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

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

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our unaudited financial statements and related notes included in this Quarterly Report on Form 10-Q, as well as our audited financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2025. This discussion contains forward-looking statements that involve risks and uncertainties. Actual results may differ materially from those expressed or implied in these forward-looking statements due to various factors discussed in this Report and in other filings with the Securities and Exchange Commission.

OVERVIEW

Farmhouse, Inc. (the "Company") is a Nevada corporation that historically engaged in technology development and brand management activities. We currently operate as a public company platform focused on evaluating strategic acquisitions and emerging opportunities, including initiatives in digital assets. The Company currently generates minimal revenue and maintains limited licensing activities that are not material. The Company continues to evaluate opportunities to develop operating business lines; however, there can be no assurance that such activities will result in material revenue in future periods.

We operate through our wholly owned subsidiaries, including Farmhouse Washington, Farmhouse DTLA, Inc., and Farmhouse Treasury LLC ("FT"). Our strategic focus is to identify and complete acquisitions that enhance long-term shareholder value and to reposition the Company toward scalable business opportunities, including through our Farmhouse Treasury division and ongoing evaluation of additional operating businesses.

Digital Asset Treasury Initiative

In September 2025, we organized Farmhouse Treasury LLC ("FT"), a wholly owned Nevada limited liability company, to support our Anti-Debasement Digital Asset Treasury ("DAT") initiative. FT is a manager-managed entity, with the Company as sole member and our Chief Executive Officer and Chief Technical Officer serving as managers.

FT was established to develop and oversee our digital asset strategy, including treasury management, custody solutions, and capital allocation in assets aligned with an anti-debasement framework, including Bitcoin and tokenized and physical gold. This initiative is intended to position the Company to participate in the emerging digital asset market while maintaining governance, reporting, and compliance standards consistent with those of a public company.

The Company has established an enterprise custody account with BitGo, which provides institutional-grade custody solutions, including insurance coverage for digital assets held in custody. BitGo has applied for a national trust bank charter with the Office of the Comptroller of the Currency; however, such status has not been finalized as of the date of this Report.

FT is a wholly owned subsidiary and is consolidated in our financial statements. At formation, no capital was contributed and no digital assets were acquired. During the three months ended March 31, 2026, FT engaged in limited organizational and treasury-related activities; however, such activities did not have a material impact on our consolidated financial position or results of operations.

FT provides a dedicated structure through which we evaluate and, if appropriate, may implement digital asset-related strategies in a controlled and transparent manner. As of the date of issuance

of these financial statements, FT has engaged in preliminary discussions with various counterparties, including cryptocurrency financing and investment platforms, regarding potential structures to execute such strategies. These discussions remain exploratory, and no binding agreements or definitive plans have been established. There can be no assurance that any such strategy will be pursued or that it will generate the anticipated benefits.

RESULTS OF OPERATIONS

Three Months Ended March 31, 2026 Compared to Three Months Ended March 31, 2025.

Operating Expenses

Total operating expenses for the three months ended March 31, 2026, were $109,449, compared to $90,794 for the same period in 2025, as shown below.

For the three months ended March 31,	2026			2025
Accounting and professional fees	$	41,633		$	23,684
Wages and benefits		46,036			46,036
Consulting fees		250			625
Public company related and filing fees		7,267			6,164
Other general and administrative expenses		14,263			14,285
Total operating expenses	$	109,449		$	90,794

The increase in operating expenses for the three months ended March 31, 2026, compared to the same period in 2025, was primarily attributable to higher accounting and professional fees, which increased due to the timing of recognizing audit and financial reporting related costs during the respective periods. Public company related and filing fees also increased due to costs associated with the Company's S-1 Registration Statement during the three months ended March 31, 2026. These increases were partially offset by lower consulting expenses and relatively consistent wages, benefits, and other general and administrative expenses.

Other income (expenses)

Total other income (expenses) for the three months ended March 31, 2026, totaled ($45,978), compared to $159,082 for the same period in 2025, as shown below.

For the three months ended March 31,	2026			2025
Gain on extinguishment of debt	$	-		$	174,935
Unrealized loss on crypto assets		(1,191)			-
Loss on derivatives		(14,212)			-
Interest expense		(30,575)			(15,853)
Total other income (expenses)	$	(45,978)		$	159,082

The change in other income (expenses) for the three months ended March 31, 2026, compared to the same period in 2025, was primarily attributable to the absence of the $174,935 gain on extinguishment of debt recognized during the three months ended March 31, 2025, which did not recur in the current period.

