{"url_path":"/sec/cirx/10-q/2026/item-1","section_key":"item-1","section_title":"Item 1 FINANCIAL STATEMENTS**","topic":"sec","document":{"doc_type":"10-Q","doc_date":"2026-05-20","source_url":"https://www.sec.gov/Archives/edgar/data/813716/0001493152-26-024654-index.html","accession_number":"0001493152-26-024654","cik":"0000813716","ticker":"CIRX","issuer_name":"CIRTRAN CORP","edgar_url":"https://www.sec.gov/Archives/edgar/data/813716/0001493152-26-024654-index.html","primary_entity_key":"0000813716","primary_entity_name":"CIRTRAN CORP"},"word_count":6222,"has_tables":true,"body_markdown":"**ITEM\n1. FINANCIAL STATEMENTS**\n\n** **\n\n**CIRTRAN\nCORPORATION**\n\n**CONDENSED\nCONSOLIDATED BALANCE SHEETS**\n\n \n\n  \nMarch 31,\n2026  \nDecember 31,\n2025 \n\n  \n(Unaudited)  \n(Audited) \n\nASSETS \n    \n   \n\nCurrent assets: \n    \n   \n\nCash \n$11,336  \n$9,589 \n\nInventory \n 1,177,603  \n 1,136,546 \n\nDeposits on inventory \n 309,426  \n 281,288 \n\nAccounts receivable, net \n 296,729  \n 365,661 \n\nOther current assets \n 470,818  \n 468,340 \n\nTotal current assets \n 2,265,912  \n 2,261,424 \n\nInvestment in securities at cost \n 248,000  \n 248,000 \n\nProperty and equipment, net of accumulated depreciation \n 4,131  \n 4,607 \n\nTotal assets \n$2,518,043  \n$2,514,031 \n\n  \n    \n   \n\nLIABILITIES AND STOCKHOLDERS’ DEFICIT \n    \n   \n\nCurrent liabilities: \n    \n   \n\nAccounts payable \n$142,469  \n$149,448 \n\nLiabilities for product returns and credits \n 65,576  \n 90,810 \n\nShort-term advances payable \n 162,866  \n 162,866 \n\nShort-term advances payable - related parties \n 1,461,554  \n 1,400,699 \n\nShort-term advances payable \n 1,461,554  \n 1,400,699 \n\nAccrued liabilities \n 2,654,255  \n 2,758,884 \n\nAccrued payroll and compensation expense \n 5,749,011  \n 5,674,164 \n\nAccrued interest, current portion \n 6,887,786  \n 6,739,423 \n\nConvertible debenture, current portion, net of discounts \n 264,284  \n 264,284 \n\nNote payable, current portion \n 90,000  \n 90,000 \n\nNote payable to stockholders \n 151,833  \n 151,833 \n\nNote payable \n 151,833  \n 151,833 \n\nDerivative liabilities \n 2,289,108  \n 2,393,544 \n\nLiabilities from discontinued operations \n 2,531,989  \n 4,818,427 \n\nTotal current liabilities: \n 22,450,731  \n 24,694,382 \n\nDeferred tax liability \n    \n   \n\nNote payable, net of current portion \n 643,000  \n 643,000 \n\nConvertible debenture, net of current portion, net of discount \n 2,310,806  \n 2,283,844 \n\nTotal liabilities \n 25,404,537  \n 27,621,226 \n\n  \n    \n   \n\nCommitments and contingencies \n —  \n — \n\n  \n    \n   \n\nStockholders’ deficit: \n    \n   \n\nCommon stock, par value $0.001; 100,000,000 shares authorized; 4,945,417 shares issued and outstanding \n 4,945  \n 4,945 \n\nAdditional paid-in capital \n 37,233,561  \n 37,233,561 \n\nAccumulated deficit \n (60,125,000) \n (62,345,701)\n\nTotal stockholders’ deficit \n (22,886,494) \n (25,107,195)\n\n  \n    \n   \n\nTotal liabilities and stockholders’ deficit \n$2,518,043  \n$2,514,031 \n\n* *\n\n*The\naccompanying notes are an integral part of these unaudited condensed consolidated financial statements.*\n\n \n\n3\n\n \n\n \n\n**CIRTRAN\nCORPORATION**\n\n**CONDENSED\nCONSOLIDATED STATEMENTS OF OPERATIONS**\n\n**(Unaudited)**\n\n \n\n  \n2026  \n2025 \n\n  \nFor the Three Months Ended\nMarch 31, \n\n  \n2026  \n2025 \n\nNet sales \n$1,161,353  \n$460,816 \n\nCost of sales \n 697,971  \n 190,522 \n\nGross profit \n 463,382  \n 270,294 \n\n  \n    \n   \n\nOperating expenses \n    \n   \n\nEmployee costs \n 130,020  \n 128,908 \n\nSelling, general and administrative expenses \n 297,240  \n 184,659 \n\nTotal operating expenses \n 427,260  \n 313,567 \n\n  \n    \n   \n\nIncome (loss) from operations \n 36,122  \n (43,273)\n\n  \n    \n   \n\nOther income (expense) \n    \n   \n\nInterest expense \n (211,806) \n (202,374)\n\nGain on forgiveness of debt \n 5,511  \n 5,141 \n\nGain (loss) on derivative valuation \n 104,436  \n 132,234 \n\nTotal other expense \n (101,859) \n (64,999)\n\n  \n    \n   \n\nNet loss from continuing operations \n (65,737) \n (108,272)\n\n  \n    \n   \n\nIncome (loss) from discontinued operations \n 2,286,438  \n (37,841)\n\n  \n    \n   \n\nNet Income (Loss) before income tax \n 2,220,701  \n (146,113)\n\nIncome tax \n —  \n (9,323)\n\nNet Income (Loss) \n$2,220,701  \n$(155,436)\n\n  \n    \n   \n\nNet loss from continuing operations per common share, basic and diluted \n$(0.01) \n$(0.02)\n\n  \n    \n   \n\nNet income (loss) from discontinued operations per common share, basic and diluted \n$0.46  \n$(0.01)\n\n  \n    \n   \n\nNet income (loss) per common share, basic and diluted \n$0.45  \n$(0.03)\n\nBasic and diluted weighted average common shares outstanding \n 4,945,417  \n 4,945,417 \n\n \n\n*The\naccompanying notes are an integral part of these unaudited condensed consolidated financial statements.*\n\n \n\n4\n\n \n\n \n\n**CIRTRAN\nCORPORATION**\n\n**CONDENSED\nCONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIT**\n\n**FOR\nTHE THREE MONTHS ENDED MARCH 31, 2026 AND 2025**\n\n**(Unaudited)**\n\n \n\n  \nShares  \nAmount  \nCapital  \nDeficit  \ndeficit \n\n  \nCommon Stock  \nAdditional\nPaid-in  \nAccumulated  \nTotal\nstockholders’ \n\n  \nShares  \nAmount  \nCapital  \nDeficit  \ndeficit \n\nBalance, December 31, 2025 \n 4,945,417  \n$4,945  \n$37,233,561  \n$(62,345,701) \n$(25,107,195)\n\nNet income \n —  \n —  \n —  \n 2,220,701  \n 2,220,701 \n\nBalance, March 31, 2026 \n 4,945,417  \n$4,945  \n$37,233,561  \n$(60,125,000) \n$(22,886,494)\n\n \n\n  \nCommon Stock  \nAdditional\nPaid-in  \nAccumulated  \nTotal\nstockholders’ \n\n  \nShares  \nAmount  \nCapital  \nDeficit  \ndeficit \n\nBalance, December 31, 2024 \n 4,945,417  \n$4,945  \n$37,233,561  \n$(61,644,067) \n$(24,405,561)\n\nNet loss \n —  \n —  \n —  \n (155,436) \n (155,436)\n\nNet income (loss) \n —  \n —  \n —  \n (155,436) \n (155,436)\n\nBalance, March 31, 2025 \n 4,945,417  \n$4,945  \n$37,233,561  \n$(61,799,503) \n$(24,560,997)\n\n \n\n*The\naccompanying notes are an integral part of these unaudited condensed consolidated financial statements.