First Breach, Inc. 10-Q

Item 1. Financial Statements FIRST BREACH, INC. CONDENSED BALANCE SHEETS (Unaudited) June 30, 2026 (Unaudited) December 31, 2025 Assets Current Assets Cash $ 4,923,504 $ 2,477,122 Accounts receivable 26,584 51,889 Inventories, net 787,479 918,359 Prepaid assets 1,255,080 46,192 Total Current Assets 6,992,647 3,493,562 Property and equipment, net 9,258,482 8,201,957 Right-of-use assets 1,093,493 1,271,638 Other assets 273,622 53,625 Total assets $ 17,618,244 $ 13,020,782 Liabilities and stockholders’ equity Current Liabilities Accounts payable $ 1,321,695 $ 2,041,908 Accrued liabilities 413,216 431,659 Accrued liabilities, related party — 428,278 Accrued liabilities — 428,278 Employee loan payable, related party 121,739 121,739 Note payable - related party 50,000 50,000 Note payable - current portion — 7,166 Convertible notes payable, net of debt discount - current portion 9,348,543 284,146 Warrant liability, at fair value 2,547,702 — Operating lease liability - current portion 387,521 372,665 Financing lease liability - current portion 1,037,003 893,710 Total current liabilities 15,227,419 4,631,271 Long-term liabilities: Note payable — 27,523 Convertible notes payable, net of debt discount — 201,215 Operating lease liability - net of current portion 791,469 988,471 Financing lease liability - net of current portion 229,697 767,822 Total liabilities 16,248,585 6,616,302 Commitments and contingencies (Note 17) - - Stockholders’ equity Preferred stock, $ 0.0001 par value, 1,000,000 authorized, no shares issued and outstanding as of June 30, 2026 and December 31, 2025, respectively — — Common stock, $ 0.0001 par value, 500,000,000 and 100,000,000 authorized, 49,152,702 and 44,500,111 shares issued and outstanding as of June 30, 2026 and December 31, 2025 respectively 4,915 4,450 Additional paid-in capital 65,131,098 41,643,152 Accumulated deficit ( 63,766,354 ) ( 35,243,122 ) Total stockholders’ equity 1,369,659 6,404,480 Total liabilities and stockholders’ equity $ 17,618,244 $ 13,020,782 The accompanying notes are an integral part of these interim unaudited condensed financial statements 1 FIRST BREACH, INC. CONDENSED STATEMENTS OF OPERATIONS (Unaudited) 2026 2025 2026 2025 For the Three Months Ended June 30, For the Six Months Ended June 30, 2026 2025 2026 2025 Net revenues $ 95,353 $ 95,219 $ 361,357 $ 110,905 Cost of revenues 605,866 592,348 1,235,716 919,844 Net loss associated with liquidation of raw materials — 298,771 — 684,960 Gross margin ( 510,513 ) ( 795,900 ) ( 874,359 ) ( 1,493,899 ) Operating expenses: Selling, general, and administrative expense 11,202,485 873,299 25,288,394 1,345,881 Research and development 126,313 — 126,313 — Total operating expenses 11,328,798 873,299 25,414,707 1,345,881 Loss from operations ( 11,839,311 ) ( 1,669,199 ) ( 26,289,066 ) ( 2,839,780 ) Other expense, net: Interest expense, net ( 1,860,323 ) ( 582,123 ) ( 2,004,679 ) ( 988,452 ) Amortization of deferred financing costs ( 191,590 ) — ( 191,590 ) — Change in fair value of warrant liability 45,094 — 45,094 — Loss on sale of assets ( 16,758 ) ( 1,906 ) ( 56,215 ) ( 1,906 ) Other income — 25,500 — 42,500 Other expense ( 13,389 ) ( 10,260 ) ( 26,776 ) ( 20,525 ) Total other expense, net ( 2,036,966 ) ( 568,789 ) ( 2,234,166 ) ( 968,383 ) Net loss before income taxes ( 13,876,277 ) ( 2,237,988 ) ( 28,523,232 ) ( 3,808,163 ) Income tax provision — — — — Net loss $ ( 13,876,277 ) $ ( 2,237,988 ) $ ( 28,523,232 ) $ ( 3,808,163 ) Net loss per share: Basic and diluted $ ( 0.26 ) $ ( 0.06 ) $ ( 0.54 ) $ ( 0.10 ) Weighted average number of shares outstanding Basic and diluted 54,112,845 37,784,611 52,767,635 37,784,611 The accompanying notes are an integral part of these interim unaudited condensed financial statements. 2 CONDENSED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2026 AND 2025 (Unaudited) Shares Amount Capital Deficit Equity (Deficit) For the Six Months Ended June 30, 2026 Common Stock Additional Paid-In Accumulated Total Stockholders’ Shares Amount Capital Deficit Equity (Deficit) Balance at January 1, 2026 44,500,111 $ 4,450 $ 41,643,152 $ ( 35,243,122 ) $ 6,404,480 Equity offering proceeds 511,170 51 1,341,953 — 1,342,004 Share based compensation — — 13,002,574 — 13,002,574 Net Loss — — — ( 14,646,955 ) ( 14,646,955 ) Balance at March 31, 2026 45,011,281 4,501 55,987,679 ( 49,890,077 ) 6,102,103 Vesting of restricted stock 4,062,500 406 ( 406 ) — — Exercise of warrants 55,920 6 ( 6 ) — — Issuance of common stock for services 23,001 2 184,006 — 184,008 Share based compensation — — 8,959,825 — 8,959,825 Net Loss — — — ( 13,876,277 ) ( 13,876,277 ) Balance at June 30, 2026 49,152,702 $ 4,915 $ 65,131,098 $ ( 63,766,354 ) $ 1,369,659 For the Six Months Ended June 30, 2025 Common Stock Additional Paid-In Accumulated Total Stockholders’ Shares Amount Capital Deficit Equity Balance at January 1, 2025 37,784,611 $ 3,778 $ 26,526,826 $ ( 21,421,001 ) $ 5,109,603 Warrants issued in conjunction with convertible notes payable — — 164,818 — 164,818 Net Loss — — — ( 1,570,175 ) ( 1,570,175 ) Balance as of March 31, 2025 37,784,611 3,778 26,691,644 ( 22,991,176 ) 3,704,246 Warrants issued in conjunction with convertible notes payable — — 421,995 — 421,995 Net loss — — — ( 2,237,988 ) ( 2,237,988 ) Balance as of June 30, 2025 37,784,611 $ 3,778 $ 27,113,639 $ ( 25,229,164 ) $ 1,888,253 The accompanying notes are an integral part of these interim unaudited condensed financial statements. 3 FIRST BREACH, INC . CONDENSED STATEMENTS OF CASH FLOWS (Unaudited) 2026 2025 For the Six Months Ended June 30, 2026 2025 Cash flows from operating activities: Net loss $ ( 28,523,232 ) $ ( 3,808,163 ) Adjustments to reconcile net loss to net cash used in operating activities: Stock-based compensation 21,962,399 — Issuance of stocks for services 184,008 — Depreciation and amortization 682,374 665,743 Amortization of debt discount 129,278 135,565 Amortization of debt discount - warrant feature and OID interest 1,559,510 433,458 Change in fair value of warrant liability ( 45,094 ) — Amortization of deferred financing costs 191,590 — Non-cash PIK interest 30,393 143,731 Loss on sale of asset ( 56,215 ) ( 1,906 ) Right-of-use assets, net of lease liabilities ( 4,001 ) 2,146 Changes in operating assets and liabilities: Accounts receivable 25,305 11,825 Inventories 130,880 1,120,416 Prepaid and other current assets ( 1,208,888 ) ( 14,985 ) Accounts payable ( 720,214 ) 567,390 Accrued liabilities 330,703 234,508 Accrued liabilities, related party ( 428,278 ) ( 6,200 ) Accrued liabilities ( 428,278 ) ( 6,200 ) Contract liabilities — ( 54,410 ) Net cash used in operating activities ( 5,759,482 ) ( 570,882 ) Cash flows from investing activities: Proceeds from sale of assets — 78,000 Capitalized expenditures ( 1,682,684 ) ( 88,368 ) Net cash used in investing activities ( 1,682,684 ) ( 10,368 ) Cash flows from financing activities: Proceeds from convertible notes payable 10,150,000 1,350,000 Principal payments on financing lease ( 598,766 ) ( 597,117 ) Proceeds from issuance on equity offerings 1,342,003 — Payments on note payable ( 34,689 ) ( 564 ) Debt issuance and deferred direct listing costs ( 970,000 ) — Net cash provided by financing activities 9,888,548 752,319 Net change to cash 2,446,382 171,069 Cash, beginning of period 2,477,122 434,613 Cash, end of period $ 4,923,504 $ 605,682 Supplemental disclosure of cash flow information: Cash paid for interest $ 203,009 $ 262,496 Supplemental non-cash financing activities Original issue discount on debt $ 5,465,385 $ — Warrant liabilities recognized as debt discounts $ 2,592,796 $ — Issuance of warrants in conjunction with convertible notes payable $ — $ 586,813 The accompanying notes are an integral part of these interim unaudited condensed financial statements. 4 FIRST BREACH, INC . NOTES TO THE CONDENSED FINANCIAL STATEMENTS (Unaudited) NOTE 1 — ORGANIZATION AND NATURE OF BUSINESS First Breach (the “Company”) was originally formed as a limited liability company named First Breach, LLC under the laws of the State of Maryland on April 9, 2018, and subsequently converted to a corporation named First Breach, Inc. (“First Breach”) incorporated under the laws of the State of Delaware on October 22, 2021. The Company is a match-grade ammunition component manufacturer offering brass cups, brass casings, full-metal-jacket projectiles, lead projectile cores, and lead wire. Equipped with numerous quality control checks, the Company offers match-grade, SAAMI-specification products. Customers will have the ability to order custom head-stamped casings as well as a wide range of grain-size options for projectiles. The majority of customers are resellers and direct-to-consumers primarily within the United States. The Company is also developing unmanned aerial systems (“UAS”) capabilities through a joint venture with ideaForge Technology Inc. formed on September 23, 2025, First Forge Technologies Inc., which was organized to develop, produce and sell drone platforms for defense, homeland security and commercial applications using domestic manufacturing and supply chain capabilities. On May 1, 2026, the Company also entered into a Master Services Agreement with Hellbender, Inc. for the design, engineering and prototyping of two Class 1 attritable first-person-view drone platforms,of which First Breach will own the design and related intellectual property of the UAS. The Company’s UAS activities are in the development stage and have not generated any revenue. The Company is dedicated to building upon its industry experience while emphasizing placing integrity first along with competitive pricing, building customer relations, and utilizing quality raw materials. NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation The accompanying interim unaudited condensed financial statements and the related notes have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and pursuant to the accounting and disclosure rules and regulations of the Securities and Exchange Commission (“SEC”). Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to SEC rules and regulations applicable to interim financial reporting. Accordingly, they do not include all the information and footnotes necessary for a complete presentation of financial position, results of operations, or cash flows. In the opinion of management, the accompanying interim unaudited condensed financial statements reflect all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation of the Company’s financial position, results of operations, and cash flows for the periods presented. These interim unaudited condensed financial statements should be read in conjunction with the audited financial statements and notes thereto included in the Company’s Current Report on Form S-1 for the year ended December 31, 2025. Financial information as of December 31, 2025 has been derived from our audited financial statements and notes thereto as of this date. Liquidity and Going Concern The Company has incurred losses since inception, devoting substantially all of its efforts toward manufacturing buildout and related operational activities, and have an accumulated deficit of $ 63,766,354 as of June 30, 2026. The Company generated a net loss of $ 13,876,277 and $ 28,523,232 during the three and six months ended June 30, 2026, respectively. Net cash used in its operating activities during the six months ended June 30, 2026 was $ 5,759,482 . The Company expects to continue to generate operating losses and negative cash flow from operations for the foreseeable future. The Company plans to continue to actively pursue financing alternatives, but there can be no assurance that it will obtain the necessary funding in the future when needed. 5 The Company’s management concluded that its recurring losses from operations and the fact that it has not generated significant revenue or positive cash flows from operations raise substantial doubt about its ability to continue as a going concern for the next 12 months after the date that these interim unaudited condensed financial statements are issued. Revenue Recognition and Cost of Revenue The Company generates revenue from the production and sale of ammunition, which includes shipping income. The Company recognizes revenue according to Accounting Standard Codification – Revenue from Contract with Customers (“ASC 606”). When the customer obtains control over the promised goods or services, the Company records revenue in the amount of consideration that it can expect to receive in exchange for those goods and services. The Company applies the following five-step model to determine revenue recognition: ● Identification of a contract with a customer ● Identification of the performance obligations in the contract ● Determination of the transaction price ● Allocation of the transaction price to the separate performance obligations ● Recognition of revenue when performance obligations are satisfied The Company only applies the five-step model when it is probable that it will collect the consideration it is entitled to in exchange for the goods or services it transfers to the customer. At contract inception and once the contract is determined to be within the scope of ASC 606, the Company assesses the goods or services promised within each contract and determines those that are performance obligations and assesses whether each promised good or service is distinct. The Company’s contracts contain a single performance obligation, and the entire transaction price is allocated to the single performance obligation. The Company recognizes as revenues the amount of the transaction price that is allocated to the respective performance obligation when the performance obligation is satisfied or as it is satisfied. Accordingly, The Company recognizes net revenues when the customer obtains control of its product, which typically occurs upon shipment of the product from our warehouse or the performance of the service. The Company applies ASC 606, Revenue from Contracts with Customers , (ASC 606) utilizing the following allowable exemptions or practical expedients: ● Portfolio approach practical expedient relative to the estimation of variable consideration ● Shipping and handling practical expedient to account for shipping and handling activities that occur after control of the related good transfers as fulfillment activities. ● Cost of obtaining a contract practical expedient to recognize the incremental costs of obtaining a contract as an expense when incurred if the amortization period of the asset is one year or less. ● Sales tax practical expedient to exclude sales taxes and other similar taxes from the transaction price. ● Significant financing component practical expedient. Substantially all the Company’s sales are domestic and are made to customers under agreements which do not include rights of return or warranty for the three and six months ended June 30, 2026 and 2025. Revenue from product sales is recognized as net of discounts and estimated returns. Cost of revenue includes the cost of purchased merchandise plus freight and any applicable delivery charges from the vendor to the Company. Sales are to individual retail consumers through the Company’s ecommerce sales and wholesale distribution partners. The majority of customers are resellers and direct-to-consumers primarily within the United States. 6 Cost of revenues earned includes all finished material, supplies and raw materials, equipment rental, and freight. SCHEDULE OF ACCOUNTS RECEIVABLE Total accounts receivable January 1, 2025 $ 30,265 January 1, 2026 $ 51,889 June 30, 2026 $ 26,584 Research and Development Costs Research and development (“R&D”) costs are expensed as incurred and are included in operating expenses in the interim unaudited condensed statements of operations. Research and development costs consist primarily of expenditures incurred in the design, development, testing, and improvement of the Company’s products and manufacturing processes, including personnel-related costs, prototype development, materials consumed in testing activities, consulting fees, and other direct costs associated with advancing the Company’s product offerings and production capabilities. The Company evaluates all research and development activities in accordance with applicable accounting guidance to determine whether capitalization is appropriate. To the extent software development costs, internal-use software costs, or other expenditures meet the criteria for capitalization under applicable accounting standards, such costs are capitalized and amortized over their estimated useful lives. As of this balance sheet, no development costs met the criteria for capitalization. Contract Liabilities As of the six months ended June 30, 2026 and the year ended December 31, 2025, the Company did not have any contract assets or contract liabilities arising from contracts with customers. All remaining performance obligations associated with these deposits are expected to be satisfied within the following calendar year. Use of Estimates Management uses estimates and assumptions in preparing its financial statements in accordance with U.S. GAAP. Those estimates and assumptions 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 reporting period. The most significant estimates relate to the estimated determination of the allowance for credit losses, allowance for obsolete inventory, warrant fair value and stock-based compensation. On an ongoing basis, management evaluates its estimates compared to historical experience and trends, which form the basis for making judgments about the carrying value of assets and liabilities. Segments 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 requires enhanced disclosures about a public entity’s reportable segments, including significant segment expense categories and expanded interim reporting requirements. The amendments are effective for years beginning after December 15, 2023, and interim periods beginning after December 15, 2024. Early adoption is permitted. The Company adopted ASU 2023-07 for the year ended December 31, 2024. The adoption of this standard did not have a material impact on the Company’s condensed financial statements. In November 2023, the FASB issued Accounting Standards Update ASC 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. ASC 2023-07 requires public entities to disclose significant segment expense categories that are regularly provided to the Chief Operating Decision Maker (“CODM”) and included in the measure of segment profit or loss, as well as the title and position of the CODM. The amendments also require disclosure of all annual segment profit or loss and asset disclosures in interim periods and provide expanded disclosure requirements for entities with a single reportable segment. The Company’s Chief Executive Officer (“CEO”) is the Chief Operating Decision Maker (“CODM”) and reviews financial performance and makes resource allocation decisions at the consolidated entity level. The CODM utilizes net income, prepared in accordance with U.S. GAAP, to evaluate financial performance, monitor variances against budget and forecast, and guide strategic decisions. Segment assets are reported as consolidated assets on the Company’s condensed balance sheet. The primary financial measures used by the CODM to evaluate performance and allocate resources are net income (loss) and operating income (loss). The CODM uses net income (loss) and operating income (loss) to evaluate the performance of the Company’s ongoing operations and as part of the Company’s internal planning and forecasting processes. Information on net income (loss) and operating income (loss) is disclosed in the interim unaudited condensed statements of operations. Segment expenses and other segment items are provided to the CODM on the same basis as disclosed in the interim unaudited condensed statements of operations. 7 The CODM does not evaluate performance or allocate resources based on segment assets, and therefore such information is not presented in the notes to the financial statements. The Company has determined that its current business and operations consist of one reporting segment. Cash Cash includes cash on hand as of June 30, 2026 and December 31, 2025. T he Company maintained an aggregate cash balance of $ 4,923,504 and $ 2,477,122 , respectively, in two bank deposit accounts held at a single financial institution. Of this amount, $ 4,673,504 and $ 2,227,122 exceeded the federally insured limit of $ 250,000 as of June 30, 2026 and December 31, 2025, respectively. The re were no cash equivalents as of June 30, 2026 and December 31, 2025. The Company has not experienced any losses in such accounts, and management believes it is not exposed to significant credit risk on its cash balances. Accounts Receivable Trade accounts receivable are stated at the amount the Company expects to collect and do not bear interest. For its financial instruments subject to credit risk, consisting of its receivables, the Company recognizes as an allowance its estimate of lifetime expected credit losses under the current expected credit loss (CECL) model of ASC 326. The approach is based on the Company’s internal knowledge and historical default rates over the expected life of the receivables and is adjusted to reflect current economic conditions. This evaluation takes into account the customer’s ability and intention to pay the consideration when it is due along with incorporating changes in the forward-looking estimates. If the expected financial condition of the Company’s customers