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U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
OR
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from ________ to ________
Commission file number
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(Exact name of registrant as specified in its charter) |
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(State or other jurisdiction of incorporation or organization) |
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(I.R.S. Employer Identification Number) |
(Address of principal executive offices)
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(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12 of the Act:
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None |
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Title of each class |
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Trading symbol(s) |
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Name of exchange on which registered |
Indicate by checkmark whether the registrant (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
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Large accelerated filer |
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Accelerated filer |
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Smaller reporting company |
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Emerging growth company |
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes
APPLICABLE ONLY TO CORPORATE ISSUERS
As of November 13, 2025, there were
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LFTD Partners Inc.
Quarterly Report on Form 10-Q
For the Quarterly Period Ended September 30, 2025
Table of Contents
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PART I — FINANCIAL INFORMATION |
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F-1 |
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Consolidated Balance Sheets, September 30, 2025 (Unaudited) and December 31, 2024 (Audited) |
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F-1 |
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F-2 |
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F-3 |
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Management’s Discussion And Analysis Of Financial Condition And Results Of Operations |
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| 2 |
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| Table of Contents |
Use of Names
In this Quarterly Report on Form 10-Q, unless the context otherwise requires, the terms “we,” “us,” “our,” “Company,” “Corporation” or “LFTD Partners” refer to LFTD Partners Inc. together with its wholly owned subsidiary Lifted Liquids, Inc d/b/a Lifted Made (“Lifted”) and d/b/a Urb Finest Flowers (“Urb”).
Currency
Unless otherwise indicated, all references to “$” in this document refer to United States dollars.
Cautionary Note Regarding Forward-Looking Statements
This Quarterly Report on Form 10-Q contains statements that are considered forward-looking statements. Forward-looking statements give the Company’s current expectations and forecasts of future events. All statements other than statements of current or historical fact contained in this Quarterly Report on Form 10-Q, including statements regarding the Company’s future financial position, planned acquisitions, prospects of our industries or our prospects, plans, performance, operations, business strategy, budgets, projected costs, capital spending, sources of liquidity and financing sources, and plans and objectives of management for future operations, are forward-looking statements. In addition, forward-looking statements generally can be identified by the use of forward-looking words such as “anticipate,” “foresee,” “project,” forecast,” “could”, “believe,” “continue,” “estimate,” “expect,” “intend,” “may,” “plan,” or the negative of these terms or variations of them or similar terms or expressions of similar meaning, as they relate to the Company. Furthermore, forward-looking statements may be included in various filings that we make with the Securities and Exchange Commission (the “SEC”), and in press releases or oral statements made by or with the approval of one of our authorized executive officers. Although we believe that the expectations reflected in these forward-looking statements are reasonable, we cannot assure you that these expectations will prove to be correct. These forward-looking statements are based on the Company’s current plans, and the Company’s actual future activities and results of operations may be materially different from those set forth in the forward-looking statements. These forward-looking statements are subject to certain known and unknown risks and uncertainties, as well as assumptions that could cause actual results to differ materially from those reflected in these forward-looking statements.
These known and unknown risks and uncertainties include, without limitation, the risk factors described under the heading “ SUMMARY OF RISK FACTORS ” under Part I and the risk factors described in Item 1A under the heading “ RISK FACTORS ” included in our Annual Report on Form 10-K for the year ended December 31, 2024 (the “2024 Form 10-K”) filed with the SEC on March 31, 2025 and in our other SEC public filings, which can be read at www.sec.gov . Therefore, these forward-looking statements are not guarantees or promises of our future performance and involve risks, uncertainties, estimates and assumptions that are difficult to predict. As a result, our actual outcomes and results may differ materially from those expressed in these forward-looking statements. You should not place undue reliance on any of these forward-looking statements.
Any or all of the forward-looking statements in this Quarterly Report on Form 10-Q may turn out to be inaccurate. The Company has based these forward-looking statements largely on its current expectations and projections about future events and financial trends that it believes may affect its financial condition, results of operations, business strategy and financial needs. The forward-looking statements can be affected by inaccurate assumptions or by known or unknown risks, uncertainties and assumptions. The Company undertakes no obligation to publicly revise these forward-looking statements to reflect events occurring after the date hereof. All subsequent written and oral forward-looking statements attributable to the Company or persons acting on its behalf are expressly qualified in their entirety by the cautionary statements contained in this Quarterly Report on Form 10-Q.
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our consolidated financial statements and related notes that appear in our 2024 Form 10-K. In addition to historical consolidated financial information, the following discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results could differ materially from those discussed in the forward-looking statements. Certain information included herein contains statements that may be considered forward-looking statements, such as statements relating to our anticipated revenues and operating results, future performance and operations, plans for future expansion, capital spending, sources of liquidity and financing sources. Such forward-looking information involves important risks and uncertainties that could significantly affect anticipated results in the future, and accordingly, such results may differ from those expressed in any forward-looking statements made herein. Readers are cautioned not to place undue reliance on any forward-looking statements contained in this document, which reflect management’s opinions only as of the date hereof. Except as required by law, we undertake no obligation to revise or publicly release the results of any revision to any forward-looking statements. You are advised, however, to consult any additional disclosures we make in our reports to the SEC. We undertake no obligation to further update any such statement, or the risk factors described under the heading “ SUMMARY OF RISK FACTORS ” under Part I and the risk factors described in Item 1A under the heading “ RISK FACTORS ” included in our 2024 Form 10-K, to reflect new information, the occurrence of future events or circumstances or otherwise. None of the statements contained herein have been approved by the Food and Drug Administration, and none of the products manufactured or sold by the Company are intended to diagnose, treat, cure or prevent any disease.
| 3 |
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| Table of Contents |
PART I — FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
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LFTD PARTNERS INC. AND SUBSIDIARY LIFTED LIQUIDS, INC. |
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CONSOLIDATED BALANCE SHEETS |
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September 30, 2025 |
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December 31, 2024 |
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(Unaudited) |
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(Audited) |
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ASSETS |
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Current Assets |
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Cash and Cash Equivalents |
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$ |
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$ |
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Prepaid Expenses |
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Accounts Receivable, net of allowance of $
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Inventory |
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Income Tax Receivable |
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Current Portion of Settlement Asset and Receivables |
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Receivable Unit Loans from Extrax NM - Current |
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Total Current Assets |
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Restricted Cash |
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Goodwill |
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Investment in Ablis |
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Investment in Bendistillery |
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Net Deferred Tax Asset |
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Fixed Assets, less accumulated depreciation of $
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Security and State Licensing Deposits and Bonds |
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Operating Lease Right-of-Use Asset, net of Right-of-Use Asset Amortization of $
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Receivable Unit Loans from Extrax NM - Non-Current |
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Total Assets |
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$ |
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$ |
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LIABILITIES AND SHAREHOLDERS' EQUITY |
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Current Liabilities |
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Operating Lease Liability |
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$ |
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$ |
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Deferred Revenue |
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Income Tax Payable |
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Collab Commissions and Royalties Payable |
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Accounts Payable and Accrued Expenses |
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Accounts Payable - Related Party |
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Preferred Stock Dividends Payable |
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Notes Payable to Surety Bank |
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Interest Payable to Surety Bank |
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Total Current Liabilities |
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Non-Current Liabilities |
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Operating Lease Liability |
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Note Payable - Related Party |
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Notes Payable to Surety Bank |
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Total Non-Current Liabilities |
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Total Liabilities |
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Commitments and Contingencies |
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Shareholders' Equity |
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Preferred Stock, $
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Series A Convertible Preferred Stock:
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Series B Convertible Preferred Stock:
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Common Stock, $
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Additional Paid-in Capital |
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Accumulated Deficit |
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(
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(
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Total Shareholders' Equity |
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Total Liabilities and Shareholders' Equity |
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$ |
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$ |
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The accompanying notes are an integral part of these unaudited interim consolidated financial statements.
| F-1 |
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| Table of Contents |
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LFTD PARTNERS INC. AND SUBSIDIARY LIFTED LIQUIDS, INC. |
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CONSOLIDATED STATEMENTS OF OPERATIONS |
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(UNAUDITED) |
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For the Three Months Ended |
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For the Nine Months Ended |
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September 30, |
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September 30, |
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2025 |
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2024 |
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2025 |
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2024 |
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Net Sales |
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$ |
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$ |
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$ |
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$ |
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Cost of Goods Sold |
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Gross Profit |
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Operating Expenses |
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Payroll Expenses |
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Professional Fees |
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Bank Charges and Merchant Fees |
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Advertising and Marketing |
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Bad Debt Expense |
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Depreciation and Amortization |
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Collab Commission and Royalty Expense |
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Other Operating Expenses |
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Total Operating Expenses |
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Income/(Loss) From Operations |
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(
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(
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Other Income/(Expenses) |
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Gain on Lease Modification |
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Interest Income |
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Interest Expense |
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(
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(
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(
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(
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Dividend Income |
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Loss From Inventory Theft |
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(
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(
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Theft Expense |
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(
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Settlement Income |
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Debt Financing Expenses |
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(
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(
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(
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(
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Penalties |
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(
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) |
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(
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(
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(
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Gain/(Loss) on Disposal of Fixed Assets |
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(
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Loss on Jeeter Collab |
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(
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Loss on Deposits |
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(
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(
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Gain on Forgiveness of Debt |
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Total Other Expenses |
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(
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(
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(
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(
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Income/(Loss) Before Provision for Income Taxes |
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(
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(
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Provision for Income Taxes |
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(
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(
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(
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Net Income/(Loss) |
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$ |
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$ |
(
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$ |
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$ |
(
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Less: Accrued Preferred Stock Dividends |
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(
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(
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(
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Net Income/(Loss) Attributable to Common Stockholders |
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$ |
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$ |
(
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$ |
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$ |
(
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Basic Net Income/(Loss) per Common Share |
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$ |
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$ |
(
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$ |
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$ |
(
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Diluted Net Income/(Loss) per Common Share |
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$ |
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$ |
(
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) |
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$ |
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$ |
(
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Weighted average number of common shares outstanding: |
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Basic |
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Diluted |
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The accompanying notes are an integral part of these unaudited interim consolidated financial statements.
| F-2 |
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| Table of Contents |
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LFTD PARTNERS INC. AND SUBSIDIARY LIFTED LIQUIDS, INC. |
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CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (DEFICIT) |
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(UNAUDITED) |
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Additional |
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Deferred Contingent |
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Total |
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Preferred Stock |
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Common Stock |
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Paid-in |
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Stock to be |
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Accumulated |
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Shareholders' |
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Shares |
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Amount |
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Shares |
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Amount |
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Capital |
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Issued |
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Deficit |
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Equity |
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Balance, December 31, 2023 |
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$ |
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$ |
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$ |
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$ |
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$ |
(
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$ |
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Series A Preferred Stock dividend payable |
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(
|
) |
|
|
(
|
) |
|
Series B Preferred Stock dividend payable |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(
|
) |
|
|
(
|
) |
|
Net Loss |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(
|
) |
|
|
(
|
) |
|
Balance, March 31, 2024 |
|
|
|
|
|
$ |
|
|
|
|
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
(
|
) |
|
$ |
|
|
|
Series A Preferred Stock dividend payable |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(
|
) |
|
|
(
|
) |
|
Series B Preferred Stock dividend payable |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(
|
) |
|
|
(
|
) |
|
Common stock buybacks and immediate cancellations between April 2, 2024 and April 9, 2024 |
|
|
|
|
|
|
|
|
|
|
(
|
) |
|
|
(
|
) |
|
|
(
|
) |
|
|
|
|
|
|
|
|
|
|
(
|
) |
|
Payment of the stock component of the second installment of Merger Consideration (the issuance of 160,000 shares of common stock) pursuant to the Oculus Merger Agreement, on May 13, 2024 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Loss |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(
|
) |
|
|
(
|
) |
|
Balance, June 30, 2024 |
|
|
|
|
|
$ |
|
|
|
|
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
(
|
) |
|
$ |
|
|
|
Series A Preferred Stock dividend payable |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(
|
) |
|
|
(
|
) |
|
Series B Preferred Stock dividend payable |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(
|
) |
|
|
(
|
) |
|
Excise taxes payable on common stock buybacks |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(
|
) |
|
|
|
|
|
|
|
|
|
|
(
|
) |
|
Net Loss |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(
|
) |
|
|
(
|
) |
|
Balance, September 30, 2024 |
|
|
|
|
|
$ |
|
|
|
|
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
(
|
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, December 31, 2024 |
|
|
|
|
|
$ |
|
|
|
|
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
(
|
) |
|
|
|
|
|
Series A Preferred Stock dividend payable |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(
|
) |
|
|
(
|
) |
|
Series B Preferred Stock dividend payable |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(
|
) |
|
|
(
|
) |
|
Net Loss |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(
|
) |
|
|
(
|
) |
|
Balance, March 31, 2025 |
|
|
|
|
|
$ |
|
|
|
|
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
(
|
) |
|
|
|
|
|
Series A Preferred Stock dividend payable |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(
|
) |
|
|
(
|
) | |
|
Series B Preferred Stock dividend payable |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(
|
) |
|
|
(
|
) | |
|
Net Loss |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(
|
) |
|
|
(
|
) | |
|
Balance, June 30, 2025 |
|
|
|
|
|
$ |
|
|
|
|
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
(
|
) |
|
|
|
|
|
Series A Preferred Stock dividend payable |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(
|
) |
|
|
(
|
) |
|
Series B Preferred Stock dividend payable |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(
|
) |
|
|
(
|
) |
|
Net Income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, September 30, 2025 |
|
|
|
|
|
$ |
|
|
|
|
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
(
|
) |
|
|
|
|
The accompanying notes are an integral part of these unaudited interim consolidated financial statements.