*\n\n \n\n5\n\n \n\n \n\n**CIRTRAN\nCORPORATION**\n\n**CONDENSED\nCONSOLIDATED STATEMENTS OF CASH FLOWS**\n\n**(Unaudited)**\n\n \n\n  \n2026  \n2025 \n\n  \nFor the Three Months Ended\nMarch 31, \n\n  \n2026  \n2025 \n\nCash flows from operating activities \n    \n   \n\nNet income (loss) \n$2,220,701  \n$(155,436)\n\nAdjustments to reconcile net income (loss) to net cash used by operating activities: \n    \n   \n\n(Income) loss from discontinued operations \n (2,286,438) \n 37,841 \n\nDepreciation expense \n 476  \n 501 \n\nGain on derivative valuation \n (104,436) \n (132,234)\n\nDebt discount amortization \n 26,960  \n 25,682 \n\nGain on forgiveness of debt \n (5,511) \n (5,141)\n\nChanges in operating assets and liabilities: \n    \n   \n\nInventory \n (41,057) \n (104,559)\n\nDeposits on inventory \n (28,138) \n 1,395 \n\nDeposits on inventory - related party \n —  \n 637 \n\nAccounts receivable \n 68,932  \n (101,967)\n\nOther current assets \n (2,478) \n (5,730)\n\nAccounts payable \n (1,468) \n (10,173)\n\nLiabilities for product returns and credits \n (25,234) \n 11,274 \n\nAccrued liabilities \n (104,627) \n (217,031)\n\nAccrued payroll and compensation \n 74,847  \n 62,944 \n\nAccrued interest \n 148,363  \n 123,669 \n\nNet cash used by operating activities \n (59,108) \n (468,328)\n\n  \n    \n   \n\nCash flows from financing activities: \n    \n   \n\nBank overdraft \n —  \n (30,384)\n\nProceeds from related-party loans \n 60,855  \n 499,922 \n\nNet cash provided by financing activities \n 60,855  \n 469,538 \n\n  \n    \n   \n\nNet change in cash \n 1,747  \n 1,210 \n\nCash, beginning of period \n 9,589  \n — \n\nCash, end of period \n$11,336  \n$1,210 \n\n  \n    \n   \n\nSupplemental disclosure of cash flow information: \n    \n   \n\nCash paid for interest \n$—  \n$— \n\nCash paid for income taxes \n$—  \n$— \n\n \n\n*The\naccompanying notes are an integral part of these unaudited condensed consolidated financial statements.*\n\n \n\n6\n\n \n\n \n\n**CIRTRAN\nCORPORATION**\n\n**NOTES\nTO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**\n\n**MARCH\n31, 2026**\n\n \n\n**NOTE\n1 — ORGANIZATION AND NATURE OF OPERATIONS**\n\n \n\nIn\n1987, CirTran Corporation was incorporated in Nevada under the name Vermillion Ventures, Inc., for the purpose of acquiring other operating\ncorporate entities. We were largely inactive until July 1, 2000, when our wholly owned subsidiary, CirTran Corporation (Utah), acquired\nsubstantially all the assets and certain liabilities of Circuit Technology, Inc., founded by our president, Iehab Hawatmeh.\n\n \n\nWe,\ntogether with our majority-owned subsidiaries, manufacture, distribute, and sell condoms, electronic tobacco products, cigars, energy\ndrinks, water beverages, and related merchandise, all using the HUSTLER® brand name. Since entering our 2019 five-year manufacturing\nand distribution agreement with an unrelated party, our efforts have been devoted to phase one of our development of all HUSTLER®-branded\nproducts, which led us to generating revenue during 2020 for the first time in several years. Business continued to thrive in the States\nand some international countries, expanding across borders and reaching new markets. Despite challenges, The Company adapted and flourished,\ndriven by great brand and product categories. This growth was not only boosted by the domestic economy but also established a global\npresence, solidifying the foundation for future success.\n\n \n\n**NOTE\n2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES**\n\n \n\n*Basis\nof Presentation*\n\n \n\nOur\nunaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles\nin the United States of America (“U.S. GAAP”), and pursuant to the rules and regulations of the Securities and Exchange Commission\n(the “SEC”). These financial statements and the notes attached hereto should be read in conjunction with the financial statements\nand notes included in our Form 10-K for the fiscal year ended December 31, 2025. In the opinion of our management, all adjustments, including\nnormal recurring adjustments necessary to present fairly our financial position, as of March 31, 2026, and the results of our operations\nand cash flows for the three months then ended have been included. The results of operations for the interim period are not necessarily\nindicative of the results for the full year ending December 31, 2026.\n\n \n\n*Use\nof Estimates*\n\n \n\nThe\npreparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the\nreported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements\nand the reported amounts of revenues and expenses during the reporting period. Significant estimates include the estimated useful lives\nof property and equipment. Actual results could differ from those estimates.\n\n \n\n*Principles\nof Consolidation*\n\n \n\nThe\nconsolidated financial statements include the accounts of the company and our wholly owned subsidiaries: CirTran Products Corp., LBC\nProducts, Inc., and CirTran Asia, Inc. Intercompany accounts and transactions have been eliminated in consolidation.\n\n \n\n*Concentrations\nof Credit Risk*\n\n \n\nWe\nmaintain our cash in bank deposit accounts, the balances of which at times may exceed federally insured limits. We continually monitor\nour banking relationships and consequently have not experienced any losses in our accounts. At times, such deposits may exceed the Federal\nDeposit Insurance Corporation insurable limit.\n\n \n\nAs\nof March 31, 2026 and December 31, 2025, one customer represented 75.8% and 97.4%, respectively, of the Company’s total accounts\nreceivable, resulting in a significant concentration of credit risk.