UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
10-Q
☒
QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For
the quarterly period ended September 30, 2025
☐
TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For
the transition period from _______________ to _______________
Commission
File No. 000-49654
CirTran
Corporation
(Exact
name of registrant as specified in its charter)
Nevada
68-0121636
(State
or other jurisdiction
of
incorporation or organization)
(IRS
Employer
Identification
No.)
6360
S Pecos Road , Suite 8 , Las Vegas , NV 89120
(Address
of principal executive offices and zip code)
(801)
963-5112
(Registrant’s
telephone number, including area code)
Securities
registered pursuant to Section 12(b) of the Exchange Act:
Title
of each class
Trading
Symbol(s)
Name
of each exchange on which registered
None
None
None
Indicate
by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate
by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule
405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant
was required to submit such files). Yes ☒ No ☐
Indicate
by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting
company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,”
“smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large
accelerated filer ☐
Accelerated
filer ☐
Non-accelerated
filer ☒
Smaller
reporting company ☒
Emerging
growth company ☐
If
an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
Indicate
the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date. As of November
19, 2025, there were 4,945,417 shares of common stock, $ 0.001 par value, outstanding.
TABLE
OF CONTENTS
Item
Page
Part I—Financial Information
1
Financial Statements (Unaudited)
3
Condensed Consolidated Balance Sheets as of September 30, 2025 (unaudited) and December 31, 2024 (Audited)
3
Condensed Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2025 and 2024 (unaudited)
4
Condensed Consolidated Statements of Stockholders’ Deficit for the Three and Nine Months Ended September 30, 2025 and 2024 (unaudited)
5
Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2025 and 2024 (unaudited)
6
Notes to Unaudited Condensed Consolidated Financial Statements
7
2
Management’s Discussion and Analysis of Financial Condition and Results of Operations
18
3
Quantitative and Qualitative Disclosures about Market Risk
20
4
Controls and Procedures
20
Part II—Other Information
6
Exhibits
21
Signatures
22
2
PART
I—FINANCIAL INFORMATION
ITEM
1. FINANCIAL STATEMENTS
CIRTRAN
CORPORATION
CONDENSED
CONSOLIDATED BALANCE SHEETS
September 30,2025
December 31, 2024
(Unaudited)
(Audited)
ASSETS
Current assets:
Cash
$ 19,274
$ —
Inventory
713,725
737,223
Deposits on inventory
339,361
28,803
Deposits on inventory - related party
—
637
Deposits on inventory
—
637
Accounts receivable, net
55,204
25,641
Other current assets
536,386
485,621
Total current assets
1,663,950
1,277,925
Investment in securities at cost
248,000
248,000
Property and equipment, net of accumulated depreciation
5,094
6,407
Total assets
$ 1,917,044
$ 1,532,332
LIABILITIES AND STOCKHOLDERS’ DEFICIT
Current liabilities:
Accounts payable
$ 507,524
$ 762,440
Cash overdraft
—
30,384
Liabilities for product returns and credits
104,565
70,054
Short-term advances payable
162,866
162,966
Short-term advances payable - related parties
1,104,000
22,452
Short-term advances payable
1,104,000
22,452
Accrued liabilities
2,595,868
2,776,008
Accrued payroll and compensation expense
5,602,489
5,381,549
Accrued interest, current portion
6,704,921
6,281,805
Convertible debenture, current portion, net of discounts
264,284
264,284
Note payable, current portion
90,000
90,000
Note payable to stockholders
151,833
151,833
Note payable
151,833
151,833
Derivative liability
2,492,987
2,458,435
Liabilities from discontinued operations
4,779,745
4,664,960
Total current liabilities:
24,561,082
23,117,170
Note payable, net of current portion
643,000
643,000
Convertible debenture, net of current portion, net of discount
2,256,587
2,177,723
Total liabilities
27,460,669
25,937,893
Commitments and contingencies
—
—
Stockholders’ deficit:
Common stock, par value $ 0.001 ; 100,000,000 shares authorized; 4,945,417 shares issued and outstanding
4,945
4,945
Additional paid-in capital
37,233,561
37,233,561
Accumulated deficit
( 62,782,131 )
( 61,644,067 )
Total stockholders’ deficit
( 25,543,625 )
( 24,405,561 )
Total liabilities and stockholders’ deficit
$ 1,917,044
$ 1,532,332
The
accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
3
CIRTRAN
CORPORATION
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
2025
2024
2025
2024
Three Months Ended
September 30,
Nine Months Ended
September 30,
2025
2024
2025
2024
Net sales
$ 448,492
$ 256,070
$ 1,077,743
$ 1,075,952
Cost of sales
270,666
130,072
544,681
456,533
Gross profit
177,826
125,998
533,062
619,419
Operating expenses
Employee costs
142,869
129,743
394,323
380,645
Selling, general and administrative expenses
201,461
218,480
541,774
601,714
Total operating expenses
344,330
348,223
936,097
982,359
Loss from operations
( 166,504 )
( 222,225 )
( 403,035 )
( 362,940 )
Other income (expense)
Interest expense
( 206,458 )
( 190,399 )
( 612,219 )
( 561,099 )
Gain on forgiveness of debt
5,690
—
10,831
—
Gain (loss) on derivative valuation
( 38,936 )
( 448,898 )
( 34,552 )
( 775,157 )
Loss on disposal
—
—
( 9,323
)
—
Other income
250
6
250
Total other expense
( 239,704 )
( 639,047 )
( 645,257 )
( 1,336,006 )
Net loss from continuing operations
( 406,208 )
( 861,272 )
( 1,048,292 )
( 1,698,946 )
Loss from discontinued operations
( 38,682 )
( 38,681 )
( 114,784 )
( 115,204 )
Net loss before income tax
( 444,890 )
( 899,953 )
( 1,163,076 )
( 1,814,150 )
Income tax
25,012
—
25,012
—
Net loss
$ ( 419,878 )
$ ( 899,953 )
$ ( 1,138,064 )
$ ( 1,814,150 )
Net loss from continuing operations per common share, basic and diluted
$ ( 0.08 )
$ ( 0.17 )
$ ( 0.21 )
$ ( 0.34 )
Net loss from discontinued operations per common share, basic and diluted
$ ( 0.01 )
$ ( 0.01 )
$ ( 0.02 )
$ ( 0.02 )
Net loss per common share, basic and diluted
$ ( 0.09 )
$ ( 0.18 )
$ ( 0.23 )
$ ( 0.36 )
Basic and diluted weighted average common shares outstanding
4,945,417
4,945,417
4,945,417
4,945,417
The
accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
4
CIRTRAN
CORPORATION
CONDENSED
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIT
FOR
THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2025 AND 2024
(Unaudited)
Shares
Amount
Capital
Deficit
deficit
Common
Stock
Additional
Paid-in
Accumulated
Total
stockholders’
Shares
Amount
Capital
Deficit
deficit
Balance,
December 31, 2024
4,945,417
$
4,945
$
37,233,561
$
( 61,644,067
)
$
( 24,405,561
)
Net
loss
—
—
—
( 155,436
)
( 155,436
)
Balance,
March 31, 2025
4,945,417
4,945
37,233,561
( 61,799,503
)
( 24,560,997
)
Net
loss
—
—
—
( 562,750
