3.  SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES

Basis of Preparation

The consolidated financial statements and accompanying notes are prepared under the accrual basis of accounting in accordance with generally accepted accounting principles of the United States of America (“US GAAP”) for interim financial information and Article 8 of Regulation S-X. They do not include all of the information and notes required by US GAAP for complete financial statements. In the opinion of the successor custodian, the financial statements include all adjustments, consisting of normal recurring adjustments and the restatement adjustments described in Note 2, considered necessary for a fair presentation of the Company’s financial position, results of operations, stockholders’ equity (deficit) and cash flows for the periods presented. The results for interim periods are not necessarily indicative of results for the full year. The December 31, 2025 consolidated balance sheet is derived from the previously audited balance sheet as restated; the restated amounts have not been audited. The previously issued annual financial statements for the year ended December 31, 2025 should no longer be relied upon (Note 2).

Principles of consolidation

The consolidated financial statements include the Company and its wholly owned subsidiaries (Note 1); intercompany balances and transactions are eliminated.

Use of Estimates

Preparation of financial statements under U.S. GAAP requires estimates and assumptions that affect reported amounts. Significant judgements include the application of the Order where it does not resolve a matter (Notes 2 and 11), the carrying amount of advances from affiliates (Note 12), useful lives, impairment, contingencies (Note 14) and the valuation allowance on deferred tax assets (Note 15). Actual results could differ.

Cash and Cash Equivalents

Cash and cash equivalents comprise bank balances and highly liquid instruments with original maturities of three months or less.

Property and Equipment

Property and equipment, including real estate held for rental, is stated at cost less accumulated depreciation and impairment and depreciated on a straight-line basis over estimated useful lives (real estate 27.5 years; furniture 5 years; computers and equipment 3–5 years; website development 3 years; land not depreciated). Repairs and maintenance are expensed. Long-lived assets, including franchise and development rights (amortized over 10 years), are reviewed for impairment when events indicate that the carrying amount may not be recoverable; an impairment is recognized when the carrying amount exceeds the undiscounted cash flows and is measured at the excess over fair value. The FlexFridge patent, product development costs and goodwill were fully impaired in 2025.

Stock-based compensation

Share-based payments to employees and non-employees are measured at the grant-date fair value of the equity instruments or, if more reliably measurable, of the goods or services received, and recognized as the services are received. No stock-based compensation was recognized in the periods presented as restated (Note 2); the 91,244 post-split shares issued to Maxim Group Partners, LLC on May 19, 2026 for investment banking services were measured at the quoted market price, $620,459, and expensed.

Basic and Diluted Net Earnings per Share

Basic earnings (loss) per share is net income (loss) divided by the weighted-average common shares outstanding; diluted earnings (loss) per share also includes dilutive potential common shares, which are excluded when anti-dilutive (Note 13).

Revenue Recognition

Rental income from furnished condominium units is recognized on a straight-line basis over the lease term under ASC 842; tenant security deposits are recorded as liabilities. The Company had no revenue within the scope of ASC 606 and no accounts receivable in the periods presented.

Investment in Securities

Equity securities with readily determinable fair values are measured at fair value through earnings (ASC 321). The ZenaTech, Inc. shares received under the voided sale of Ecker Capital, LLC are not recognized because the Company has no rights to them under the Order (Note 2).

Income Taxes

Income taxes are accounted for under the asset-and-liability method (ASC 740); deferred tax assets are reduced by a valuation allowance when realization is not more likely than not (Note 15).

Segment Information

The Company has one operating and reportable segment, the rental of residential real estate; the chief operating decision maker (the former sole director and, since October 6, 2026, the custodian) reviews financial information on a consolidated basis.

Recent Accounting Pronouncements

No recently issued accounting pronouncements are expected to have a material effect on the consolidated financial statements.