| F-3 |
|
|
| Table of Contents |
|
LFTD PARTNERS INC. AND SUBSIDIARY LIFTED LIQUIDS, INC. |
||||||||
|
CONSOLIDATED STATEMENTS OF CASH FLOWS |
||||||||
|
(UNAUDITED) |
|
|
|
For the Nine Months Ended |
|
|||||
|
|
|
September 30, |
|
|||||
|
|
|
2025 |
|
|
2024 |
|
||
|
Cash Flows From Operating Activities |
|
|
|
|
|
|
||
|
Net Income/(Loss) |
|
$ |
|
|
|
$ |
(
|
) |
|
Adjustments to Reconcile Net Income/(Loss) to Net Cash Provided by/(Used in) Operating Activities |
|
|
|
|
|
|
|
|
|
Sales Allowance |
|
|
|
|
|
|
(
|
) |
|
Spoiled and Written Off Inventory |
|
|
|
|
|
|
|
|
|
Bad Debt Expense |
|
|
|
|
|
|
|
|
|
Depreciation and Amortization |
|
|
|
|
|
|
|
|
|
Loss/(Gain) on Lease Modification |
|
|
|
|
|
|
(
|
) |
|
Loss From Inventory Theft |
|
|
|
|
|
|
|
|
|
Settlement Income |
|
|
(
|
) |
|
|
(
|
) |
|
Debt Financing Expenses |
|
|
|
|
|
|
|
|
|
Loss on Disposal of Fixed Assets |
|
|
|
|
|
|
|
|
|
Loss on Jeeter Collab |
|
|
|
|
|
|
|
|
|
Loss on Deposits |
|
|
|
|
|
|
|
|
|
Gain on Forgiveness of Debt |
|
|
(
|
) |
|
|
|
|
|
Deferred Income Taxes |
|
|
(
|
) |
|
|
(
|
) |
|
Effect on Cash of Changes in Operating Assets and Liabilities |
|
|
|
|
|
|
|
|
|
Prepaid Expenses |
|
|
|
|
|
|
|
|
|
Accounts Receivable |
|
|
(
|
) |
|
|
(
|
) |
|
Inventory |
|
|
(
|
) |
|
|
(
|
) |
|
Change in Right Of Use Asset |
|
|
|
|
|
|
|
|
|
Change in Receivable Unit Loans from Extrax NM |
|
|
(
|
) |
|
|
(
|
) |
|
Other Assets |
|
|
|
|
|
|
(
|
) |
|
Income Tax Receivable and Payable, net |
|
|
|
|
|
|
(
|
) |
|
Collab Commissions and Royalties Payable |
|
|
(
|
) |
|
|
(
|
) |
|
Deferred Revenue |
|
|
|
|
|
|
|
|
|
Accounts Payable and Accrued Expenses |
|
|
(
|
) |
|
|
(
|
) |
|
Accounts Payable and Interest Payable to Related Parties |
|
|
|
|
|
|
(
|
) |
|
Change in Settlement Asset and Receivables |
|
|
|
|
|
|
|
|
|
Change in Finance and Operating Lease Liabilities |
|
|
(
|
) |
|
|
(
|
) |
|
Net Cash Provided By/(Used In) Operating Activities |
|
|
|
|
|
|
(
|
) |
|
Cash Flows From Investing Activities |
|
|
|
|
|
|
|
|
|
Net Cash Paid as Part of the Oculus Transaction |
|
|
|
|
|
|
(
|
) |
|
Purchases of Fixed Assets |
|
|
(
|
) |
|
|
(
|
) |
|
Proceeds from Disposal of Fixed Assets |
|
|
|
|
|
|
|
|
|
Net Cash Used in Investing Activities |
|
|
(
|
) |
|
|
(
|
) |
|
Cash Flows From Financing Activities |
|
|
|
|
|
|
|
|
|
Proceeds from Related Party Note |
|
|
|
|
|
|
|
|
|
Payments on Related Party Note |
|
|
(
|
) |
|
|
|
|
|
Payments on Surety Bank Loans |
|
|
(
|
) |
|
|
(
|
) |
|
Payments of Dividends to Preferred Stockholders |
|
|
(
|
) |
|
|
(
|
) |
|
Purchase of Shares of Common Stock |
|
|
|
|
|
|
(
|
) |
|
Net Cash Used In Financing Activities |
|
|
(
|
) |
|
|
(
|
) |
|
Net Decrease in Cash |
|
|
(
|
) |
|
|
(
|
) |
|
Cash, Cash Equivalents and Restricted Cash at Beginning of Period |
|
|
|
|
|
|
|
|
|
Cash, Cash Equivalents and Restricted Cash at End of Period |
|
$ |
|
|
|
$ |
|
|
|
|
|
For the Nine Months Ended |
|
|||||
|
|
|
September 30, |
|
|||||
|
|
|
2025 |
|
|
2024 |
|
||
|
Supplemental Cash Flow Information |
|
|
|
|
|
|
||
|
Cash Paid For Interest |
|
$ |
|
|
|
$ |
|
|
|
Cash Paid/(Received) For Income Taxes |
|
|
(
|
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-Cash Activities |
|
|
|
|
|
|
|
|
|
Right-of-Use assets acquired from inception of Operating Leases |
|
$ |
|
|
|
$ |
|
|
|
Issuance of stock component of the second installment of Merger Consideration (the issuance of 160,000 shares of common stock) pursuant to the Oculus Merger Agreement, on May 13, 2024 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of the Consolidated Statements of Cash Flows to the Consolidated Balance Sheets |
|
|
|
|
|
|
|
|
|
Cash and Cash Equivalents |
|
$ |
|
|
|
$ |
|
|
|
Restricted Cash |
|
|
|
|
|
|
|
|
|
Total Cash, Cash Equivalents and Restricted Cash at End of Period |
|
$ |
|
|
|
$ |
|
|
The accompanying notes are an integral part of these unaudited interim consolidated financial statements.
| F-4 |
|
|
| Table of Contents |
LFTD PARTNERS INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 1 – DESCRIPTION OF THE BUSINESS OF LFTD PARTNERS INC.
LFTD Partners Inc., Jacksonville, Florida, was organized under the laws of the State of Nevada on January 2, 1986. Shares of the Company’s common stock are listed for trading on the OTCQB Venture Market under the symbol “LIFD”.
LFTD Partners is the parent corporation of Lifted Liquids, Inc. d/b/a Lifted Made and d/b/a Urb Finest Flowers (
www.urb.shop
), Kenosha, Wisconsin (“Lifted Made” or “Lifted”), which manufactures and sells hemp-derived and other psychoactive products under its award-winning Urb Finest Flowers (“Urb”) brand and other brands, hemp-free health and wellness gummies under its Mielos brand (
www.mielos.com
), and hemp-free energy gummies under its Rebel Energy Gummy brand (
www.RebelEnergyGummy.com
). Lifted is the worldwide, exclusive manufacturer and seller of Diamond Supply Co. (
www.DiamondSupplyCo.com
) hemp-derived products, and is the exclusive manufacturer and seller in the USA of hemp-derived products for a subsidiary of a large, publicly traded US marijuana company. LFTD Partners Inc. also owns
Management of the Company is primarily interested in acquiring companies operating outside of the hemp or marijuana industries, which have many regulatory risks.
Our principal headquarters are located at 14155 Pine Island Drive, Jacksonville, Florida 32224. Our telephone number is (847) 915-2446. Our corporate website address is www.LFTDPartners.com .
NOTE 2 – BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation – The accompanying unaudited interim consolidated financial statements include the accounts of LFTD Partners and have been prepared in accordance with accounting principles generally accepted in the United States (“US GAAP”) for financial information and in accordance with the rules and regulations of the U.S. Securities & Exchange Commission (“SEC”). Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements and, accordingly, certain information, footnotes and disclosures normally included in the annual financial statements, prepared in accordance with US GAAP, have been condensed or omitted in accordance with SEC rules and regulations. The financial data presented herein should be read in conjunction with the audited consolidated financial statements and accompanying notes included in the Company's Annual Report on Form 10-K for the year ended December 31, 2024 (the “2024 Form 10-K”). In the opinion of management, the financial data presented includes all adjustments necessary to present fairly the financial position, results of operations and cash flows for the interim periods presented. Certain previously reported amounts have been reclassified between line items to conform to the current period presentation. Results of interim periods should not be considered indicative of the results for the full year. These unaudited interim condensed consolidated financial statements include estimates and assumptions of management that affect the amounts reported in the unaudited condensed consolidated financial statements. Actual results could differ from these estimates.
Significant Accounting Policies – There have been no changes to the Company’s significant accounting policies as described in NOTE 2 – BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES to the Company's Consolidated Financial Statements included in the 2024 Form 10-K.
Use of Estimates – The preparation of financial statements in conformity with US GAAP typically requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, and expenses. Actual results and outcomes may differ from management’s estimates and assumptions. Key estimates in these financial statements include the allowance for doubtful accounts, sales allowance, estimated useful lives of property, plant and equipment, valuation allowance on deferred income tax assets, and the fair value of stock options and warrants.
| F-5 |
|
|
| Table of Contents |
Cash and Cash Equivalents
– Cash and cash equivalents as of the reported period ends include cash on-hand. The Company considers all highly liquid investments with an original maturity date within 90 days to be cash equivalents. Cash equivalents are carried at cost. The Company maintains its cash balance at a credit-worthy financial institution that is insured by the Federal Deposit Insurance Corporation (“FDIC”) up to $
Fair Value of Financial Instruments – The historical carrying amount of the financial instruments, which principally include cash, trade receivables, historical accounts payable and accrued expenses, approximates fair value due to the relative short maturity of such instruments.
Accounting Standards Codification (“ASC”) 820 defines fair value, establishes a framework for measuring fair value under US GAAP and enhances disclosures about fair value measurements. Fair value is defined under ASC 820 as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value under ASC 820 must maximize the use of observable inputs and minimize the use of unobservable inputs. The standard describes a fair-value hierarchy based on three levels of inputs, of which the first two are considered observable and the last unobservable, that may be used to measure fair value as follows:
Level 1 – Quoted prices in active markets for identical assets or liabilities.
Level 2 – Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.
Level 3 – Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.
Accounts Receivable – The Company evaluates the collectability of its trade accounts receivable based on a number of factors. Management of the Company reviews and discusses all outstanding customer trade balances as of reporting period end. In circumstances where the Company becomes aware of a specific customer’s inability to meet its financial obligations to the Company, a specific reserve for bad debts is estimated and recorded (the “Allowance for Doubtful Accounts”), which reduces the recognized receivable to the estimated amount the Company believes will ultimately be collected. Management also considers industry-specific factors which may impact customers’ ability to meet their financial obligations to the Company.
In addition to specific customer identification of potential bad debts, management takes into consideration Accounting Standards Update (“ASU”) No. 2016-13, Financial Instruments – Credit Losses, which is codified as Accounting Standards Codification Topic 326, adds to US GAAP the current expected credit loss model (“CECL Model”), which is a measurement model based on expected losses rather than incurred losses. Under the CECL Model, an entity recognizes its estimate of expected losses as an allowance. The Company has considered the applicable guidance in ASU 2016-13. Key aspects of the CECL Model include the following:
|
|
1. |
The CECL Model applies to financing receivables measured at amortized cost, which includes trade accounts receivable. |
|
|
2. |
An entity will recognize an allowance for credit losses that results in the financial statements reflecting the net amount expected to be collected from the financial asset. |
|
|
3. |
The allowance represents the portion of the amortized cost basis that an entity does not expect to collect due to credit over the asset’s contractual life, considering past events, current conditions and reasonable and supportable forecasts of future economic conditions. |
In performing its CECL Model Analysis, management calculates the ratio of write offs to sales made to wholesalers and distributors for the trailing three-year period (the “Bad Debt Loss Rate”). The Bad Debt Loss Rate is then multiplied by sales made to wholesalers and distributors during the trailing twelve months (the “Bad Debt Calc”). The Bad Debt Calc is compared to the total accounts receivable that is older than 90 days as of reported period end; for conservatism, whichever is larger is considered the Allowance for Doubtful Accounts as of reported period end. The Company’s position is that the Company’s conservative approach toward the treatment of Allowance for Doubtful Accounts provides sufficient coverage in relation to potential credit losses from outstanding invoice write-offs. The Company reported Allowance for Doubtful Accounts of $
| F-6 |
|
|
| Table of Contents |
An allowance for sales is recorded for estimated future discounts/refunds related to returns of products sold prior to the reporting period end. An allowance for sales reduces net sales on the Consolidated Statements of Operations, and also reduces accounts receivable on the Consolidated Balance Sheets. A primary impetus for the need of a sales allowance and a reduction in accounts receivable as of the reported period end was that, sometimes, when employees of federal, state and local regulatory agencies and/or law enforcement make statements and/or issue correspondence that claim or imply that certain hemp-derived products are unsafe or illegal, these statements and correspondence, and industry publications and/or news media coverage of such statements and correspondence, may trigger confusion, uncertainty or alarm among the distributors, retailers and consumers who purchase the Company’s products, and consequently result in decreased sales or returns/exchanges of our products. However, the Company has been able to re-sell the returned products to other distributors, retailers and consumers. Nonetheless, in anticipation of the need to honor exchanges of these certain products, management records a credit note reserve and corresponding sales allowance for these types of products.
Fixed Assets
– Fixed assets are recorded and stated at cost. Fixed assets that cost less than $
Management regularly reviews property and equipment and other long-lived assets for possible impairment. This review occurs annually, or more frequently if events or changes in circumstances indicate the carrying amount of the asset may not be recoverable. If there is an indication of impairment, management then prepares an estimate of future cash flows (undiscounted and without interest charges) expected to result from the use of the asset and its eventual disposition. If these cash flows are less than the carrying amount of the asset, an impairment loss is recognized to write down the asset to its estimated fair value. The fair value is estimated using the present value of the future cash flows discounted at a rate commensurate with management’s estimates of the business risks.
Preparation of estimated expected future cash flows is inherently subjective and is based on management’s best estimate of assumptions concerning expected future conditions. Long-lived assets held for sale are recorded at the lower of their carrying amount or fair value less cost to sell.
Cost of Goods Sold – Cost of goods sold primarily consist of the costs of raw goods utilized in the manufacture of products, direct labor, co-packing fees, freight and shipping charges, and certain quality control costs, such as lab testing costs.
Spoiled and obsolete inventory that is written off is a component of cost of goods sold. The process of determining obsolete or spoiled inventory involves:
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1) |
Identifying raw goods that would no longer be used in the manufacture of finished goods; |
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2) |
Identifying expired raw goods; |
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3) |
Identifying finished goods that would no longer be sold or that are slow moving; |
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4) |
Identifying finished goods that are expired; and |
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5) |
Valuing and expensing raw and finished goods that would no longer be sold. |
| F-7 |
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| Table of Contents |
Basic and Diluted Net Income/(Loss) Per Common Share – Basic net income/(loss) per common share is calculated by dividing net income/(loss), less accrued preferred stock dividends, by the weighted-average number of common shares outstanding during the period. Diluted net income/(loss) per common share is calculated by dividing net income/(loss), less accrued preferred stock dividends, by the weighted-average number of common shares and dilutive common share equivalents outstanding during the period. When dilutive, the incremental potential common shares issuable upon exercise of stock options and warrants are determined by the treasury stock method. The following table summarizes the calculations of basic and diluted earnings (loss) per common share for the three and nine months ended September 30, 2025 and 2024:
|
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For the Three Months Ended |
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|
For the Nine Months Ended |
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|||||||||||
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September 30, |
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September 30, |
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|||||||||||
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2025 |
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2024 |
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2025 |
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2024 |
|
|||||
|
Net Income/(Loss) |
|
$ |
|
|
|
$ |
(
|
) |
|
Net Income/(Loss) |
|
$ |
|
|
|
$ |
(
|
) |
|
Less: Accrued Preferred Stock Dividends |
|
(
|
) |
|
(
|
) |
|
Less: Accrued Preferred Stock Dividends |
|
(
|
) |
|
(
|
) | ||||
|
Net Income/(Loss) Attributable to Common Stockholders |
|
$ |
|
|
|
$ |
(
|
) |
|
Net Income/(Loss) Attributable to Common Stockholders |
|
$ |
|
|
|
$ |
(
|
) |
|
|
|
|
|
|
|
|
|
|
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|
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|
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|
|
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|
Weighted average number of common shares outstanding: |
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|
|
Weighted average number of common shares outstanding: |
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Basic |
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Basic |
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Diluted |
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Diluted |
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|
Basic Net Income/(Loss) per Common Share |
|
$ |
|
|
|
$ |
(
|
) |
|
Basic Net Income/(Loss) per Common Share |
|
$ |
|
|
|
$ |
(
|
) |
|
Diluted Net Income/(Loss) per Common Share |
|
$ |
|
|
|
$ |
(
|
) |
|
Diluted Net Income/(Loss) per Common Share |
|
$ |
|
|
|
$ |
(
|
) |
Recent Accounting Pronouncements – On December 14, 2023, the FASB issued a final standard on improvements to income tax disclosures, ASU 2023-09, Improvements to Income Tax Disclosures. The standard requires disaggregated information about a reporting entity’s effective tax rate reconciliation as well as information on income taxes paid. The standard is intended to benefit investors by providing more detailed income tax disclosures that would be useful in making capital allocation decisions. For public business entities, the new requirements will be effective for annual periods beginning after December 15, 2024. The Company is currently evaluating the impact, if any, that the updated standard will have on the consolidated financial statements.
In addition, in November 2024, the FASB issued “ASU 2024-03 - Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40); Disaggregation of Income Statement Expenses”. ASU 2024-03 is effective for public business entities for annual periods beginning after December 15, 2026. The Company is currently evaluating the impact, if any, that the updated standard will have on the consolidated financial statements.
On November 27, 2023, the FASB issued ASU 2023-07-Segment Reporting. The new guidance was issued primarily to provide financial statement users with more disaggregated expense information about a public entity’s reportable segments. The guidance is effective for calendar year public entities in 2024 year-end financial statements, and as such was adopted by the Company in its 2024 year-end financial statements. Refer to NOTE 17 – SEGMENTS AND CONCENTRATIONS .
Reclassifications – Some items from the prior period have been reclassified within the financial statements to conform with the current presentation.
Business Combinations – The Company accounts for its acquisitions under ASC Topic 805, Business Combinations and Reorganizations (“ASC Topic 805”). ASC Topic 805 provides guidance on how the acquirer recognizes and measures the consideration transferred, identifiable assets acquired, liabilities assumed, non-controlling interests, and goodwill acquired in a business combination. ASC Topic 805 also expands required disclosures surrounding the nature and financial effects of business combinations. Acquisition costs are expensed as incurred.
When the Company acquires a business, we allocate the purchase price to the assets acquired and liabilities assumed in the transaction at their respective estimated fair values. We record any premium over the fair value of net assets acquired as goodwill. The allocation of the purchase price involves judgments and estimates both in characterizing the assets and in determining their fair value. We use all available information to make these fair value determinations and engage independent valuation specialists to assist in the fair value determination of the acquired long-lived assets.
| F-8 |
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| Table of Contents |
Accounting for Goodwill – Goodwill represents the future economic benefit arising from other assets acquired that could not be individually identified and separately recognized. The goodwill arising from the Company’s acquisitions is attributable to the value of the potential expanded market opportunity with new customers.
Goodwill is not amortized but is subject to annual impairment testing unless circumstances dictate more frequent assessments. The Company performs an annual impairment assessment for goodwill during the fourth quarter of each year and more frequently whenever events or changes in circumstances indicate that the fair value of the asset may be less than the carrying amount. Goodwill impairment testing is a two-step process performed at the reporting unit level. Step one compares the fair value of the reporting unit to its carrying amount. The fair value of the reporting unit is determined by using the income approach. Under the income approach, the Company determines fair value based on estimated future cash flows of the reporting unit, which are discounted to the present value using discount factors that consider the timing and risk of cash flows and other factors. For the discount rate, the Company considered the current market interest rates, including the interest rates on the Company’s closed loans from Surety Bank, the Company’s risk relative to the overall market, the Company’s size and industry and other Company-specific risks. Other significant assumptions used in the income approach include the terminal value, growth rates, future capital expenditures and changes in future working capital requirements. If the fair value of the reporting unit is greater than its carrying amount, there is no impairment. If the reporting unit’s carrying amount exceeds its fair value, then the second step must be completed to measure the amount of impairment, if any. Step two calculates the implied fair value of goodwill by deducting the fair value of all tangible and intangible net assets of the reporting unit from the fair value of the reporting unit as calculated in step one. In this step, the fair value of the reporting unit is allocated to all of the reporting unit’s assets and liabilities in a hypothetical purchase price allocation as if the reporting unit had been acquired on that date. If the carrying amount of goodwill exceeds the implied fair value of goodwill, an impairment loss is recognized in an amount equal to the excess.
Determining the fair value of a reporting unit is judgmental in nature and requires the use of significant estimates and assumptions, including revenue growth rates, strategic plans, and future market conditions, among others. There can be no assurance that the Company’s estimates and assumptions made for purposes of the goodwill impairment testing will prove to be accurate predictions of the future. Changes in assumptions and estimates could cause the Company to perform an impairment test prior to scheduled annual impairment tests.
NOTE 3 - RISKS AND UNCERTAINTIES
Going Concern
– The Company currently has one revenue-generating subsidiary, Lifted. Prior to the acquisition of Lifted on February 24, 2020, the Company had no sources of revenue, and the Company had a history of recurring losses, which has resulted in an accumulated deficit of $
The Company’s investments in Ablis and Bendistillery made the Company a minority owner of these companies. As a minority owner, the Company is not able to recognize any portion of Ablis’ or Bendistillery’s revenues or earnings in the Company’s financial statements. The Company monitors its investments in Ablis and Bendistillery and from time to time will evaluate whether there has been a potential impairment of value.
The regulatory risks and uncertainties associated with Lifted's hemp-derived products and vapes, other intoxicating products, and the other significant risks described in our 2024 Form 10-K, have created significant adverse risks to the Company, which have caused substantial doubt about the Company’s ability to continue as a going concern.
| F-9 |
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| Table of Contents |
The Company has significant financial obligations under its loan agreements with Surety Bank, and also the Company is accruing and paying
On November 12, 2025, President Trump signed into law H.R. 5371, the “Continuing Appropriations, Agriculture, Legislative Branch, Military Construction and Veterans Affairs, and Extensions Act, 2026” (the “Act”), which makes continuing appropriations and extensions for fiscal year 2026, and which also bans intoxicating hemp-derived consumable products nationally on November 12, 2026. It is unknown to the Company whether or not the sections of the Act that impact the hemp industry will ultimately go into effect on November 12, 2026, or if those sections will be replaced, impacted or amended by subsequent acts of Congress. However, the Act in all likelihood will have a devastating impact on the Company and the price of its common stock. The material adverse effects of the Act cannot be overstated; these material adverse effects include, but are not limited to, the following:
|
|
1) |
The elimination of half or more of Lifted’s sales. Sales of hemp-derived products made up approximately 47% of Lifted’s sales during the three months ended September 30, 2025; thus, the Act could eliminate approximately half or more of the Company’s revenue; |
|
|
2) |
Goodwill impairment charges. As a result of LFTD Partners' acquisition of Lifted, LFTD Partners recognized goodwill of $
|
|
|
3) |
An investment impairment charge. The Act will necessitate the calculation and recording of an impairment of LFTD Partners’ investment in hemp-derived beverage and products maker Ablis. LFTD Partners’ investment in Ablis was reported as $
|
|
|
4) |
Significant inventory write offs. The Act will most likely negatively impact the pricing of hemp-derived products, the availability and price of raw goods and production forecasting, which will lead to increased write-offs each quarter end. Moreover, any hemp-derived products in inventory on November 12, 2026 will have to be written off. |
Additional factors that could materially adversely affect the Company’s future operating results include, but are not limited to: other changes to federal laws and regulations; any new rule proposed by the federal Drug Enforcement Administration that might attempt to classify certain hemp-derived products as controlled substances; and any other federal or state laws and regulations prohibiting or restricting hemp-derived, nicotine or tobacco products, kratom or kratom extracts or byproducts (such as 7-hydroxymitragynine, which the U.S. Food and Drug Administration has recommended to be scheduled as a controlled substance), psychoactive products and/or vaping.
There is also a risk that the Company potentially might be accused of selling products containing ingredients that might be considered an analog of a controlled substance. The Company is also subject to vendor concentration risk, customer concentration risk, customer credit risk, and counterparty risk. A limited number of customers have historically made up a significant portion of the Company’s sales. Also, historically, the Company has purchased raw goods and finished goods from a limited number of suppliers. The loss of Lifted’s relationships with these customers and vendors could have a material adverse effect on Lifted’s business.
The Company maintains levels of cash bank accounts that typically exceed federally insured limits. The Company has not experienced any losses in such accounts and it believes that it is not exposed to any significant credit risk on cash.
No assurance or guarantee whatsoever can be given that the net income of the Company’s wholly owned subsidiary Lifted will be sufficient to allow the Company to pay all of its operating expenses, its financial obligations under its loan agreements with Surety Bank, the dividends accruing and being paid on the Company’s preferred stock, future company-wide management bonus pool payments, and other obligations.
As a result of all of the foregoing described factors, there is substantial doubt that the Company will be able to continue as a going concern.
NOTE 4 – THE COMPANY’S INVESTMENTS
The Company’s Investment in Lifted
At December 31, 2024, the Company performed its annual goodwill impairment assessment on the goodwill recognized as part of the acquisition of Lifted, and determined that no impairment was necessary.
