Quarterly Report for Quarter Ending March 31, 2026 (Form 10-Q)

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

On April 29, 2026, Jim O'Rourke, the Company's Chief Executive Officer, passed away. The Company is in the process of implementing its succession plan and evaluating the impact, if any, on its operations and financial results.

We are an operating company which has experienced losses since our inception. Our sources of cash to date have been capital invested by shareholders and venture capital investors/lenders. On March 6, 2022, the Company acquired CM Tech and received $1,207,168 in revenue through to the end of December 31, 2022.

On March 6, 2022, pursuant to a Securities Purchase Agreement (the "SPA"), Powerdyne International, Inc. (the "Company"), acquired all of the issued and outstanding membership interests of Creative Motion Technology, LLC, a Massachusetts limited liability company, (the "Membership Interests"). The Membership Interest is owned by Mr. James F. O'Rourke, the principal owner and sole director and officer of the Company. The purchase price paid by the Company was 2,000,000 shares of its Series A Preferred Stock valued at $1,500,000.

Creative Motion Technology, LLC ("CM Tech") is a small New England based motor manufacturer founded in 2004 and has been in business for over 17 years. CM Tech's management has over 60 years of design and manufacturing expertise, specializing in the design and custom building of industrial servomotors both brush and brushless motor designs. CM Tech's current market focus is on the niche motor demands for low volume, high-quality cost-effective motors which are primarily used in industrial robotics for the semiconductor manufacturing industry. The motors that CM Tech currently has in production primarily provide the X, Y, and Z axis articulation in factory automation robots.

Included with CM Tech acquisition is Frame One, which is a custom picture framing shop located in North Reading, MA. Frame One has been in business since 2006 and brings with it a strong client base consisting of local schools, colleges, artist guilds, artists, artists, interior decorators/designers, museums, photographers, art galleries and theaters.

The foregoing description of the SPA does not purport to be complete and is qualified in its entirety by reference to the complete text of the document, which is filed as an exhibit to this report and is incorporated herein by reference.

The issuance of the 2,000,000 shares of Series A Preferred Stock pursuant to the Securities Purchase Agreement were made in reliance on the exemption from registration afforded under Section 4(2), of the Securities Act of 1933, as amended, and/or Rule 506 of Regulation D promulgated thereunder. Such offer and sale were not conducted in connection with a public offering, and no public solicitation or advertisement was made or relied upon by the Seller/Investor in connection with the issuance by the Company of the Shares.

The following discussion contains forward-looking statements, as discussed above. Please see the sections entitled "Forward-Looking Condensed Statements" and "Risk Factors" for a discussion of the uncertainties, risks and assumptions associated with these forward-looking statements.

Reclassifications

Certain amounts in the prior period have been reclassified to conform to the current period presentation. These reclassifications have no material effect on the reported financial results.

Results of Operations - The three months ended March 31, 2026, compared to the three months ended March 31, 2025:

Revenues

During the three months ended March 31, 2026, we generated $171,025 in revenue, and during the three months ended March 31, 2025, we generated $271,056 in revenue. Revenues for CM Tech, LLC decreased by approximately $100,031 due to the threat of tariffs and economic uncertainty during the first quarter of 2026. Although management expects revenues to increase for CM Tech through the end of 2026. Revenues for Frame One LLC were relatively flat for the three months ended for March 31, 2026, compared to the three months ended March 31, 2025.

Cost of Revenues

During the three months ended March 31, 2026, we incurred $131,752 in cost of revenues, and during the three months ended March 31, 2025, we generated $209,417 in cost of revenues. The cost of revenue decreased consistently with the decrease in revenues.

Gross Profit

During the three months ended March 31, 2026, we generated $39,273 in gross profits, and during the three months ended March 31, 2025, we generated $61,639 in gross profit. Gross profit margin was consistent at approximately 23% compared to the three months ended March 31, 2026.

Operating expenses

During the three months ended March 31, 2026, total operating expenses increased to $159,520 from $116,773 for the three months ended March 31, 2025. The increase is due to additional expenses for completing various financing agreements.

For the three months ended March 31, 2026, the Company had a net loss of $120,246 and for March 31, 2025, there was a loss of $55,134, respectively. We expect that the Company will continue to generate increases in revenues so that we become profitable and cash flow positive by acquiring new customers and / or adding increased sales to existing customers. However, there is no guarantee that we can achieve these results.

