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Item 7. Management’s Discussion and Analysis

2026-04-15 compared with 2025-04-15 · 49 added, 56 removed, 50 unchanged (68% of the section changed)

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION

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

for the historical information, the following discussion contains forward-looking statements that are subject to risks and uncertainties.

We caution you not to put undue reliance on any forward-looking statements, which speak only as of the date of this report.

results or actions may differ materially from these forward-looking statements for many reasons, including the risks described in “Risk

Factors” and elsewhere in this annual report.

Our discussion and analysis of our financial condition and results of operations

should be read in conjunction with the financial statements and related notes and with the understanding that our actual future results

may be materially different from what we currently expect.

results or actions may differ materially from these forward-looking statements for many reasons.

Our discussion and analysis of our financial

condition and results of operations should be read in conjunction with the financial statements and related notes and with the understanding

that our actual future results may be materially different from what we currently expect.

on our diversified expertise in manufacturing, marketing, distribution, and technology services in a wide variety of consumer products,

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and Cost of Sales

had revenues of $1,296,796 and $1,616,148 during the years ended December 31, 2024 and 2023, respectively, a decrease of $319,352 or

had revenues of $3,126,891 and $1,296,796 during the years ended December 31, 2025 and 2024, respectively, an increase of $1,830,095

We had cost of sales of $1,586,194 and $458,158, respectively, for gross profit of $1,540,697 and $838,638, respectively.

are derived from the design, manufacture, and delivery of certain licensed products in accordance with our GloBrands-HUSTLER® distribution

We had higher revenue in the prior period due to additional income from the licensing of novelties in an international territory.

the year ended December 31, 2024 and 2023, employee costs were $515,807 and $511,519 respectively, an increase of only $4,288 or 0.8%.

the year ended December 31, 2024 and 2023, selling, general, and administrative expenses were $873,570 and $509,895, respectively, an

increase of $363,675 or 71.3%.

The increase in operating expenses year over year is the result of additional marketing expense to launch product on detail chains.

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 half of the year.

the year ended December 31, 2025 and 2024, employee costs were $508,553 and $515,807, respectively, a decrease of only $7,254 or 1.4%.

the year ended December 31, 2025 and 2024, selling, general, and administrative expenses were $1,161,867 and $873,570, respectively,

an increase of $288,297 or 33%.

The increase in operating expenses year over year is the result of additional marketing expense to launch

product on retail chains.

Income and Expense

the year ended December 31, 2025, we had total other expense of $418,445.

This consisted of $790,589 of interest expense, an

impairment loss on out investment of $52,000 and a loss of $1,161,498 on derivative valuation.

We also had other income of $250 and

a gain on the disposal of property of $7,222.

This consisted of $822,735 of interest expense, a gain on settlement

of debt of $328,857, a gain on forgiveness of debt of $19,859, a loss on disposal of equipment of $9,323 and a gain of $64,891 on derivative

We also had other income of $6.

the year ended December 31, 2024, we had total other expense of $1,996,615.

This consisted of interest expense of $768,899, a loss on the

fair value of derivative liabilities of $292,100, a gain on settlement of debt of $194,709, a gain on forgiveness of debt of $328,384

and other income of $1,124.

This consisted of $790,589 of interest expense, an impairment

loss on our investment of $52,000 and a loss of $1,161,498 on derivative valuation.

We also had other income of $250 and a gain on the

disposal of equipment of $7,222.

a result of the foregoing, we had a net loss from continuing operations of $548,168 as compared to $2,547,354 in the prior year.

the year ended December 31, 2025, we recognized a loss from discontinued operations of $153,466 due to interest expense.

the year ended December 31, 2023, we recognized a gain from discontinued operations of $20,831,526 due to the extinguishment of time

the year ended December 31, 2024, we recognized a loss from discontinued operations of $153,886 due to interest expense.

and Capital Resources

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$62.3 million at December 31, 2025.

the year ended December 31, 2024, operations used $46,354 of net cash, comprised of a loss from discontinued operations of $153,886, noncash

items totaling $1,310,404 consisting primarily of losses recognized from the changes in fair values of derivative liabilities and debt

discount amortization.