\n\n* *\n\n**\n\n7\n\n \n\n* *\n\n*Operating\nSegments*\n\n* *\n\nOperating\nsegments are defined as components of an entity for which discrete financial information is available that is regularly reviewed by the\nChief Operating Decision Maker (“CODM”), or decision maker group, in deciding how to allocate resources to an individual\nsegment and in assessing performance. Our chief operating decision maker is the Chief Executive Officer. The Company has two operating\nsegments as of March 31, 2026 and December 31, 2025 (see Note 12).\n\n \n\n*Cash\nEquivalents*\n\n \n\nWe\nconsider all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents. There were no cash\nequivalents as of March 31, 2026 and December 31, 2025.\n\n* *\n\n*Revenue\nRecognition*\n\n \n\nWe\nfollow Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 606, *Revenue\nfrom Contracts with Customers*, for revenue recognition. Adoption of ASC 606 did not have a significant impact on our financial statements.\nWe generate revenue by providing product design services and through the sales of tangible product. We recognize revenue upon transfer\nof control of promised products or services to customers in an amount that reflects the consideration expected to be received in exchange\nfor those products or services. We determine the transaction price associated with each deliverable based on the unique contract with\nthe customer, which is a stand-alone contract that we retain the right to accept or reject. Revenue is recognized net of allowances for\nreturns and any taxes collected from customers, which are subsequently remitted to governmental authorities.\n\n \n\nDuring\nthe three months ended March 31, 2026 and 2025, we recognized revenue of $19,632 and $20,408, respectively, related to the performance\nobligations under product development service agreements with customers. We recognize $5,000 per month for administrative services and\na 5% markup per agreement.\n\n \n\nAdditionally,\nwe recognized revenues of $1,141,721 and $440,408 during the three months ended March 31, 2026 and 2025, respectively, related to the\ndelivery of products to our customers. Each delivery is based on the unique contract with the customer, which is a stand-alone contract\nthat we retain the right to accept or reject. Upon acceptance, we oblige delivery of such product to the customer at an agreed-upon place,\ntime, and price. We recognize revenue under the unique contract upon fulfilment of our performance obligations therein, typically limited\nto the delivery of product. Payment terms depend on customer agreement and length of relationship. It varies between cash in advance\nto 30-60 days term.\n\n \n\n*Accounts\nReceivable*\n\n \n\nRevenues\nthat have been recognized but not yet received are recorded as accounts receivable. The Company estimates credit losses based on the\nCurrent Expected Credit Losses (“CECL”) model in accordance with ASC 326. The allowance for credit losses is based on a variety\nof factors, including historical loss experience, current conditions, and reasonable and supportable forecasts of future economic conditions.\n\n \n\nUpon\nadoption of ASU 2025-05 in the year ended December 31, 2025, the Company elected the practical expedient to estimate expected credit\nlosses based on actual uncollected accounts. Under this approach, the Company recognizes credit losses as receivables are deemed uncollectible\nrather than applying more complex forward-looking modeling. The Company applied this guidance prospectively, and the adoption did not\nhave a material impact on the Company’s consolidated financial statements. The election of this practical expedient simplifies\nthe estimation process by reducing the level of judgment and complexity required in applying the CECL model.\n\n \n\nAs\nof March 31, 2026 and December 31, 2025, the Company has recorded an allowance for doubtful accounts of $39,221 and $65,704, respectively.\n\n \n\n8\n\n \n\n \n\n*Investment\nin Securities*\n\n \n\nOur\ncost-method investment consists of an investment in a private digital multi-media technology company that totaled $248,000\nand $248,000\nat March 31, 2026 and December 31, 2025, respectively. Because we owned less than 20%\nof that company’s stock as of each date, and no significant influence or control exists, the investment is accounted for using\nthe cost method. Pursuant to ASC 321, the Company also searched for observable transactions in the investee’s stock and found\nnone. We evaluated the investment for impairment and determined that the investment was not impaired as of March 31,\n2026.\n\n \n\n*Inventories*\n\n \n\nInventories\nare stated at the lower of average cost or net realizable value.\n\n \n\nWhen\nthere is evidence that the inventory’s value is less than original cost, the inventory is reduced to market value. We determine\nmarket value on current resale amounts and whether technological obsolescence exists. We will seek agreements with manufacturing customers\nthat require them to purchase their inventory items in the event they cancel their business with us.\n\n \n\nFrom\ntime to time, we will place deposits on inventory to be delivered in the future. These deposits are carried as a separate balance sheet\ncomponent and total $309,426 (non-related-party) and $0 (related-party) as of March 31, 2026 and $281,288 (non-related-party) and $0\n(related-party) as of December 31, 2025.\n\n \n\nFor\nmost of the tobacco related products, the Company pays in advance for Federal Excise Taxes and State Excise Taxes prior to receiving\nproduct. The Company accrues those taxes on its balance sheet and expenses them on a per-unit basis as sold.\n\n \n\nInventory\nbalances consisted of the following:\n\n SCHEDULE OF INVENTORY\n\n  \nMarch 31,\n2026  \nDecember 31,\n2025 \n\nFinished goods \n$1,145,440  \n$1,117,975 \n\nRaw materials \n 32,163  \n 18,571 \n\nTotal \n$1,177,603  \n$1,136,546 \n\n \n\n*Fair\nValue of Financial Instruments*\n\n \n\nASC\n820-10-15, *Fair Value Measurement-Overall-Scope and Scope Exceptions*, defines fair value, thereby eliminating inconsistencies\nin guidance found in various prior accounting pronouncements, and increases disclosures surrounding fair value calculations. ASC 820-10-15\nestablishes a three-tiered fair value hierarchy that prioritizes inputs to valuation techniques used in fair value calculations. The\nthree levels of inputs are defined as follows:\n\n \n\n*Level\n1*—Level 1 applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities.\n\n \n\n*Level\n2*—Level 2 applies to assets or liabilities for which there are inputs other than quoted prices that are observable for the\nasset or liability, such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or\nliabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which\nsignificant inputs are observable or can be derived principally from, or corroborated by, observable market data.\n\n \n\n*Level\n3*—Level 3 applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant\nto the measurement of the fair value of the assets or liabilities.\n\n \n\n9\n\n \n\n \n\nAccounts\npayable and related-party payables have fair values that approximate the carrying value due to the short-term nature of these instruments.\nDerivative liabilities are measured using level 3 inputs.\n\n SCHEDULE OF FINANCIAL ASSETS AND LIABILITIES CARRIED AT FAIR VALUE MEASURED ON RECURRING BASIS\n\n  \nTotal Fair\nValue at\nMarch 31,\n2026  \nQuoted prices\nin active\nmarkets\n(Level 1)  \nSignificant\nother\nobservable\ninputs (Level 2)  \nSignificant\nunobservable\ninputs (Level 3) \n\nDerivative liabilities \n$2,289,108  \n$—  \n$—  \n$2,289,108 \n\n \n\n  \nTotal Fair\nValue at\nDecember 31,\n2025  \nQuoted prices\nin active\nmarkets\n(Level 1)  \nSignificant\nother\nobservable\ninputs (Level 2)  \nSignificant\nunobservable\ninputs (Level 3) \n\nDerivative liabilities \n$2,393,544  \n$—  \n$—  \n$2,393,544 \n\n \n\n*Loss\nper Share*\n\n \n\nBasic\nloss per share is calculated by dividing net loss available to common shareholders by the weighted-average number of common shares outstanding\nduring each period. Diluted loss per share is similarly calculated, except that the weighted-average number of common shares outstanding\nwould include common shares that may be issued subject to existing rights with dilutive potential when applicable. There were approximately\n215,792,611 and 237,997,505 potentially issuable shares from the conversions of convertible debentures outstanding that were excluded\nin dilutive outstanding shares for the three months ended March 31, 2026 and 2025, respectively, due to the anti-dilutive effect these\nwould have on net loss per share. We do not currently have adequate authorized but unissued shares to satisfy our obligations should\nall instruments eligible to convert to common stock be exercised. We are not currently contemplating an increase in our authorized shares\nbut may do so in the future.\n\n* *\n\n*Income\nTaxes*\n\n \n\nIncome\ntaxes are provided for the tax effects of the transactions reported in the financial statements and consist of taxes currently due plus\ndeferred taxes related primarily to tax net operating loss carryforwards. The deferred tax assets and liabilities represent the future\ntax return consequences of these differences, which will either be taxable or deductible when assets and liabilities are recovered or\nsettled, as well as operating loss carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to\napply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred\ntax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. A valuation\nallowance is established against deferred tax assets when in the judgment of management, it is more likely than not that such deferred\ntax assets will not become available. Because the judgment about the level of future taxable income is dependent to a great extent on\nmatters that may, at least in part, be beyond our control, it is at least reasonably possible that management’s judgment about\nthe need for a valuation allowance for deferred taxes could change in the near term.\n\n \n\nTax\nbenefits are recognized only for tax positions that are more likely than not to be sustained upon examination by tax authorities. The\namount recognized is measured as the largest amount of benefit that is greater than 50% likely to be realized upon settlement. A liability\nfor “unrecognized tax benefits” is recorded for any tax benefits claimed in our tax returns that do not meet these recognition\nand measurement standards. As of March 31, 2026 and December 31, 2025, no liability for unrecognized tax benefits was required to be\nreported.\n\n \n\n*Recently\nIssued Accounting Pronouncements*\n\n \n\nThe\nCompany continually assesses any new accounting pronouncements to determine their applicability. When it is determined that a new accounting\npronouncement affects the Company’s financial reporting, the Company undertakes a study to determine the consequences of the change\nto its Consolidated Financial Statements and assures that there are proper controls in place to ascertain that the Company’s Consolidated\nFinancial Statements properly reflect the change.\n\n \n\n10\n\n \n\n \n\n**NOTE\n3 — GOING CONCERN**\n\n \n\nThe\naccompanying consolidated financial statements have been prepared in conformity with US GAAP, which considers our continuation as a going\nconcern. We had a working capital deficiency of $20,184,819, as of March 31, 2026, and a net loss from continuing operations of $65,737\nfor the three months ended March 31, 2026. As of March 31, 2026, we had an accumulated deficit of $60,125,000. These conditions raise\nsubstantial doubt about our ability to continue as a going concern.\n\n \n\nOur\nability to continue as a going concern is dependent upon our ability to successfully accomplish our business plan and eventually attain\nprofitable operations. The accompanying consolidated financial statements do not include any adjustments that may be necessary if we\nare unable to continue as a going concern.