{"url_path":"/sec/ehvvf/10-k/2026/item-5","section_key":"item-5","section_title":"Item 5 OPERATING AND FINANCIAL REVIEW AND PROSPECTS**","topic":"sec","document":{"doc_type":"20-F","doc_date":"2026-05-15","source_url":"https://www.sec.gov/Archives/edgar/data/1653606/0001493152-26-023957-index.html","accession_number":"0001493152-26-023957","cik":"0001653606","ticker":"EHVVF","issuer_name":"Ehave, Inc.","edgar_url":"https://www.sec.gov/Archives/edgar/data/1653606/0001493152-26-023957-index.html","primary_entity_key":"0001653606","primary_entity_name":"Ehave, Inc."},"word_count":2280,"has_tables":true,"body_markdown":"**ITEM\n5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS**\n\nYou\nshould read the following discussion of our financial condition and results of operations in conjunction with the financial statements\nand the notes thereto included elsewhere in this Annual Report on Form 20-F. The following discussion contains forward- looking statements\nthat reflect our plans, estimates and beliefs, including our belief as to the potential of MegaTeam and Ninja Reflex applications as\nan effective remediation tool for ADHD and our expectations as to the success of our research and related content distribution in 2022\nand beyond, future financial position, business strategy and plans for future operations, and statements that are not historical facts,\ninvolve known and unknown risks and uncertainties]. Our actual results could differ materially from those discussed in the forward-looking\nstatements. Factors that could cause or contribute to these differences include those discussed below and elsewhere in this Annual Report\non Form 20-F, particularly those in “Item 3. Key Information – D. Risk Factors.” See also “Special Note Regarding\nForward-Looking Statements.”\n\nWith\nrespect to the forward-looking statements made within this Item 5, we have made numerous assumptions regarding among other things: our\nability to obtain financing to fund our continuing development programs, the results of our clinical trials, our ability to obtain commercial\nsales, and future expense levels being within our current expectations. Investors are cautioned against placing undue reliance on forward-looking\nstatements. We do not undertake to update these forward-looking statements except as required by applicable law.\n\n25\n\n**Overview**\n\nWe\nare creating a medical psychedelics and mental health data platform that integrates with our proprietary and third-party assessment and\ntherapeutic digital applications. Our product focus is based on two tiers of activities: (1) MegaTeam and Ninja Reflex, our clinically\nvalidated digital assessment and rehabilitation software that is engaging for the patient, and (2) adaptation of custom and third-party\nclinically validated digital assessment and rehabilitation software for enhanced patient engagement and data modeling. We intend to provide\ntechnology solutions to clinicians, patients, researchers, pharmaceutical companies and payors.\n\nAdditionally,\nthrough our KetaDash subsidiary, we provide a platform for medical practitioners to administer healthcare services to patients at home,\nwith an emphasis on providing ketamine infusion services.\n\nWe\nqualify as an “emerging growth company” under the JOBS Act. As a result, we are permitted to, and intend to, rely on exemptions\nfrom certain disclosure requirements. For so long as we are an emerging growth company, we will not be required to:\n\n●\nhave\nan auditor report on our internal controls over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act;\n\n●\ncomply\nwith any requirement that may be adopted by the Public Company Accounting Oversight Board regarding mandatory audit firm rotation\nor a supplement to the auditor’s report providing additional information about the audit and the financial statements (i.e.,\nan auditor discussion and analysis);\n\n●\nsubmit\ncertain executive compensation matters to shareholder advisory votes, such as “say-on-pay” and “say-on-frequency;”\nand\n\n●\ndisclose\ncertain executive compensation related items such as the correlation between executive compensation and performance and comparisons\nof the CEO’s compensation to median employee compensation.\n\nIn\naddition, Section 107 of the JOBS Act also provides that an emerging growth company can take advantage of the extended transition period\nprovided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. In other words, an emerging\ngrowth company can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies.\nWe have elected to take advantage of the benefits of this extended transition period. Our financial statements may therefore not be comparable\nto those of companies that comply with such new or revised accounting standards.\n\nWe\nwill remain an “emerging growth company” for up to five years, or until the earliest of (i) the last day of the first fiscal\nyear in which our total annual gross revenues exceed $1.07 billion, (ii) the date that we become a “large accelerated filer”\nas defined in Rule\n\n12b-2\nunder the Securities Exchange Act of 1934, which would occur if the market value of our ordinary shares that is held by non- affiliates\nexceeds $700 million as of the last business day of our most recently completed second fiscal quarter or (iii) the date on which we have\nissued more than $1 billion in non-convertible debt during the preceding three year period.