Changes in working capital totaled $1,122,020

the year ended December 31, 2023, operations used $72,607 of net cash, comprised of a loss from continuing operations of $551,699, noncash

items totaling $20,948,388 consisting primarily of losses recognized from the changes in fair values of derivative liabilities, debt

discount amortization and a gain of $20,831,526 from discontinued operations.

Changes in working capital totaled $587,421.

During the year ended December 31, 2024, we were provided with $15,400 of net cash from the sale of an automobile.

the year ended December 31, 2024, we were provided $30,954 of net cash in financing activities mainly comprised of repayments

on related-party loans that totaled $61,336 and proceeds from related-party loans of $61,906.

the year ended December 31, 2023, we were provided approximately $63,000 of net cash in financing activities mainly comprised of repayments

on related-party loans that totaled $47,478 and proceeds from related-party loans of $114,600.

the year ended December 31, 2025, operations used $1,338,174 of net cash, comprised of a loss from discontinued operations of $153,466,

noncash items totaling ($152,221), consisting primarily of gains recognized from the settlement of debt, and changes in working capital

totaled ($484,319).

the year ended December 31, 2024, operations used $46,354 of net cash, comprised of a loss from discontinued operations of $153,886,

noncash items totaling $1,310,404, consisting primarily of losses recognized from the changes in fair values of derivative liabilities

and debt discount amortization, and changes in working capital totaled $1,122,020.

During the year ended December 31, 2025, we neither used or received any cash for investing activity.

the year ended December 31, 2024, we were provided with $15,400 of net cash from the sale of an automobile.

the year ended December 31, 2025, we were provided $1,347,763 of net cash in financing activities comprised of a decrease in our bank

overdraft of $30,384 and proceeds from related-party loans of $1,378,147.

the year ended December 31, 2024, we were provided $30,954 of net cash in financing activities comprised of repayments on related-party

loans that totaled $61,336, proceeds from related-party loans of $61,906 and an increase in our bank overdraft of $30,384.

Capital Resources and Anticipated Requirements

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Debentures and Notes Payable

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 has a total outstanding principal

balance of $2.4 million, with accrued interest of $2 million as of December 31, 2024.

We also have four additional convertible debentures

with Tekfine with maturity dates ranging from February 28, 2022, until May 30, 2022, totaling $275,000, unless earlier converted.

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.

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 has a total

outstanding principal balance of $2.4 million, with accrued interest of $2.2 million as of December 31, 2025.

We also have four

additional convertible debentures with Tekfine with a maturity date April 30, 2027, 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

have received advances from related parties totaling $1,378,147 and $61,906 during the years ended December 31, 2025 and 2024, respectively,

as well as making repayments on related-party loans of $0 and $61,336 during the years ended December 31, 2025 and 2024, respectively.

Accounting Policies

The Company considers its accounting for the fair value of financial instruments, revenue recognition, accounts receivable, allowance

for doubtful accounts and inventory among its critical accounting policies.

The Company maintains an allowance for doubtful accounts to

reflect management’s estimate of the amount of receivables that will not be collected.

This estimate is considered a critical accounting

estimate due to the subjectivity involved in evaluating the collectability of accounts receivable.

The fair value measurement of derivative

instruments is also one of our critical accounting estimates due to the complexity and subjectivity involved.

These estimates often require

the use of valuation models that rely on unobservable inputs.

Refer to Note 2 of our financial statements contained elsewhere in this

Form 10-K for a more detail description of each, and a summary of all our critical accounting policies and recently adopted and issued

accounting standards.

Accounting Policies and Estimates

preparation of our financial statements requires management to make estimates and assumptions that affect reported amounts and disclosures.

Refer to Note 2 of

our consolidated financial statements contained elsewhere in this Annual Report on Form 10-K for a summary of our significant accounting

policies and recently adopting and issued accounting standards.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis