CIRTRAN CORP 10-K

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA Page Report of Independent Registered Public Accounting Firm (PCAOB ID No. 0 5525 ) F-2 Consolidated Balance Sheets as of December 31, 2024 and 2023 F-3 Consolidated Statements of Operations for the Years Ended December 31, 2024 and 2023 F-4 Consolidated Statements of Stockholders’ Deficit for the Years Ended December 31, 2024 and 2023 F-5 Consolidated Statements of Cash Flows for the Years Ended December 31, 2024 and 2023 F-6 Notes to the Consolidated Financial Statements F-7 F- 1 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Directors and Shareholders of CirTran Corporation Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of CirTran Corporation (“the Company”) as of December 31, 2024 and 2023, and the related consolidated statements of operations, stockholders’ deficit, and cash flows for each of the years in the two-year period ended December 31, 2024, and the related notes (collectively referred to as the financial statements). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023 and the results of its operations and its cash flows for each of the years in the two-year period ended December 31, 2024, in conformity with accounting principles generally accepted in the United States of America. Going Concern The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 3 to the financial statements, the Company has a working capital deficiency, a net loss from continuing operations, and an accumulated deficit. These factors, among others, raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 3. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. Basis for Opinion These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matters Critical audit matters are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. We determined that there were no critical audit matters. Fruci & Associates II, PLLC – PCAOB ID #05525 We have served as the Company’s auditor since 2020. Spokane, Washington April 15, 2025 F- 2 CIRTRAN CORPORATION CONSOLIDATED BALANCE SHEETS December 31, 2024 December 31, 2023 ASSETS Current assets: Cash $ — $ — Inventory 737,223 815,612 Deposits on inventory 28,803 26,983 Deposits on inventory - related party 637 224,411 Deposits on inventory 637 224,411 Accounts receivable, net 25,641 21,536 Other current assets 485,621 441,095 Total current assets 1,277,925 1,529,637 Investment in securities at cost 248,000 300,000 Property and equipment, net of accumulated depreciation 6,407 18,925 Total assets $ 1,532,332 $ 1,848,562 LIABILITIES AND STOCKHOLDERS’ DEFICIT Current liabilities: Accounts payable $ 762,440 $ 625,848 Cash overdraft 30,384 — Liabilities for product returns and credits 70,054 8,701 Short-term advances payable 162,966 172,966 Short-term advances payable - related parties 22,452 21,882 Short-term advances payable 22,452 21,882 Accrued liabilities 2,776,008 2,889,389 Accrued payroll and compensation expense 5,381,549 5,067,213 Accrued interest, current portion 6,281,805 5,758,603 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 1,296,937 Liabilities from discontinued operations 4,664,960 4,511,075 Total current liabilities: 23,117,170 20,858,731 Deferred tax liability — 55,946 Note payable, net of current portion 643,000 634,636 Convertible debenture, net of current portion, net of discount 2,177,723 2,077,934 Total liabilities 25,937,893 23,627,247 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 ( 61,644,067 ) ( 59,017,191 ) Total stockholders’ deficit ( 24,405,561 ) ( 21,778,685 Total liabilities and stockholders’ deficit $ 1,532,332 $ 1,848,562 The accompanying notes are an integral part of these consolidated financial statements. F- 3 CIRTRAN CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS 2024 2023 For the Years Ended December 31, 2024 2023 Net sales $ 1,296,796 $ 1,616,148 Cost of sales 458,158 609,651 Gross profit 838,638 1,006,497 Operating expenses Employee costs 515,807 511,519 Selling, general and administrative expenses 873,570 509,895 Total operating expenses 1,389,377 1,021,414 Loss from operations ( 550,739 ) ( 14,917 ) Other income (expense) Interest expense ( 790,589 ) ( 768,899 ) Gain on settlement of debt — 194,709 Gain on forgiveness of debt — 328,384 Gain on disposal of equipment 7,222 — Impairment of investment ( 52,000 ) Loss on derivative valuation ( 1,161,498 ) ( 292,100 ) Other income 250 1,124 Total other expense ( 1,996,615 ) ( 536,782 ) Net loss from continuing operations ( 2,547,354 ) ( 551,699 ) (Loss) income from discontinued operations ( 153,886 ) 20,831,526 Net (loss) income before income tax ( 2,701,240 ) 20,279,827 Income tax 74,364 8,533 Net (loss) income $ ( 2,626,876 ) $ 20,288,360 Net loss from continuing operations per common share, basic and diluted $ ( 0.50 ) $ ( 0.11 ) Net (loss) income from discontinued operations per common share, basic and diluted $ ( 0.03 ) $ 4.21 Net (loss) income per common share, basic and diluted $ ( 0.53 ) $ 4.10 Basic and diluted weighted average common shares outstanding 4,945,417 4,945,417 The accompanying notes are an integral part of these consolidated financial statements. F- 4 CIRTRAN CORPORATION CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIT FOR THE YEARS ENDED DECEMBER 31, 2024 AND 2023 Shares Amount Capital Deficit deficit Common Stock Additional Paid-in Accumulated Total stockholders’ Shares Amount Capital Deficit deficit Balance, December 31, 2022 4,945,417 $ 4,945 $ 37,233,561 $ ( 79,305,551 ) $ ( 42,067,045 ) Net income — — — 20,288,360 20,288,360 Balance, December 31, 2023 4,945,417 4,945 37,233,561 ( 59,017,191 ) ( 21,778,685 ) Balance 4,945,417 4,945 37,233,561 ( 59,017,191 ) ( 21,778,685 ) Net loss — — — ( 2,626,876 ) ( 2,626,876 ) Net income (loss) — — — ( 2,626,876 ) ( 2,626,876 ) Balance, December 31, 2024 4,945,417 $ 4,945 $ 37,233,561 $ ( 61,644,067 ) $ ( 24,405,561 ) Balance 4,945,417 $ 4,945 $ 37,233,561 $ ( 61,644,067 ) $ ( 24,405,561 ) The accompanying notes are an integral part of these consolidated financial statements. F- 5 CIRTRAN CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS 2024 2023 For the Years Ended December 31, 2024 2023 Cash flows from operating activities Net ( loss) income $ ( 2,626,876 ) $ 20,288,360 Adjustments to reconcile net (loss) income to net cash used by operating activities: Loss (gain) from discontinued operations 153,886 ( 20,831,526 ) Depreciation expense 4,340 4,507 Loss on derivative valuation 1,161,498 292,100 Debt discount amortization 99,788 109,624 Gain on disposal of equipment ( 7,222 ) — Loss on impairment of investment 52,000 — Gain on settlement of debt — ( 194,709 ) Gain on forgiveness of debt — ( 328,384 ) Changes in operating assets and liabilities: Inventory 78,389 402 Deposits on inventory ( 1,820 ) 13,457 Deposits on inventory - related party 223,774 193,222 Accounts receivable ( 4,105 ) 41,337 Other current assets ( 44,526 ) ( 112,627 ) Accounts payable 134,958 ( 1,188,715 ) Liabilities for product returns and credits 61,353 8,701 Accrued liabilities ( 113,383 ) 810,136 Income tax liability ( 55,946 ) 5,058 Accrued payroll and compensation 314,336 272,377 Accrued interest 523,202 544,073 Net cash used by operating activities ( 46,354 ) ( 72,607 ) Cash flows from investing activities: Purchase of property and equipment — ( 8,414 ) Proceeds from sale of automobile 15,400 — Net Cash used in investing activities 15,400 ( 8,414 ) Cash flows from financing activities: Bank overdraft 30,384 — Repayments of loans payable — ( 4,182 ) Proceeds from related-party loans 61,906 114,600 Repayments of related-party loans ( 61,336 ) ( 47,478 ) Net Cash provided by financing activities 30,954 62,940 Net change in cash — ( 18,081 ) Cash, beginning of year — 18,081 Cash, end of year $ — $ — Supplemental disclosure of cash flow information: Cash paid for interest $ — $ — Cash paid for income taxes $ — $ — The accompanying notes are an integral part of these consolidated financial statements. F- 6 CIRTRAN CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2024 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 consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). 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. 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 December 31, 2024 and 2023. F- 7 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 years ended December 31, 2024 and 2023, we recognized revenue of $ 90,929 and $ 410,000 , 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 years ended December 31, 2024 and 2023. Additionally, we recognized revenues of $ 1,205,867 and $ 1,206,148 during the years ended December 31, 2024 and 2023, 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 fulfillment 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 December 31, 2024 and 2023, the Company has recorded an allowance for doubtful accounts of $ 4,839 and $ 0 , 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 $ 300,000 at December 31, 2024 and 2023, respectivley. 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. We evaluated the investment for impairment and determined that the investment was impaired as of December 31, 2024. We recognized a loss on an impairment of $ 52,000 as of December 31, 2024. 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. 