)
( 562,750
)
Balance,
June 30, 2025
4,945,417
4,945
37,233,561
( 62,362,253
)
( 25,123,747
)
Net
loss
—
—
—
( 419,878
)
( 419,878
)
Balance,
September 30, 2025
4,945,417
$
4,945
$
37,233,561
$
( 62,782,131
)
$
( 25,543,625
)
Common
Stock
Additional
Paid-in
Accumulated
Total
stockholders’
Shares
Amount
Capital
Deficit
deficit
Balance,
December 31, 2023
4,945,417
$
4,945
$
37,233,561
$
( 59,017,191
)
$
( 21,778,685
)
Net
loss
—
—
—
( 518,088
)
( 518,088
)
Balance,
March 31, 2024
4,945,417
4,945
37,233,561
( 59,535,279
)
( 22,296,773
)
Net
loss
—
—
—
( 396,109
)
( 396,109
)
Balance,
June 30, 2024
4,945,417
4,945
37,233,561
( 59,931,388
)
( 22,692,882
)
Balance
4,945,417
4,945
37,233,561
( 59,931,388
)
( 22,692,882
)
Net
loss
—
—
—
( 899,953
)
( 899,953
)
Balance,
September 30, 2024
4,945,417
$
4,945
$
37,233,561
$
( 60,831,341
)
$
( 23,592,835
)
Balance
4,945,417
$
4,945
$
37,233,561
$
( 60,831,341
)
$
( 23,592,835
)
The
accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
5
CIRTRAN
CORPORATION
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
2025
2024
For the Nine Months Ended September 30,
2025
2024
Cash flows from operating activities
Net loss
$ ( 1,138,064 )
$ ( 1,814,150 )
Adjustments to reconcile net loss to net cash used by operating activities:
Loss from discontinued operations
114,784
115,204
Depreciation expense
1,313
3,677
(Gain) loss on derivative valuation
34,552
775,157
Debt discount amortization
78,862
73,852
Gain on forgiveness of debt
( 10,831 )
—
Changes in operating assets and liabilities:
Inventory
23,499
123,689
Deposits on inventory
( 310,558 )
610
Deposits on inventory - related party
637
( 371,842 )
Accounts receivable
( 29,563 )
( 113,559 )
Other current assets
( 50,765 )
( 7,968
Accounts payable
( 244,085 )
35,793
Liabilities for product returns
34,511
50,820
Accrued liabilities
( 180,138 )
250,345
Income tax liability
—
( 28,503 )
Accrued payroll and compensation
220,940
216,552
Accrued interest
423,116
681,889
Net cash used by operating activities
( 1,031,790 )
( 8,434 )
Cash flows from financing activities:
Bank overdraft
( 30,384 )
—
Proceeds from related-party loans
1,081,448
8,434
Net Cash provided by financing activities
1,051,064
8,434
Net change in cash
19,274
—
Cash, beginning of period
—
—
Cash, end of period
$ 19,274
$ —
Supplemental disclosure of cash flow information:
Cash paid for interest
$ —
$ —
Cash paid for income taxes
$ —
$ —
The
accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
6
CIRTRAN
CORPORATION
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER
30, 2025
(Unaudited)
NOTE
1 — ORGANIZATION AND NATURE OF OPERATIONS
In
1987, CirTran Corporation was incorporated in Nevada under the name Vermillion Ventures, Inc., for the purpose of acquiring other operating
corporate entities. We were largely inactive until July 1, 2000, when our wholly owned subsidiary, CirTran Corporation (Utah), acquired
substantially all the assets and certain liabilities of Circuit Technology, Inc., founded by our president, Iehab Hawatmeh.
We,
together with our majority-owned subsidiaries, manufacture, distribute, and sell condoms, electronic tobacco products, cigars, energy
drinks, water beverages, and related merchandise, all using the HUSTLER® brand name. Since entering our 2019 five-year manufacturing
and distribution agreement with an unrelated party, our efforts have been devoted to phase one of our development of all HUSTLER®-branded
products, which led us to generating revenue during 2020 for the first time in several years. Business continued to thrive in the States
and some international countries, expanding across borders and reaching new markets. Despite challenges, The Company adapted and flourished,
driven by great brand and product categories. This growth was not only boosted by the domestic economy but also established a global
presence, solidifying the foundation for future success.
NOTE
2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis
of Presentation
Our
unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles
in the United States of America (“U.S. GAAP”), and pursuant to the rules and regulations of the Securities and Exchange Commission
(the “SEC”). These financial statements and the notes attached hereto should be read in conjunction with the financial statements
and notes included in our Form 10-K for the fiscal year ended December 31, 2024. In the opinion of our management, all adjustments, including
normal recurring adjustments necessary to present fairly our financial position, as of September 30, 2025, and the results of our operations
and cash flows for the nine months then ended have been included. The results of operations for the interim period are not necessarily
indicative of the results for the full year ending December 31, 2025.
Use
of 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 and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements
and the reported amounts of revenues and expenses during the reporting period. Significant estimates include the estimated useful lives
of property and equipment. Actual results could differ from those estimates.
Principles
of Consolidation
The
consolidated financial statements include the accounts of the company and our wholly owned subsidiaries: CirTran Products Corp., LBC
Products, Inc., and CirTran Asia, Inc. Intercompany accounts and transactions have been eliminated in consolidation.
Concentrations
of Credit Risk
We
maintain our cash in bank deposit accounts, the balances of which at times may exceed federally insured limits. We continually monitor
our banking relationships and consequently have not experienced any losses in our accounts. At times, such deposits may exceed the Federal
Deposit Insurance Corporation insurable limit.
7
Cash
Equivalents
We
consider all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents. There were no cash
equivalents as of September 30, 2025 and December 31, 2024.
Revenue
Recognition
We
follow Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 606, Revenue
from Contracts with Customers , for revenue recognition. Adoption of ASC 606 did not have a significant impact on our financial statements.
We generate revenue by providing product design services and through the sales of tangible product. We recognize revenue upon transfer
of control of promised products or services to customers in an amount that reflects the consideration expected to be received in exchange
for those products or services. We determine the transaction price associated with each deliverable based on the unique contract with
the customer, which is a stand-alone contract that we retain the right to accept or reject. Revenue is recognized net of allowances for
returns and any taxes collected from customers, which are subsequently remitted to governmental authorities.