The Company’s Investments in Ablis and Bendistillery
On April 30, 2019, the Company purchased
On October 15, 2025, the management of LFTD Partners had a video conference with the officers of Ablis and Bendistillery. During this meeting, the management of those companies discussed the performance of Ablis and Bendistillery during the three months and nine months ended September 30, 2025. Based upon the financial and non-financial information that was shared with LFTD Partners during that conference call, the management of LFTD Partners believes that no impairment of the value of Ablis and Bendistillery is warranted at this point in time.
| F-10 |
|
|
| Table of Contents |
NOTE 5 – PROPERTY AND EQUIPMENT, NET
Property and Equipment consist of the following:
|
Asset Class |
|
September 30, 2025 |
|
|
December 31, 2024 |
|
||
|
Building |
|
$ |
|
|
|
$ |
|
|
|
Land |
|
|
|
|
|
|
|
|
|
Machinery & Equipment |
|
|
|
|
|
|
|
|
|
Furniture & Fixtures |
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|
|
|
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Computer Equipment |
|
|
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|
|
|
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|
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Building & Leasehold Improvements |
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|
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|
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|
|
|
|
Vehicles |
|
|
|
|
|
|
|
|
|
Trade Show Booths |
|
|
|
|
|
|
|
|
|
Sub-total: |
|
$ |
|
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: Accumulated Depreciation |
|
|
(
|
) |
|
|
(
|
) |
|
|
|
$ |
|
|
|
$ |
|
|
The useful lives of the Company’s property and equipment by asset class are as follows:
|
Asset Class |
Estimated Useful Life |
|
|
Building |
|
|
|
Land |
|
|
|
Machinery & Equipment |
|
|
|
Building Improvements |
|
|
|
Leasehold Improvements |
|
|
|
Trade Show Booths |
|
|
|
Vehicles |
|
|
|
Computer Equipment |
|
|
|
Furniture & Fixtures |
|
|
In the Consolidated Statements of Operations, depreciation expense is consolidated with amortization expense.
Depreciation expense related to machinery and equipment and depreciation expense related to the 5511 Building, totaling $
In comparison, depreciation expense related to machinery and equipment and depreciation expense related to the 5511 Building, totaling $
| F-11 |
|
|
| Table of Contents |
NOTE 6 – THEFT OF INVENTORY
During the quarter ended September 30, 2025, total net non-operating Other Expenses of $
Also included in Loss From Inventory Theft for the quarter ended September 30, 2025 is $
NOTE 7 – INTANGIBLE ASSETS, NET
Reference is hereby made to the disclosures above in the following sections, which are hereby incorporated by reference thereto:
NOTE 2 – BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES
Business Combinations
Accounting for Goodwill
NOTE 4 – THE COMPANY’S INVESTMENTS
The Company’s Investment in Lifted
NOTE 8 – RELATED PARTY TRANSACTIONS
Ablis
During the quarter ended three and nine months ended September 30, 2025, Lifted sold $
Robert T. Warrender II
In January 2022, Lifted hired Mr. Robert T. Warrender II, NWarrender’s father, as an employee, with a salary of $
Sublease of Space Located at 2701-09 West Fulton PH, Chicago, Illinois 60612
On July 6, 2022, Lifted entered into a sublease for office space in Chicago, Illinois located at 2701-09 West Fulton PH, Chicago, Illinois 60612. The sublease was terminated as of June 30, 2024. Prior to the termination of the sublease, the sublease cost $
The sublessor was Lifted’s former Chief Strategy Officer. The sublease was structured so that the sublessor's lease payment obligations to the landlord were passed on to Lifted on a dollar-for-dollar basis, such that the sublessor did not realize a cashflow profit or loss from the sublease.
Since the term was less than twelve months, this lease was not recorded on the Consolidated Balance Sheet, and lease expense was recognized on a straight-line basis over the lease term.
Lease and Purchase of 5511 95th Avenue, Kenosha, Wisconsin 53144
Toward the end of 2020, NWarrender, through his assigned entity 95th Holdings, LLC ("Holdings"), purchased a building located at 5511 95th Avenue, Kenosha, Wisconsin 53144 (“5511 Building”) that was immediately leased to us to conduct our expanded operations. The 5511 Building includes office, laboratory and warehouse space. As part of the lease agreement with Holdings, the parties agreed that Lifted would eventually purchase the 5511 Building. The purchase price for the 5511 Building was originally subject to variation based on a formula agreed upon by the parties. Pursuant to the Omnibus Agreement with NWarrender on December 30, 2021, Lifted was obligated to purchase the 5511 Building from Holdings on or before December 31, 2022 for a fixed purchase price of $
Pursuant to an Acceleration Agreement, the deadline to purchase the 5511 Building was extended by one year to December 31, 2023. In addition, the Acceleration Agreement contained a provision that if we raised $
| F-12 |
|
|
| Table of Contents |
On December 14, 2023, LFTD Partners and Lifted (together the “Borrower”), jointly borrowed a total of $
The Lender made two five-year loans to the Borrower, as joint borrowers: (1) a working capital loan of $
The Board of Directors of the Company has authorized management of the Company to explore a sale of the 5511 Building, and, if the 5511 Building is sold, to apply the net proceeds of such sale, firstly to the full repayment of the Building Loan, and secondly to the partial repayment of the Working Capital Loan. Simultaneously with such authorization, the Board of Directors of the Company has authorized management of the Company to apply certain tax refunds expected to be received by the Company, plus certain cash on hand held by the Company, to the partial or full repayment of the Working Capital Loan. Pursuant to this authorization, during the third quarter ended September 30, 2025, the Working Capital Loan was paid down $
Laurie Warrender
On December 30, 2024, Laurie Warrender, NWarrender’s mother, was hired as an employee of Lifted, as a consultant and advisor to NWarrender, with a salary of $
Mystic Foods LLC
During the three months and nine months ended September 30, 2025, Lifted purchased $
Outside Director Fees
Each of the Company’s outside directors, including Mr. Vincent Mesolella, Dr. Joshua Bloom, Ms. Sharial Howard, Mr. Richard Morrissy, Dr. James Jacobs, and Mr. Kevin Rocio, receive quarterly director fees of $
William C. “Jake” Jacobs
At the closing of the acquisition of Lifted,
Related Party Note
On April 1, 2025, the Company converted $
| F-13 |
|
|
| Table of Contents |
Listing Contract
On July 21, 2025, Lifted (“Seller”) entered into a listing contract with @properties (the “Firm”). The Seller’s listing agents with @properties are Seller’s director Kevin Rocio and Jake Hansen. The listing contract gives the Firm the exclusive right to sell the 5511 Building. The term of the contract is from July 21, 2025 up to the earlier of midnight on July 21, 2026, or the conveyance of the entire 5511 Building. The Firm’s commission shall be 3% of the sale price. Seller shall pay the Firm’s commission, which shall be earned, if, during the term of the listing: 1) Seller sells all or any part of the 5511 Building; 2) Seller grants an option to purchase all or any part of the 5511 Building which is subsequently exercised; 3) Seller exchanges all or any part of the 5511 Building; 4) A transaction occurs which causes an effective change in ownership or control of all or any party of the 5511 Building. Once earned, the Firm’s commission is due and payable in full at the closing.
NOTE 9 – SHAREHOLDERS’ EQUITY AND STOCK BASED COMPENSATION
Issuance of Series A Convertible Preferred Stock
The Company has authorized
As of September 30, 2025,
As of September 30, 2025 and December 31, 2024, the Company has accrued a liability of $
Issuance of Series B Convertible Preferred Stock
The Company has authorized
| F-14 |
|
|
| Table of Contents |
As of September 30, 2025,
As of September 30, 2025 and December 31, 2024, the Company has accrued a liability of $
Share-Based Compensation
At the closing of the acquisition of Lifted,
Options and Warrants
As of September 30, 2025, the Company did not have any options or warrants outstanding.
As of September 30, 2024, in addition to our outstanding common stock, we have issued (a) options to purchase
The following is a summary of share-based compensation, option and warrant activity as of September 30, 2025 and changes during the nine months then ended:
|
|
|
|
|
|
|
|
|
Weighted-Average |
|
|
|
|
||||
|
|
|
|
|
|
Weighted-Average |
|
|
Remaining Contractual |
|
|
Aggregate Intrinsic |
|
||||
|
|
|
Shares |
|
|
Exercise Price |
|
|
Term (Years) |
|
|
Value |
|
||||
|
Exercisable Warrants Outstanding, December 31, 2024 |
|
|
|
|
|
$ |
|
|
|
|
|
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Warrants That Expired During Q1 2025 |
|
|
(
|
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exercisable Options and Warrants Outstanding, September 30, 2025 |
|
|
|
|
|
$ |
|
|
|
|
|
|
|
$ |
|
|
|
Outstanding Options and Warrants, September 30, 2025 |
|
|
|
|
|
$ |
|
|
|
|
|
|
|
$ |
|
|
| F-15 |
|
|
| Table of Contents |
In connection with the Company’s acquisition of Lifted pursuant to the Lifted Merger Agreement, the Company entered into several material agreements with NWarrender, GJacobs, and WJacobs.
Registration Rights Agreement
Pursuant to a Registration Rights Agreement, NWarrender was granted demand and piggyback registration rights with respect to the
Stockholders Agreement
At the closing of the Lifted Merger, NWarrender, GJacobs, and WJacobs entered into a Stockholders Agreement under which they agreed to vote all shares of Company common stock now or hereafter held by them in accordance with unanimous agreement among the three on certain corporate matters, including the election and removal of directors, amendments to charter documents, compensation decisions, acquisitions and divestitures, and capital raising activities.
Executive Employment Agreements
Concurrent with the Lifted Merger closing, the Company entered into five-year, automatically renewing Executive Employment Agreements with NWarrender (Vice Chairman, Chief Operating Officer of the Company, and Chief Executive Officer of Lifted), GJacobs (Chairman, Chief Executive Officer, and Secretary), and WJacobs (President, Chief Financial Officer, and Treasurer).
NOTE 10 – LEASES
In February 2016, the FASB issued ASU No. 2016-02, “Leases” (Topic 842) (“ASU 2016-02”). The amended guidance, which was effective for the Company on January 1, 2019, requires the recognition of lease assets and lease liabilities on the balance sheet for those leases with terms in excess of 12 months and currently classified as operating leases. Leases with an initial term of one year or less are not recorded on the balance sheet; lease expense for these types of leases are recognized on a straight-line basis over the lease term. Options to extend or terminate a lease are not included in the determination of the right-of-use asset or lease liability unless it is reasonably certain to be exercised. Operating lease right-of-use assets and operating lease liabilities are recognized based on the present value of future minimum lease payments over the lease term at commencement date. Lifted adopted ASU 2016-02 using the modified retrospective approach, electing the package of practical expedients.
The Company currently has operating leases for its leased facilities located at 8910 58 th Place, Suites 100, 600 and 700, Kenosha, WI 53144 and 5732 95 th Avenue, Suites 100-300, Kenosha, WI 53144. These facilities are used for manufacturing, packaging, storage and office space in Kenosha, Wisconsin. The Company has paid security deposits for these leases. From time to time, the Company maintains inventory at third party facilities around the USA.
The following table is the maturity analysis of the Company’s operating leases as of the reported period end:
|
|
|
Finance |
|
|
Operating |
|
||
|
2025 |
|
$ |
|
|
|
$ |
|
|
|
2026 |
|
|
|
|
|
|
|
|
|
2027 |
|
|
|
|
|
|
|
|
|
2028 |
|
|
|
|
|
|
|
|
|
2029 |
|
|
|
|
|
|
|
|
|
Thereafter |
|
|
|
|
|
|
|
|
|
Total |
|
|
|
|
|
|
|
|
|
Less: Present value discount |
|
|
|
|
|
|
(
|
) |
|
Lease liability |
|
$ |
|
|
|
$ |
|
|
| F-16 |
|
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| Table of Contents |
In calculating the right-of-use assets and liabilities, the Company uses a discount rate based on a published range of conventional commercial mortgage interest rates corresponding to the life of each lease. The Company uses the higher end of the range due to the Company’s limited credit history.
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September 30, 2025 |
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December 31, 2024 |
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Weighted Average remaining lease term (years) |
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Weighted Average Discount rate |
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% |
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% |
Lease Costs
The table below summarizes the components of lease costs for the following periods:
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For the Three Months Ended September 30, |
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Lease Cost: |
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2025 |
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2024 |
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Finance lease expense: |
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Amortization of Right-of-Use Assets |
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$ |
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$ |
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Interest on lease liabilities |
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Operating lease expenses |
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Total |
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$ |
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$ |
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For the Nine Months Ended September 30, |
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Lease Cost: |
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2025 |
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2024 |
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Finance lease expense: |
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Amortization of Right-of-Use Assets |
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$ |
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$ |
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Interest on lease liabilities |
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Operating lease expense |
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Total |
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$ |
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$ |
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Balance Sheet Classification of Operating Lease Assets and Liabilities
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Asset |
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Balance Sheet Line |
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September 30, 2025 |
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Operating Lease Right-of-Use Asset, net of Right-of-Use Asset Amortization of $397,951 |
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Non-Current Assets |
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$ |
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Liability |
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Balance Sheet Line |
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September 30, 2025 |
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Operating Lease Liabilities |
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Current Liabilities |
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$ |
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Non-Current Liabilities |
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Allocation of a Portion of Lease Expense to Finished Goods
A portion of monthly overhead expenses, such as those related to leases, utilities, insurance, and indirect labor, are allocated to finished goods based on the estimated percentage cost toward the finished goods. Depreciation expense related to certain machinery and equipment is also allocated to finished goods.
Other Deposits and Bonds
The majority of the Company’s security deposit for the lease of 789 Tech Center Drive, Unit C, Durango, Colorado 81301 was returned to the Company in the second quarter of 2025 after the termination of the lease. The Company’s security deposit for its former sublease of the space located at 2701-09 West Fulton PH, Chicago, Illinois 60612 was written off in the second quarter of 2025.
As part of Lifted’s acquisition of the assets of Oculus, Lifted had assumed the Aztec Lease, and the security deposit that had been previously paid by Oculus to the landlord of the Aztec Lease. The Aztec Lease was terminated on May 7, 2024, and the security deposit was not returned to Lifted.
| F-17 |
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| Table of Contents |
The Company is required to, and has, paid bonds and deposits to various state departments and vendors for licenses and utilities, respectively.
NOTE 11 - CONTINGENT CONTRACTUAL OBLIGATIONS AND COMMERCIAL COMMITMENTS
Potential Issuance of Warrants to Purchase Shares of Common Stock of the Company
The Compensation Committee of the Company’s Board of Directors may, from time to time, recommend that certain warrants to purchase shares of common stock of the Company should be issued to new or current members of the Company’s Board of Directors, to officers and employees of the Company and its subsidiaries, or to members of any advisory board or consultants to the Company.
Compensation of Lifted’s Chief Strategy Officer
Lifted entered into an agreement with its Chief Strategy Officer (the “CSO”),
Company-Wide Management Bonus Pool
Please refer to NOTE 13 – COMPANY-WIDE MANAGEMENT BONUS POOL for more information about the company-wide management bonus pool.
Other Contingent Contractual Obligations and Commercial Commitments
For other contingent contractual obligations and commercial commitments, please refer to NOTE 8 – RELATED PARTY TRANSACTIONS .
NOTE 12 – LEGAL PROCEEDINGS
The Company may be involved in certain legal proceedings that arise from time to time in the ordinary course of its business. Except for income tax contingencies, the Company records accruals for contingencies to the extent that management concludes that the occurrence is probable and that the related amounts of loss can be reasonably estimated. Legal expenses associated with the contingency are expensed as incurred.
Lifted currently is involved in two pending lawsuits, as the defendant:
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(1) |
Hernandez v Lifted Liquids – Plaintiffs have sued the Company as representatives of a putative class action case in the United States District Court for the Northern District of Illinois. The Complaint alleges that Plaintiffs bought the Company’s vape cartridge products and that the delta-9-THC cannabinoid content of those products was underreported. The Complaint alleges that the Company fraudulently misrepresented the nature of the products, breached an implied warranty, and was unjustly enriched. The Company contends that this lawsuit is without merit and intends to vigorously defend the action. |
| F-18 |
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| Table of Contents |
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(2) |
Jessie Hooks v. Lifted Made, URB Cannabis, Barry Hollingsworth, Gerard Jacobs, Nicholas Warrender, and Pharmlabs, LLC – Plaintiff had filed suit against the Company, three of its officers, and a testing company in the United States District Court for the Eastern District of Wisconsin alleging that Plaintiff bought 3-4 of the Company’s products, that some of the Company’s products exceeded legal limitations for hemp, and that all of the Defendants misrepresented the nature of the products. In his Amended Complaint, plaintiff asserted seven causes of action including civil RICO claims and alleged the existence of 1,000 “John Doe” defendants. The Company contended that this lawsuit was without merit and is vigorously defending the action. On February 6, 2025, the Court ordered that the RICO claims were dismissed with prejudice, and the other claims were also dismissed. The Court noted that the RICO claims were “borderline frivolous”. The Court further dismissed all claims against the individual defendants. On March 6, 2025, Plaintiff filed a second amended complaint alleging that the Company misrepresented various products. The Company will continue to vigorously defend against the meritless claims. The Company has filed a motion to dismiss and is waiting for the Court’s decision. |
Lifted currently is involved in two pending lawsuits, as the plaintiff:
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(1) |
Lifted Liquids, Inc. v. Asad Awawdeh and Habib Cash and Carry SD, Inc. –
The Company has filed an action seeking to recover approximately $
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(2) |
Lifted Liquids, Inc. v RanCo, LLC,
The Company has filed an action to recover approximately $
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As described in NOTE 18 – SUBSEQUENT EVENTS , on or about October 2, 2025, Lifted compromised and settled a dispute with one of its former insurance carriers, on terms agreeable to the parties.
Settlement Agreement with Chris Hillseth Enterprises Corporation and Ameri-Kal LLC
The Company had filed an action seeking to recover amounts paid for equipment that did not work as represented. On or about April 28, 2025, the parties resolved the matter via a signed settlement agreement, pursuant to which the Company will recoup a total of $
Dismissal of Loree Perry, Individually and on Behalf of All Others Similarly Situated v. Sheikhani Group, et al
Plaintiff added the Company and four of its officers to a putative class action case against a Texas retailer, several cannabis industry manufacturers, testing companies, and related individuals in the United States District Court for the Eastern District of Texas. The Amended Complaint alleges that Plaintiff bought two of the Company’s vape cartridge products and that the delta-9-THC cannabinoid content of those and additional unspecified “many” of the Company’s other products was underreported. The Amended Complaint alleges that all of the Defendants misrepresent the nature of their products and are intentionally engaging in ongoing illegal sales. The Amended Complaint asserts seven causes of action including a civil RICO claim and alleges the existence of 1,000 “John Doe” defendants. The Company contends that this lawsuit is without merit and filed a motion to dismiss. On March 8, 2025, Plaintiff has voluntarily dismissed the complaint without prejudice to refiling it at a later date.
Settlement Agreement with Girish GPO, Inc.
On November 9, 2023, Lifted entered into a settlement agreement that was mutually acceptable to the parties which has resolved the following lawsuit:
Lifted Liquids, Inc. v. Girish GPO, Inc., Girish Ray, and the Law Offices of Saul Roffe.
The Company had filed an action in a case styled “Lifted Liquids, Inc. v. Girish GPO, Inc., Girish Ray, and the Law Offices of Saul Roffe” seeking to recover $
| F-19 |
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| Table of Contents |
Settlement Agreement With Dev Distribution, LLC
On October 9, 2023, Lifted entered into a settlement agreement that was mutually acceptable to the parties which has resolved the following lawsuit:
Lifted Liquids, Inc. v. DEV Distribution, LLC
, No, DC-22-15080. In October 2022, Lifted filed an action against Dev Distribution LLC (“Dev”),
Amendment to Settlement With Dev Distribution, LLC
On April 1, 2024, the Company entered into an Addendum to Settlement Agreement and Mutual Release (“Addendum”) with Dev. Under the Addendum, the total consideration to be paid by Dev has been increased from $230,000 to $
NOTE 13 – COMPANY-WIDE MANAGEMENT BONUS POOL
Pursuant to the employment agreements entered into between the Company and its three principal executives GJacobs, WJacobs and NWarrender (individually, “Executive”), the Company is obligated to compensate management of the Company via a management bonus pool.
For each fiscal year during the Employment Term, the Executive shall be eligible to be considered for an annual bonus (the “Annual Bonus”) as part of a Company-wide management bonus pool arrangement. During the fourth quarter of each year, the Chairman of the Compensation Committee of the Board (the “Compensation Committee”) shall recommend in writing a consolidated earnings before interest, taxes, depreciation and amortization (“EBITDA”) target (each, a “Target”) for the following year (the “Target Year”), which Target must be approved in writing by each of the following for as long as he remains employed by the Company: GJacobs, WJacobs, and NWarrender (collectively, and with respect to each for only as long as he is an employee of the Company, the “Executive Management Group”). If the Chairman of the Compensation Committee does not recommend in writing a Target for a Target Year that is approved in writing by all of the members of the Executive Management Group prior to the commencement of the Target Year, then the Target for the Target Year shall be equal to the actual consolidated EBITDA of the Company and its subsidiaries during the then-current year (i.e., the year preceding the Target Year) as certified in writing by the Company’s outside firm of independent certified public accountants. If the actual consolidated EBITDA of the Company and its subsidiaries during the Target Year as certified in writing by the Company’s outside firm of independent certified public accountants exceeds the Target (the amount by which the actual consolidated EBITDA of the Company and its subsidiaries during the Target Year as certified in writing by the Company’s outside firm of independent certified public accountants exceeds the Target, the “Excess Amount”), then cash equal to 33% of the Excess Amount shall be set aside by the Company as a cash management bonus pool (the “Bonus Pool”), and the amount of the Bonus Pool shall be allocated and paid out by the Company as bonuses or fees to the officers of the Company and its subsidiaries (and potentially, to directors or third parties who have significantly helped the Company and its subsidiaries during the Target Year), with the amount to be paid to each payee, including the amount of any Annual Bonus to be paid to the Executive, to be determined by unanimous written agreement of the Executive Management Group, in their sole discretion. The Executive expressly agrees and acknowledges that the amount of the Annual Bonus (if any) allocated and paid to the Executive as so determined by unanimous written agreement of the Executive Management Group shall be final, non-appealable, and binding upon the Executive, regardless of whether the Executive receives any Annual Bonus, and regardless of whether any Annual Bonus received by the Executive is higher or lower than any other person’s bonus, under any and all circumstances whatsoever. The Company shall pay the Executive the Annual Bonus, if any, no later than March 15 th of the year following the applicable Target Year. In the event that there is funding for the Bonus Pool but the Executive Management Group does not reach a unanimous decision on Bonus allocations, then no annual bonus shall be paid. The Annual Bonus Pool would then be placed in escrow and the Executive Management Group would mediate.
| F-20 |
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| Table of Contents |
Pursuant to the Amended Omnibus Agreement, the 2022 company-wide bonus pool shall not be allowed to be accrued or paid by LIFD if and to the extent that doing so would decrease LIFD’s 2022 diluted earnings per share of common stock below $
NOTE 14 – INCOME TAXES
Provisions for income taxes are based on taxes payable or refundable for the current year and deferred income taxes. Deferred income taxes are provided on differences between the tax bases of assets and liabilities and their reported amounts in the financial statements and on tax carry forwards. Deferred tax assets and liabilities are included in the financial statements at currently enacted income tax rates applicable to the period in which the deferred tax assets and liabilities are expected to be realized or settled. As changes in tax laws or rates are enacted, deferred tax assets and liabilities are adjusted through the provision for income taxes. A valuation allowance is provided against deferred income tax assets when it is not more likely than not that the deferred income tax assets will be realized.
On December 22, 2017, the U.S. government enacted comprehensive tax legislation commonly referred to as the Tax Cuts and Jobs Act (the “Tax Act”). The Tax Act reduced the U.S. federal statutory tax rate, broadened the corporate tax base through the elimination or reduction of deductions, exclusions, and credits, limited the ability of U.S. corporations to deduct interest expense, and transitioned to a territorial tax system which allows for the repatriation of foreign earnings to the U.S. with a
Significant components on the Company’s income tax provision (benefit) for continuing operations is as follows:
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For the Three Months Ended |
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For the Nine Months Ended |
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September 30, |
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September 30, |
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2025 |
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2024 |
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2025 |
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2024 |
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Current |
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Domestic-Federal |
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$ |
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$ |
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$ |
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$ |
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Domestic-State |
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Franchise taxes |
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(
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Foreign |
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Deferred |
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Domestic-Federal |
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(
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) |
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(
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) |
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(
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Domestic-State |
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(
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(
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Foreign |
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(
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(
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(
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Total Provision/(Benefit) for Income Taxes |
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$ |
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$ |
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$ |
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$ |
(
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The Company currently believes that all significant filing positions are highly certain and that all of its significant income tax filing positions and deductions would be sustained upon audit. Therefore, the Company has no significant reserves for uncertain tax positions and no adjustments to such reserves were required by US GAAP. The Company’s policy is to recognize accrued interest and penalties related to unrecognized tax benefits in the provision for income taxes.
| F-21 |
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| Table of Contents |
A reconciliation of the amount of tax provision (benefit) computed using the U.S. federal statutory income tax rate to the provision for income taxes on continuing operations is as follows:
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For the Three Months Ended |
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For the Nine Months Ended |
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September 30, |
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September 30, |
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2025 |
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2024 |
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2025 |
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2024 |
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Domestic-Federal |
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$ |
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$ |
(
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$ |
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$ |
(
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State taxes, net of federal benefit |
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(
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(
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Non-deductible expenses |
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Franchise taxes |
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(
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Revision of prior years' provision to return filing |
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Change in estimated future income tax rates |
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(
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(
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Change in valuation allowance |
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(
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(
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Other |
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(
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(
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(
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(
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Total Provision/(Benefit) for Income Taxes |
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$ |
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$ |
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$ |
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$ |
(
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Deferred tax assets and liabilities as of September 30, 2025 and December 31, 2024 were as follows:
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September 30, |
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December 31, |
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2025 |
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2024 |
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Deferred Tax Assets: |
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Operating Loss Carry forwards |
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$ |
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$ |
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Stock-Based Compensation |
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Sales Allowances |
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Accrued Related Party Expenses |
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Interest Carryforward |
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Allowance for Doubtful Accounts |
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Lease Liabilities |
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Other |
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Less: Valuation allowance for stock-based compensation |
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(
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(
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Total Deferred Tax Assets |
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Deferred Tax Liabilities: |
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Depreciation & Amortization |
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(
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(
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Other |
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Total Deferred Tax Liabilities |
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(
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(
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Net Deferred Tax Assets/(Liabilities) |
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$ |
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$ |
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NOTE 15 – DEBT
On December 14, 2023, the Company entered into two loan arrangements with a single lender: the $
| F-22 |
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| Table of Contents |
The following presents the Working Capital Loan and Building Loan in the Consolidated Balance Sheets as of September 30, 2025 and December 31, 2024:
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September 30, 2025 |
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December 31, 2024 |
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Working Capital Loan |
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$ |
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$ |
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Real Estate Loan |
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Total principal amount |
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Less: Unamortized debt financing costs |
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(
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(
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Less: Current portion of Surety Bank notes |
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(
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) |
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(
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) |
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Non-Current portion of Surety Bank notes |
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$ |
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$ |
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The following represents aggregate payments due on the Working Capital and Building Loans as of September 30, 2025:
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2025 |
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$ |
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2026 |
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2027 |
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2028 |
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Thereafter |
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Total |
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Less: Interest portion |
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(
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) |
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Total principal amount |
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$ |
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NOTE 16 – REVENUES
Revenue – The Company recognizes revenue in accordance with Accounting Standards Codification (“ASC”) 606. The majority of the Company’s sales are of branded products to distributors, wholesalers, and end consumers. A minority of the Company’s sales are of raw goods to manufacturers, distributors and wholesalers. The majority of the Company’s sales are to distributors, followed by the Company’s sales to wholesalers, and then the Company’s sales to end consumers. Distributors primarily sell Lifted’s products to vape and smoke shops, stores specializing in hemp-derived products, convenience stores, health food stores, and other outlets.
Typically, the Company’s revenue is recognized when it satisfies a single performance obligation by transferring control of its products to a customer. Control is generally transferred when the Company’s products are either shipped or delivered based on the terms contained within the underlying contracts or agreements. If the shipping terms on a sale are FOB destination, the revenue is deferred until the product reaches its destination.
The Company excludes from revenues all taxes assessed by a governmental authority that are imposed on the sale of its products and collected from customers. Discounts and rebates provided to customers are recorded as a reduction to gross sales.
License Fee
– On June 1, 2023, Lifted and Extrax NM LLC (“ENM”) entered into an Agreement (the “ENM Agreement”). Pursuant to the ENM Agreement, (1) Lifted will sell certain devices/objects to ENM, and Lifted will loan certain amounts to ENM, and (2) ENM will manufacture and exclusively sell Urb-branded marijuana products to licensed marijuana dispensaries located in New Mexico. ENM shall pay over to Lifted one-half of the gross sales proceeds, excluding only governmentally-imposed taxes, received by ENM from product sales, which payments shall be allocated and applied as follows: firstly, to repay Lifted for its loans to ENM; secondly, to pay to Lifted mutually agreed upon amounts for said devices/objects sold by Lifted to ENM; and thirdly, to pay to Lifted a license fee (the “License Fee”). The License Fee shall be calculated as an amount equal to (a) one-half of the gross sales proceeds paid to Lifted, minus (b) the loan repayment(s) and the amounts paid for said devices/objects sold by Lifted to ENM. License Fee is included in Net Sales, if any. No License Fee was reported during the nine months ended September 30, 2025. $
| F-23 |
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| Table of Contents |
As of September 30, 2025, Lifted and ENM signed an Agreement pursuant to which ENM has acknowledged that it owes Lifted a total $
Allowance for Sales – An allowance for sales is recorded for estimated future discounts/refunds related to returns of products sold prior to the reporting period end. Described below are some of the reasons why a customer may want to return an ordered item, and how the Company responds in each situation:
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1) |
The ordered item breaks, melts, or separates in transit to the customer. In this case, the Company will replace the broken, melted or separated item at no cost to the customer. |
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|
2) |
The Company sent the wrong item to the customer. In this case, the Company will allow the customer to keep, at no cost to the customer, the item that was mistakenly sent to the customer. The Company will also send the correct product to the customer, at no cost to the customer. |
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|
3) |
The customer ordered the wrong product. In this case, the customer, at his/her own expense, must mail the mistakenly ordered product back to the Company, and the Company will mail the correct product to the customer. |
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4) |
The ordered item is recalled. In a situation where product is recalled, the Company will offer a replacement, credit, or refund. |
An allowance for sales reduces net sales on the Consolidated Statements of Operations, and also reduces accounts receivable on the Consolidated Balance Sheets. Sales allowances of $
Deferred Revenue – Amounts received from a customer before the purchased product is shipped to the customer are treated as deferred revenue. If cash is not received, an accounts receivable is recognized for the invoiced order, but revenue is not recognized until the order is fully shipped.
At September 30, 2025, total deferred revenue was $
NOTE 17 – SEGMENTS AND CONCENTRATIONS
The financial statements of LFTD Partners are consolidated with Lifted’s, since Lifted is a wholly owned subsidiary of LFTD Partners. All of the Company’s sales are generated by the Company’s wholly owned subsidiary Lifted; LFTD Partners as an entity by itself generates no sales.
Pursuant to Accounting Standards Codification (“ASC”) 280-10-50-1: “an operating segment is a component of a public entity that has all of the following characteristics:
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a. |
It engages in business activities from which it may recognize revenues and incur expenses (including revenues and expenses relating to transactions with other components of the same public entity). |
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b. |
Its operating results are regularly reviewed by the public entity’s chief operating decision maker (“CODM”) to make decisions about resources to be allocated to the segment and assess its performance. |
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c. |
Its discrete financial information is available.” |
Based on the similarities and shared resources of our production and related product portfolio, the Company views its operations and manages its business as one operating and one reporting segment. The Company’s CODM is NWarrender. Due to the rapidly evolving nature of the Company’s industry, NWarrender leads the Company’s efforts to launch new products to stay ahead of trends, find new sales channels, and modify sales strategies. Consumer demands, changes to regulations, proposed legislation, resource needs for Lifted’s collaborations with third parties, and new product opportunities with novel cannabinoids or other active ingredients, are some of the factors that are considered by NWarrender when determining how to allocate the Company’s resources for operations and business development.
| F-24 |
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| Table of Contents |
Shown below are tables showing the approximate disaggregation of historical revenue:
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For the Three Months Ended |
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For the Nine Months Ended |
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Net sales of raw materials to customers |
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Net sales of products to private label clients |
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Net sales of products to wholesalers |
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Net sales of products to distributors |
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Net sales of products to end consumers |
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Net Sales |
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For the Three Months Ended |
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September 30, |
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September 30, |
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Product Type |
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2024 |
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2025 |
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2024 |
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Vapes |
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$ |
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$ |
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$ |
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$ |
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Edibles |
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Flower |
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Cartridges |
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Apparel and Accessories |
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Net Sales |
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$ |
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$ |
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$ |
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For the Three Months Ended |
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For the Nine Months Ended |
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September 30, |
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September 30, |
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Hemp vs Non-Hemp Product Sales |
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2025 |
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2024 |
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2025 |
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2024 |
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Net sales of hemp products |
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$ |
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$ |
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$ |
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Net sales of non-hemp products |
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Net Sales |
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$ |
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$ |
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$ |
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$ |
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For the Three Months Ended |
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For the Nine Months Ended |
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September 30, |
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September 30, |
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Geographic Market |
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2025 |
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2024 |
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2025 |
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2024 |
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United States |
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$ |
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$ |
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$ |
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International |
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Net Sales |
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$ |
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$ |
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$ |
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NOTE 18 – SUBSEQUENT EVENTS
Management of the Company has evaluated the events that have occurred through the date of the filing of this Quarterly Report on Form 10-Q.
Settlement with Former Insurance Carrier
On or about October 2, 2025, Lifted compromised and settled a dispute with one of its former insurance carriers, on terms agreeable to the parties.
Amendment of Articles of Incorporation of Subsidiary
On October 27, 2025, the Board of Directors of Lifted Liquids, Inc.,
Creation of Highlandia Inc.
On October 24, 2025, LFTD Partners Inc. created a new wholly owned subsidiary in Florida called Highlandia Inc. Highlandia, which has not yet conducted any business, intends to enter the hemp-derived beverage industry.
Update Regarding Theft of Inventory
As described in
NOTE 6 – THEFT OF INVENTORY
, in July 2025, $
Federal Regulation
On November 12, 2025, President Trump signed into law H.R. 5371, the “Continuing Appropriations, Agriculture, Legislative Branch, Military Construction and Veterans Affairs, and Extensions Act, 2026” (the “Act”), which makes continuing appropriations and extensions for fiscal year 2026, and which also bans intoxicating hemp-derived consumable products nationally on November 12, 2026. It is unknown to the Company whether or not the sections of the Act that impact the hemp industry will ultimately go into effect on November 12, 2026, or if those sections will be replaced, impacted or amended by subsequent acts of Congress. However, the Act in all likelihood will have a devastating impact on the Company and the price of its common stock. The material adverse effects of the Act cannot be overstated; these material adverse effects include, but are not limited to, the following:
|
|
1) |
The elimination of half or more of Lifted’s sales. Sales of hemp-derived products made up approximately 47% of Lifted’s sales during the three months ended September 30, 2025; thus, the Act could eliminate approximately half or more of the Company’s revenue; |
|
|
2) |
Goodwill impairment charges. As a result of LFTD Partners' acquisition of Lifted, LFTD Partners recognized goodwill of $
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|
3) |
An investment impairment charge. The Act will necessitate the calculation and recording of an impairment of LFTD Partners’ investment in hemp-derived beverage and products maker Ablis. LFTD Partners’ investment in Ablis was reported as $
|
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|
4) |
Significant inventory write offs. The Act will most likely negatively impact the pricing of hemp-derived products, the availability and price of raw goods and production forecasting, which will lead to increased write-offs each quarter end. Moreover, any hemp-derived products in inventory on November 12, 2026 will have to be written off. |
| F-25 |
|
|
| Table of Contents |
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
As used in this Quarterly Report on Form 10-Q, references to the “Company,” “LFTD Partners,” “LIFD,” “Lifted,” “we,” “our” or “us” refer to LFTD Partners Inc. and Lifted, unless the context otherwise indicates.
The following Management’s Discussion and Analysis (“MD&A”) section includes a discussion of our results of operations, liquidity and financial condition and certain factors that may affect our future results. This MD&A should be read in conjunction with the Company’s risk factors, consolidated financial statements and related, accompanying notes that appear elsewhere in this Quarterly Report on Form 10-Q. In addition to historical financial information, the following MD&A contains forward-looking statements and forward-looking information, as defined under applicable United States securities laws, that reflect our plans, estimates and beliefs. MD&A of our financial condition and results of operations is provided as a supplement to the accompanying financial statements and related notes to help provide an understanding of our financial condition, the changes in our financial condition and the results of operations.
As a result of many factors, the Company’s actual results may differ materially from those anticipated in these forward-looking statements and information. The Company’s consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States (“US GAAP”). Financial information presented in this MD&A is presented in United States dollars (“$”).
Cautionary Note Regarding Forward-Looking Statements
Reference is hereby made to the disclosures above in the following sections, which are hereby incorporated by reference thereto:
PART I – FINANCIAL INFORMATION
Cautionary Note Regarding Forward-Looking Statements
PART II – OTHER INFORMATION
ITEM 1A. RISK FACTORS
Overview
Reference is hereby made to the description of the business of LFTD Partners Inc. in the following section, which is hereby incorporated by reference thereto:
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 – DESCRIPTION OF THE BUSINESS OF LFTD PARTNERS INC.
Liquidity and Capital Resources
On February 24, 2020, the Company acquired 100% of the ownership interests of Lifted. All of the Company’s sales are generated by the Company’s wholly owned subsidiary Lifted; LFTD Partners by itself generates no sales. We also do not recognize any revenue or earnings from our investments in Bendistillery or Ablis.
The Company's cash needs for working capital, capital expenditures, growth opportunities, the payments of Series A and Series B Preferred Stock dividends, bonuses, its financial obligations under its loan agreements with Surety Bank, and other obligations, are expected to be met with current cash on hand and cash flows provided by operating activities.
| 4 |
|
|
| Table of Contents |
The Company’s ability to generate sufficient operating cash flow is directly affected by the timing and collectability of its accounts receivable. A significant portion of the Company’s revenue comes from wholesale and distributor sales, which often involve extended payment terms. As a result, delays in customer payments can have a material impact on cash flow, liquidity, and working capital availability. Fluctuations in cash collections can impact the Company’s ability to meet short-term obligations, fund inventory purchases, and invest in growth initiatives. Prolonged delays in accounts receivable collection could necessitate further adjustments to working capital management strategies, including modifications to vendor payment schedules, securing additional financing, or reevaluating sales terms to improve cash flow predictability. Management assesses the impact of delayed customer payments on overall liquidity and considers credit risk and allowance for doubtful accounts, in an effort to provide some safeguard against potential cash flow disruptions. However, if economic conditions deteriorate or customer creditworthiness declines further, additional measures may be required to preserve liquidity and operational stability.
The Company has a history of losses as evidenced by the accumulated deficit at September 30, 2025 of $3,915,542. We plan to sustain the Company as a going concern by taking the following actions: (1) continuing to operate Lifted; (2) acquiring and/or developing profitable businesses that will create positive income from operations; and/or (3) completing private placements of our common stock and/or preferred stock. We believe that by taking these actions, we will be provided with sufficient future operations and cash flow to continue as a going concern. However, there can be no assurance that we will be successful in consummating such actions on acceptable terms, if at all. Moreover, many of such actions can be expected to result in substantial dilution to the existing shareholders of the Company.