were to improve, the allowances may be reduced accordingly. Provisions to the allowances for credit losses are recorded in selling, general and administrative expenses. As of June 30, 2026 and December 31, 2025, the Company determined that the vast majority of its accounts receivable were fully collectible and, accordingly, did not record an allowance for credit losses. Inventories, net Inventories are valued at the lower of cost and net realizable value, with cost determined using the weighted average cost method on a first-in first-out basis. Net realizable value is defined as sales price less cost of completion, disposable and transportation. Production costs, including labor and manufacturing overhead, are applied to finished goods based on estimated production capacity. Any excess production costs that result from abnormally low production levels are expensed as incurred and included in cost of revenues. The Company evaluates inventory for excess or obsolescence and records provisions when necessary to reduce inventories to their net realizable value. The reserve for excess or obsolete inventories was $ 20,105 as of June 30, 2026 and December 31, 2025. Property and Equipment, net The Company states property and equipment at historical cost less accumulated depreciation and amortization. The Company computes depreciation and amortization using the straight-line method at rates intended to depreciate the cost of assets over their estimated useful lives, which are generally 3 three to ten years . Upon retirement or sale of property and equipment, The Company removes the cost of the disposed assets and related accumulated depreciation and amortization from the accounts, and any resulting gain or loss is credited or charged to other income or expenses. The Company charges expenditures for normal repairs and maintenance to expenses as incurred. 8 The Company capitalizes additions and expenditures for improving or rebuilding existing assets that extend the useful life. Leasehold improvements made either at the inception of the lease or during the lease term are amortized over the shorter of their economic lives or the lease term including any renewals that are reasonably assured. Property and equipment is stated at historical cost less accumulated depreciation. The estimated useful lives as follows: SCHEDULE OF PROPERTY AND EQUIPMENT ESTIMATED USEFUL LIVES Asset Class Useful Life (Years) Vehicles 3 - 6 Leasehold improvements 6 - 7 Office furniture & fixtures 7 Tooling, machinery and equipment 3 - 10 Long-Lived Assets Recoverability of long-lived assets, including property and equipment and certain identifiable intangible assets are evaluated whenever events or circumstances indicate that the carrying amount of an asset may not be recoverable. Factors considered important which could trigger an impairment review include but are not limited to significant underperformance relative to historical or projected future operating results, significant changes in the manner of use of the assets or the strategy for the overall business, significant decrease in the market value of the assets and significant negative industry or economic trends. In the event the carrying amount of the long-lived assets may not be recoverable based upon the existence of one or more of the indicators, the assets are assessed for impairment based on the estimated future undiscounted cash flows expected to result from the use of the asset and its eventual deposition. If the carrying amount of an asset exceeds the sum of the estimated future undiscounted cash flow, an impairment loss is recorded for the excess of the asset’s carrying amount over its fair value. There was no impairment as of June 30, 2026 and 2025. Fair Value of Financial Instruments The Company complies with ASC 820, Fair Value Measurements and Disclosures , which defines fair value, establishes a framework for measuring fair value in accordance with U.S. GAAP and expands disclosure requirements about fair value measurements. Under ASC 820, there are three categories for the classification and measurement of assets and liabilities carried at fair value: Level 1: Valuation based on quoted market prices in active markets for identical assets or liabilities. Since valuations are based on quoted prices that are readily and regularly available in an active market, valuation of these products does not entail a significant degree of judgment. Examples include publicly traded equity securities and publicly traded mutual funds that are actively traded on a major exchange or over-the-counter market. Level 2: Valuation based on quoted market prices of investments that are not actively traded or for which certain significant inputs are not observable, either directly or indirectly. Examples include municipal bonds, where fair value is estimated using recently executed transactions, bid asked prices and pricing models that factor in, where applicable, interest rates, bond spreads and volatility. Level 3: Valuation based on inputs that are unobservable and reflect management’s best estimate of what market participants would use as fair value. Examples include limited partnerships and private equity investments. The estimated fair value of cash, trade receivables, accounts payable, accrued expenses and other current liabilities are based on Level 1 inputs as the fair values approximate carrying amounts as of June 30, 2026 and December 31, 2025, based on the short-term nature and maturity of these instruments. 9 The fair value of the Company’s convertible notes payable, approximated the carrying value as of June 30, 2026 and December 31, 2025. Factors that the Company considered when estimating the fair value of its debt included market conditions and the terms of the debt. The level of the debt would be considered as Level 2. The estimated fair value of warrants shares is determined based on various valuation methodologies, including the Monte Carlo pricing model and other appropriate valuation techniques. These methodologies consider underlying economic factors that influenced which of these events would occur, when they were likely to occur, and the specific terms that would be in effect at the time (i.e., stock price, exercise/conversion price, etc.). Probabilities were assigned to each variable such as the timing and pricing of events over the term of the instruments based on management projections. The following tables present information about the Company’s liabilities measured at fair value on a recurring basis as of June 30, 2026 and December 31, 2025: SCHEDULE OF LIABILITIES MEASURED AT FAIR VALUE ON A RECURRING BASIS Liabilities Measured at Fair Value on a Recurring Basis at June 30, 2026 Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Balance at June 30, 2026 Liabilities Warrants (Note 14) $ — $ — $ 2,547,702 $ 2,547,702 Total liabilities $ — $ — $ 2,547,702 $ 2,547,702 Liabilities Measured at Fair Value on a Recurring Basis at December 31, 2025 Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Balance at December 31, 2025 Liabilities Warrants (Note 14) $ — $ — $ — $ — Total liabilities $ — $ — $ — $ — 10 Changes in Level 3 warrants liabilities, measured at fair value on a recurring basis as of June 30, 2026 and December 31, 2025 are as follows: SCHEDULE OF CHANGES IN LEVEL 3 WARRANT LIABILITIES MEASURED AT FAIR VALUE ON A RECURRING BASIS 2026 2025 Warrant Liability June 30, December 31, 2026 2025 Beginning balance $ — $ — Warrants issued in conjunction with convertible notes payable 2,592,796 — Changes in fair value ( 45,094 ) — Closing balance $ 2,547,702 $ — The fair value of the warrant liability was estimated using a Monte Carlo simulation model and classified as a Level 3 financial instrument. Significant assumptions used in the model included exercise price, expected volatility, risk-free interest rates, expected term, and probability-weighted assessments of contingent events. Warrants The Company accounts for warrants as either equity-classified or liability-classified instruments based on an assessment of the warrant’s specific terms and applicable authoritative guidance in ASC 480, Distinguishing Liabilities from Equity (“ASC 480”) and ASC 815, Derivatives and Hedging (“ASC 815”). The Company’s assessment considers whether the warrants are freestanding financial instruments pursuant to ASC 480, whether they meet the definition of a liability pursuant to ASC 480, and whether the warrants meet all of the requirements for equity classification under ASC 815, including whether the warrants are indexed to the Company’s own common stock and whether the warrant holders could potentially require “net cash settlement” in a circumstance outside of the Company’s control, among other conditions for equity classification. This assessment, which requires the use of professional judgment, is conducted at the time of warrant issuance. The issuance of warrants in conjunction with convertible debt, prior to April 24, 2026 (see Note 9) and warrants to investors and placement agents (see Note 14) qualify for the derivative scope exception under ASC 815 and are therefore presented as a component of Stockholders’ Equity on the interim unaudited condensed balance sheets without subsequent fair value re-measurement. The issuance of warrants in conjunction with convertible debt, on April 24, 2026 (see Note 9) are liability-classified, as they do not meet the fixed-for-fixed criterion under ASC 815-40. The Company separately assessed whether these warrants meet the definition of a derivative under ASC 815 and determined they do not, as the net settlement criterion is not met. These warrants are initially recorded at fair value and are subsequently re-measured at each reporting period, with changes in fair value recognized in the statements of operations. The classification and derivative assessments are reassessed at each reporting period, as a change in facts could affect the derivative classification. Net loss per share Basic net loss per share is computed by dividing net loss available to common shareholders by the weighted average shares outstanding during the period. Diluted net loss per share takes into account the potential dilution that could occur if securities or other contracts to issue shares, such as stock options, warrants, and unvested restricted stock units, were exercised and converted into common shares and the impact would not be antidilutive. Diluted net loss per share is computed by dividing net loss available to common shareholders by the weighted average shares outstanding during the period, increased by the number of additional shares that would have been outstanding if the potential shares had been issued and were dilutive. Contingently issuable shares are included in basic net loss per share only when there is no circumstance under which those shares would not be issued. 