During the three months ended March 31, 2026, the Company recognized an unrealized loss on crypto assets of $1,191, reflecting changes in the fair value of digital assets held during the period. The Company also recognized a loss on derivatives of $14,212, related to the fair value

adjustment of derivative liabilities associated with certain convertible financing arrangements.

Interest expense increased to $30,575 for the three months ended March 31, 2026, from $15,853 for the same period in 2025, primarily due to higher debt balances, including additional convertible financing arrangements, and related amortization of debt discounts.

Net Income (loss)

The Company reported a net loss of $155,427 for the three months ended March 31, 2026, compared to net income of $68,288 for the same period in 2025. The change was primarily attributable to the absence of the $174,935 gain on extinguishment of debt recognized during the three months ended March 31, 2025, as well as increased interest expense and losses recognized on derivative liabilities during the current period.

In addition to the items discussed above, changes in the Company's results of operations were impacted by non-cash and non-operating items, including fair value adjustments related to derivative liabilities and unrealized changes in the value of crypto assets held by the Company.

Results for the three months ended March 31, 2026 reflect the Company's continued transition in operations, including reduced activity related to certain legacy initiatives and an increased focus on evaluating strategic opportunities, including its digital asset treasury strategy. The Company did not generate revenues during either the current or prior year period and continued to incur costs associated with maintaining public company infrastructure, professional services, and regulatory compliance. Management continues to monitor operating expenses and evaluate capital formation and strategic opportunities.

Critical Accounting Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, and expenses. One of the Company's more significant estimates relates to the valuation of derivative liabilities associated with certain convertible debt instruments.

As of March 31, 2026 and December 31, 2025, the Company estimated the probability of triggering certain contingent conversion features embedded in its convertible Series 2023, 2025 and 2026 Series notes to be 10%. Actual outcomes could differ from these estimates, and changes in assumptions may result in further adjustments in future periods.

LIQUIDITY AND CAPITAL RESOURCES

Liquidity, Going Concern and Working Capital

The following discussion summarizes our liquidity position, working capital needs, and sources of capital as of March 31, 2026 and December 31, 2025.

Cash Flows and Working Capital

We had cash and cash equivalents of $32,329 as of March 31, 2026, compared to $14,188 as of December 31, 2025. Our increase in cash during the period was primarily attributable to financing activities.

Our working capital deficit was $2,355,449 as of March 31, 2026, compared to $2,215,329 as of December 31, 2025.

The accompanying condensed consolidated financial statements have been prepared assuming the Company will continue as a going concern. As of March 31, 2026, the Company had a

stockholders' deficit of $2,823,586, incurred a net loss of $155,427 for the three months ended March 31, 2026, and used $61,459 of cash in operating activities during the period. These conditions raise substantial doubt about the Company's ability to continue as a going concern within one year after the date the condensed consolidated financial statements are issued.

The Company continues to have limited access to capital and expects additional financing will be necessary to fund operations. Market conditions for microcap companies remain challenging, making it difficult to secure financing on favorable terms. The Company's capital structure includes convertible debt instruments, certain of which are in default and certain of which contain embedded derivative features that may result in additional non-cash expense and potential dilution.

Management's plans to address liquidity needs include pursuing additional capital through equity and debt financings, including potential draws under the GHS equity financing agreement, continued financial support from related parties, renegotiating or restructuring certain debt obligations, and continuing efforts to manage operating expenditures while evaluating strategic opportunities, including its digital asset treasury initiative and other potential business opportunities.

Subsequent to March 31, 2026, the Company completed a financing transaction resulting in gross proceeds of $2.0 million, which management believes provides additional liquidity to support operations and strategic initiatives in the near term. However, these plans are not entirely within the Company's control, and there can be no assurance that additional financing will be available on acceptable terms, if at all. Accordingly, substantial doubt about the Company's ability to continue as a going concern remains.

Financing Activities

The Company has historically funded operations through private placements, convertible debt issuances, short-term advances, and related party support.

For the three months ended March 31, 2026, the Company completed the following financing transactions:

·The Company issued a $10,000 Series 2026 mandatorily convertible note to an unaffiliated investor. The note bears interest at 10% per annum and matures in February 2029.

