement in Shenzhen, China, commencing November 10, 2025, and continuing through November 9, 2027. The lease rate remains constant for the term of the lease. The annual rate is $58,536 with installment payments of $4,878 each month. We account for our leases under ASC 842, Leases, which requires all leases to be reported on the balance sheet as right-of-use assets and lease obligations. We elected the expedients permitted under the transition guidance that retained lease classification and initial direct costs for any leases that existed prior to adoption of the standard. We categorized leases with terms longer than twelve months as either operating or finance. Finance leases are generally those leases that would allow us to substantially utilize or pay for the entire asset over its estimated life. Assets acquired under finance leases are recorded in property and equipment, net. All other leases are categorized as operating leases. We did not have any finance leases as of June 30, 2026. We elected the accounting policy to include both the lease and non-lease components of our agreements as a single component and account for them as a lease. Lease liabilities are recognized at the present value of the fixed lease payments using a discount rate based on similarly secured borrowings available to us. Lease assets are recognized based on the initial present value of the fixed lease payments, reduced by landlord incentives, plus any direct costs from executing the lease. Lease assets are tested for impairment in the same manner as long-lived assets used in operations. Leasehold improvements are capitalized at cost over the lesser of their expected useful life or the lease term. When we have options to extend the lease term, terminate the lease before the contractual expiration date, or purchase the leased asset, and it is reasonably certain that we will exercise the option, we consider these options in determining the classification and measurement of the lease. Costs associated with the operating lease are recognized on a straight-line basis within operating expenses over the term of the lease.

In March 2022 we entered into a three-year lease agreement commencing April 15, 2022 and continuing through April 30, 2025, for our research and development office located in Aptos, CA.

In April 2025 we extended the lease for two additional years commencing May 1, 2025 and continuing through April 30, 2027.

2027-04-30

70785

5555

5930

6020

58536

4878

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.

589265

88500

291470

1016531

302299

1839348

NOTE 7 – SUBSEQUENT EVENTS In July 2026, we sold 8,500 shares of our common stock for $<span id="xdx_90F_eus-gaap--SaleOfStockConsiderationReceivedOnTransaction_c20260701__20260731__us-gaap--SubsequentEventTypeAxis__us-gaap--SubsequentEventMember_z9etlvO1Qsdh" title="Sale of comon stock value">170,000 in private transactions. We did not pay commissions or finder’s fees and are using proceeds for working capital. On August 10, 2026, we made a $200,000 investment in Shenzhen CQENS and will use the money to fund operations.

8500

170000

200000

false false false false