11 Advertising Advertising and marketing costs are expensed as incurred. During the three months ended June 30, 2026 and 2025, advertising costs incurred by the Company totaled $ 1,074 and $ 23,795 , respectively. During the six months ended June 30, 2026 and 2025, advertising costs incurred by the Company totaled $ 2,074 and $ 44,387 , respectively. Advertising and marketing costs are included in selling, general and administrative expenses in the accompanying interim unaudited condensed statements of operations. Deferred Financing Costs Deferred financing costs relating to the Company’s convertible notes payable are deferred and amortized ratably over the life of the debt using the straight-line method. Deferred financing costs are included as an addition to interest expense on the interim unaudited condensed statements of operations and are included in Convertible notes payable, net of debt discount on the interim unaudited condensed balance sheets. Shipping and Handling Costs The Company accounts for shipping and handling activities as fulfillment activities. As such, the Company does not evaluate shipping and handling as promised services to its customers. Shipping and handling costs are included in cost of revenues in the accompanying interim unaudited condensed statements of operations. Leases The Company is a lessee in multiple noncancelable operating and financing leases. If the contract provides the Company with the right to substantially all the economic benefits and the right to direct the use of the identified asset, it is generally considered to be or contain a lease. Right-of-Use (ROU) assets and lease liabilities are recognized at the lease commencement date based on the present value of the future lease payments over the expected lease term. The ROU asset is also adjusted for any lease prepayments made, lease incentives received, and initial direct costs incurred. The lease liability is initially and subsequently recognized based on the present value of its future lease payments. Variable payments are included in the future lease payments when those variable payments depend on an index or a rate. Increases (decreases) to variable lease payments due to subsequent changes in an index or rate are recorded as variable lease expense (income) in the future period in which they are incurred. The discount rate used is the implicit rate in the lease contract, if it is readily determinable, or the Company’s incremental borrowing rate. The Company uses the incremental borrowing rate based on the information available at the commencement date for all leases. The Company’s incremental borrowing rate for a lease is the rate of interest it would have to pay on a collateralized basis to borrow an amount equal to the lease payments under similar terms and in a similar economic environment. The ROU asset for operating leases is subsequently measured throughout the lease term at the amount of the remeasured lease liability (i.e., present value of the remaining lease payments), plus unamortized initial direct costs, plus (minus) any prepaid (accrued) lease payments, less the unamortized balance of lease incentives received, and any impairment recognized. Operating leases with fluctuating lease payments: For operating leases with lease payments that fluctuate over the lease term, the total lease costs are recognized on a straight-line basis over the lease term. The ROU asset for finance leases is amortized on a straight-line basis over the economic life of the asset as the financing leases include an option to purchase the underlying asset that the Company is reasonably certain to exercise. For all underlying classes of assets, the Company has elected the practical expedient to not recognize ROU assets and lease liabilities for short-term leases that have a lease term of 12 months or less at lease commencement. The Company recognizes short-term lease cost on a straight-line basis over the lease term. 12 Stock-Based Compensation The Company accounts for stock awards issued under ASC 718, Compensation – Stock Compensation (“ASC 718”). The Company classifies awards granted to employees, directors and non-employee consultants as either equity-classified or liability-classified based on the terms of the award. Equity-classified awards are measured at the grant-date fair value and recognized as compensation expense over the requisite service period, which is generally the vesting period. Equity-classified awards are not subsequently remeasured. As of June 30, 2026 and December 31, 2025, all stock awards issued were equity-classified. Stock-based compensation is recognized as an expense over the employee’s requisite vesting period and over the non-employee’s period of providing goods or services. The fair value of each stock option or warrant award is estimated on the date of grant using the Black-Scholes option valuation model or the Monte Carlo simulation method. Income Taxes The Company accounts for income taxes in accordance with ASC Topic 740, Income Taxes. Deferred income taxes are recorded for the expected tax consequences of temporary differences between the basis of assets and liabilities for financial reporting purposes and amounts recognized for income tax purposes. As of June 30, 2026 and December 31, 2025, the Company recorded a valuation allowance equal to the full recorded amount of its net deferred tax assets since it is more-likely-than-not that benefits from its deferred tax assets will not be realized. The valuation allowance is reviewed quarterly and is maintained until sufficient positive evidence exists to support its reversal. The Company recognizes the impact of an uncertain tax position if the position will more likely than not be sustained upon examination by a taxing authority, based on the technical merits of the position. The Company’s policy is to record interest and penalties related to income taxes as part of its income tax provision. As of June 30, 2026 and December 31, 2025, the Company had no unrecognized tax benefits and as such, no liability, interest or penalties were required to be recorded. The Company does not expect this to change significantly in the next twelve months. Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating losses. Deferred tax assets and liabilities are measured using enacted tax rates in effect for the year in which those temporary differences are expected to be recover or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is entirely dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversals of deferred tax liabilities, projected future taxable income, and tax planning strategies in making this assessment. The Company files income tax returns in the U.S. federal jurisdiction and the State of Maryland. Accounting Pronouncements Recently Issued and Adopted Pronouncements In March 2024, the FASB issued ASU 2024-01, Compensation—Stock Compensation (Topic 718): Scope Application of Profits Interest and Similar Awards, which adds an illustrative example clarifying whether profits interest and similar awards should be accounted for as share-based payment arrangements under ASC 718 or under other guidance such as ASC 710. The Company’s share-based awards consist of restricted stock units and stock options accounted for as equity-classified awards under ASC 718, and the Company has not granted profits interest or similar awards. Accordingly, the adoption of ASU 2024-01 did not have an impact on the Company’s condensed financial statements as adopted on January 1, 2026. 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. We are also a “smaller reporting company,” as defined in the Exchange Act. We may continue to be a smaller reporting company even after we are no longer an emerging growth company. We may take advantage of certain of the scaled disclosures available to smaller reporting companies and will be permitted to do so for so long as (i) our voting and non-voting common stock held by non-affiliates is less than $250.0 million measured on the last business day of our second fiscal quarter, or (ii) our annual revenue is less than $100.0 million during the most recently completed fiscal year and our voting and non-voting common stock held by non-affiliates is less than $700.0 million measured on the last business day of our second fiscal quarter. The amendments also require disclosure of all annual segment profit or loss and asset disclosures in interim periods and provide expanded disclosure requirements for entities with a single reportable segment. 13 ASU 2023-07 is effective for fiscal years beginning after December 15, 2023, and interim periods beginning after December 15, 2024. The Company adopted ASU 2023-07 for its year ended December 31, 2024, in accordance with the required effective date for non-accelerated filers. The adoption did not impact the Company’s financial position, results of operations, or cash flows; however, it resulted in enhanced segment disclosures in the notes to the financial statements in accordance with ASC 280, Segment Reporting . These enhancements include the identification of significant segment expense categories, disclosure of the measures of segment profit or loss used by the Chief Operating Decision Maker (“CODM”), related reconciliations to the most comparable GAAP measure, and expanded disclosures for entities with a single reportable segment. In December 2023, the FASB issued ASU 2023-09 , Income Taxes (Topic 740): Improvements to Income Tax Disclosures . The ASU requires that an entity disclose specific categories in the effective tax rate reconciliation as well as reconciling items that meet a quantitative threshold. Further, the ASU requires additional disclosures on income tax expense and taxes paid, net of refunds received, by jurisdiction. The new standard is effective for annual periods beginning after December 15, 2024 on a prospective basis with the option to apply it retrospectively. Early adoption is permitted. The Company adopted ASC 2023-09 for the year ended December 31, 2025, and applied the new disclosure requirements prospectively to the current annual period. Prior period disclosures have not been adjusted to reflect the new disclosure requirements. Recently Issued but Not Yet Adopted Accounting Pronouncements In July 2025, the FASB issued ASU 2025-05, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets, which provides a practical expedient permitting an entity to assume that current conditions as of the balance sheet date do not change over the remaining life of current accounts receivable and current contract assets arising from transactions accounted for under ASC 606 when developing reasonable and supportable forecasts used to estimate expected credit losses. The guidance is effective for