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. F- 8 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 $ 28,803 (non-related-party) and $ 637 (related-party) as of December 31, 2024 and $ 26,983 (non-related-party) and $ 224,411 (related-party) as of December 31, 2023. 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 December 31, 2024 December 31, 2023 Finished goods $ 673,866 $ 772,589 Raw materials 63,357 43,023 Total $ 737,223 $ 815,612 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 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 Total Fair Value at December 31, 2023 Quoted prices in active markets (Level 1) Significant other observable inputs (Level 2) Significant unobservable inputs (Level 3) Derivative liabilities $ 1,296,937 $ — $ — $ 1,296,937 F- 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 472,076,000 and 216,834,000 potentially issuable shares from the conversions of convertible debentures outstanding that were excluded in dilutive outstanding shares for the years ended December 31, 2024 and 2023, 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. Income Taxes Income taxes are provided for the tax effects of the transactions reported in the financial statements and consist of taxes currently due plus deferred taxes related primarily to tax net operating loss carryforwards. The deferred tax assets and liabilities represent the future tax return consequences of these differences, which will either be taxable or deductible when assets and liabilities are recovered or settled, as well as operating loss carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance is established against deferred tax assets when in the judgment of management, it is more likely than not that such deferred tax assets will not become available. Because the judgment about the level of future taxable income is dependent to a great extent on matters that may, at least in part, be beyond our control, it is at least reasonably possible that management’s judgment about the need for a valuation allowance for deferred taxes could change in the near term. Tax benefits are recognized only for tax positions that are more likely than not to be sustained upon examination by tax authorities. The amount recognized is measured as the largest amount of benefit that is greater than 50% likely to be realized upon settlement. A liability for “unrecognized tax benefits” is recorded for any tax benefits claimed in our tax returns that do not meet these recognition and measurement standards. As of December 31, 2024 and 2023, no liability for unrecognized tax benefits was required to be reported. 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. Early adoption is permitted. 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 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 $ 21,839,245 , as of December 31, 2024, and a net loss from continuing operations of $ 2,547,354 for the year ended December 31, 2024. As of December 31, 2024, we had an accumulated deficit of $ 61,644,067 . These conditions raise substantial doubt about our ability to continue as a going concern. F- 10 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. Property and equipment and estimated service lives consist of the following: SCHEDULE OF PROPERTY AND EQUIPMENT AND ESTIMATED SERVICE LIVES December 31, 2024 December 31, 2023 Useful Life (years) Furniture and office equipment $ 12,212 $ 12,212 5 - 10 Vehicles – 18,672 3 - 7 Total 12,212 30,884 Less: accumulated depreciation ( 5,805 ) ( 11,959 ) Property and equipment, net $ 6,407 $ 18,925 We recorded $ 4,340 and $ 4,507 of depreciation expense during the years ended December 31, 2024 and 2023. During the year ended December 31, 2024, the Company sold its vehicle resulting in a gain on disposal of $ 7,222 . 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 December 31, 2024 and 2023, 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 December 31, 2024 and 2023, was $ 72,466 and $ 72,466 , respectively. No demand for payment has been made. There were $ 19,952 and $ 21,882 of short-term advances due to related parties as of December 31, 2024 and 2023, respectively. F- 11 We have previously agreed to issue stock options to Iehab Hawatmeh, our president, as compensation for services provided as our chief executive officer. The terms of his employment agreement require us to grant options to purchase 6,000 shares of our stock each year. Mr. Hawatmeh held outstanding options to purchase 24,000 shares of common stock as of December 31, 2024. See Note 11–Stock Options and Warrants. As of December 31, 2024 and 2023, 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 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 years ended December 31, 2024 and 2023, we had a net decrease in deposits with a related-party inventory supplier totaling $ 223,774 and $ 193,222 , respectively. 