The following table summarizes our Company’s cash flows for the nine months ended September 30, 2025 and 2024:
|
|
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For the Nine Months Ended |
|
|||||
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|
|
September 30, |
|
|||||
|
|
|
2025 |
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2024 |
|
||
|
Net Cash Provided By/(Used In) Operating Activities |
|
$ | 785,188 |
|
|
$ | (67,154 | ) |
|
Net Cash Used in Investing Activities |
|
|
(87,082 | ) |
|
|
(480,611 | ) |
|
Net Cash Used In Financing Activities |
|
|
(924,389 | ) |
|
|
(634,969 | ) |
Cash Flows From Operating Activities
Net cash provided by operating activities was $785,188 during the nine months ended September 30, 2025; this resulted from net income of $62,265 increased by net, non-cash expenses of $2,045,638 and reduced by net operating assets and liabilities of $1,322,715. Non-cash expenses are primarily related to spoiled and written off inventory of $769,104, bad debt expense of $664,686, and Loss From Inventory Theft of $358,072.
In comparison, net cash used in operating activities was $67,154 for the nine months ended September 30, 2024. During the nine months ended September 30, 2024, net cash used in operating activities primarily resulted from a net loss of $1,858,615, which includes net, non-cash expenses of $4,379,929, offset by an increase in net operating assets and liabilities of $2,588,468. Non-cash expenses are primarily related to bad debt expense of $2,304,898, spoiled and written off inventory of $1,379,982, and loss on the Jeeter collaboration of $1,349,467.
Cash Flows From Investing Activities
Net cash used in investing activities was $87,082 during the nine months ended September 30, 2025, and was due to the purchase of fixed assets.
Net cash used in investing activities was $480,611 during the nine months ended September 30, 2024. In 2024, Lifted spent $310,763 on purchases of fixed assets and $200,000 for the cash portion of the second installment of merger consideration pursuant to the Oculus Merger Agreement.
Cash Flows From Financing Activities
During the nine months ended September 30, 2025, net cash used in financing activities was $924,389, primarily consisting of payments on the Surety Bank loans of $1,050,849 and payments on the Related Party Note (defined below) of $211,538, offset by proceeds of $350,000 from the Related Party Note.
In comparison, during the nine months ended September 30, 2024, net cash used in financing activities was $634,969, which is primarily driven by payments on the Surety Bank loans of $382,733 and purchases of shares of the Company’s common stock of $240,240.
| 5 |
|
|
| Table of Contents |
During the nine months ended September 30, 2025, net cash decreased by $226,283, and we had $1,920,664 of unrestricted cash at September 30, 2025. In comparison, during the nine months ended September 30, 2024, net cash decreased by $1,182,734, and we had $3,174,805 of unrestricted cash at September 30, 2024.
Comparison of the Consolidated Balance Sheets as of September 30, 2025 and December 31, 2024
The following table summarizes our Company’s current assets, current liabilities and working capital as of September 30, 2025 and December 31, 2024.
|
|
|
September 30, 2025 |
|
|
December 31, 2024 |
|
||
|
Current Assets |
|
$ | 14,591,256 |
|
|
$ | 16,928,005 |
|
|
Current Liabilities |
|
|
4,827,091 |
|
|
|
6,084,011 |
|
|
Working Capital |
|
|
9,764,165 |
|
|
|
10,843,994 |
|
As of September 30, 2025, we had cash and restricted cash of $2,920,664; in comparison, as of December 31, 2024, we had cash and restricted cash of $3,146,947.
As of September 30, 2025, we reported prepaid expenses of $259,222, primarily consisting of prepaid inventory of $174,274. In comparison, as of December 31, 2024, we reported prepaid expenses of $1,598,654, primarily consisting of prepaid inventory of $1,470,957.
Accounts receivable of $2,308,084, net of $1,536,905 allowance for doubtful accounts, were outstanding as of September 30, 2025. In comparison, accounts receivable of $2,358,823, net of $853,329 allowance for doubtful accounts, were outstanding as of December 31, 2024.
The Company evaluates the collectability of its trade accounts receivable based on a number of factors. Management of the Company reviews and discusses all outstanding customer trade balances as of reporting period end. In circumstances where the Company becomes aware of a specific customer’s inability to meet its financial obligations to the Company, a specific reserve for bad debts is estimated and recorded (the “Allowance for Doubtful Accounts”), which reduces the recognized receivable to the estimated amount the Company believes will ultimately be collected. Management also considers industry-specific factors which may impact customers’ ability to meet their financial obligations to the Company.
In addition to specific customer identification of potential bad debts, management takes into consideration Accounting Standards Update (“ASU”) No. 2016-13, Financial Instruments – Credit Losses, which is codified as Accounting Standards Codification Topic 326, adds to US GAAP the current expected credit loss model (“CECL Model”), which is a measurement model based on expected losses rather than incurred losses. Under the CECL Model, an entity recognizes its estimate of expected losses as an allowance. The Company has considered the applicable guidance in ASU 2016-13. Key aspects of the CECL Model include the following:
|
|
1. |
The CECL Model applies to financing receivables measured at amortized cost, which includes trade accounts receivable. |
|
|
2. |
An entity will recognize an allowance for credit losses that results in the financial statements reflecting the net amount expected to be collected from the financial asset. |
|
|
3. |
The allowance represents the portion of the amortized cost basis that an entity does not expect to collect due to credit over the asset’s contractual life, considering past events, current conditions and reasonable and supportable forecasts of future economic conditions. |
In performing its CECL Model Analysis, management calculates the ratio of write offs to sales made to wholesalers and distributors for the trailing three-year period (the “Bad Debt Loss Rate”). The Bad Debt Loss Rate is then multiplied by sales made to wholesalers and distributors during the trailing twelve months (the “Bad Debt Calc”). The Bad Debt Calc is compared to the total accounts receivable that is older than 90 days as of reported period end; for conservatism, whichever is larger is considered the Allowance for Doubtful Accounts as of reported period end. The Company’s position is that the Company’s conservative approach toward the treatment of Allowance for Doubtful Accounts provides sufficient coverage in relation to potential credit losses from outstanding invoice write-offs.
| 6 |
|
|
| Table of Contents |
An allowance for sales is recorded for estimated future discounts/refunds related to returns of products sold prior to the reporting period end. An allowance for sales reduces net sales on the Consolidated Statements of Operations, and also reduces accounts receivable on the Consolidated Balance Sheets. Sales allowances of $350,000 and $304,018 were reported as of September 30, 2025 and December 31, 2024, respectively. A primary impetus for the need of a sales allowance and a reduction in accounts receivable as of September 30, 2025 and December 31, 2024 was that, sometimes, when employees of federal, state and local regulatory agencies and/or law enforcement make statements and/or issue correspondence that claim or imply that certain hemp-derived products are unsafe or illegal, these statements and correspondence, and industry publications and/or news media coverage of such statements and correspondence, may trigger confusion, uncertainty or alarm among the distributors, retailers and consumers who purchase our products, and consequently result in decreased sales or returns/exchanges of our products. However, the Company has been able to re-sell the returned products to other distributors, retailers and consumers. Nonetheless, in anticipation of the need to honor exchanges of these certain products, management records a credit note reserve and corresponding sales allowance for these types of products.
Inventory is valued at the lower of average cost or market value (net realizable value). Inventory consisted of the following at September 30, 2025 and December 31, 2024:
|
|
|
September 30, 2025 |
|
|
December 31, 2024 |
|
||
|
Raw Goods |
|
$ | 5,779,633 |
|
|
$ | 5,867,526 |
|
|
Finished Goods |
|
|
4,297,743 |
|
|
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3,448,765 |
|
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Total Inventory |
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$ | 10,077,375 |
|
|
$ | 9,316,291 |
|
Overhead expenses related to leases, utilities, insurance, and indirect labor are allocated to finished goods based on the estimated percentage cost toward the finished goods. Depreciation expense related to certain machinery and equipment is also allocated to finished goods. At September 30, 2025, $379,749 of overhead expenses were allocated to finished goods. In comparison, at December 31, 2024, $383,646 of overhead expenses were allocated to finished goods.
As of September 30, 2025 and December 31, 2024, our other assets primarily included goodwill of $23,092,794, which was comprised of $22,292,767 of goodwill from the acquisition of Lifted on February 24, 2020, and $800,027 of goodwill from Lifted’s purchase of nearly all of the assets of Oculus CRS, LLC, and Lifted’s merger with Oculus CHS Management Corp. in April 2023.
Also, as of both September 30, 2025 and December 31, 2024, our other assets included our investments in Ablis and Bendistillery, which total $1,896,200. Net fixed assets as of September 30, 2025 and December 31, 2024 were $2,375,501 and $2,704,615, respectively.
In addition, as of both September 30, 2025 and December 31, 2024, our other assets also included restricted cash of $1,000,000. We are required by our Business Loan Agreement with Surety Bank to maintain a minimum depository balance of $1,000,000 with Surety Bank for the duration of our Business Loan. The Business Loan matures on December 14, 2028.
As of September 30, 2025, current liabilities of $4,827,091 primarily consisted of accounts payable and accrued expenses of $2,889,818, deferred revenue of $892,548 and the current portion of the notes payable to Surety Bank of $662,387. In comparison, as of December 31, 2024, current liabilities of $6,084,011 primarily consisted of accounts payable and accrued expenses of $4,563,464, deferred revenue of $674,676 and the current portion of the notes payable to Surety Bank of $559,418. The year-to-date decline in current liabilities was primarily attributable to a year-to-date reduction in our accounts payable and accrued expenses due to the timing of payments to suppliers and other vendors.
The second installment of the Oculus CHS Management Corp. merger consideration was paid by Lifted to Chase and Hagan Sanchez following the first anniversary of the closing of the merger, which was April 28, 2024. The second installment of merger consideration consists of:
|
|
(1) |
Two Hundred Thousand Dollars ($200,000) in cash; and |
|
|
(2) |
One Hundred Sixty Thousand (160,000) newly issued shares of unregistered LIFD Common Stock. |
| 7 |
|
|
| Table of Contents |
On May 13, 2024, the cash component of the second installment of merger consideration was paid, and the stock component of the second installment of merger consideration was issued.
On April 1, 2025, the Company converted $350,000 of its cash into USD Coin (USDC), a digital stablecoin pegged to the U.S. dollar. Shortly thereafter, the digital wallet containing the USDC was compromised by an unauthorized and unknown third party, resulting in the theft of the full amount. The Company promptly reported the incident to the U.S. Federal Bureau of Investigation and continues to cooperate fully in the ongoing investigation. The Company's outside law firm is also advising the Company regarding the matter. At this time, the Company is doubtful whether any of the stolen funds will be recovered. On April 22, 2025, the Company borrowed $350,000 from Beachin Company, an affiliate of the Company’s CEO and CFO (the “Related Party Note”). The $350,000 loan does not bear interest, and is being repaid by the Company using funds that otherwise would have been paid to the Company’s CEO and CFO in the form of salary or bonuses pursuant to their employment agreements with the Company.
As of September 30, 2025, non-current liabilities of $2,559,873 consisted of the non-current portion of the loans payable to Surety Bank, which totaled $1,673,872, operating lease liability of $747,539, and the Related Party Note of $138,462. The Board of Directors of the Company has authorized management of the Company to apply certain tax refunds expected to be received by the Company, plus certain cash on hand held by the Company, to the partial or full repayment of the Working Capital Loan. Pursuant to this authorization, during the third quarter ended September 30, 2025, the Working Capital Loan was paid down $592,050 using certain tax refunds received by the Company. In comparison, at December 31, 2024, non-current liabilities of $3,727,360 consisted of the non-current portion of the loans payable to Surety Bank, which totaled $2,789,372 and operating lease liability of $937,988.
In prior years, the Company’s payables have been greater than its cash on hand. Prior to the Company’s acquisition of Lifted, the Company had inconsistent income-generating ability and was therefore reliant on raising money from loans or stock sales. The Company had an accumulated deficit of $3,915,542 and $3,967,708 as of September 30, 2025 and December 31, 2024, respectively.
Comparison of Operations for the Three and Nine Months Ended September 30, 2025 to September 30, 2024
Net sales during the three and nine months ended September 30, 2025 were $9,056,742 and $28,505,928, respectively, compared to net sales during the three and nine months ended September 30, 2024 of $8,691,675 and $28,845,623, respectively. Lifted’s sales of non-hemp products were a primary driver of the increase in sales between the third quarter of 2024 and the third quarter of 2025. Reasons for the decrease in net sales between the nine months ended September 30, 2024 and the nine months ended September 30, 2025 include, but are not limited to: prohibition of, or tighter regulation of, intoxicating hemp-derived products has been adopted or proposed in many states that are significant markets for Lifted, such as in Florida, Texas, Illinois and California; greater competition in the marketplace for branded hemp-derived and psychoactive products that are similar to those that Lifted sells; more distributors creating their own brands and selling their own branded products at a lower price than Lifted’s products; increased competition for products containing more milligrams of cannabinoids or active ingredients per unit at a lower price point; and other competing brands paying distributors and wholesalers more than what Lifted is willing to pay (if anything), for valuable shelf space.
During the nine months ended September 30, 2025, Lifted has launched certain initiatives in order to attempt to increase net sales and decrease operating expenses, including: laying off certain employees and independent contractors in Kenosha and Durango; restructuring its sales team; consolidating operations; developing the marketing and distribution networks of hemp-free brands including Rebel Energy Gummy, Mielos, and other brands and products; and increasing spending on marketing and advertising, and digital marketing.