annual reporting periods beginning after December 15, 2025, and interim periods within those periods, applied prospectively, with early adoption permitted. Given the short-term nature of the Company’s accounts receivable and its history of no material credit losses, the adoption of ASU 2025-05 does not anticipate a material impact on the Company’s condensed financial statements when effective. In November 2024, the FASB issued ASU 2024-04, Debt—Debt with Conversion and Other Options (Subtopic 470-20): Induced Conversions of Convertible Debt Instruments, which clarifies the criteria for determining whether the settlement of a convertible debt instrument should be accounted for as an induced conversion or as a debt extinguishment. The guidance is effective for annual reporting periods beginning after December 15, 2025, and interim periods within those periods, with early adoption permitted for entities that have adopted ASU 2020-06, and may be applied prospectively or retrospectively. The Company considered ASU 2024-04 in connection with its convertible notes payable. Conversions of the Company’s convertible notes occurred in accordance with the instruments’ original contractual conversion terms and did not involve modifications to those terms to induce conversion; accordingly, ASU 2024-04 does anticipate a material impact on the Company’s condensed financial statements when effective. In November 2024, the FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses to expand the disclosure requirements for certain costs and expenses. In January 2025, FASB issued ASU 2025-01, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Clarifying the Effective Date, which clarified the effective date of ASU 2024-03 as periods beginning after December 15, 2026 for annual reporting, and interim reporting periods within annual reporting periods beginning after December 15, 2027. Early adoption is permitted. The Company is currently evaluating the impact this standard will have on its financial statements. NOTE 3 — INVENTORIES Inventories, net consisted of the following at: SCHEDULE OF INVENTORIES NET June 30, 2026 December 31, 2025 Finished products $ 165,923 $ 319,131 Raw materials 483,000 472,863 Work in progress 158,661 146,470 Inventory, gross 807,584 938,464 Allowance for obsolete inventory ( 20,105 ) ( 20,105 ) Total inventory, net $ 787,479 $ 918,359 Net Loss from Liquidation of Raw Materials The net loss on liquidation of raw materials for the three months ended June 30, 2026 and 2025 was $ 0 and $ 298,771 , respectively, and for six months ended June 30, 2026 and 2025 was $ 0 and $ 684,960 , respectively, attributable to the liquidation of certain raw material inventory outside the normal course of operations to support operating cash flow and working capital management, which resulted in proceeds below the inventory’s carrying value. 14 NOTE 4 — PREPAID ASSETS Prepaid assets consist of the following at: SCHEDULE OF PREPAID ASSETS June 30, 2026 December 31, 2025 Prepaid insurance $ 20,222 $ 35,389 Prepaid drone development (Note 17) 1,023,687 — Prepaid other 211,171 10,803 Total prepaid assets $ 1,255,080 $ 46,192 NOTE 5 — PROPERTY AND EQUIPMENT, NET Property and equipment, net consist of the following at: SCHEDULE OF PROPERTY AND EQUIPMENT, NET Classification June 30, 2026 December 31, 2025 Vehicles $ 447,700 $ 340,210 Leasehold improvements 1,690,532 1,656,123 Office furniture and fixtures 60,328 60,328 Tooling, machinery and equipment 11,406,922 9,876,922 Total property and equipment, gross 11,406,922 9,876,922 Total property and equipment 13,605,482 11,933,583 Less: Accumulated depreciation and amortization ( 4,347,000 ) ( 3,731,626 ) Property and equipment, net $ 9,258,482 $ 8,201,957 Depreciation and amortization expense was $ 347,135 and $ 333,177 for the three months ended June 30, 2026 and 2025, respectively. Depreciation and amortization expense was $ 682,374 and $ 665,743 for the six mo nths ended June 30, 2026 and 2025, respectively. NOTE 6 — ACCRUED LIABILITIES Accrued liabilities consisted of the following at: SCHEDULE OF ACCRUED LIABILITIES June 30, 2026 December 31, 2025 Accrued outstanding lease payments $ 40,098 $ 22,439 Accrued professional fees 54,758 106,120 Accrued utilities — 10,991 Accrued employee compensation 51,360 25,109 Accrued contractor costs 267,000 267,000 Total accrued liabilities $ 413,216 $ 431,659 NOTE 7 — OPERATING LEASES   On March 18, 2021, the Company entered into a lease agreement with New Heights Industrial Park, LLC for a new office and manufacturing space totaling 71,500 square feet in Hagerstown, Maryland. The lease commenced upon the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) manufacturing certification received on May 22, 2022, and shall expire 84 months thereafter. The initial monthly rent was $ 31,877 with annual increases of 3 % per annum. The lease agreement grants the Company two successive five-year extension options, with rent for each extension term commencing at 103% of the prior year’s annual rent, subject to timely notice and the absence of default .   15 Components of operating lease were as follows: SCHEDULE OF COMPONENTS OF OPERATING LEASE June 30, 2026 December 31, 2025 Operating lease right-of-use lease asset $ 2,465,275 $ 2,465,275 Accumulated amortization ( 1,371,782 ) ( 1,193,637 ) Net balance $ 1,093,493 $ 1,271,638 Lease liability, current portion $ 387,521 $ 372,665 Lease liability, long term 791,469 988,471 Total operating lease liabilities $ 1,178,990 $ 1,361,136 Weighted Average Remaining Lease Term – operating leases 34 months 40 months Weighted Average Discount Rate – operating leases 4.5 % 4.5 % Future minimum lease payments under this operating lease as of June 30, 2026, were as follows: SCHEDULE OF FUTURE MINIMUM LEASE PAYMENTS FOR OPERATING LEASES 2026 (remainder of year) $ 215,268 2027 439,146 2028 452,320 2029 152,252 Total lease payments 1,258,986 Less imputed interest ( 79,996 ) Maturities of lease liabilities $ 1,178,990 Total operating lease expense for the three and six months ended June 30, 2026 and 2025, was $ 103,543 and $ 207,086 respectively, and is recorded in selling, general, and administrative expenses in the accompanying interim unaudited condensed statements of operations.   Supplemental cash flows information related to leases was as follows: SCHEDULE OF SUPPLEMENTAL CASH FLOWS INFORMATION June 30, 2026 June 30, 2025 Cash paid for amounts included in the measurement of lease liability: Operating cash flows from operating lease $ 211,088 $ 204,939 16 NOTE 8 — FINANCING LEASES On February 8, 2023, the Company entered into an equipment financing agreement with Utica Leaseco, LLC (“Utica”), pursuant to a Master Lease Agreement, (“Master Lease Agreement”), between Utica, as lessor, and the Company as the lessee (collectively, the “Lessee”). Under the Master Lease Agreement, Utica loaned an aggregate of $ 1,800,000 for certain of the Company’s equipment listed therein (the “Equipment”), which it leases to the Lessee. The initial term of the Master Lease Agreement was for 51 months. Under the Master Lease Agreement, the Lessee agreed to pay an initial monthly rent of $ 50,040 . The Lessor will have the option to charge Lessee a surcharge of 1% of the monthly payment amount per month for every 0.25% that the prime rate of Renasant Bank exceeds 5.5% . On August 31, 2023, the parties entered into a second equipment schedule to the Master Lease Agreement, pursuant to which Utica loaned an aggregate of $ 1,500,000 for certain equipment listed therein. The term of the second equipment schedule is 48 months and agreed monthly payments are $ 44,250 . The Lessor will have the option to charge Lessee a surcharge of 1% of the monthly payment amount per month for every 0.25% that the prime rate of Renasant Bank exceeds 8.25% . If any rent is not received by Utica within five (5) calendar days of the due date, the Lessee shall pay a late charge equal to ten (10%) percent of the amount. In addition, in the event that any payment is not processed or is returned on the basis of insufficient funds, upon demand, the Lessee shall pay Utica a charge equal to five percent (5%) of the amount of such payment . The Lessee is also required to pay an annual administration fee of $ 5,000 for each agreement. Upon the expiration of the term of the Master Lease Agreement, the Lessee is required to pay, together with all other amounts then due and payable under the Master Lease Agreement, in cash, an end of term buyout price equal to the lesser of: (a) $ 90,000 for the initial lease and $ 75,000 for the second lease (five percent (5%) of the Total Invoice Cost (as defined in the Master Lease Agreement)). Provided that no default under the Master Lease Agreement has occurred and is continuing beyond any applicable grace or cure period, the Lessee has an early buy-out option with respect to all but not less than all of the Equipment, upon the payment of any outstanding rental payments or other fees then due, plus an additional amount set forth in the Master Lease Agreement, which represents the anticipated fair market value of the Equipment as of the anticipated end date of the Master Lease Agreement. In addition, the Lessee shall pay Utica an administrative charge to be determined by Utica to cover its time and expenses incurred in connection with the exercise of the option to purchase, including, but not limited to, reasonable attorney fees and costs. Furthermore, upon the exercise by the Lessee of this option to purchase the Equipment, the Lessee shall pay all sales and transfer taxes and all fees payable to any governmental authority as a result of the transfer of title of the Equipment to Lessee. In connection with the Master Lease Agreement, the Lessee granted a security interest on all of its right, title and interest in and to: (i) the Equipment, together with all related software (embedded therein or otherwise) and general intangibles, all additions, attachments, accessories and accessions thereto whether or not furnished by the supplier; (ii) all accounts, chattel paper, deposit accounts, documents, other equipment, general intangibles, instruments, inventory, investment property, letter of credit rights and any supporting obligations related to any of the foregoing; (iii) all books and records pertaining to the foregoing; (iv) all property of such Lessee held by Utica, including all property of every description, in the custody of or in transit to Utica for any purpose, including safekeeping, collection or pledge, for the account of such Lessee or as to which such Lessee may have any right or power, including but not limited to cash; and (v) to the extent not otherwise included, all insurance, substitutions, replacements, exchanges, accessions, proceeds and products of the foregoing. At June 30, 2026 and December 31, 2025, supplemental information related to the collateralized assets of the finance leases was as follows: SUPPLEMENTAL INFORMATION RELATED TO THE COLLATERALIZED ASSET OF FINANCE LEASE June 30, 2026 December 31, 2025 Equipment $ 9,000,000 $ 9,000,000 Accumulated depreciation ( 2,990,323 ) ( 2,540,323 ) Net balance $ 6,009,677 $ 6,459,677 17 The following table presents information about the amount and timing of the liability arising from the Company’s financing lease as of June 30, 2026: SCHEDULE OF FUTURE MINIMUM LEASE PAYMENTS FOR FINANCE LEASE Future Minimum Financing Lease Payments Finance Lease Liability 2026 (remainder of year) $ 472,103 2027 843,320 Total undiscounted financing lease payments 1,315,423 Unamortized debt discount ( 48,723 ) Financing lease liability - current portion ( 1,037,003 ) Present value of financing lease liability $ 229,697 Weighted average remaining lease term 1.18 Years Weighted average discount rate 22.6 % NOTE 9 — CONVERTIBLE DEBT Summary of Convertible Notes Payable SUMMARY OF CONVERTIBLE NOTES PAYABLE June 30, 2026 December 31, 2025 April 24, 2026, principal of $ 15,615,385 and accrued interest of $ 171,983 , net of unamortized OID interest of $ 4,462,150 , and unamortized debt discount of $ 2,572,765 as of June 30, 2026 $ 8,752,453 $ — December 2, 2025, principal of $ 45,400 and accrued PIK interest of $ 2,612 and $ 361 , net of unamortized OID interest of $ 3,327 and $ 5,114 and unamortized debt discount of $ 5,095 and $ 7,832 as of June 30, 2026 and December 31, 2025, respectively 39,590 32,815 August 8, 2025, principal of $ 227,000 , and accrued PIK interest of $ 20,275 and $ 9,018 , net of unamortized OID interest of $ 10,967 and $ 19,868 and unamortized debt discount of $ 26,357 and $ 47,750 as of June 30, 2026 and December 31, 2025, respectively 209,951 168,400 May 8, 2025, principal of $ 340,500 and accrued PIK interest of $ 38,994 and $ 22,109 , net of unamortized OID interest of $ 9,664 and $ 23,016 and unamortized debt discount of $ 23,281 and $ 55,447 as of June 30, 2026 and December 31, 2025, respectively 346,549 284,146 Total of convertible notes payable 9,348,543 485,361 Convertible notes payable, net of debt discount - current portion ( 9,348,543 ) ( 284,146 ) Convertible notes payable, net of debt discount - long-term portion $ — $ 201,215 Senior Secured Promissory Notes Outstanding as of June 30, 2026 April 2026 Convertible Notes On April 24, 2026 (the “Original Issuance Date”), the Company entered into a securities purchase agreement with certain related parties, pursuant to which the Company issued senior secured convertible promissory notes in the principal amount of $ 15,615,385 (the “Notes”) including Original issue discount (“OID”) of $ 5,465,385 , and matures twelve (12) months from the Original Issuance Date. The cash proceeds received by the Company were $ 10,150,000 . The Company intends to use the net proceeds for working capital and general corporate purposes. The Notes bear interest at a rate of 6 % per annum per annum on the original outstanding principal amount. 18 In connection with the issuance of the Notes, the accredited investors were also issued a total of 507,500 six month warrants to purchase shares of the Company’s common stock at an exercise price of $ 8.00 per share (the “Warrant Shares”). If, while the Warrant Shares are outstanding, the Company issues common stock for consideration per share less than $ 8.00 , the exercise price of the Warrant Shares will be reduced to the latest common stock issuance price. December 2, 2025 Convertible Notes Payable - Investor A On December 2, 2025 (the “Issuance Date”), the Company entered into a securities purchase agreement (the “Purchase Agreement”) with an investor, pursuant to which the Company issued a senior secured convertible promissory note in the principal amount of $ 40,000 (the “Note”) plus OID of $ 5,400 , on the date on which is eighteen (18) months from the Original Issue Date (the “Maturity Date”). The proceeds received by the Company were $ 40,000 . The Company intends to use the net proceeds for working capital and general corporate purposes. The Note has a maturity date of eighteen months from the Issuance Date. The Note bears interest at a rate of 10 % per annum per annum paid-in-kind (“PIK interest”) quarterly, with a minimum guaranteed interest of six months on the original outstanding principal amount. In connection with the issuance of the Note, the investor was also issued a total of 20,000 five-year warrants to purchase shares of the Company’s common stock at an exercise price of $ 0.50 per share (the “Warrant shares”). The Warrants include a full-ratchet anti-dilution provision that adjusts the exercise price if the Company issues equity securities at a price below $ 0.50 per share. August 8, 2025 Convertible Notes Payable - Investor B On August 8, 2025 (the “Issuance Date”), the Company entered into a securities purchase agreement (the “Purchase Agreement”) with an investor, pursuant to which the Company issued a senior secured convertible promissory note in the principal amount of $ 200,000 (the “Note”) plus OID of $ 27,000 , on the date on which is eighteen (18) months from the Original Issue Date (the “Maturity Date”). The proceeds received by the Company were $ 200,000 . The Company intends to use the net proceeds for working capital and general corporate purposes. The Note has a maturity date of eighteen months from the Issuance Date. The Note bears interest at a rate of 10 % per annum per annum paid-in-kind (“PIK interest”) quarterly, with a minimum guaranteed interest of six months on the original outstanding principal amount. In connection with the issuance of the Note, the investor was also issued a total of 100,000 five-year warrants to purchase shares of the Company’s common stock at an exercise price of $ 0.50 per share (the “Warrant shares”). The Warrants include a full-ratchet anti-dilution provision that adjusts the exercise price if the Company issues equity securities at a price below $ 0.50 per share. May 8, 2025 Convertible Notes Payable - Investor C On May 8, 2025 (the “Issuance Date”), the Company entered into a securities purchase agreement (the “Purchase Agreement”) with an investor, pursuant to which the Company issued a senior secured convertible promissory note in the principal amount of $ 300,000 (the “Note”) plus OID of $ 40,500 , on the date on which is eighteen (18) months from the Original Issue Date (the “Maturity Date”). The proceeds received by the Company were $ 300,000 . The Company intends to use the net proceeds for working capital and general corporate purposes. The Note has a maturity date of eighteen months from the Issuance Date. The Note bears interest at a rate of 10 % per annum per annum paid-in-kind (“PIK interest”) quarterly, with a minimum guaranteed interest of six months on the original outstanding principal amount. In connection with the issuance of the Note, the investor was also issued a total of 150,000 five-year warrants to purchase shares of the Company’s common stock at an exercise price of $ 0.50 per share (the “Warrant shares”). The Warrants include a full-ratchet anti-dilution provision that adjusts the exercise price if the Company issues equity securities at a price below $ 0.50 per share. 19 NOTE 10 — NOTE PAYABLE On May 6, 2025, the Company entered into a note payable in the principal amount of $ 38,692 to finance the purchase of a vehicle. The note bears interest at a fixed annual rate of 5.44 % and matures in May 2030. The note requires monthly principal and interest payments and is secured by the underlying vehicle. As of December 31, 2025, the outstanding principal balance was $ 34,689 . The note was repaid in full in January 2026. NOTE 11 — STOCKHOLDERS’ EQUITY The Company is authorized to issue 500,000,000 and 100,000,000 common shares, par value $ 0.0001 per share as of June 30, 2026 and December 31, 2025, respectively, and 1,000,000 and 1,000,000 shares of preferred stock, par value $ 0.0001 per share as of June 30, 2026 and December 31, 2025, respectively. As of June 30, 2026 and December 31, 2025, the Company had 49,152,702 and 44,500,111 common shares issued and outstanding, respectively. The common shares entitle the holder thereof to one vote per share on all matters coming before the shareholders of the Company for a vote. No shares of preferred stock have been issued or designated by First Breach, Inc. LLC conversion to C-Corp. On October 22, 2021, First Breach, LLC converted from a Delaware limited liability company to a Delaware corporation, First Breach, Inc. The Certificate of Incorporation of First Breach, Inc. authorizes the issuance of 100,000,000 shares of common stock and 1,000,000 shares of preferred stock. No shares of preferred stock have been issued or designated by First Breach, Inc. The former equity unit holders of First Breach, LLC were issued 16,235,000 shares of common stock following the limited liability company’s conversion to a Delaware corporation. Amended and Restated Certificate of Incorporation On January 19, 2026, the Company’s Board of Directors and stockholders approved an Amended and Restated Certificate of Incorporation. The Restated Certificate, among other matters, (i) authorizes the issuance of preferred stock in one or more series with terms to be determined by the Board, (ii) provides for one vote per share of common stock , and (iii) increases the authorized number of shares of common stock from 100,000,000 to 500,000,000 shares. Share issuances During the six months ended June 30, 2026, the Company issued an aggregate of 23,001 shares of common stock, with a fair value of $ 184,008 , to consultants in connection with a public relations agreement and an investor relations agreement for services to be rendered through September 30, 2026 and April 3, 2027, respectively. NOTE 12 — CUSTOMER AND SUPPLIER CONCENTRATION Significant dealers and suppliers are those that account for greater than 10% of the Company’s revenues and purchases. During the three months ended June 30, 2026, the Company had sales to five individual customers over 10% of total sales, w hich represente d 24 %, 23 %, 23 %, 22 % and 16 % of total sales. During the three months ended June 30, 2025, the Company had sales to one individual customers over 10% of total sales, which represented 94 % of total sales. During the six months ended June 30, 2026, the Company had sales to three individual customers over 10% of total sales, w hich represente d 43 %, 24 % and 12 % of total sales. During the six months ended June 30, 2025, the Company had sales to three individual customers over 10% of total sales, which represented 82 %, 14 % and 18 % of total sales. The Company is dependent on third-party manufacturers and distributors for certain materials utilized in the manufacturing process. During the three months ended June 30, 2026, the Company purchased 63 % of raw materials from three vendors. During the three months ended June 30, 2025, the Company purchased 100 % of raw materials from one vendor. The Company believes there are other suppliers that could be substituted should this supplier become unavailable or non-competitive. During the six months ended June 30, 2026 , the Company purchased 98 % of raw materials from four vendors. During the six months ended June 30, 2025, the Company purchased 100 % of raw materials from one vendor. Th e Company believes there are other suppliers that could be substituted should this supplier become unavailable or non-competitive. 