During
the nine months ended September 30, 2025 and 2024, we recognized revenue of $ 57,976 and $ 68,709 , respectively, related to the performance
obligations under product development service agreements with customers. These contracts are long term in nature and revenue is recognized
at certain milestone intervals upon our delivery and customer acceptance of work product related to those milestones: namely, product
design, packaging, branding display, and prototypes. There were no costs to obtain the contracts identified, and therefore, no asset
has been recorded for customer acquisition costs. We have not recognized impairment losses related to the receivables from these contracts
during the nine months ended September 30, 2025 and 2024.
Additionally,
we recognized revenues of $ 1,019,767 and $ 1,007,243 during the nine months ended September 30, 2025 and 2024, respectively, related to
the delivery of products to our customers. Each delivery is based on the unique contract with the customer, which is a stand-alone contract
that we retain the right to accept or reject. Upon acceptance, we oblige delivery of such product to the customer at an agreed-upon place,
time, and price. We recognize revenue under the unique contract upon fulfilment of our performance obligations therein, typically limited
to the delivery of product.
Accounts
Receivable
Revenues
that have been recognized but not yet received are recorded as accounts receivable. The Company estimates credit losses based on the
Current Expected Credit Losses (CECL) model as required by ASC 326. The allowance for credit losses is based on a variety of factors,
including historical loss experience, current conditions, and reasonable and supportable forecasts of future economic conditions. As
of September 30, 2025 and December 31, 2024, the Company has recorded an allowance for doubtful accounts of $ 783 and $ 4,839 , respectively.
Investment
in Securities
Our
cost-method investment consists of an investment in a private digital multi-media technology company that totaled $ 248,000 and $ 248,000
at September 30, 2025 and December 31, 2024, respectively. Because we owned less than 20 % of that company’s stock as of each date,
and no significant influence or control exists, the investment is accounted for using the cost method. Pursuant to ASC 321, the Company
also searched for observable transactions in the investee’s stock and found none.
Inventories
Inventories
are stated at the lower of average cost or net realizable value. Cost on manufactured inventories includes labor, material, and overhead.
Overhead cost is based on indirect costs allocated to cost of sales, work-in-process inventory, and finished goods inventory. Indirect
overhead costs have been charged to cost of sales or capitalized as inventory, based on management’s estimate of the benefit of
indirect manufacturing costs to the manufacturing process.
8
When
there is evidence that the inventory’s value is less than original cost, the inventory is reduced to market value. We determine
market value on current resale amounts and whether technological obsolescence exists. We will seek agreements with manufacturing customers
that require them to purchase their inventory items in the event they cancel their business with us.
From
time to time, we will place deposits on inventory to be delivered in the future. These deposits are carried as a separate balance sheet
component and total $ 339,361 (non-related-party) and $ 0 (related-party) as of September 30, 2025, and $ 28,803 (non-related-party) and
$ 637 (related-party) as of December 31, 2024.
On
most of tobacco related products, the Company pays in advance for Federal Excise Taxes and State Excise Taxes prior to receiving product.
The Company accrues those taxes on its balance sheet and expenses them per-unit basis as sold.
Inventory
balances consisted of the following:
SCHEDULE OF INVENTORY
September 30,
2025
December 31,
2024
Finished goods
$ 649,607
$ 673,866
Raw materials
64,118
63,357
Total
$ 713,725
$ 737,223
Fair
Value of Financial Instruments
ASC
820-10-15, Fair Value Measurement-Overall-Scope and Scope Exceptions , defines fair value, thereby eliminating inconsistencies
in guidance found in various prior accounting pronouncements, and increases disclosures surrounding fair value calculations. ASC 820-10-15
establishes a three-tiered fair value hierarchy that prioritizes inputs to valuation techniques used in fair value calculations. The
three levels of inputs are defined as follows:
Level
1 —Level 1 applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities.
Level
2 —Level 2 applies to assets or liabilities for which there are inputs other than quoted prices that are observable for the
asset or liability, such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or
liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which
significant inputs are observable or can be derived principally from, or corroborated by, observable market data.
Level
3 —Level 3 applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant
to the measurement of the fair value of the assets or liabilities.
Accounts
payable and related-party payables have fair values that approximate the carrying value due to the short-term nature of these instruments.
Derivative liabilities are measured using level 3 inputs.
SCHEDULE OF FINANCIAL ASSETS AND LIABILITIES CARRIED AT FAIR VALUE MEASURED ON RECURRING BASIS
Total Fair
Value at
September 30,
2025
Quoted
prices
in active
markets
(Level 1)
Significant
other
observable
inputs
(Level 2)
Significant
unobservable
inputs
(Level 3)
Derivative liabilities
$ 2,492,987
$ —
$ —
$ 2,492,987
Total Fair
Value at
December 31,
2024
Quoted
prices
in active
markets
(Level 1)
Significant
other
observable
inputs
(Level 2)
Significant
unobservable
inputs
(Level 3)
Derivative liabilities
$ 2,458,435
$ —
$ —
$ 2,458,435
9
Loss
per Share
Basic
loss per share is calculated by dividing net loss available to common shareholders by the weighted-average number of common shares outstanding
during each period. Diluted loss per share is similarly calculated, except that the weighted-average number of common shares outstanding
would include common shares that may be issued subject to existing rights with dilutive potential when applicable. There were approximately
321,000,000 and 402,678,000 potentially issuable shares from the conversions of convertible debentures outstanding that were excluded
in dilutive outstanding shares for the nine months ended September 30, 2025 and 2024, respectively, due to the anti-dilutive effect these
would have on net loss per share. We do not currently have adequate authorized but unissued shares to satisfy our obligations should
all instruments eligible to convert to common stock be exercised. We are not currently contemplating an increase in our authorized shares
but may do so in the future.
Recently
Issued Accounting Pronouncements
The
Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2023-07, Segment Reporting (Topic 280): Improvements
to Reportable Segment Disclosures, in November 2023. This update enhances segment reporting disclosures to provide investors with more
useful and transparent information about a company’s operating segments. Public companies must now disclose significant segment
expenses that are regularly reviewed by the chief operating decision-maker (CODM). These expenses should be reported on an itemized basis,
providing more insight into segment profitability. Companies must provide segment disclosures in both annual and interim reports. Required
disclosures apply to all public entities under FASB’s segment reporting rules. Effective for fiscal years beginning after December
15, 2023, including interim periods within those fiscal years. The Company adopted this ASU, effective for the year ended December 31,
2024. Refer to Note 12 for disclosure of Segment information.
The
Company continually assesses any new accounting pronouncements to determine their applicability. When it is determined that a new accounting
pronouncement affects the Company’s financial reporting, the Company undertakes a study to determine the consequences of the change
to its Consolidated Financial Statements and assures that there are proper controls in place to ascertain that the Company’s Consolidated
Financial Statements properly reflect the change.
