Quarterly Report for Quarter Ending June 30, 2026 (Form 10-Q)

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

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 from the new operation 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 former 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, 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 June 30, 2026, compared to the three months ended June 30, 2025:

Revenues

During the three months ended June 30, 2026, we generated $255,595 in revenue, and during the three months ended June 30, 2025, we generated $342,697 in revenue. There has been an overall slowdown due to tariff concerns and supply chain slowdowns due to geopolitical tensions. Although management expects revenues to increase for CM Tech through the end of 2026. Also, our founder and CEO passed away in the three months ended June 30, 2026, which we have retained and added key personnel to stabilize and grow our business.

Cost of Revenues

During the three months ended June 30, 2026, we incurred $160,365 in cost of revenues, and during the three months ended June 30, 2025, we incurred $330,265 in cost of revenues.

Gross Profit

During the three months ended June 30, 2026, we generated $95,230 in gross profits, and during the three months ended June 30, 2025, we generated $12,432 in gross profit. Gross profit increased due cost reductions despite the decrease in revenues. In the prior year, there were adjustments to inventory to actual and other inventory related expenses that were of one-time nature.

Operating expenses

During the three months ended June 30, 2026, total operating expenses increased to $233,602 from $168,471 for the six months ended June 30, 2025. Costs increased due to interest expenses and consulting expenses.

For the three months ended June 30, 2026, the Company had a net loss of $138,371 and for June 30, 2025, there was a loss of $156,039, respectively.

Results of Operations - The six months ended June 30, 2026, compared to the six months ended June 30, 2025:

Revenues

During the six months ended June 30, 2026, we generated $426,620 in revenue, and during the six months ended June 30, 2025, we generated $612,035 in revenue. Revenues decrease by approximately $185,415 mostly in the second three months of 2026 due to supply chain disruptions and due to our CEO passing away. We have retained and added key personnel to stabilize and grow our business.

Cost of Revenues

During the six months ended June 30, 2026, we incurred $333,620 in cost of revenues, and during the six months ended June 30, 2025, we incurred $539,682 in cost of revenues.

Gross Profit

During the six months ended June 30, 2026, we generated $93,000 in gross profits, and during the six months ended June 30, 2025, we generated $72,353 in gross profit.

Operating expenses

During the six months ended June 30, 2026, total operating expenses increased to $351,617 from $283,525 for the six months ended June 30, 2025. The majority of the increase is due to interest expense from the short term loan payable and default expenses for the 1800 Diagonal note of approximately $35,000 and the $33,000 from share based compensation accrued to third party consultants.

For the six months ended June 30, 2026, the Company had a net loss of $258,617 and for June 30, 2025, there was a loss of $211,173, respectively.

Liquidity and Capital Resources

As of June 30, 2026, and December 31, 2025, we had working capital deficits of $545,503 and $560,776, respectively.

For the six months ended June 30, 2026, we had an approximately $25,000 increase in cash from the year-ended December 31, 2025.

		For the six				For the six
		months ended				months ended
		June 30, 2026				June 30, 2025
Operating activities			(147,385	)			(136,936	)
Investing activities			-				-
Financing activities			172,675				119,450

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 $250,000. The additional increase in the line of credit does not change any terms from the original agreement as of May 30th, 2024. As of June 30, 2025, the Company has drawn $244,950 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 June 30, 2026, CM Tech has cash of $53,785, trade accounts receivable at $39,823 and inventories of $39,678 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 April 22, 2026, we issued a Common Stock Purchase Warrant with Quick Capital, LLC a Wyoming limited liability company with an office located at 66 West Flagler Street900- # 2292 Miami, FL 33130 (the "Investor"), or the "Selling Security Holder".

The Common Stock Purchase Warrant (the "Warrant") certifies that, for value received in connection with the funding of that certain convertible promissory note dated April 22, 2026, in the original principal amount of $71,022.72 issued by the Company to the Lender (the "Note"), Quick Capital, LLC, a Wyoming limited liability company (the "Lender," and including any permitted and registered assigns, the "Holder"), is entitled, upon the terms and subject to the limitations on exercise and the conditions set forth herein, at any time during the Exercise Period, to purchase from Powerdyne International, Inc., a Delaware corporation (the "Company"), up to 3,551,136 shares of Common Stock (the "Warrant Shares") at the Exercise Price per share then in effect. The number of Warrant Shares for which this Warrant may be exercised is subject to adjustment in accordance with the terms hereof. This Warrant is issued by the Company as of the Issuance Date pursuant to the Note Purchase Agreement dated April 22, 2026, between the Company and the Lender (the "Purchase Agreement").