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 $ 1,168,930 and $ 837,618 during the periods ended December 31, 2024 and 2023, 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 December 31, 2024 December 31, 2023 Tax liabilities $ 66,456 $ 37,228 Accrued Royalty - Globrands LLC 854,498 1,092,915 Other 1,855,054 1,759,246 Total $ 2,776,008 $ 2,889,389 Other accrued liabilities as of December 31, 2024 and 2023, include a non-interest-bearing payable totaling $ 45,000 and $ 45,000 , respectively, that is due on demand and customer deposits totaling $ 1,730,213 and $ 1,735,109 , respectively. Accrued payroll and compensation liabilities consist of the following: SCHEDULE OF ACCRUED PAYROLL AND COMPENSATION LIABILITIES December 31, 2024 December 31, 2023 Director fees $ 135,000 $ 135,000 Bonus expenses 121,858 121,858 Commissions 2,148 2,148 Consulting 412,322 438,822 Administrative payroll 4,710,221 4,369,385 Total $ 5,381,549 $ 5,067,213 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. F- 12 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 $ 5,164 and $ 5,164 were due as December 31, 2024 and 2023, respectively. 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 $ 345,000 and $ 345,000 was accrued during the periods ended December 31, 2024 and 2023, 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. F- 13 NOTE 8 — NOTES PAYABLE Notes payable consisted of the following: SCHEDULE OF NOTES PAYABLE December 31, 2024 December 31, 2023 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 143,000 134,636 Total $ 733,000 $ 724,636 There is $ 402,906 and $ 366,626 of accrued interest due on these notes as of December 31, 2024 and 2023, respectively. NOTE 9 — CONVERTIBLE DEBENTURES Convertible debentures consisted of the following: SCHEDULE OF CONVERTIBLE DEBENTURES December 31, 2024 December 31, 2023 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 Debt carrying amount $ 2,665,528 $ 2,665,528 Less: discounts ( 223,521 ) ( 323,310 ) Total $ 2,442,007 $ 2,342,218 Less: current portion ( 264,284 ) ( 264,284 ) Long-term portion $ 2,177,723 $ 2,077,934 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 December 31, 2024 and 2023, we had accrued interest on the convertible debentures totaling $ 2,055,232 and $ 1,921,590 , respectively. 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 December 31, 2024, using the following assumptions: SCHEDULE OF DERIVATIVE LIABILITIES AT FAIR VALUE Volatility 136.0 % - 139.62 % Risk-free rates 4.09 % - 4.13 % Stock price $ 0.01999 Remaining life 0.25 - 2.33 years F- 14 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, 2022 $ 1,004,837 Derivative loss due to mark to market adjustment 292,100 Balance at December 31, 2023 1,296,937 Balance 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 The fair values of the derivative instruments are measured each quarter, which resulted in a loss of $ 1,161,498 and $ 292,100 during the years ended December 31, 2024 and 2023, respectively. As of December 31, 2024 and 2023, the fair market value of the derivatives aggregated $ 2,458,435 and $ 1,296,937 , respectively. NOTE 11 — STOCK OPTIONS AND WARRANTS Stock Incentive Plans As of December 31, 2024 and 2023, 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 December 31, 2024 and 2023, there were 32,000 and 40,000 options, respectively, issued and vested with a weighted average exercise price of $ 0.01 . Outstanding options as of December 31, 2024, 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 Exercisable, December 31, 2024 32,000 $ 0.01 1.52 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. F- 15 The following table details revenue, operating expenses, and assets for the Company’s reportable segments for the year ended December 31, 2024. SCHEDULE OF SEGMENTAL INFORMATION 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 F- 16 Tobacco Line All other product lines Total Revenue: Net sales $ 1,056,862 $ 239,934 $ 1,296,796 Cost of sales 363,989 94,169 458,158 Gross profit 692,873 145,765 838,638 Operating expenses: Employee costs 425,073 90,734 515,807 Selling, general and administrative expenses 717,827 155,743 873,570 Total operating expenses 1,142,900 246,477 1,389,377 Loss from operations ( 450,027 ) ( 100,712 ) ( 550,739 ) Other income (expense): Interest expense — ( 790,589 ) ( 790,589 ) Impairment of investment ( 52,000 ) ( 52,000 ) Gain on disposal of equipment — 7,222 7,222 Loss on derivative valuation — ( 1,161,498 ) ( 1,161,498 ) Other income — 250 250 Total other expense — ( 1,996,615 ) ( 1,996,615 ) Net loss from continuing operations ( 450,027 ) ( 2,097,327 ) ( 2,547,354 ) Loss from discontinued operations — ( 153,886 ) ( 153,886 ) Net Loss before income tax ( 450,027 ) ( 2,251,213 ) ( 2,701,240 ) Income tax — 74,364 74,364 Net Loss $ ( 450,027 ) $ ( 2,176,849 ) $ ( 2,626,876 ) NOTE 13 — INCOME TAXES We did not provide any current or deferred U.S. federal income tax provision or benefit for any of the periods presented because we have experienced operating losses since inception. When it is more likely than not that a tax asset cannot be realized through future income, the company must allow for this future tax benefit. We provided a full valuation allowance on the net deferred tax asset, consisting of net operating loss carryforwards, because management has determined that it is more likely than not that we will not earn income sufficient to realize the deferred tax assets during the carryforward period. The U.S. federal income tax rate of 21 % is being used. We have not taken a tax position that, if challenged, would have a material effect on the financial statements for the years ended December 31, 2024 and 2023, applicable under FASB ASC 740, Income Taxes . We did not recognize any adjustment to the liability for an uncertain tax position and, therefore, did not record any adjustment to the beginning balance of accumulated deficit on the balance sheet. All our tax returns remain open. As of December 31, 2024 and 2023, we had net operating loss carryforwards for tax reporting purposes of approximately $ 6.1 million and $ 3.8 million, respectively. During the year ended December 31, 2019, we dissolved four subsidiaries that had total net operating loss carryforwards of approximately $ 8.9 million, which were forfeited upon dissolution, reducing our deferred tax asset by approximately $ 1.9 million. In addition, the realization of tax benefits relating to net operating loss carryforwards is limited due to the settlement related to amounts previously due to the IRS, as discussed in Note 6 – Other Accrued Liabilities. F- 17 As of December 31, 2024 and 2023, we recognized a tax benefit of $ 74,364 and $ 8,533 , respectively, for our LBC Products, Inc, subsidiary only. LBC is not considered part of the consolidated company for tax purposes. SCHEDULE OF NET DEFERRED TAX ASSETS 2024 2023 Deferred Tax Assets: NOL Carryover $ 1,585,600 $ 1,177,300 Less valuation allowance ( 1,585,600 ) ( 1,177,300 ) Net deferred tax assets $ — $ — The income tax provision differs from the amount of income tax determined by applying the U.S. federal income tax rate to pretax income from continuing operations for the years ended December 31, 2024 and 2023 due to the following: SCHEDULE OF RECONCILIATION OF INCOME TAXES COMPUTED AT STATUTORY RATE 2024 2023 Book income (loss) $ ( 552,900 ) $ 4,260,600 Change in payroll accruals 66,000 57,200 Allowance for doubtful accounts — ( 8,300 ) Amortization of debt discount 21,000 23,000 Related party accruals 100 — Change in derivative liability 243,900 61,300 Valuation allowance 221,900 ( 4,393,800 ) Income tax expense $ — $ — NOTE 14 — 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 December 31, 2024 and 2023. Additionally, the revenues and costs associated with this business are displayed as losses from discontinued operations. During the year ended December 31, 2023, the Company received legal representation that the judgement related to Play Beverages, LLC, (Note 7) can no longer be enforced after seven years, as a result, the Company has recognized a gain from discontinued operations of $ 18,873,932 of time barred debt previously included in liabilities from discontinued operations. Total assets and liabilities included in discontinued operations were as follows: SCHEDULE OF DISCONTINUED OPERATIONS December 31, 2024 December 31, 2023 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 1,790,509 1,636,624 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 $ 4,664,960 $ 4,511,075 Net loss from discontinued operations for the years ended December 31, 2024 and 2023, were comprised of the following components: 2024 2023 Years ended December 31, 2024 2023 Other expense: Gain on settlement $ — $ 18,878,359 Gain on forgiveness of debt — 2,106,633 Interest expense ( 153,886 ) ( 153,466 ) Net loss from discontinued operations $ ( 153,886 ) $ 20,831,526 NOTE 15 — SUBSEQUENT EVENTS In accordance with SFAS 165 (ASC 855-10), management has performed an evaluation of subsequent events through the date that the consolidated financial statements were issued and has determined that it does not have any material subsequent events to disclose in these consolidated financial statements. F- 18 ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None.