\n\n \n\nIn\nthe coming year, our foreseeable cash requirements will relate to the development of business operations and associated expenses. We\nmay experience a cash shortfall and be required to raise additional capital.\n\n \n\nHistorically,\nwe have mainly relied upon shareholder loans and advances to finance operations and growth. Management may raise additional capital by\nretaining net earnings, if any, or through future public or private offerings of our stock or loans from private investors, although\nwe 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\nshareholders and us.\n\n \n\n**NOTE\n4 — PROPERTY AND EQUIPMENT**\n\n \n\nWe\nincur certain costs associated with the design and development of molds and dies for our contract-manufacturing segment. These costs\nare 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\nas part of production equipment in property and equipment and are amortized over their useful lives. We hold title to all molds and dies\nused in the manufacture of products.\n\n \n\nProperty\nand equipment and estimated service lives consist of the following:\n\n SCHEDULE OF PROPERTY AND EQUIPMENT AND ESTIMATED SERVICE LIVES\n\n  \nMarch 31,\n2026  \nDecember 31,\n2025  \nUseful Life\n(years)\n\nFurniture and office equipment \n$12,212  \n$12,212  \n5-10\n\nTotal \n 12,212  \n 12,212  \n \n\nLess: accumulated depreciation \n (8,081) \n (7,605) \n \n\nProperty and equipment, net \n$4,131  \n$4,607  \n \n\n \n\nWe\nrecorded $476 and $501 of depreciation expense during the three months ended March 31, 2026 and 2025.\n\n \n\n**NOTE\n5 — RELATED PARTY TRANSACTIONS**\n\n \n\nIn\n2007, 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\nMay 2008. There were no repayments made during the periods presented. At March 31, 2026 and December 31, 2025, the principal amount owing\non the note was $151,833 and $151,833, respectively. No demand for payment has been made.\n\n \n\nOn\nMarch 31, 2008, we issued to this same family member, along with two other company shareholders, promissory notes totaling $315,000 ($105,000\neach). Under the terms of these three $105,000 notes, we received total proceeds of $300,000 and agreed to repay the amount received\nplus 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.\nWe made no payments towards the outstanding notes during the periods presented. The principal balance owing on the notes as of March\n31, 2026 and December 31, 2025, was $72,466 and $72,466, respectively. No demand for payment has been made.\n\n \n\nThere\nwere $1,461,554 and $1,400,699 of short-term advances due to related parties as of March 31, 2026 and December 31, 2025, respectively.\n\n \n\n11\n\n \n\n \n\nAs\nof March 31, 2026 and December 31, 2025, we owed our president a total of $433,379 and $433,379, respectively, in unsecured advances.\nThe advances and short-term bridge loans were approved by our board of directors under a 5% borrowing fee. The borrowing fees were waived\nby our president on these loans. These amounts are included in our liabilities from discontinued operations.\n\n \n\nTotal\ninventory purchases from the related parties were $0 and $231,151 during the three months ended March 31, 2026 and 2025, respectively.\nAll transactions were at a 2% markup over the related party’s cost paid for inventory in arm’s-length transactions.\n\n \n\n**NOTE\n6 — OTHER ACCRUED LIABILITIES**\n\n \n\nAccrued\ntax liabilities consist of delinquent payroll taxes, interest, and penalties owed by us to the Internal Revenue Service (“IRS”)\nand other tax entities.\n\n \n\nAccrued\nliabilities consist of the following:\n\n SCHEDULE OF ACCRUED LIABILITIES\n\n  \nMarch 31,\n2026  \nDecember 31,\n2025 \n\n  \n   \n  \n\nTax liabilities \n$32,505  \n$31,769 \n\nAccrued Royalty - Globrands LLC \n 965,592  \n 928,247 \n\nOther \n 1,656,158  \n 1,798,868 \n\nTotal \n$2,654,255  \n$2,758,884 \n\n \n\nOther\naccrued liabilities as of March 31, 2026 and December 31, 2025, include a non-interest-bearing payable totaling $45,000 and $45,000,\nrespectively, that is due on demand and customer deposits totaling $1,607,268 and $1,774,016, respectively.\n\n \n\nAccrued\npayroll and compensation liabilities consist of the following:\n\n SCHEDULE OF ACCRUED PAYROLL AND COMPENSATION LIABILITIES\n\n  \nMarch 31, 2026  \nDecember 31, 2025 \n\n  \n   \n  \n\nDirector fees \n$135,000  \n$135,000 \n\nBonus expenses \n 121,858  \n 121,858 \n\nCommissions \n 2,148  \n 2,148 \n\nConsulting \n 365,670  \n 371,822 \n\nAdministrative payroll \n 5,124,335  \n 5,043,336 \n\nTotal \n$5,749,011  \n$5,674,164 \n\n \n\n**NOTE\n7 — COMMITMENTS AND CONTINGENCIES**\n\n \n\n*Litigation\nand Claims*\n\n \n\nVarious\nvendors, service providers, and others have asserted legal claims in previous years. These creditors generally are not actively seeking\ncollection of amounts due to them, and we have determined that the probability of realizing any loss on these claims is remote and will\nseek to compromise and settle at a deep discount any of such claims that are asserted for collection. These amounts are included in our\ncurrent liabilities, except where we believe collection or enforcement of the judgments is barred by the applicable statute of limitations,\nin which case the liabilities have been eliminated. We have not accrued any liability for claims or judgments that we have determined\nto be barred by the applicable statute of limitations, which generally is eight years for judgments in Utah.\n\n \n\n12\n\n \n\n \n\n*Employment\nAgreements*\n\n \n\nWe\nengage Iehab Hawatmeh, our president and chief executive officer, through an employment agreement entered in August 2009 and amended\nin September 2017. In July 2017, Mr. Hawatmeh had resigned all positions with us to pursue other business activities, thereby effectively\nterminating the agreement. However, the amendment to his employment agreement in September 2017 reinstated Mr. Hawatmeh to his previous\npositions, with a salary in an amount to be determined. Among other things, the reinstated employment agreement: (a) grants options to\npurchase 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\nthe grant date, for the maximum term allowed under our stock option plan; (b) provides for health insurance coverage, cell phone, car\nallowance, life insurance, and director and officer liability insurance, as well as any other bonus approved by our board; and (c) includes\nadditional incentive compensation as follows: (i) a quarterly bonus equal to 5% of our earnings before interest, taxes, depreciation,\nand amortization for the applicable quarter; (ii) bonuses equal to 1% of the net purchase price of any acquisitions we complete that\nare directly generated and arranged by Mr. Hawatmeh; and (iii) an annual bonus (payable quarterly) equal to 1% of our gross sales of\nall products, net of returns and allowances. On January 1, 2020, we resumed accruing wages for our chief executive officer. A total of\n$86,250 and $345,000 was accrued during the periods ended March 31, 2026 and December 31, 2025, respectively.\n\n \n\n*License\nAgreements*\n\n \n\nWe\nhave entered into agreements requiring us to pay certain royalties for the manufacture and distribution of licensed products. Fees are\nbased on a percentage of sales and remitted quarterly and are included in cost of sales for financial reporting purposes.\n\n \n\n**NOTE\n8 — NOTES PAYABLE**\n\n \n\nNotes\npayable consisted of the following:\n\n SCHEDULE OF NOTES PAYABLE\n\n  \nMarch 31,\n2026  \nDecember 31,\n2025 \n\n  \n   \n  \n\nNote payable to former service provider for past due account payable (current) \n$90,000  \n$90,000 \n\nNote payable for settlement of debt \n 500,000  \n 500,000 \n\nSmall Business Administration loan \n 143,000  \n 143,000 \n\nTotal \n$733,000  \n$733,000 \n\n \n\nThere\nis $458,278 and $447,334 of accrued interest due on these notes as of March 31, 2026 and December 31, 2025, respectively.\n\n \n\n**NOTE\n9 — CONVERTIBLE DEBENTURES**\n\n \n\nConvertible\ndebentures consisted of the following:\n\n SCHEDULE OF CONVERTIBLE DEBENTURES\n\n  \nMarch 31,\n2026  \nDecember 31,\n2025 \n\n  \n   \n  \n\nConvertible debenture, 5% stated interest rate, secured by all our assets, due on April 30, 2027 \n$200,000  \n$200,000 \n\nConvertible debenture, 5% stated interest rate, secured by all our assets, due on April 30, 2027 \n 25,000  \n 25,000 \n\nConvertible debenture, 5% stated interest rate, secured by all our assets, due on April 30, 2027 \n 25,000  \n 25,000 \n\nConvertible debenture, 5% stated interest rate, secured by all our assets, due on April 30, 2027 \n 25,000  \n 25,000 \n\nConvertible debenture, 5% stated interest rate, secured by all our assets, due on April 30, 2027 \n 2,390,528  \n 2,390,528 \n\nSubtotal \n$2,665,528  \n$2,665,528 \n\nLess: discounts \n (90,438) \n (117,400)\n\nTotal \n$2,575,090  \n$2,548,128 \n\nLess: current portion \n (264,284) \n (264,284)\n\nLong-term portion \n$2,310,806  \n$2,283,844 \n\n \n\n13\n\n \n\n \n\nThe\nconvertible debentures and accrued interest are convertible into shares of our common stock at the lower of $100 or the lowest bid price\nfor the 20 trading days prior to conversion.\n\n \n\nOn\nNovember 26, 2025, the Company and the lender entered into a Forbearance and Standstill Agreement, extending the maturity date on all\ndebentures to April 30, 2027.\n\n \n\nAs\nof March 31, 2026 and December 31, 2025, we had accrued interest on the convertible debentures totaling $2,211,385 and $2,179,837, respectively.\n\n \n\n**NOTE\n10 — DERIVATIVE LIABILITIES**\n\n \n\nAs\ndiscussed in Note 9—Convertible Debentures, we have entered into five separate agreements to borrow a total of $2,665,528 with\nthe outstanding principal and interest being convertible at the holder’s option into common stock of the company at the lesser\nof $100 (notes one through four) or $0.10 (note five) or the lowest closing bid price in the prior 20 trading days. Embedded derivatives\nare valued separately from the host instrument and are recognized as derivative liabilities in our balance sheet. We measure these instruments\nat their estimated fair value and recognize changes in their estimated fair value in results of operations during the period of change.\nWe have estimated the fair value of these embedded derivatives for convertible debentures and associated warrants using a Monte Carlo\nsimulation as of March 31, 2026 and December 31, 2025, using the following assumptions:\n\n SCHEDULE OF DERIVATIVE LIABILITIES AT FAIR VALUE\n\n  \nMarch 31, 2026  \nDecember 31, 2025 \n\nVolatility \n 101.2% \n 108.7% - 117.2%\n\nRisk-free rates \n 3.59% \n 3.53% - 3.59%\n\nStock price \n 0.0207  \n$0.043 \n\nRemaining life \n 0.25- 1.08 years  \n 0.25- 1.33 years \n\n \n\nA\nsummary of the activity of the derivative liability for these notes is as follows:\n\n SCHEDULE OF ACTIVITY OF THE DERIVATIVE LIABILITY\n\n  \n   \n\nBalance at December 31, 2024 \n$2,458,435 \n\nDerivative loss due to mark to market adjustment \n (64,891)\n\nBalance at December 31, 2025 \n 2,393,544 \n\nBalance \n 2,393,544 \n\nDerivative gain due to mark to market adjustment \n (104,436)\n\nBalance at March 31, 2026 \n$2,289,108 \n\nBalance \n$2,289,108 \n\n \n\nThe\nfair values of the derivative instruments are measured each quarter, which resulted in a gain of $104,436 and $132,234 during the three\nmonths ended March 31, 2026 and 2025, respectively. As of March 31, 2026 and December 31, 2025, the fair market value of the derivatives\naggregated $2,289,108 and $2,393,544, respectively.\n\n \n\n14\n\n \n\n \n\n**NOTE\n11 — STOCK OPTIONS AND WARRANTS**\n\n \n\n*Stock\nIncentive Plans*\n\n \n\nAs\nof March 31, 2026 and 2025, we had no unrecognized compensation related to outstanding options that have not yet vested at year-end that\nwould be recognized in subsequent periods.