NOTE
3 — GOING CONCERN
The
accompanying unaudited consolidated financial statements have been prepared in conformity with US GAAP, which considers our
continuation as a going concern. We had a working capital deficiency of $ 22,897,132 ,
as of September 30, 2025, and a net loss from continuing operations of $ 1,013,957 for
the nine months ended September 30, 2025. As of September 30, 2025, we had an accumulated deficit of $ 62,782,131 .
These conditions raise substantial doubt about our ability to continue as a going concern.
Our
ability to continue as a going concern is dependent upon our ability to successfully accomplish our business plan and eventually attain
profitable operations. The accompanying consolidated financial statements do not include any adjustments that may be necessary if we
are unable to continue as a going concern.
In
the coming year, our foreseeable cash requirements will relate to the development of business operations and associated expenses. We
may experience a cash shortfall and be required to raise additional capital.
Historically,
we have mainly relied upon shareholder loans and advances to finance operations and growth. Management may raise additional capital by
retaining net earnings, if any, or through future public or private offerings of our stock or loans from private investors, although
we cannot assure that we will be able to obtain such financing. Our failure to do so could have a material and adverse effect upon our
shareholders and us.
NOTE
4 — PROPERTY AND EQUIPMENT
We
incur certain costs associated with the design and development of molds and dies for our contract-manufacturing segment. These costs
are held as deposits on the balance sheet until the molds or dies are finished and ready for use. At that point, the costs are included
as part of production equipment in property and equipment and are amortized over their useful lives. We hold title to all molds and dies
used in the manufacture of products.
10
Property
and equipment and estimated service lives consist of the following:
SCHEDULE OF PROPERTY AND EQUIPMENT AND ESTIMATED SERVICE LIVES
September 30,
2025
December 31,
2024
Useful Life
(years)
Furniture and office equipment
$ 12,212
$ 12,212
5 - 10
Vehicles
–
–
3 - 7
Total
12,212
12,212
Less: accumulated depreciation
( 7,118 )
( 5,805 )
Property and equipment, net
$ 5,094
$ 6,407
We
recorded $ 1,313
and $ 3,677
of depreciation expense during the nine months ended September 30, 2025 and 2024. Depreciation expense in included in selling, general and administrative expenses on the Statement of Operations.
NOTE
5 — RELATED PARTY TRANSACTIONS
In
2007, we issued a 10 % promissory note to a family member of our president in exchange for $ 300,000 . The note was due on demand after
May 2008. There were no repayments made during the periods presented. At September 30, 2025 and December 31, 2024, the principal amount
owing on the note was $ 151,833 and $ 151,833 , respectively. No demand for payment has been made.
On
March 31, 2008, we issued to this same family member, along with two other company shareholders, promissory notes totaling $ 315,000 ($ 105,000
each). Under the terms of these three $ 105,000 notes, we received total proceeds of $ 300,000 and agreed to repay the amount received
plus a 5 % borrowing fee. The notes were due April 30, 2008, after which they were due on demand, with interest accruing at 12 % per annum.
We made no payments towards the outstanding notes during the periods presented. The principal balance owing on the notes as of September
30, 2025 and December 31, 2024, was $ 72,466 and $ 72,466 , respectively. No demand for payment has been made.
There
were $ 19,952 and $ 21,882 short-term advances due to related parties as of September 30, 2025 and December 31, 2024, respectively.
As
of September 30, 2025 and December 31, 2024, we owed our president a total of $ 433,379 and $ 433,379 , respectively, in unsecured advances.
The advances and short-term bridge loans were approved by our board of directors under a 5 % borrowing fee. The borrowing fees were waived
by our president on these loans. These amounts are included in our liabilities from discontinued operations.
As
of September 30, 2025 and December 31, 2024, the Company owes the CEO $ 7,059 for short term advances to the Company. The advances are
non-interest bearing and due on demand.
During
the nine months ended September 30, 2025, we had a net decrease in deposits with a related-party inventory supplier totaling $ 1,081,548 ,
resulting in a credit balance of $ 1,104,000 , which is disclosed as Short-term advances payable - related parties. The related party is
an entity controlled by our chief executive officer. All transactions were at a 2 % markup over the related-party’s cost paid for
inventory in arm’s-length transactions. Total inventory purchases from the related party were $ 669,044 and $ 731,918 during the
nine months ended September 30, 2025 and 2024, respectively.
NOTE
6 — OTHER ACCRUED LIABILITIES
Accrued
tax liabilities consist of delinquent payroll taxes, interest, and penalties owed by us to the Internal Revenue Service (“IRS”)
and other tax entities.
Accrued
liabilities consist of the following:
SCHEDULE OF ACCRUED LIABILITIES
September 30,
2025
December 31,
2024
Tax liabilities
$ 43,748
$ 66,456
Accrued Royalty - Globrands LLC
781,253
854,498
Other
1,770,867
1,855,054
Total
$ 2,595,868
$ 2,776,008
11
Other
accrued liabilities as of September 30, 2025 and December 31, 2024, include a non-interest-bearing payable totaling $ 45,000 and $ 45,000 ,
respectively, that is due on demand and customer deposits totaling $ 1,728,301 and $ 1,730,213 , respectively.
Accrued
payroll and compensation liabilities consist of the following:
SCHEDULE OF ACCRUED PAYROLL AND COMPENSATION LIABILITIES
September 30,
2025
December 31,
2024
Director fees
$ 140,000
$ 135,000
Bonus expenses
129,358
121,858
Commissions
2,148
2,148
Consulting
383,833
412,322
Administrative payroll
4,947,150
4,710,221
Total
$ 5,602,489
$ 5,381,549
NOTE
7 — COMMITMENTS AND CONTINGENCIES
Litigation
and Claims
Various
vendors, service providers, and others have asserted legal claims in previous years. These creditors generally are not actively seeking
collection of amounts due to them, and we have determined that the probability of realizing any loss on these claims is remote and will
seek to compromise and settle at a deep discount any of such claims that are asserted for collection. These amounts are included in our
current liabilities, except where we believe collection or enforcement of the judgments is barred by the applicable statute of limitations,
in which case the liabilities have been eliminated. We have not accrued any liability for claims or judgments that we have determined
to be barred by the applicable statute of limitations, which generally is eight years for judgments in Utah.
Playboy
Enterprises, Inc.