Liquidity and Capital Resources

As of March 31, 2026, and December 31, 2025, we had working capital deficits of $507,700 and $504,954, respectively.

For the three months ended March 31, 2026, we had a $23,111 decrease in cash compared to the year-ended December 31, 2025, due to continued economic uncertainty and approximately $100,000 decrease in revenues at CM Tech.

The decrease in cash flow from operations of approximately $14,000 is consistent with the decrease in cash and decrease in revenues at CM Tech.

Financing Activities:

On May 30th, 2024, CM Technology, LLC ("CM Tech") a wholly owned subsidiary of the Company entered into a line of credit with a financial institution that has national scope through one of their local branches. The line of credit is for a maximum of $170,000 which is collateralized and has a security interest in the deposit account or cash, inventories and trade accounts receivable of CM Tech and is due and payable on demand. Our CEO has personally guaranteed the line of credit. The Company paid a $450 documentation fee. On March 12, 2025, CM Tech was approved for an additional increase in the line of credit to $220,000. The additional increase in the line of credit does not change any terms from the original agreement as of May 30th, 2024. As of March 31, 2025, the Company has drawn $220,000 to finance working capital. The Company is not in default on the line of credit. The Company accrues monthly interest on outstanding balances at 2.5% plus the prime interest rate.

As of March 31, 2026, CM Tech has cash of $7,973, trade accounts receivable at $3,655 and inventories of $40,855 collateralized against the line of credit creating a security interest.

On June 23, 2025, Powerdyne International Inc. ("Powerdyne International Inc." or the "Company") (OTCPK: PWDY) entered into an investment agreement (the "Agreement") with GHS Investments, LLC (the "Investor"), whereby the Investor has agreed to invest up to $10,000,000 to purchase shares of our common stock. GHS Investments LLC is a Nevada limited liability company, with offices at 420 Jericho Turnpike, Suite 102, Jericho, NY 11753 (the "Investor").

Subject to the terms and conditions of the Investment Agreement and Registration Agreement, we may, in our sole discretion, deliver a put notice to the Investor which states the dollar amount which we intend to sell to the Investor on a certain date. The amount that we shall be entitled to sell to Investor shall be equal to two hundred percent (200%) of the average daily volume (U.S. market only) of the common stock for the ten (10) trading days prior to the applicable notice date so long as such amount does not exceed a calculated dollar amount per every 10 days of $500,000. The minimum amount shall be equal to $10,000.

In connection with the Agreement, we also entered into a registration rights agreement dated June 23, 2025, whereby we agreed to file a Registration Statement on Form S-1 with the Securities and Exchange Commission within thirty (30) days of the date of the registration rights agreement and to have the Registration Statement declared effective by the Securities and Exchange Commission within ninety (90) days after we have filed the Registration Statement.

On March 23, 2026, the Company hired a company to render corporate relations, advisory and market awareness campaign for 25 million restricted shares for a one-year contract.

On September 12, 2025, the Company issued a convertible promissory note in the principal amount of $77,720 for cash proceeds of $67,000. The note bears a one-time 12% interest charge and requires five fixed payments totaling $87,046, with the first payment of $43,523 due March 15, 2026.

The Company did not make the March 15, 2026, payment. On March 31, 2026, the Company received written notice of default from counsel to 1800 Diagonal Lending LLC. Under Section 3.1 of the note, an Event of Default occurs only if the breach continues for five (5) days after written notice. As of March 31, 2026, the five-day cure period had not yet expired. On May 11, 2026, the Company confirmed with 1800 Diagonal Lending LLC that the outstanding obligation recorded at the default amount has been fully paid off.

On March 3 and March 25, 2026, we received 2 noninterest bearing advances from a stockholder in the amount of $3,000 and $21,500, to be repaid at a later date. The balance of this advance as of March 31, 2026, was $24,500.

During the three months ended March 31, 2026, the Company's CEO provided $23,000 to fund our operations.

Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements that are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is deemed by our management to be material to investors.

Recent Accounting Pronouncements

Refer to Note 3 of our condensed consolidated financial statements for recent accounting pronouncements.