20 NOTE 13 — STOCK-BASED COMPENSATION Equity Compensation Plan On January 22, 2026, the board of directors (the “Board”) of the Company approved the 2026 Equity Incentive Plan (the “2026 Plan”), which permits the grant of incentive share options (“ISOs”), non-qualified share options, performance unit awards, restricted share awards, restricted unit awards (“RSUs”), share appreciation rights and other stock awards (collectively, the “Awards” or “Award”) to employees, directors and consultants of the Company. The Company initially reserved 12 million shares of common stock (the “Share Reserve”) for issuance of awards under the 2026 Plan. The Share Reserve will automatically increase on January 1 of each year for a period of up five years commencing on January 1, 2026 and ending on and including January 1, 2031, in an amount equal to fifteen percent (15%) of the total number of shares of common stock outstanding on December 31, of the immediately preceding year. As of June 30, 2026, the number of shares available for issuance under the 2026 Plan was 2,000,000 . In the event of any recapitalization or otherwise changes its capital structure, or other such transaction as defined in the 2026 Plan, thereafter upon any exercise or satisfaction of a previously granted Awards, holders of such are entitled to receive (or purchase, if applicable) under such Award, in lieu of the number of common stock then covered by such Award, what the holder would have been entitled to pursuant to the terms of any such event. No fractional shares or rights for fraction shares of common stock shall be issued under the 2026 Plan. Stock Options and Restricted Unit Awards During the six months ended June 30, 2026, the Company’s Board approved grants for an aggregate of 10,000,000 RSUs to certain officers of the Company. The RSUs are subject to both time-based and market-based vesting conditions. The time-based RSUs vest in three tranches in April 2026, July 2026, and October 2026. There were 4,062,500 RSUs that vested during the six months ended June 30, 2026. No stock options were granted during the six months ended June 30, 2026, 2026. Stock-based compensation expense is measured based on the fair value of awards in accordance with ASC 718. Equity-classified awards are measured at their grant-date fair value and are not subsequently remeasured. The cost of stock-based compensation is recognized over the requisite service period, which is generally the vesting period of the respective award. There were no approved grants of RSUs issued during the six months ended June 30, 2025. Stock Options The following table summarizes the Company’s ISO activity and related information for the six months ended June 30, 2026: SCHEDULE OF ISO ACTIVITY AND RELATED INFORMATION Number of Options Weighted Avg Exercise Price Weighted Average Contractual Term in Years Outstanding at January 1, 2026 15,113,046 $ 1.07 7.44 Granted — — — Exercised — — — Forfeited, cancelled and expired — — — Outstanding at June 30, 2026 15,113,046 $ 1.07 6.94 Exercisable at June 30, 2026 14,768,046 $ 1.07 6.89 21 As of June 30, 2026, vested outstanding stock options had approximately $ 29,214,092 intrinsic value as the estimated fair value of the underlying common stock is greater than the exercise price. As of June 30, 2026, there was approximately $ 215,890 of total unrecognized share-based compensation related to unvested stock options, which the Company expects to recognize over the next 1.1 years. The Company did no t grant any stock options, and there was no stock option activity during six months ended June 30, 2025. The Company determined the fair market value of its Common Stock underlying the stock options based upon recent sales of securities. The risk-free interest rate assumption for options granted is based upon observed interest rates on the United States government securities appropriate for the expected term of the Company’s employee stock options. The Company does not have sufficient historical information to develop reasonable expectations about future exercise patterns and post-vesting employment termination behavior. Accordingly, the Company has elected to use the “simplified method” to estimate the expected term of its share-based awards. The simplified method computes the expected term as the sum of the award’s vesting term plus the original contractual term divided by two. Based on the lack of historical data of volatility for the Company’s common stock, the Company based its estimate of expected volatility on a weighted average of the historical volatility of comparable public companies that manufacture similar products and are similar in size, stage of life cycle, and financial leverage. The dividend yield assumption for options granted is based on the Company’s history and expectation of dividend payouts. The Company has never declared or paid any cash dividends on its Common Stock, and the Company does not anticipate paying any cash dividends in the foreseeable future. The Company recognizes stock option forfeitures as they occur as there is insufficient historical data to accurately determine future forfeitures rates. The Company recognizes compensation expense for stock option awards on a straight-line basis over the applicable service period of the award. The service period is generally the vesting period. Restricted Unit Issuances On January 23, 2026, the Company granted RSUs under the stock equity incentive plan to officers. The Company granted the CEO an award covering 6,000,000 shares of common stock, pursuant to which 2,437,500 shares vest on April 1, 2026, 1,687,500 shares vest on July 1, 2026 and 1,312,500 shares vest on October 1, 2026, in each case subject to continued service, and the remaining 562,500 shares vest upon the Company achieving specified fully diluted market capitalization thresholds of $ 250 million, $ 500 million and $ 750 million, with 187,500 shares vesting upon the achievement of each such milestone. On the same date, the Company granted the President an award covering 4,000,000 shares of common stock, pursuant to which 1,625,000 shares vest on April 1, 2026, 1,125,000 shares vest on July 1, 2026 and 875,000 shares vest on October 1, 2026, in each case subject to continued service, and the remaining 375,000 shares vest upon the Company achieving specified fully diluted market capitalization thresholds of $ 250 million, $ 500 million and $ 750 million, with 125,000 shares vesting upon the achievement of each such milestone. Each award is subject to the terms and conditions of the applicable award agreement and the stock equity incentive plan. 22 The following table summarizes the Company’s time based RSU activity for the six months ended June 30, 2026: SCHEDULE OF TIME BASED RSU ACTIVITY Number of Units Weighted-Average Grant Date Fair Value Unvested as of December 31, 2025 — $ — Granted 9,062,500 3.00 Vested ( 4,062,500 ) 3.00 Forfeited or cancelled — — Unvested as of June 30, 2026 5,000,000 $ 3.00 As of June 30, 2026, there was approximately $ 6,525,000 of total unrecognized share-based compensation related to unvested time-based RSUs, which the Company expects to recognize over the next 0.26 years. None of the market based RSUs vested during the six months ended June 30,2026. As of June 30, 2026, there was approximately $ 1,568,334 of total unrecognized share-based compensation related to unvested market-based RSUs, which the Company expects to recognize over the next 3.74 years. The weighted average grant date fair value of the market-based RSUs unvested is $ 2.87 as of June 30. 2026. There were no approved grants of RSUs issued during the six months ended June 30, 2025. The Company classifies stock-based compensation expense in the interim unaudited condensed statement of operations in the same manner in which the award recipient’s costs are classified in the interim unaudited condensed statement of operations. Total stock-based compensation expense for the three months ended June 30, 2026 and 2025 was $ 8,959,825 and $ 0 , respectively. Total stock-based compensation expense for the six months ended June 30, 2026 and 2025 was $ 21,962,399 and $ 0 , respectively. NOTE 14 — WARRANTS During the six months ended June 30, 2026, the Company issued 507,500 six-month warrants to purchase shares of the Company’s common stock at an exercise price of $ 8.00 per share in conjunction with convertible notes issued on April 24, 2026. The warrants include a full-ratchet anti-dilution provision that adjusts the exercise price if the Company issues equity securities at less than $ 8.00 per share. These warrants are liability-classified, as they do not meet the fixed-for-fixed criterion under ASC 815-40 (refer Note 2 for details). During the six months ended June 30, 2025, the Company issued an aggregate of 675,000 five-year warrants to purchase shares of the Company’s common stock at an exercise price of $ 0.50 per share in conjunction with the convertible notes. The warrants were issued on January 15, 2025 ( 250,000 ) and April 18, 2025 ( 150,000 warrants), May 8, 2025 ( 150,000 warrants), and May 25, 2025 ( 125,000 warrants). The warrants include a full-ratchet anti-dilution provision that adjusts the exercise price if the Company issues equity securities at less than $ 0.50 per share. 