Our
affiliate, Play Beverages, LLC, filed suit against Playboy Enterprises, Inc., in Cook County, Illinois, Circuit Court in October 2012
asserting numerous claims, including breach of contract and tortious interference. Playboy responded with a counterclaim of breach of
contract and trademark infringement. After proceedings in October 2016, the court awarded a judgment of $ 6.6 million to Playboy against
Play Beverages and CirTran Beverage Corp., our subsidiary. The court denied our motion for a new trial and awarded Playboy treble patent
infringement damages and attorney’s fees. We filed a notice of appeal in July 2017 and again in March 2018. Playboy has initiated
collection efforts but has recovered no funds. In September 2018, the appellate court affirmed the judgment of the circuit court. The
balance due related to this judgment, has been included in liabilities in discontinued operations. As of December 31, 2023, the Company
received legal representation that the judgement can no longer be enforced after seven years, as a result, the Company has recognized
a gain from discontinued operations of $ 18,878,359 of time barred debt previously included in liabilities from discontinued operations.
Delinquent
Payroll Taxes, Interest, and Penalties
In
November 2004, the IRS accepted our amended offer in compromise (the “Offer”) to settle delinquent payroll taxes, interest,
and penalties, which required us to pay $ 500,000 , remain current in our payment of taxes for five years , and forego claiming any net
operating losses for the years 2001 through 2015 or until we paid taxes on future profits in an amount equal to the taxes of $ 1,455,767
waived by the Offer. In June 2013, we entered into a partial installment agreement to pay $ 768,526 in unpaid 2009 payroll taxes, which
required us to pay the IRS 5 % of cash deposits. The monthly payments were to continue until the account balances were paid in full or
until the collection statute of limitation expired on October 6, 2020. We are currently in communication with the IRS regarding the statute
of limitations on this settlement and appropriate next steps. During the year ended December 31, 2023, the Company wrote off $ 512,520
as time barred debt. The amounts of $ 0 and $ 5,164 were due as September 30, 2025 and December 31, 2024, respectively.
12
Employment
Agreements
We
engage Iehab Hawatmeh, our president and chief executive officer, through an employment agreement entered in August 2009 and amended
in September 2017. In July 2017, Mr. Hawatmeh had resigned all positions with us to pursue other business activities, thereby effectively
terminating the agreement. However, the amendment to his employment agreement in September 2017 reinstated Mr. Hawatmeh to his previous
positions, with a salary in an amount to be determined. Among other things, the reinstated employment agreement: (a) grants options to
purchase a minimum of 6,000 shares of our stock each year, with an exercise price equal to the market price of our common stock as of
the grant date, for the maximum term allowed under our stock option plan; (b) provides for health insurance coverage, cell phone, car
allowance, life insurance, and director and officer liability insurance, as well as any other bonus approved by our board; and (c) includes
additional incentive compensation as follows: (i) a quarterly bonus equal to 5 % of our earnings before interest, taxes, depreciation,
and amortization for the applicable quarter; (ii) bonuses equal to 1 % of the net purchase price of any acquisitions we complete that
are directly generated and arranged by Mr. Hawatmeh; and (iii) an annual bonus (payable quarterly) equal to 1 % of our gross sales of
all products, net of returns and allowances. On January 1, 2020, we resumed accruing wages for our chief executive officer. A total of
$ 223,372 and $ 74,124 was accrued during the periods ended September 30, 2025 and December 31, 2024, respectively.
License
Agreements
We
have entered into agreements requiring us to pay certain royalties for the manufacture and distribution of licensed products. Fees are
based on a percentage of sales and remitted quarterly and are included in cost of sales for financial reporting purposes.
NOTE
8 — NOTES PAYABLE
Notes
payable consisted of the following:
SCHEDULE OF NOTES PAYABLE
September 30,
2025
December 31,
2024
Note payable to former service provider for past due account payable (current)
$ 90,000
$ 90,000
Note payable for settlement of debt (long-term)
500,000
500,000
Small Business Administration loans
143,000
143,000
Total
$ 733,000
$ 733,000
There
is $ 436,000 and $ 402,906 of accrued interest due on these notes as of September 30, 2025 and December 31, 2024, respectively.
NOTE
9 — CONVERTIBLE DEBENTURES
Convertible
debentures consisted of the following:
SCHEDULE OF CONVERTIBLE DEBENTURES
September 30,
2025
December 31,
2024
Convertible debenture, 5 % stated interest rate, secured by all our assets, due on May 30, 2022
$ 200,000
$ 200,000
Convertible debenture, 5 % stated interest rate, secured by all our assets, due on February 8, 2022
25,000
25,000
Convertible debenture, 5 % stated interest rate, secured by all our assets, due on May 30, 2022
25,000
25,000
Convertible debenture, 5 % stated interest rate, secured by all our assets, due on December 8, 2022
25,000
25,000
Convertible debenture, 5 % stated interest rate, secured by all our assets, due on April 30, 2027
2,390,528
2,390,528
Subtotal
$ 2,665,528
$ 2,665,528
Less: discounts
( 144,655 )
( 223,521 )
Total
$ 2,520,871
$ 2,442,007
Less: current portion
( 264,284 )
( 264,284 )
Long-term portion
$ 2,256,587
$ 2,177,723
The
convertible debentures and accrued interest are convertible into shares of our common stock at the lower of $ 100 or the lowest bid price
for the 20 trading days prior to conversion.
As
of September 30, 2025 and December 31, 2024, we had accrued interest on the convertible debentures totaling $ 2,147,600 and $ 2,055,232 ,
respectively.
13
NOTE
10 — DERIVATIVE LIABILITIES
As
discussed in Note 9—Convertible Debentures, we have entered into five separate agreements to borrow a total of $ 2,665,528 with
the outstanding principal and interest being convertible at the holder’s option into common stock of the company at the lesser
of $ 100 (notes one through four) or $0.10 (note five) or the lowest closing bid price in the prior 20 trading days . Embedded derivatives
are valued separately from the host instrument and are recognized as derivative liabilities in our balance sheet. We measure these instruments
at their estimated fair value and recognize changes in their estimated fair value in results of operations during the period of change.
We have estimated the fair value of these embedded derivatives for convertible debentures and associated warrants using a Monte Carlo
simulation as of September 30, 2025, using the following assumptions:
SCHEDULE OF DERIVATIVE LIABILITIES AT FAIR VALUE
Volatility
94.6 % - 125.4 %
Risk-free rates
3.76 % - 3.81 %
Stock price
$ 0.015
Remaining life
0.25 - 1.58 years
A
summary of the activity of the derivative liability for these notes is as follows:
SCHEDULE OF ACTIVITY OF THE DERIVATIVE LIABILITY
Balance at December 31, 2023
$ 1,296,937
Derivative loss due to mark to market adjustment
1,161,498
Balance at December 31, 2024
2,458,435
Balance
2,458,435
Derivative loss due to mark to market adjustment
34,552
Balance at September 30, 2025
$ 2,492,987
Balance
$ 2,492,987
The
fair values of the derivative instruments are measured each quarter, which resulted in a loss of $ 34,552 and $ 775,157 during the nine
months ended September 30, 2025 and 2024, respectively. As of September 30, 2025 and December 31, 2024, the fair market value of the
derivatives aggregated $ 2,492,987 and $ 2,458,435 , respectively.