·In March 2026, the Company received a $100,000 financing advance from an investor in connection with a contemplated financing transaction. As of March 31, 2026, the advance was recorded as a financing advance liability because definitive financing documents had not yet been executed. Subsequent to quarter-end, this advance was applied toward the May 2026 financing transaction.

For the three months ended March 31, 2025, the Company completed the following financing transactions:

·The Company issued a Series 2025 mandatorily convertible note in the principal amount of $10,000 to an individual investor.

·The Company issued a Series 2025 mandatorily convertible note in the principal amount of $61,000 to an individual investor. The principal amount included $26,000 of accrued liabilities exchanged for debt pursuant to a liability conversion agreement, with the remaining $35,000 representing new cash proceeds.

Reference is made to Notes 5, 6, 7 and 9 to the condensed consolidated financial statements included under Item 1 of this Quarterly Report for additional information regarding debt obligations, financing arrangements, and related party balances.

Proceeds from financing activities have been used primarily for general corporate purposes, including working capital, public company expenses, professional fees, and operating expenses.

Related Party Transactions

The Company has engaged in transactions with related parties, including advances from officers and the issuance of convertible debt.

During the three months ended March 31, 2026, officers provided ongoing support through working capital advances and payments made on behalf of the Company, while receiving repayments totaling $1,600. As of March 31, 2026, amounts due to related parties totaled $361,880, including accrued compensation to the Company's contracted Chief Financial Officer and officer advances.

In April 2025, the Company issued a $25,000 Series 2025 mandatorily convertible note to the spouse of a Company director. The note was issued on substantially the same terms as those offered to unaffiliated investors.

Additional information regarding related party transactions is included in Note 9 to the condensed consolidated financial statements.

Capital Requirements and Outlook

The Company expects to require additional financing to support ongoing operations and strategic initiatives. The Company continues to incur costs associated with maintaining public company infrastructure, professional services, and regulatory compliance while evaluating new business opportunities.

The Company maintains an equity financing arrangement with GHS Investments LLC that provides for up to $20.0 million in potential financing over a 24-month term, subject to contractual conditions and the Company's election to utilize the facility. As of March 31, 2026, the Company had not drawn funds under the facility.

The Company is evaluating various financing alternatives, including debt and equity offerings, strategic partnerships, and other capital formation opportunities. If the Company is unable to obtain additional financing, it may be required to further reduce expenditures, curtail operations, or delay strategic initiatives.

Subsequent Event Financing

Subsequent to March 31, 2026, the Company completed a financing transaction with Axiom Holdings Group, LLC resulting in $2.0 million of total consideration, consisting of:

·$1.0 million in cash consideration, including a previously funded $100,000 advance received in March 2026; and

·$1.0 million of digital asset consideration.

The financing was completed through the issuance of a convertible promissory note with an original principal balance of $2,222,222, reflecting a 10% original issue discount. The note bears interest at 15% per annum, matures ten months from issuance, and contains variable conversion provisions based on the Company's future stock price, subject to stated floor and ceiling prices.

On May 4, 2026, the Company received approximately $884,000 of net cash proceeds, after giving effect to the prior advance and payment of investor legal fees pursuant to the transaction documents.

As of the issuance date of these condensed consolidated financial statements, transfer of the committed digital asset consideration remained in process. Management has been advised by the investor that the timing of such transfer is being coordinated due to customary market, custody, and transfer-related considerations associated with the movement of digital assets. Accordingly, the Company had not obtained custody or control of the digital assets, and no digital assets related to this financing transaction have been recognized in the accompanying condensed consolidated financial statements.

Proceeds are expected to be used for general corporate purposes, including working capital, strategic initiatives, digital asset treasury activities, and repayment of certain obligations. Reference is made to Note 13 to the condensed consolidated financial statements included under Item 1 of this Quarterly Report for additional information regarding the financing transaction.

SUPPLEMENTAL, UNAUDITED PRO FORMA INFORMATION

The unaudited pro forma condensed balance sheet reflects the Axiom Financing as if it had occurred on March 31, 2026, including the contractual digital asset consideration to be provided by the investor. However, as of the issuance date of these condensed consolidated financial statements, transfer of the committed digital asset consideration remained in process. Management has been advised by the investor that the timing of such transfer is being coordinated due to customary market, custody, and transfer-related considerations associated with the movement of digital assets. Accordingly, the Company had not obtained custody or control of such digital assets, and no digital assets related to the financing transaction have been recognized in the accompanying condensed consolidated financial statements. The pro forma presentation is intended solely to illustrate the potential effect of the financing transaction as if completed as of March 31, 2026.