\n\n**Critical\nAccounting Policies and Estimates**\n\nThe\npreparation of financial statements in conformity with U.S. GAAP requires companies to make estimates and assumptions that affect the\nreported amounts of assets, liabilities, revenues and expenses and disclosure of contingent assets and liabilities at the date of the\nfinancial statements and the reported amounts of revenues and expenses during the reporting period. These estimates and judgments are\nsubject to an inherent degree of uncertainty, and actual results may differ. Our significant accounting policies are more fully described\nin Note 1 to our financial statements included elsewhere in this Annual Report. Critical accounting estimates and judgments are continually\nevaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable\nunder the circumstances, and are particularly important to the portrayal of our financial position and results of operations. Our estimates\nare primarily guided by observing the following critical accounting policies.\n\n26\n\n**Intangible\nassets, net**\n\n** **\n\nThe\nCompany’s intangible assets include finite lived assets. Finite lived intangible assets, consisting of intellectual property are\namortized on a straight-line basis over the estimated useful lives of the assets.\n\nFinite\nlived intangible assets are tested for impairment when events or changes in circumstances indicate that the carrying value of the asset\nmay not be recoverable. An impairment loss is recognized if the sum of the expected long-term undiscounted cash flows the asset is expected\nto generate is less than its carrying amount. Actual future cash flows may differ from the estimates used in the impairment testing.\n\n**Financial\nOverview**\n\nOur\noperations have been funded, to date, primarily through the sale of our common shares in a public offering and series of private placements\nof convertible notes and warrants. For the year ended December 31, 2025, we were unable to raise any new convertible notes and warrants\nand through our offering pursuant to Regulation A. The Company is currently in default on its convertible notes.\n\n**Operating\nLosses**\n\nSince\nour inception, we have incurred significant operating losses. Our net losses were $3,756,479 and $2,748,874 for the years ended December\n31, 2025 and 2024, respectively. As of December 31, 2025, we had an accumulated deficit of $40,767,900. We expect to continue to incur\nsignificant expenses and operating losses over the next several years. Our net losses may fluctuate significantly from quarter to quarter\nand from year to year. We anticipate that our expenses will increase significantly as we plan to continue development and commercialization\nof MegaTeam, NinjaReflex and KetaDash products as well as to engage in continuing research and development related to products and services.\n\n**A.\nOperating Results**\n\n**Years\nEnded December 31, 2025 and December 31, 2024**\n\n**Revenues**\n\nThe\nCompany has not generated any significant revenues to date.\n\n**General\nand administrative**\n\nGeneral\nand administrative expenses increased by $794,260 or 32% to $3,298,116 for the year ended December 31, 2025 compared to $2,503,856 for\nthe year ended December 31, 2024. The increase was primarily due to an increase of amortization expense of approximately $507,800, increase\nin consulting fees of approximately $176,000, a loss on conversion of debt to equity of $94,000, and an increase of advertising and marketing\nexpenses of approximately $52,000.\n\n27\n\n**Other\nincome and expenses**\n\nThe\nCompany recorded other expense for the year ended December 31, 2025 in the amount of $460,546 compared to $245,018 of other expense for\nthe year ended December 31, 2024. The increase in expense in the amount of $215,528 or 88% is primarily resulted from approximately $44,500\nof related party interest expense being recognized and no other income recognized in 2025 when 2024 had approximately $170,000 of other\nincome.\n\n**B.\nLiquidity and Capital Resources**\n\nThrough\nDecember 31, 2025, we have incurred an accumulated deficit of $40,767,900, primarily as a result of expenses incurred through a combination\nof development and commercialization activities related to our products and general and administrative expenses supporting those activities,\nas well as a net loss of $3,756,479 and negative operating cash flows during the year ending December 31, 2025. Our total cash balance\nas of December 31, 2025 was $791,432. At December 31, 2025, we had a working capital deficit of $12,342,855. We anticipate that we will\ncontinue to incur losses and negative cash flows from operations, and that such losses will increase over the next several years due\nto development costs associated with our Ehave Dashboard, MegaTeam, and Ninja Reflex products, until our products reach commercial profitability.\nAs a result of these expected losses and negative cash flows from operations, along with our current cash position, based on our current\nprojections, we may not have sufficient resources to fund operations through the fourth quarter of 2026. Therefore, there is substantial\ndoubt about our ability to continue as a going concern.