NOTE
11 — STOCK OPTIONS AND WARRANTS
Stock
Incentive Plans
As
of September 30, 2025 and 2024, we had no unrecognized compensation related to outstanding options that have not yet vested at year-end
that would be recognized in subsequent periods.
As
of September 30, 2025 and December 31, 2024, there were 24,000 and 32,000 options, respectively, issued and vested with a weighted average
exercise price of $ 0.01 . Outstanding options as of September 30, 2025, consisted of:
SCHEDULE OF STOCK OPTIONS OUTSTANDING
Number of
Options
Weighted
Average
Exercise
Price
Average Remaining Life
Outstanding, December 31, 2023
40,000
$ 0.01
2.94
Issued
—
$ —
—
Cancelled
( 8,000 )
$ —
—
Exercised
—
$ —
—
Outstanding, December 31, 2024
32,000
$ 0.01
1.52
Issued
—
$ —
—
Cancelled
( 8,000 )
$ —
—
Exercised
—
$ —
—
Outstanding, September 30, 2025
24,000
$ 0.01
1.27
Exercisable, September 30, 2025
24,000
$ 0.01
1.27
14
NOTE
12 — SEGMENTS
The
Company uses ASC 280, Segment Reporting , in determining its reportable segments. The Company has two reportable segments based
on sales: Tobacco products and all other sources of revenue. The guidance requires that segment disclosures present the measure(s) used
by the Chief Operating Decision Maker (“CODM”) to decide how to allocate resources and for purposes of assessing such segments’
performance. The Company’s CODM is comprised of its executive management team who use revenue and expenses of the two reporting
segments to assess the performance of the business of our reportable operating segments.
The
following table details revenue, operating expenses, and assets for the Company’s reportable segments for the period ended September
30, 2025.
SCHEDULE OF SEGMENTAL INFORMATION
Tobacco Line
All other
product lines
Total
ASSETS
Current Assets:
Cash
$ 19,274
$ —
$ 19,274
Inventory
670,902
42,823
713,725
Deposits on inventory
318,999
20,362
339,361
Accounts receivable
51,892
3,312
55,204
Other current assets
—
536,386
536,386
Total current assets
1,061,067
602,883
1,663,950
Investment in securities at cost
—
248,000
248,000
Property and equipment, net of accumulated depreciation
—
5,094
5,094
Total assets
$ 1,061,067
$ 855,977
$ 1,917,044
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities:
Accounts payable
$ 477,073
$ 30,451
$ 507,524
Liabilities for product returns and credits
98,291
6,274
104,565
Short-term advances payable
—
162,866
162,866
Short-term advances payable - related parties
—
1,104,000
1,104,000
Short-term advances payable
—
1,104,000
1,104,000
Accrued liabilities
2,440,116
155,752
2,595,868
Accrued payroll and compensation expense
5,266,340
336,149
5,602,489
Accrued interest, current portion
—
6,704,921
6,704,921
Convertible debenture, current portion, net of discounts
—
264,284
264,284
Note payable, current portion
—
90,000
90,000
Note payable to stockholders
—
151,833
151,833
Note payable
—
151,833
151,833
Derivative liability
—
2,492,987
2,492,987
Liabilities from discontinued operations
—
4,779,745
4,779,745
Total current liabilities:
8,281,820
16,279,262
24,561,082
Note payable, net of current portion
—
643,000
643,000
Convertible debenture, net of current portion, net of discount
—
2,256,587
2,256,587
Total liabilities
8,281,820
19,178,849
27,460,669
Stockholders’ Equity:
Common stock
—
4,945
4,945
Additional paid-in capital
—
37,233,561
37,233,561
Accumulated deficit
( 7,220,753 )
( 55,561,378 )
( 62,782,131 )
Total stockholders’ equity
( 7,220,753 )
( 18,322,872 )
( 25,543,625 )
Total liabilities and stockholders’ deficit
$ 1,061,067
$ 855,977
$ 1,917,044
15
The
following table details revenue, operating expenses, and assets for the Company’s reportable segments for the year ended December
31, 2024.
Tobacco
Line
All other
product lines
Total
ASSETS
Current
Assets:
Cash
$
—
$
—
$
—
Inventory
641,919
95,304
737,223
Deposits
on inventory
—
28,803
28,803
Deposits
on inventory - related party
637
—
637
Deposits
on inventory
637
—
637
Accounts
receivable
—
25,641
25,641
Other
current assets
—
485,621
485,621
Total
current assets
642,556
635,369
1,277,925
Investment
in securities at cost
—
248,000
248,000
Property
and equipment, net of accumulated depreciation
—
6,407
6,407
Total
assets
$
642,556
$
889,776
$
1,532,332
LIABILITIES
AND STOCKHOLDERS’ EQUITY
Current
Liabilities:
Accounts
payable
$
244,524
$
517,916
$
762,440
Cash
overdraft
—
30,384
30,384
Liabilities
for product returns and credits
61,353
8,701
70,054
Short-term
advances payable
—
162,966
162,966
Short-term
advances payable - related parties
—
22,452
22,452
Short-term
advances payable
—
22,452
22,452
Accrued
liabilities
1,397,825
1,378,183
2,776,008
Accrued
payroll and compensation expense
4,391,000
990,549
5,381,549
Accrued
interest, current portion
—
6,281,805
6,281,805
Convertible
debenture, current portion, net of discounts
—
264,284
264,284
Note
payable, current portion
—
90,000
90,000
Note
payable to stockholders
—
151,833
151,833
Note
payable
—
151,833
151,833
Derivative
liability
—
2,458,435
2,458,435
Liabilities
from discontinued operations
—
4,664,960
4,664,960
Total
current liabilities:
6,094,702
17,022,468
23,117,170
Note
payable, net of current portion
—
643,000
643,000
Convertible
debenture, net of current portion, net of discount
—
2,177,723
2,177,723
Total
liabilities
6,094,702
19,843,191
25,937,893
Stockholders’
Equity:
Common
stock
—
4,945
4,945
Additional
paid-in capital
—
37,233,561
37,233,561
Accumulated
deficit
( 5,452,146
)
( 56,191,921
)
( 61,644,067
)
Total
stockholders’ equity
( 5,452,146
)
( 18,953,415
)
( 24,405,561
)
Total
liabilities and stockholders’ deficit
$
642,556
$
889,776
$
1,532,332
16
The
following table details revenue, operating expenses, and assets for the Company’s reportable segments for the nine months ended
September 30, 2025.