\n\n SCHEDULE OF STOCK OPTIONS OUTSTANDING\n\n  \nNumber of\nOptions  \nWeighted\nAverage\nExercise\nPrice  \nAverage Remaining Life \n\nOutstanding, December 31, 2024 \n 32,000  \n$0.01  \n 1.02 \n\nIssued \n —  \n$—  \n — \n\nCancelled \n (8,000) \n$—  \n — \n\nExercised \n —  \n$—  \n — \n\nOutstanding, December 31, 2025 \n 24,000  \n$0.01  \n 1.02 \n\nIssued \n —  \n$—  \n — \n\nCancelled \n (8,000) \n$—  \n — \n\nExercised \n —  \n$—  \n — \n\nExercisable, March 31, 2026 \n 16,000  \n$0.01  \n 0.77 \n\n \n\n**NOTE\n12 — SEGMENTS**\n\n \n\nThe\nCompany uses ASC 280, *Segment Reporting*, in determining its reportable segments. The Company has two reportable segments based\non sales: Tobacco products and all other sources of revenue. The guidance requires that segment disclosures present the measure(s) used\nby the Chief Operating Decision Maker (“CODM”) to decide how to allocate resources and for purposes of assessing such segments’\nperformance. The Company’s CODM is comprised of its executive management team who use revenue and expenses of the two reporting\nsegments to assess the performance of the business of our reportable operating segments.\n\n \n\nThe\nfollowing table details revenue, operating expenses, and assets for the Company’s reportable segments as of March 31, 2026.\n\n SCHEDULE OF SEGMENTAL INFORMATION\n\n  \nTobacco Line  \n\n**All other**\n\n**product lines**\n  \nTotal \n\nASSETS \n    \n    \n   \n\nCurrent Assets: \n    \n    \n   \n\nCash \n$11,336  \n$—  \n$11,336 \n\nInventory \n 1,136,387  \n 41,216  \n 1,177,603 \n\nDeposits on inventory \n 298,596  \n 10,830  \n 309,426 \n\nAccounts receivable \n 286,343  \n 10,385  \n 296,729 \n\nOther current assets \n 454,339  \n 16,479  \n 470,818 \n\nTotal current assets \n 2,187,002  \n 78,910  \n 2,265,912 \n\nInvestment in securities at cost \n —  \n 248,000  \n 248,000 \n\nProperty and equipment, net of accumulated depreciation \n —  \n 4,131  \n 4,131 \n\nTotal assets \n$2,187,002  \n$331,041  \n$2,518,043 \n\n  \n    \n    \n   \n\nLIABILITIES AND STOCKHOLDERS’ EQUITY \n    \n    \n   \n\nCurrent Liabilities: \n    \n    \n   \n\nAccounts payable \n$137,483  \n$4,986  \n$142,469 \n\nLiabilities for product returns and credits \n 63,281  \n 2,295  \n 65,576 \n\nShort-term advances payable \n —  \n 162,866  \n 162,866 \n\nShort-term advances payable - related parties \n —  \n 1,461,554  \n 1,461,554 \n\nShort-term advances payable \n —  \n 1,461,554  \n 1,461,554 \n\nAccrued liabilities \n 2,558,608  \n 95,647  \n 2,654,255 \n\nAccrued payroll and compensation expense \n 5,547,796  \n 201,215  \n 5,749,011 \n\nAccrued interest, current portion \n —  \n 6,887,786  \n 6,887,786 \n\nConvertible debenture, current portion, net of discounts \n —  \n 264,284  \n 264,284 \n\nNote payable, current portion \n —  \n 90,000  \n 90,000 \n\nNote payable to stockholders \n —  \n 151,833  \n 151,833 \n\nNote payable \n —  \n 151,833  \n 151,833 \n\nDerivative liability \n —  \n 2,289,108  \n 2,289,108 \n\nLiabilities from discontinued operations \n —  \n 2,531,989  \n 2,531,989 \n\nTotal current liabilities: \n 8,307,168  \n 14,143,563  \n 22,450,731 \n\nNote payable, net of current portion \n —  \n 643,000  \n 643,000 \n\nConvertible debenture, net of current portion, net of discount \n —  \n 2,310,806  \n 2,310,806 \n\nTotal liabilities \n 8,307,168  \n 17,097,369  \n 25,404,537 \n\n  \n    \n    \n   \n\nStockholders’ Equity: \n    \n    \n   \n\nCommon stock \n —  \n 4,945  \n 4,945 \n\nAdditional paid-in capital \n —  \n 37,233,561  \n 37,233,561 \n\nAccumulated deficit \n \n(6,120,166\n) \n \n(54,004,834\n) \n (60,125,000)\n\nTotal stockholders’ equity \n \n(6,120,166\n) \n \n(16,766,328\n) \n (22,886,494)\n\nTotal liabilities and stockholders’ deficit \n$\n2,187,002\n  \n$\n331,041\n  \n$2,518,043 \n\n \n\n15\n\n \n\n \n\nThe\nfollowing table details revenue, operating expenses, and assets for the Company’s reportable segments for the year ended December\n31, 2025.\n\n \n\n  \nTobacco Line  \n\n**All other**\n\n**product lines**\n  \nTotal \n\nASSETS \n    \n    \n   \n\nCurrent Assets: \n    \n    \n   \n\nCash \n$9,589  \n$—  \n$9,589 \n\nInventory \n 1,091,084  \n 45,462  \n 1,136,546 \n\nDeposits on inventory \n 270,036  \n 11,252  \n 281,288 \n\nAccounts receivable \n 351,035  \n 14,626  \n 365,661 \n\nOther current assets \n 449,606  \n 18,734  \n 468,340 \n\nTotal current assets \n 2,171,350  \n 90,074  \n 2,261,424 \n\nInvestment in securities at cost \n —  \n 248,000  \n 248,000 \n\nProperty and equipment, net of accumulated depreciation \n —  \n 4,607  \n 4,607 \n\nTotal assets \n$2,171,350  \n$342,681  \n$2,514,031 \n\n  \n    \n    \n   \n\nLIABILITIES AND STOCKHOLDERS’ EQUITY \n    \n    \n   \n\nCurrent Liabilities: \n    \n    \n   \n\nAccounts payable \n$143,470  \n$5,978  \n$149,448 \n\nLiabilities for product returns and credits \n 87,178  \n 3,632  \n 90,810 \n\nShort-term advances payable \n —  \n 162,866  \n 162,866 \n\nShort-term advances payable - related parties \n —  \n 1,400,699  \n 1,400,699 \n\nShort-term advances payable \n —  \n 1,400,699  \n 1,400,699 \n\nAccrued liabilities \n 2,648,529  \n 110,355  \n 2,758,884 \n\nAccrued payroll and compensation expense \n 5,447,197  \n 226,967  \n 5,674,164 \n\nAccrued interest, current portion \n —  \n 6,739,423  \n 6,739,423 \n\nConvertible debenture, current portion, net of discounts \n —  \n 264,284  \n 264,284 \n\nNote payable, current portion \n —  \n 90,000  \n 90,000 \n\nNote payable to stockholders \n —  \n 151,833  \n 151,833 \n\nNote payable \n —  \n 151,833  \n 151,833 \n\nDerivative liability \n —  \n 2,393,544  \n 2,393,544 \n\nLiabilities from discontinued operations \n —  \n 4,818,427  \n 4,818,427 \n\nTotal current liabilities: \n 8,326,374  \n 16,368,008  \n 24,694,382 \n\nNote payable, net of current portion \n —  \n 643,000  \n 643,000 \n\nConvertible debenture, net of current portion, net of discount \n —  \n 2,283,844  \n 2,283,844 \n\nTotal liabilities \n 8,326,374  \n 19,294,852  \n 27,621,226 \n\n  \n    \n    \n   \n\nStockholders’ Equity: \n    \n    \n   \n\nCommon stock \n —  \n 4,945  \n 4,945 \n\nAdditional paid-in capital \n —  \n 37,233,561  \n 37,233,561 \n\nAccumulated deficit \n (6,155,024) \n (56,190,677) \n (62,345,701)\n\nTotal stockholders’ equity \n (6,155,024) \n (18,952,171) \n (25,107,195)\n\nTotal liabilities and stockholders’ deficit \n$2,171,350  \n$342,681  \n$2,514,031 \n\n \n\n16\n\n \n\n \n\nThe\nfollowing table details revenue, operating expenses, and assets for the Company’s reportable segments for the three months ended\nMarch 31, 2026.