The unaudited pro forma information is presented for informational purposes only and is not prepared in accordance with Article 11 of Regulation S-X. The pro forma adjustments are based on available information and assumptions that management believes are reasonable under the circumstances; however, such assumptions are inherently subject to uncertainties and contingencies.

The unaudited pro forma condensed balance sheet does not purport to represent what the Company's financial position would have been had the Axiom Financing occurred as of March 31, 2026, nor does it purport to project the Company's financial position for any future period. Actual results may differ materially from those presented.

Farmhouse, Inc.

Supplemental, Unaudited Pro Forma Condensed Consolidated Balance Sheet

As of March 31, 2026

		As Reported			Axiom Financing			Debt Repayment Adjustments			Pro Forma
ASSETS
Cash and cash equivalents	$	32,329		$	884,000	A	$	(98,684)		$	817,645
Prepaid expenses		8,550			-			-			8,550
Crypto assets		14,209			1,000,000			-			1,014,209
Deferred equity facility		40,050			-			-			40,050
Total assets	$	95,138		$	1,884,000		$	(98,684)		$	1,880,454
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Accounts payable	$	35,455		$	-		$	(35,324)		$	131
Accrued legal fees		10,070			-			-			10,070
Accrued payroll and payroll taxes		1,544,076			-			-			1,544,076
Accrued liabilities		8,050			-			-			8,050
Accrued interest payable		142,623			-			(1,932)			140,691
Convertible notes payable, net of debt discount		113,766			-			-			113,766
Notes payable		55,000			-			(5,000)			50,000
Convertible note payable - Axiom		-			2,222,222	B		-			2,222,222
Less: debt discount (OID and issuance costs)		-			(238,222)	C, E		-			(238,222)
Derivative liability		104,667			-	E		-			104,667
Financing advance		100,000			(100,000)	D		-			-
Due to related parties		336,880			-			(56,428)			280,452
Total current liabilities		2,450,587			1,884,000			(98,684)			4,235,903
Non-current liabilities:
Convertible debt - RP		25,000			-			-			25,000
Convertible debt - 2025		443,137			-			-			443,137
Total non-current liabilities		468,137			-			-			468,137
Total liabilities		2,918,724			1,884,000			(98,684)			4,704,040
Stockholders' deficit:
Common stock		1,911			-			-			1,911
Additional paid-in capital		4,493,027			-			-			4,493,027
Accumulated deficit		(7,318,524)			-			-			(7,318,524)
Total stockholders' deficit		(2,823,586)			-			-			(2,823,586)
Total liabilities and stockholders' deficit	$	95,138		$	1,884,000		$	(98,684)		$	1,880,454

Notes to Unaudited Pro Forma Condensed Balance Sheet

(A) Cash Proceeds - Reflects net cash proceeds of approximately $884,000 received upon closing, after giving effect to the prior $100,000 advance and the withholding/payment of approximately $16,000 of investor legal fees in accordance with the SPA.

(B) Axiom Financing - Reflects the issuance of a convertible promissory note with an original principal amount of $2,222,222, including a 10% original issue discount, in exchange for total consideration of $2,000,000 consisting of $1,000,000 in cash and $1,000,000 in contractual digital asset consideration. For illustrative pro forma purposes, the digital asset consideration is assumed to have been transferred as of March 31, 2026. However, as of the issuance date of these condensed consolidated financial statements, transfer of the committed digital asset consideration remained in process, and the Company had not obtained custody or control of such digital assets. Accordingly, no digital assets related to the financing transaction have been recognized in the accompanying condensed consolidated financial statements.

(C) Debt Discount and Issuance Costs - Reflects the $222,222 original issue discount and approximately $16,000 of issuance costs as a reduction of the carrying amount of the convertible note payable for illustrative purposes

(D) Financing Advance - Reflects the reclassification of the $100,000 advance received in March 2026, which was applied toward the Axiom Financing and is no longer presented as a separate liability.

(E) Derivative Liability and Debt Discount - We have determined that the Axiom note will require derivative accounting. The associated derivative liability and debt discount has not yet been determined and is not disclosed here.

OFF BALANCE SHEET ARRANGEMENTS

The Company does not have any off-balance sheet arrangements that have or are reasonably likely to have a material current or future effect on its financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.