Tobacco Line
All other
product lines
Total
Revenue:
Net sales
$ 950,160
$ 127,583
$ 1,077,743
Cost of sales
453,800
90,881
544,681
Gross profit
496,360
36,702
533,062
Operating expenses:
Employee costs
370,664
23,659
394,323
Selling, general and administrative expenses
509,268
32,506
541,774
Total operating expenses
879,932
56,165
936,097
Loss from operations
( 383,572 )
( 19,463 )
( 403,035 )
Other income (expense):
Interest expense
—
( 612,219 )
( 612,219 )
Gain on forgiveness of debt
—
10,831
10,831
Gain on derivative valuation
—
( 34,552 )
( 34,552 )
Income tax refund
25,012
25,012
Loss on disposal
( 9,323 )
( 9,323 )
Other income
—
6
6
Total other expense
—
( 620,245 )
( 620,245 )
Net loss from continuing operations
( 383,572 )
( 639,708 )
( 1,023,280 )
Loss from discontinued operations
—
( 114,784 )
( 114,784 )
Net Loss
$ ( 383,572 )
$ ( 754,492 )
$ ( 1,138,064 )
NOTE
13 — DISCONTINUED OPERATIONS
At
October 21, 2016, we exited the beverage licensing and distribution business. The assets and liabilities associated with this business
are displayed as assets and liabilities from discontinued operations as of September 30, 2025 and December 31, 2024. Additionally, the
revenues and costs associated with this business are displayed as losses from discontinued operations.
Total
assets and liabilities included in discontinued operations were as follows:
SCHEDULE OF DISCONTINUED OPERATIONS
September 30,
2025
December 31,
2024
Assets from Discontinued Operations:
Cash
$ —
$ —
Total assets from discontinued operations
$ —
$ —
Liabilities from Discontinued Operations:
Accounts payable
$ 283,818
$ 283,818
Accrued liabilities
58,184
58,184
Accrued interest
1,905,294
1,790,509
Accrued payroll and compensation expense
122,864
122,864
Current maturities of long-term debt
239,085
239,085
Short-term advances payable
2,170,500
2,170,500
Total liabilities from discontinued operations
$ 4,779,745
$ 4,664,960
Net
loss from discontinued operations for the nine months ended September 30, 2025 and 2024, were comprised of the following components:
2025
2024
Nine Months ended September 30,
2025
2024
Other expense:
Interest expense
$ ( 114,784 )
$ ( 115,204 )
Net loss from discontinued operations
$ ( 114,784 )
$ ( 115,204
NOTE
14 — SUBSEQUENT EVENTS
In
accordance with SFAS 165 (ASC 855-10), management has performed an evaluation of subsequent events through the date that the unaudited
consolidated financial statements were issued and has determined that it does not have any material subsequent events to disclose in
these unaudited consolidated financial statements.
17
ITEM
2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The
following discussion should be read in conjunction with our condensed consolidated unaudited financial statements and notes to our unaudited
financial statements included elsewhere in this report. This discussion contains forward-looking statements that involve risks and uncertainties.
Actual results could differ materially from those anticipated in these forward-looking statements as a result of various factors discussed
elsewhere in this report.
Overview
Based
on our diversified expertise in manufacturing, marketing, distribution, and technology services in a wide variety of consumer products,
including tobacco products, medical devices, and beverages, around the world, we have an innovative and consumer-focused approach to
brand portfolio management, resting on a strong understanding of consumers domestically, and we have established a footprint in more
than 50 key, international markets.
Since
2021, we continue under our 2019 five-year manufacturing and distribution agreement with an unrelated party to manufacture, distribute,
and sell condoms, electronic tobacco products, cigars, energy drinks, water beverages, and related merchandise, all using the HUSTLER®
brand name.
Results
of Operations for the Three Months Ended September 30, 2025, Compared to the Three Months Ended September 30, 2024
Sales
and Cost of Sales
During
the three months ended September 30, 2025 and 2024, we had net sales of $448,492 and $256,070, respectively, an increase of $192,422
or 75.1%. We had cost of sales of $270,666 and $130,072, respectively, and gross profit of $177,826 and $125,998, respectively. Revenues
are derived from the design, manufacture, and delivery of certain licensed products in accordance with our GloBrands-HUSTLER® distribution
agreement. We had higher revenue in the current period due to higher sales in our vapor product line where sales picked up in the last
three months ended September 30, 2025.
Operating
Expenses
During
the three months ended September 30, 2025 and 2024, employee costs were $142,869 and $129,743 respectively, an increase of $13,126 or
10.1%.
During
the three months ended September 30, 2025 and 2024, selling, general, and administrative expenses (“S,G&A”) were $201,461
and $218,480, respectively, a decrease of $17,019 or 7.8%. The decrease in S,G&A expenses period over period was the result of a
reduction in spending on marketing and promotions.
Other
Expense
Total
other expense during the three months ended September 30, 2025 was $239,704 compared to $639,047 the prior period. In the current
period we had $206,458 of interest expense, a loss of $38,936 on derivative valuation and a gain on forgiveness of debt of $5,690. In the prior period we had $190,399 of interest expense, a loss of $448,898 on derivative
valuation and other income of $250.
Net
Loss
Our
net loss from continuing operations for the three months ended September 30, 2025, was $406,208 compared to $861,272 for the three months
ended September 30, 2024, a decrease to our net loss of $455,064. Our net loss decreased in the current period due to the reasons discussed
above.
Results
of Operations for the Nine Months Ended September 30, 2025, Compared to the Nine Months Ended September 30, 2024
Sales
and Cost of Sales
During
the nine months ended September 30, 2025 and 2024, we had net sales of $1,077,743 and $1,075,952, respectively, an increase of only $1,791
or .2%. We had cost of sales of $544,681 and $456,533, respectively, and gross profit of $533,062 and $619,419, respectively. Revenues
are derived from the design, manufacture, and delivery of certain licensed products in accordance with our GloBrands-HUSTLER® distribution
agreement. We had higher revenue in the current period due to higher sales in our vapor product line where sales picked up in the last three months ended September 30, 2025.
18
Operating
Expenses
During
the nine months ended September 30, 2025 and 2024, employee costs were $394,323 and $380,645 respectively, an increase of $13,678 or
3.6%.
During
the nine months ended September 30, 2025 and 2024, selling, S,G&A expenses were $541,774 and $601,714, respectively, a decrease
of $59,940 or 10%. The decrease in S,G&A expense period over period was the result of a reduction in spending on marketing
and promotions.
Other
Expense
Total
other expense during the nine months ended September 30, 2025 was $645,257 compared to $1,336,006 for the prior period. In the
current period we had $612,219 of interest expense, a loss of $34,552 on derivative valuation, a gain on forgiveness of debt of
$10,831 and other income of $6. In the prior period we had $561,099 of interest expense, a loss
of $775,157 on derivative valuation and other income of $250.
Net
Loss
Our
net loss from continuing operations for the nine months ended September 30, 2025, was $1,048,292 compared to $1,698,946 for the nine
months ended September 30, 2024, a decrease to our net loss of $650,654. Our net loss decreased in the current period due to the reasons
discussed above.