Capitalized terms used in this Warrant shall have the meanings set forth in the Purchase Agreement unless otherwise defined in the body of this Warrant or in Section 12 below. For purposes of this Warrant, the term "Exercise Price" shall mean) $0.01 per share subject to adjustment as provided herein (including but not limited to cashless exercise), and the term "Exercise Period" shall mean the period commencing on the Issuance Date and ending on 5:00 p.m. Eastern Standard Time on the five-year anniversary of such date.

On May 28, 2026, by and between Powerdyne International, Inc., a Delaware corporation, with its address at 45 Main Street, North Reading, Massachusetts 01864 (the "Company"), and Vanquish Funding Group Inc., a Virginia corporation, with its address at 1800 Diagonal Road, Suite 623, Alexandria VA 22314 (the "Lender"). Lender desires to purchase and the Company desires to issue and sell, upon the terms and conditions set forth in this Agreement, a convertible promissory note of the Company, in the aggregate principal amount of $67,000.00

On April 16, 2026, April 30 and May 13,2026, we received 3 noninterest bearing advances from a stockholder in the amount of $2,250, $2,225 and $2,200, to be repaid at a later date. The balance of this advance as of June 30, 2026, was $6,675.00 The total Balance as of June 30, 2026, was $31,175.

Going Concern

The accompanying condensed consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As of June 30, 2026, the Company had an accumulated deficit of $5,766,914, a working-capital deficit of approximately $545,503, and had incurred net losses of $258,617 for the six months ended June 30, 2026. The Company has historically financed its operations primarily through related-party advances, short-term convertible debt, draws under its line of credit, and limited operating cash flow. These conditions raise substantial doubt about the Company's ability to continue as a going concern for a period of one year from the date these financial statements are issued. Management's plans to alleviate the substantial doubt include:

	●	Generating additional revenue from its CM Tech motor manufacturing and Frame One framing operations, including efforts to stabilize and grow sales following the recent addition of key personnel after the passing of the Company's founder and former CEO;
	●	Utilizing the Equity Financing Agreement with GHS Investments, LLC (dated June 23, 2025), under which the Company may put up to $10,000,000 of common stock to the investor (subject to volume and other limitations). The related Form S-1 registration statement was declared effective by the Securities and Exchange Commission on August 3, 2026;
	●	Continuing to access its existing $250,000 line of credit (of which $219,750 was outstanding at June 30, 2026) and seeking additional short-term financing or related-party advances as needed; and
	●	Closely managing working capital, inventory, and operating expenses.

While management believes these plans are probable of being effectively implemented and will alleviate the substantial doubt about the Company's ability to continue as a going concern, there can be no assurance that the Company will be successful in generating sufficient revenue, obtaining additional financing on acceptable terms, or that the GHS facility will be utilized in amounts sufficient to meet the Company's obligations as they become due. The condensed consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Related-Party Transactions and Management Succession

During the three months ended June 30, 2026, the Company's founder, sole director, and Chief Executive Officer, James F. O'Rourke, passed away. Following his death, the Company appointed Tony Carchide as President and Chief Financial Officer (Principal Executive Officer). The Company has retained and added key personnel to stabilize operations and support continued growth of its CM Tech and Frame One businesses.

As of June 30, 2026, the Company owed $273,591 to the estate of the former CEO (December 31, 2025 - $250,591). The increase of $23,000 during the six months ended June 30, 2026, represents additional advances provided to fund operations prior to his passing. These amounts are non-interest-bearing, due on demand, and are recorded as a current liability under "Due to related party - CEO." Management is in the process of reviewing the status of these obligations with the estate and has not yet finalized any settlement, repayment schedule, or formal assumption arrangements. In addition, as of June 30, 2026, the Company had outstanding non-interest-bearing advances from other related parties totaling $71,175 (December 31, 2025 - $40,000). This balance includes a $40,000 advance received in April 2025 from an individual who currently serves as Vice President of the Company, as well as smaller advances totaling $31,175 received from a stockholder during the first and second quarters of 2026. All of these advances are due on demand and are classified as current liabilities.

The Company's $250,000 line of credit remains personally guaranteed by the former CEO. Management is evaluating the impact of his passing on the guarantee and is in discussions with the lender regarding any required amendments or replacement guarantees. All related-party transactions are conducted in the ordinary course of business. The Company believes the terms of these arrangements are comparable to those that would be available from unaffiliated third parties; however, there can be no assurance that similar financing will continue to be available from related parties in the future.

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.