\n\n \n\n  \nTobacco Line  \nAll other\nproduct lines  \nTotal \n\nRevenue: \n    \n    \n   \n\nNet sales \n$1,120,706  \n$40,647  \n$1,161,353 \n\nCost of sales \n 673,542  \n 24,429  \n 697,971 \n\nGross profit \n 447,164  \n 16,218  \n 463,382 \n\n  \n    \n    \n   \n\nOperating expenses: \n    \n    \n   \n\nEmployee costs \n 125,469  \n 4,551  \n 130,020 \n\nSelling, general and administrative expenses \n 286,837  \n 10,403  \n 297,240 \n\nTotal operating expenses \n 412,306  \n 14,954  \n 427,260 \n\n  \n    \n    \n   \n\nIncome from operations \n 34,858  \n 1,264  \n 36,122 \n\n  \n    \n    \n   \n\nOther income (expense): \n    \n    \n   \n\nInterest expense \n —  \n (211,806) \n (211,806)\n\nGain on forgiveness of debt \n —  \n 5,511  \n 5,511 \n\nLoss on derivative valuation \n —  \n 104,436  \n 104,436 \n\nTotal other expense \n —  \n (101,859) \n (101,859)\n\nNet income (loss) from continuing operations \n 34,858  \n (100,595) \n (65,737)\n\nIncome from discontinued operations \n —  \n 2,286,438  \n 2,286,438 \n\nNet Income before income tax \n 34,858  \n 2,185,843  \n 2,220,701 \n\nIncome tax \n —  \n —  \n — \n\nNet Income \n$34,858  \n$2,185,843  \n$2,220,701 \n\n \n\nThe\nfollowing table details revenue, operating expenses, and assets for the Company’s reportable segments for the three months ended\nMarch 31, 2025.\n\n \n\n  \nTobacco Line  \nAll other\nproduct lines  \nTotal \n\nRevenue: \n    \n    \n   \n\nNet sales \n$428,512  \n$32,304  \n$460,816 \n\nCost of sales \n 177,443  \n 13,079  \n 190,522 \n\nGross profit \n 251,069  \n 19,225  \n 270,294 \n\n  \n    \n    \n   \n\nOperating expenses: \n    \n    \n   \n\nEmployee costs \n 123,752  \n 5,156  \n 128,908 \n\nSelling, general and administrative expenses \n 177,273  \n 7,386  \n 184,659 \n\nTotal operating expenses \n 301,025  \n 12,542  \n 313,567 \n\n  \n    \n    \n   \n\nLoss from operations \n (49,956) \n 6,683  \n (43,273)\n\n  \n    \n    \n   \n\nOther income (expense): \n    \n    \n   \n\nInterest expense \n —  \n (202,374) \n (202,374)\n\nGain on forgiveness of debt \n —  \n 5,141  \n 5,141 \n\nGain on derivative valuation \n —  \n 132,234  \n 132,234 \n\nTotal other expense \n —  \n (64,999) \n (64,999)\n\nNet loss from continuing operations \n (49,956) \n (58,316) \n (108,272)\n\nLoss from discontinued operations \n —  \n (37,841) \n (37,841)\n\nIncome tax \n —  \n (9,323) \n (9,323)\n\nNet Loss \n$(49,956) \n$(105,480) \n$(155,436)\n\n \n\n17\n\n \n\n \n\n**NOTE\n13 — INCOME TAXES**\n\n \n\nThe\nCompany’s deferred tax assets consist primarily of net operating loss carryforwards and other temporary differences. Management\nevaluates the realizability of deferred tax assets each reporting period and concludes that it is more likely than not that such assets\nwill not be realized; accordingly, a valuation allowance is maintained against the full amount of deferred tax assets.\n\n \n\nAt\nMarch 31, 2026, the Company had federal net operating loss carryforwards of approximately $1,426,000, which generated gross deferred\ntax assets of approximately $299,000 at the 21% U.S. federal rate and $64,000 at the 4.5% Utah state rate, for total gross deferred tax\nassets of approximately $363,000. A full valuation allowance of approximately $482,435 was recorded, resulting in no net deferred tax\nasset on the balance sheet.\n\n \n\nThe\nCompany accounts for uncertain tax positions in accordance with ASC 740. As of March 31, 2026, the Company had no unrecognized tax benefits\nand no accrued interest or penalties related to uncertain tax positions. The Company’s tax returns remain subject to examination\nby taxing authorities for open tax years.\n\n \n\n**NOTE\n14 — DISCONTINUED OPERATIONS**\n\n \n\nOn\nOctober 21, 2016, we exited the beverage licensing and distribution business. The assets and liabilities associated with this business\nare displayed as assets and liabilities from discontinued operations as of March 31, 2026 and December 31, 2025. Additionally, the revenues\nand costs associated with this business are displayed as losses from discontinued operations.\n\n \n\nTotal\nassets and liabilities included in discontinued operations were as follows:\n\n SCHEDULE OF DISCONTINUED OPERATIONS\n\n  \nMarch 31,\n2026  \nDecember 31,\n2025 \n\nAssets from Discontinued Operations: \n    \n   \n\nCash \n$—  \n$— \n\nTotal assets from discontinued operations \n$—  \n$— \n\n  \n    \n   \n\nLiabilities from Discontinued Operations: \n    \n   \n\nAccounts payable \n$283,818  \n$283,818 \n\nAccrued liabilities \n 58,184  \n 58,184 \n\nAccrued interest \n 1,790,509  \n 1,790,509 \n\nAccrued payroll and compensation expense \n 122,864  \n 122,864 \n\nCurrent maturities of long-term debt \n 239,085  \n 239,085 \n\nShort-term advances payable \n 37,529  \n 2,323,967 \n\nTotal liabilities from discontinued operations \n$2,531,989  \n$4,818,427 \n\n \n\nNet\nincome (loss) from discontinued operations for the three months ended March 31, 2026 and 2025, were comprised of the following components:\n\n \n\n  \n2026  \n2025 \n\n  \nThree Months ended March 31, \n\n  \n2026  \n2025 \n\nOther expense: \n    \n   \n\nInterest expense \n$(37,841) \n$(37,841)\n\nGain on write off of time barred debt \n 2,324,279  \n   \n\nNet loss from discontinued operations \n$2,286,438  \n$(37,841)\n\n \n\n**NOTE\n15 — SUBSEQUENT EVENTS**\n\n \n\nIn\naccordance with SFAS 165 (ASC 855-10), management has performed an evaluation of subsequent events through the date that the consolidated\nfinancial statements were issued and has determined that it does not have any material subsequent events to disclose in these consolidated\nfinancial statements.\n\n \n\n18"}