Liquidity
and Capital Resources
We
have had a history of losses from operations, as our expenses have been greater than our revenue. Our accumulated deficit was approximately
$62.8 million at September 30, 2025. As of September 30, 2025, we had current assets of $1.6 million and current liabilities of approximately
$24.5 million, resulting in a working capital deficit of approximately $22.9 million at September 30, 2025.
Operating
Activities
During
the nine months ended September 30, 2025, operations used $1,031,790 of net cash, comprised of a loss of $1,138,064, noncash items totaling
$218,680 consisting primarily of a gain recognized from the changes in fair values of derivative liabilities and debt discount amortization,
and changes in working capital totaling $112,406. During the nine months ended September 30, 2024, operations used $8,434 of net cash,
comprised of a loss of $1,814,150, noncash items totaling $967,890 consisting primarily of losses recognized from the changes in fair
values of derivative liabilities and debt discount amortization, and changes in working capital totaling $837,826.
Financing
Activities
During
the nine months ended September 30, 2025, financing activities provided $1,051,064 of cash, compared to $8,434 of cash provided
during the nine months ended September 30, 2024. Cash provided in financing consisted mostly of related party loans.
Our
Capital Resources and Anticipated Requirements
Our
monthly operating costs are approximately $35,000 per month, excluding approximately $50,000 of accruing interest expense and capital
expenditures. We continue to focus on generating revenue and reducing our monthly business expenses through cost reductions and operational
streamlining. We have only recently begun to generate enough cash to sustain our day-to-day operations, and we expect to access external
capital resources in the future to fund any new projects we may undertake. We cannot assure that we will be successful in obtaining such
capital.
If
we seek infusions of capital from investors, it is unlikely that we will be able to obtain additional debt financing. If we did incur
additional debt, we would be required to devote additional cash flow to servicing the debt and securing the debt with assets.
Our
issuance of additional shares for equity or for conversion of debt could dilute the value of our common stock and existing stockholders’
positions.
19
Convertible
Debentures and Note Payable
We
currently have an outstanding amended, restated, and consolidated secured convertible debenture with Tekfine, LLC, an unrelated entity,
with a maturity date of April 30, 2027, to the extent not previously converted. The amended debenture had a total outstanding principal
balance of $2.4 million, with accrued interest of $2 million as of September 30, 2025. We also have four additional convertible debentures
with Tekfine with maturity dates ranging from December 8, 2022, until December 30, 2022, totaling $275,000, unless earlier converted.
The convertible debentures and accrued interest are convertible into shares of our common stock at the lower of $100 or $0.10 (depending
on the instrument) or the lowest bid price for the 20 trading days prior to conversion.
As
of September 30, 2025, there is $21,882 of short-term advances due to related parties. The advances are due on demand and included in
current liabilities. No demand for payment has been made.
Going
Concern
These
interim unaudited financial statements have been prepared on the going concern basis, which assumes that adequate sources of financing
will be obtained as required and that our assets will be realized and liabilities settled in the ordinary course of business. Accordingly,
the interim unaudited financial statements do not include any adjustments related to the recoverability of assets and classification
of assets and liabilities that might be necessary should we not be unable to continue as a going concern.
Critical
Accounting Policies
We
have identified the policies outlined below as critical to our business operations and an understanding of our results of operations.
Refer to Note 2 – Summary of Significant Accounting Policies for discussion.
ITEM
3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
As
a smaller reporting company, we are not required to provide the information required by this item.
ITEM
4. CONTROLS AND PROCEDURES
Evaluation
of Disclosure Controls and Procedures
As
of September 30, 2025, we carried out an evaluation, under the supervision and with the participation of management, including our chief
executive and financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures. Based upon
that evaluation, management concluded that our disclosure controls and procedures were not effective as of September 30, 2025, to provide
reasonable assurance that the information required to be disclosed by us in reports that we file or submit under the Exchange Act is
recorded, processed, summarized, and reported within the periods prescribed by U.S. Securities and Exchange Commission and that such
information is accumulated and communicated to management, including our chief executive and financial officer, as appropriate, to allow
timely decisions regarding required disclosure.
In
designing and evaluating disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well
designed and operated, can provide only reasonable, not absolute assurance of achieving the desired objectives. Also, the design of a
control system must reflect the fact that there are resource constraints and the benefits of controls must be considered relative to
their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that
all control issues and instances of fraud, if any, have been detected. These inherent limitations include the realities that judgments
in decision-making can be faulty and that breakdowns can occur because of simple error or mistake. The design of any system of controls
is based, in part, upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will
succeed in achieving its stated goals under all potential future conditions.
Changes
in Internal Control over Financial Reporting
There
has been no change in our internal control over financial reporting during the quarter ended September 30, 2025, that has materially
affected, or is reasonably likely to materially affect, our internal control over financial reporting.
20
PART
II—OTHER INFORMATION
ITEM
6. EXHIBITS
The
following exhibits are filed as a part of this report:
Exhibit
Number*
Title
of Document
Location
Item
31
Rule
13a-14(a)/15d-14(a) Certifications
31.01
Certification of Principal Executive and Principal Financial Officer Pursuant to Rule 13a-14
This
filing.
Item
32
Section
1350 Certifications
32.01
Certification of Chief Executive Officer and Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
This
filing.
Item
101
Interactive
Data File
101.INS
Inline
XBRL Instance Document
This
filing.
101.SCH
Inline
XBRL Taxonomy Extension Schema
This
filing.
101.CAL
Inline
XBRL Taxonomy Extension Calculation Linkbase
This
filing.
101.DEF
Inline
XBRL Taxonomy Extension Definition Linkbase
This
filing.
101.LAB
Inline
XBRL Taxonomy Extension Label Linkbase
This
filing.
101.PRE
Inline
XBRL Taxonomy Extension Presentation Linkbase
This
filing.
104
Cover
Page Interactive Data File (embedded within the Inline XBRL document)
*
All
exhibits are numbered with the number preceding the decimal indicating the applicable SEC reference number in Item 601 and the number
following the decimal indicating the document’s sequence.
**
The
XBRL related information in Exhibit 101 will not be deemed “filed” for purposes of Section 18 of the Securities Exchange
Act of 1934, as amended, or otherwise subject to liability of that section and will not be incorporated by reference into any filing
or other document pursuant to the Securities Act of 1933, as amended, except as is expressly set forth by specific reference in such
filing or document.
21
SIGNATURE
PAGE
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
CIRTRAN
CORPORATION
Dated:
November 19, 2025
By:
/s/
Iehab Hawatmeh
Iehab
Hawatmeh, President
Principal
Executive and Financial Officer
22
Text extracted from the filing as submitted to EDGAR. Formatting, tables and exhibits are simplified for reading; the original document is authoritative for anything you rely on.