23 The following table shows a summary of common stock warrants for the six months ended June 30, 2026: SUMMARY OF COMMON STOCK WARRANTS Number of Weighted Average Exercise Warrants Price Weighted Average Contractual Term in Years Outstanding at January 1, 2026 16,223,996 $ 1.06 1.41 Granted 507,500 8.00 — Exercised — — — Forfeited — — — Cancelled — — — Expired — — — Outstanding at June 30, 2026 16,731,496 $ 1.27 1.04 Exercisable at June 30, 2026 16,731,496 $ 1.27 1.04 NOTE 15 - LOSS PER SHARE Basic and diluted net loss per share was determined by dividing net loss attributable to common stockholders by the weighted-average common shares outstanding during the period. The following table sets forth the computation of basic and diluted net loss per share for the periods indicated: SCHEDULE OF COMPUTATION OF BASIC AND DILUTED NET LOSS PER SHARE Basic and diluted net loss per share 2026 2025 2026 2025 Three months ended, June 30 Six months ended, June 30 Basic and diluted net loss per share 2026 2025 2026 2025 Numerator: Net loss $ ( 13,876,277 ) $ ( 2,237,988 ) $ ( 28,523,232 ) $ ( 3,808,163 ) Denominator: Weighted-average shares outstanding 54,112,845 37,784,611 52,767,635 37,784,611 Net loss per share of common stock - Basic and Diluted $ ( 0.26 ) $ ( 0.06 ) $ ( 0.54 ) $ ( 0.10 ) The following warrants to purchase common stock, RSUs, and options to purchase common stock have been excluded from the computation of net loss per share of common stock for the periods presented because including them would have had an anti-dilutive effect: SCHEDULE OF ANTI-DILUTIVE EFFECT OF NET LOSS PER SHARE 2026 2025 2026 2025 Three months ended, June 30 Six months ended, June 30 2026 2025 2026 2025 Warrants to purchase common stock 16,731,496 17,628,996 16,731,496 17,628,996 RSUs 937,500 — 937,500 — Options to purchase common stock 15,113,046 15,113,046 15,113,046 15,113,046 Antidilutive securities excluded from computation of earnings per share, amount 32,782,042 32,742,042 32,782,042 32,742,042 24 NOTE 16 - RELATED PARTY TRANSACTIONS Executive Compensation The Company employs two related parties consisting of CEO and COO who serve in executive and management roles. During the three and six months ended June 30, 2026, the Company paid or accrued aggregate compensation, including salaries, discretionary bonuses, and other employee-related benefits, of approximately $ 809,000 and $ 485,000 , respectively, to these related parties. Restricted Unit Awards On January 23, 2026, the Company granted an aggregate of 10,000,000 shares of RSUs to certain related parties. The RSUs are subject to vesting upon the satisfaction of both time-based and market-based conditions (see Note 13). April 2026 Convertible Notes On April 24, 2026, the Company entered into a securities purchase agreement with certain related parties with a principal amount of $ 15,615,385 , including OID of $ 5,465,385 (see Note 18). Employee Loan Payable During the six months ended June 30, 2026, the Company had an unsecured loan payable to an employee (the “Employee Loan”). The outstanding balances amount to $ 121,739 as of June 30, 2026 and December 31, 2025. There is no formal written loan agreement, stated maturity date, or stated interest rate associated with the Employee Loan. The Employee Loan is payable on demand. Because the Employee Loan does not bear stated interest, management evaluated the requirements of ASC 835-30, Imputation of Interest. Given (i) the short-term nature of the borrowing, (ii) the related-party nature of the transaction, and (iii) the absence of a stated repayment schedule, management determined that imputing interest would not have a material impact on the financial statements. Accordingly, no interest expense has been recorded in connection with the Employee Loan. The Employee Loan is classified as a current liability on the accompanying interim unaudited condensed balance sheets as of June 30, 2026 and December 31, 2025. Related Party Loan Payable On November 6, 2025, the Company entered into a promissory note agreement (the “Related Party Note”) with a related party. The Related Party Note provides for a principal amount of $ 50,000 and bears interest at a rate of 6 % per annum. The Related Party Note matures and becomes due and payable in a single balloon payment consisting of all unpaid principal and accrued interest ninety (90) calendar days following the date on which the Company’s common stock is publicly listed on a national securities exchange in the United States. The Company may prepay the Related Party Note, in whole or in part, at any time without penalty. As of June 30, 2026 and December 31, 2025, the outstanding principal balance under the Related Party Note was $ 50,000 . NOTE 17 - COMMITMENTS AND CONTINGENCIES Joint Venture The Company entered into a joint venture agreement with IdeaForge Technology Inc., (“IdeaForge”) on September 23, 2025 (the “IdeaForge JV Agreement”), as amended on March 11, 2026 (the “IdeaForge JV Amending Agreement”), together with the IdeaForge JV Agreement, the “JV Agreement” ), pursuant to which the parties agreed to form First Forge Technology Inc., a Delaware entity (the “Joint Venture”). The core objective of the Joint Venture is to co-develop and manufacture high-performance drones that are fully compliant with U.S. regulatory and defense standards, as well as the development of new intellectual property and drone technology, while being certified and labeled as “Made in the USA.” Pursuant to the JV Agreement, the Company and IdeaForge are each entitled to 50 % of the outstanding equity interests of the Joint Venture, with each party to be issued 5,000 shares for a purchase price of $ 1.00 upon issuance. 25 On March 11, 2026, the Joint Venture amended its certificate of incorporation to authorize and designate a new class of Series A Preferred Stock. The Series A Preferred Stock is non-voting, non-convertible, does not carry dividend or liquidation preference rights and does not otherwise participate in the governance or economic rights of the Joint Venture (“JV Preferred Shares”). Obligations of the Joint Venture Pursuant to the JV Agreement, the Company agreed, among other things, to (i) make a total capital contribution to the Joint Venture in such amount as may be required for its operations and as agreed between the parties, which shall include a capital contribution of up to $ 25,000,000 (“Capital Contribution”), of which a first tranche of $ 10,000,000 shall be invested on or before December 31, 2026 and applied toward the Capital Contribution, with the remaining balance to be invested on or before December 31, 2027, each of which amounts may be adjusted by mutual agreement of the parties, and which investment may be made through the purchase of JV Preferred Shares; (ii) facilitate the provision of a demarcated manufacturing facility for manufacturing services, including through lease assistance; (iii) provide the Joint Venture with such technical know-how, expertise and operational assistance as may be reasonably required in connection with obtaining applicable licenses, permits, approvals and regulatory clearances; and (iv) support the Joint Venture’s commercial development efforts by sharing relevant customer contacts in the defense, law enforcement and related sectors globally. Drone Development On May 1, 2026, the Company entered into a master services agreement with Hellbender Inc. (“Hellbender”) for the design, engineering, and prototyping of two attributable drone platforms (the “Hellbender Agreement”). The Hellbender Agreement has an estimated total contract value of approximately $ 3,000,000 . The estimated service period for the Hellbender Agreement is approximately eleven months. For the six months ended June 30, 2026, the Company funded $ 1,150,000 of the commitment and has incurred $ 126,313 in costs associated with the Hellbender Agreement and the remaining balance is a prepaid expense of $ 1,023,687 . Equity Line of Credit On May 21, 2026, the company entered into a Equity Line of Credit Agreement (the “ELOC Agreement”) with certain accredited investors (the “ELOC Investors”), pursuant to which the Company can issue $ 50,000,000 in Common Stock. The term of the ELOC Agreement is thirty six ( 36 ) months from the date of the agreement. Under the ELOC Agreement, the Company may, at its sole discretion, deliver purchase notices to ELOC Investors directing them to purchase shares of the Company’s Common Stock at a purchase price equal to 97 % of the volume-weighted average price of the Common Stock during a specified pricing period. During the period ended June 30, 2026, no such notices were delivered for the ELOC. In connection with the ELOC Agreement, the Company has paid $ 25,000 in legal expenses. There are no commitment fees associated with the ELOC Agreement. Litigation The Company may be subject to legal proceedings and claims that arise in the ordinary course of business. Management is not currently aware of any matters that will have a material effect on the financial position, results of operations, or cash flows of the Company. 26 NOTE 18 - SUBSEQUENT EVENTS The Company evaluated subsequent events occurring through the date these interim unaudited condensed financial statements were issued (or available to be issued). Based on this evaluation, the Company identified the following non-recognized subsequent events. Nasdaq Listing On August 20, 2026, the Company’s common stock commenced trading on the Nasdaq Capital Market under the ticker symbol “FBDT”, marking the completion of the Company’s Nasdaq listing process. Conversion of Convertible Notes On August 20, 2026, in connection with the Company’s Nasdaq listing, senior secured convertible promissory notes with an aggregate outstanding balance of $ 15,615,385 , including original issue discount, and accrued interest of $ 302,896 automatically converted into 1,989,784 shares of the Company’s common stock at a conversion price of $ 8.00 per share. The conversion resulted in the issuance of 1,951,922 shares related to the notes and 37,862 shares related to accrued interest. Upon conversion, the associated indebtedness was fully extinguished. May 8, 2026 Convertible Notes On May 8, 2026 (the “Original Issuance Date”), the Company entered into a securities purchase agreement with certain related parties, pursuant to which the Company issued senior secured convertible promissory notes in the principal amount of $ 7,692,308 (the “Notes”), including original issue discount, and matures twelve ( 12 ) months from the Original Issuance Date. The cash proceeds, net, received by the Company were $ 5,000,000 on August 14, 2026. On August 20, 2026, in connection with the Company’s Nasdaq listing, the convertible notes automatically converted into 961,539 shares of the Company’s common stock at a conversion price of $ 8.00 per share. Upon conversion, the associated indebtedness was fully extinguished. The Company intends to use the net proceeds for working capital and general corporate purposes. Issuance of Advisory Shares In connection with the commencement of trading of the Company’s common stock on the Nasdaq Capital Market on August 20, 2026, the Company is required to issue 887,472 shares of common stock to RBW Capital Partners pursuant to the terms of an advisory agreement. The shares represented 1.0% of the Company’s fully diluted common stock outstanding immediately prior to the Nasdaq listing. In addition, the Company paid RBW Capital Partners a one-time cash advisory fee of $ 250,000 upon the successful completion of the listing. 27