\n\nOur\nplans include the continued commercialization of our products and raising capital through a combination of equity offerings, debt financings,\nother third-party funding and other collaborations and strategic partnerships. There are no assurances, however, that we will be successful\nin obtaining the level of financing needed for our operations. We are exploring various financing options including equity funding and\nstrategic collaboration. However, there are no assurances that we will be successful in obtaining the level of financing needed for our\noperations or that any such financing would be on terms favourable to us. Any future financing may involve substantial dilution to existing\ninvestors. If we are unsuccessful in commercializing our products and raising capital, we may need to reduce activities, curtail or cease\noperations.\n\n**Operating\nActivities**\n\nNet\ncash used in operating activities for the year ended December 31, 2025 was $264,202, which includes a net loss of $3,756,479, offset\nby non-cash adjustments of $1,283,947 of which related to amortization of intangible assets of $1,175,726, loss recognized on Aibotics\ncommon stock issued to settle liability of $91,248, and amortization of debt discount of $16,973. The change in net working capital items\nresulted in an increase the cash of $2,208,330 primarily related to the increase in account payable and accrued expenses of $2,004,497\nand accrued expenses – related party and accrued interest of $168,000 and a decrease in prepaid expenses of $35,833.\n\nNet\ncash used in operating activities for the year ended December 31, 2024 was $248,407, which includes a net loss of $2,748,874, offset\nby non-cash adjustments of $757,322 of which related to amortization of intangible assets of $667,883, Gain recognized on common stock\nissued to settle liability of $79,591, amortization of debt discount of $9,350, and depreciation expense of $498. The change in net working\ncapital items resulted in an increase the cash of $1,875,229 primarily related to the increase in account payable and accrued expenses\nof $1,455,145 and accrued expenses – related party and accrued interest of $288,000.\n\n**Investing\nActivities**\n\nNet\ncash used in investing activities was $0 for both years ended December 31, 2025 and 2024.\n\n**Financing\nActivities**\n\nNet\ncash provided by financing activities for the year ended December 31, 2025 was $250,000 related to $300,000 of proceeds from the convertible\nnote payable and $50,000 of repayments of the convertible note payable,\n\nNet\ncash provided by financing activities for the year ended December 31, 2024 was $165,000 related to proceeds from related party note payable.\n\n28\n\n**C.\nResearch and Development, Patents, and Licenses, etc.**\n\nOngoing\nresearch and development is critical to our success. We seek to engage with reputable research and clinical institutions to access and\nassist tools and methods developed. We hope to finance our research and development with government and research grants and internal\nfunds. Our research and development is comprised primarily of software development expenditures. We intend to continue to research and\ndevelop new technologies and products for the mental health market. There can be no assurance that we can achieve any or all of our research\nand development goals.\n\n**D.\nTrend Information**\n\nIt\nis important to note that historical patterns of expenditures cannot be taken as an indication of future expenditures. The amount and\ntiming of expenditures and availability of capital resources vary substantially from period to period, depending on the level of development\nactivity being undertaken at any one time and the availability of funding from investors and prospective strategic partners. See discussion\nin Parts A and B of Item 5: “Operating and Financial Review and Prospects” for a description of the trend information relevant\nto us. Except as disclosed elsewhere in our annual report, we know of no trends, uncertainties, demands, commitments or events that are\nreasonably likely to have a material effect on our liquidity or capital resources or that would cause reported financial information\nnot necessarily to be indicative of future operating results or financial conditions.\n\n**E.\nOff-Balance Sheet Arrangements**\n\nWe\nare not party to any transactions, agreements or other contractual arrangements with unconsolidated entities whereby we have financial\nguarantees, subordinated retained interests, derivative instruments or other contingent arrangements that expose us to material continuing\nrisks, contingent liabilities, or any other obligations under a variable interest in an unconsolidated entity that provides us with financing,\nliquidity, market risk or credit risk support.\n\n**F.\nTabular Disclosure of Contractual Obligations**\n\nWe\nhave no contractual obligations as of December 31, 2025.\n\nWe\nexpect to fund our capital expenditure requirements and commitments with existing working capital.\n\n29\n\n**G.\nSafe Harbor**\n\nWe\nseek safe harbor for our forward-looking statements contained in Items 5.E and F. See “*Cautionary Note Regarding Forward- Looking\nStatements”.*"}