Cost of Goods Sold
Cost of Goods Sold amounted to $4,899,247 and $4,933,780 during the three months ended September 30, 2025 and 2024, respectively, and $18,884,646 and $18,149,447 during the nine months ended September 30, 2025 and 2024, respectively.
Lifted's industry, and customer preferences, are constantly and quickly evolving. Consequently, Lifted finds it extremely difficult to predict future sales of its products and to anticipate raw goods needs for future production. This exposes Lifted to the risk that it will need to write off obsolete raw goods and slow-moving finished goods, causing an increase in cost of goods sold.
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During the quarter ended September 30, 2025, the Company recognized a net benefit of $11,826 related to the write off of obsolete and spoiled inventory as a result of the reversal of a write off of $185,781 of certain packaging in the second quarter of 2025; the second quarter 2025 write off was reversed in the third quarter of 2025 because the packaging is expected to be used in production. During the nine months ended September 30, 2025, and 2024, $769,104 and $1,379,982 of obsolete and spoiled inventory was written off, respectively.
Operating Expenses
Operating expenses include accounts such as payroll expenses, professional fees, bank charges and merchant fees, advertising and marketing, bad debt expense, depreciation and amortization, collaboration commission and royalty expense, and other operating expenses.
Payroll Expenses
During the three and nine months ended September 30, 2025, the Company reported $1,169,117 and $3,665,391 of payroll expenses, respectively. In comparison, during the three and nine months ended September 30, 2024, the Company reported $1,360,035 and $4,432,534 of payroll expenses, respectively. In March 2025, an Employee Retention Tax Credit (“ERC”) of $22,357 related to the second quarter of 2020 was recovered. The $22,357 ERC is accounted for as a reduction in payroll expenses in the first quarter of 2025.
Payroll expenses include sales commissions paid to independent contractors. Lifted entered into an agreement with its Chief Strategy Officer (the “CSO”), effective as of April 1, 2025, pursuant to which, in addition to his base compensation of $10,000 every two weeks plus health insurance coverage, the CSO receives (1) a royalty on certain gummies manufactured by Lifted of between $0.005 and $0.01, and (2) certain quarterly and annual bonuses based upon Lifted’s quarterly and annual collected revenues on certain sales exceeding targets of $9,000,000 and $58,000,000, respectively.
Lifted’s former Chief Strategy Officer (the “CSO”), who worked for Lifted from July 1, 2021 through April 30, 2024, had been hired to develop and implement certain important strategies to assist Lifted’s efforts to increase its production, fulfillment and sales capabilities. The CSO’s two-year agreement with Lifted entitled the CSO to be paid an annual salary of $180,000 plus a bonus equal to 5% of total net sales for Lifted in excess of $6,000,000 per quarter. The CSO’s final bonus, for April 2024, was $27,941. For the three and nine months ended September 30, 2024, the bonus earned by the CSO was $0 and $191,273, respectively.
Advertising and Marketing Expenses
Advertising and marketing costs are expensed as incurred. During the three and nine months ended September 30, 2025, the Company incurred $426,573 and $1,374,018, respectively, in advertising and marketing expenses. Advertising and marketing expenses primarily relate to marketing campaigns, trade shows, digital marketing, and promotional products. Lifted has been engaging with third party specialists to increase its presence in the direct-to-consumer space. In comparison, during the three and nine months ended September 30, 2024, the Company incurred $470,676 and $837,462, respectively, in advertising and marketing expenses.
Bad Debt Expense
Bad debt expense for the three and nine months ended September 30, 2025 totaled $418,918 and $664,686, respectively. In comparison, bad debt expense for the three and nine months ended September 30, 2024, totaled $864,345 and $2,304,898, respectively.
Bad debt expense stems from the change in the Company’s allowance for doubtful accounts, which stems from the Company’s CECL Model analysis. The delay in Lifted’s receipt of payments from certain customers—primarily distributors—have increasingly become an issue for Lifted. Certain customers have become slower to pay Lifted for purchased product (“Slow Paying Customers”), and the Slow Paying Customers disregard payment terms. Management speculates that some Slow Paying Customers may be slow-paying Lifted because of their own sales collection issues, which may in part be caused by the regulatory uncertainty over our industry. The Company has an accounting protocol which effectively causes the Company to recognize an allowance for doubtful accounts for all invoices older than 90 days. Consequently, the delay in Lifted’s receipt of payments from certain customers has a direct impact on the Company’s net receivables, net income, and earnings per share.
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Collaboration Commission and Royalty Expense
During the three and nine months ended September 30, 2025, the Company reported collaboration commission and royalty expense of $33,899 and $106,739, respectively. In comparison, during the three and nine months ended September 30, 2024, the Company reported collaboration commission and royalty expense of $180,571 and $589,871, respectively. The change in collaboration commission and royalty expense primarily stems from decreased sales of the products covered by respective collaborations. Lifted has been de-emphasizing its collaboration efforts with outside brands due to the collaborations’ lack of traction in sales. Also, on or about April 28, 2025, Lifted and Cali Sweets, LLC (“Cali”) terminated the Manufacturing, Sales and Marketing Agreement (“Cali Agreement”). Under the Termination Agreement, Lifted and Cali mutually agreed to terminate the Cali Agreement and all agreements, obligations and responsibilities of the parties thereunder, as of January 1, 2025.
Other Operating Expenses
Other operating expenses include, for example, software expenses, travel, insurance expense, rent expense, repairs and maintenance, state license and filing fees, excise and sales tax expense, health benefits, warehouse and lab expenses below the Company’s capitalization threshold, and other expenses. Other operating expenses decreased to $442,570 during the quarter ended September 30, 2025, from $677,659 during the quarter ended September 30, 2024. In comparison, during the nine months ended September 30, 2025, other operating expenses decreased to $1,738,729 from $2,006,623 during the nine months ended September 30, 2024. The premiums of certain insurance policies that the Company has had in place have typically been based on the Company’s revenue; as such, these policies are costly for the Company.
Other Income or Expenses
During the quarter ended September 30, 2025, total net non-operating Other Expenses of $441,977 primarily consisted of $358,072 of Loss From Inventory Theft. In July 2025, $335,460 worth of finished goods were stolen off of Lifted’s third-party shipper's truck just after leaving Lifted's co-packer's facility in Orange County, California. The thieves were apprehended by authorities, and Lifted filed an insurance claim with the shipping company's insurance company. Lifted’s co-packer credited Lifted $40,000. On November 6, 2025, Lifted executed a Property Damage-Liability Release with the insurance carrier of the shipping company, in exchange for the insurance company paying $250,000.
Also included in Loss From Inventory Theft for the quarter ended September 30, 2025 is $22,612 worth of finished goods that were stolen in September 2025 in transit to a customer. Lifted has filed an insurance claim with the shipping company's insurance company, but it is an unknown how much, if any, of the stolen product will be reimbursed by the insurance company.
In comparison, during the quarter ended September 30, 2024, net non-operating Other Expenses of $48,381 primarily consisted of interest expense of $88,293 offset by interest income of $39,213.
During the nine months ended September 30, 2025, total net non-operating Other Expenses of $710,479 primarily consisted of $358,072 of Loss From Inventory Theft, Theft Expense of $350,000 and Interest Expense of $230,948 offset by Settlement Income of $177,500 and Interest Income of $75,677. In comparison, during the nine months ended September 30, 2024, total net non-operating Other Expenses of $1,539,996 primarily consisted of the $1,349,467 loss related to the termination of the Jeeter collaboration and interest expense of $271,630.
Net Income/(Loss)
During the quarter ended September 30, 2025, the Company recognized Net Income of $634,257. In comparison, during the quarter ended September 30, 2024, the Company recognized a Net Loss of $194,399.
During the nine months ended September 30, 2025, the Company recognized Net Income of $62,265. In comparison, during the nine months ended September 30, 2024, the Company recognized a Net Loss of $1,858,615.
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The Business Loan requires that Borrower shall maintain a minimum 1.50x debt service coverage ratio (“DSCR”) based on Borrower's annual corporate tax return. The DSCR shall be tested annually, beginning with the 2023 return. The DSCR shall be calculated as EBIDA (earnings before interest, depreciation, and amortization) divided by contractual annual debt service payments. Borrower met the DSCR requirement contained in the Business Loan for the year ended December 31, 2023. Surety Bank waived any claim of default based on Borrower’s 2024 DSCR.
Off-Balance Sheet Arrangements
As of reported period end, the Company has no off-balance sheet arrangements.
Critical Accounting Policies and Estimates
Critical accounting policies and estimates are discussed in NOTE 2 – BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES of the consolidated financial statements accompanying this Quarterly Report on Form 10-Q.
Tax Provision
Please refer to NOTE 14 – INCOME TAXES for information about the Company’s tax provision.
Other Matters
We may be subject to other legal proceedings, claims, and litigation arising in the ordinary course of business in addition to the matters discussed in NOTE 12 – LEGAL PROCEEDINGS. We intend to vigorously pursue and defend such litigation. Although the outcome of these other matters is currently not determinable, our management does not expect that the ultimate costs to resolve these matters will have a material adverse effect on our Company’s financial position, results of operations, or cash flows.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
As a smaller reporting company, we are not required to provide the information required by this Item.
ITEM 4. CONTROLS AND PROCEDURES
(a) Evaluation of Disclosure Controls and Procedures
Our Chief Financial Officer, WJacobs, evaluated the effectiveness of the Company’s disclosure controls and procedures. The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports, such as this report, that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company’s management, including its principal executive and principal financial officer, as appropriate to allow timely decisions regarding required disclosure. Based on that evaluation, WJacobs concluded that because of the material weakness in internal control over financial reporting described below, our disclosure controls and procedures were not effective as of September 30, 2025.
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(b) Management’s report on internal control over financial reporting
Management is responsible for establishing and maintaining adequate internal control over financial reporting for the Company. “Internal Control Over Financial Reporting” is defined in Exchange Act Rules 13a -15(f) and 15d - 5(f) as a process designed by, or under the supervision of, an issuer’s principal executive and principal financial officers, or persons performing similar functions, and effected by an issuer’s board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. It includes those policies and procedures that:
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(1) |
Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and disposition of an issuer; |
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Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the issuer are being made only in accordance with authorizations of management and directors of the issuer; and |
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Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the issuer’s assets that could have a material adverse effect on the financial statements. |
During September 2025, management conducted an evaluation of the effectiveness of our internal control over financial reporting as of September 30, 2025 based on the framework set forth in the report entitled Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on the evaluation, management concluded that our internal control over financial reporting as of September 30, 2025 was not effective. Management identified the following material weaknesses as of September 30, 2025:
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(1) |
There existed a lack of segregation of duties in regard to the Company’s financial reporting, procedures for depositing of funds, procedures for cash disbursements, procedures for checkbook entries, period close procedures, and procedures for financial statement preparation. |
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There are not effective policies and procedures in place to provide adequate, independent oversight over financial reporting, timely preparation, and review of accounting records, and there is a lack of segregation of duties. |
Management is continually working to improve the effectiveness of our internal control over financial reporting. Our actions have included the following to improve controls over our financial statement preparation and reporting process:
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(1) |
We have enhanced certain resources available within our accounting team. We hired a Chief Financial Officer of Lifted who is specifically responsible for overseeing the financial reporting processes of Lifted. We have also engaged a licensed, external certified public accountant who advises and assists us with various aspects of the financial reporting process, including at our direction, objectively reviewing work product significant to the closing of our financial statements. |
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(2) |
We have enhanced the use of specialist involvement in complex, non-routine, and technical areas of accounting, valuation, new accounting standards adoption, and tax matters. These specialists include the licensed, external certified public accountant referred to above, a global public accounting and tax firm, and a valuation firm. |
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(3) |
We are in the process of implementing tools to manage the structure of our financial closing processes. These tools include: (a) formalizing checklists designed to ensure accounting requirements and account reconciliations are completed and (b) formalizing required work instructions for completing and objectively reviewing financial closing work product, account reconciliations and analyses, which includes documenting preparer and reviewer responsibilities and signoffs. |
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(4) |
We are archiving, in an access-restricted retention domain, documentation critical to supporting our financial reporting, including financial closing work product, account reconciliations and analyses, supporting documents and agreements, accounting technical memoranda, and other documentation supporting complex, non-routine accounting and valuation matters. Starting with the April 2024 expense reports, all LFTD Partners and Lifted employee expense reports are also stored online in this access-restricted retention domain. We have made this documentation transparent and accessible to our registered public accounting firm, other advisers, and to our lead independent director, Mr. Vincent J. Mesolella. |
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(5) |
From time to time, we have engaged a third-party consulting firm with expertise in corporate governance, internal controls, risk management, and assurance. This firm has been engaged to assist management with remediating internal control deficiencies and designing and implementing controls over our financial processes and reporting. |
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(6) |
Providing copies of LFTD Partners’ and Lifted’s bank statements to Mr. Mesolella. Starting with LFTD Partners’ April 2024 bank statements, the LFTD Partners bank statements and bank reconciliations are stored online in an access-restricted retention domain, in the same location as where Lifted’s bank statements and bank reconciliations are stored. Previously, our Chief Financial Officer, WJacobs, emailed copies of LFTD Partners and Lifted’s bank statements to Mr. Mesolella monthly. WJacobs engages with Mr. Mesolella, as needed, to address any questions or concerns. |
Because of its inherent limitations, internal controls over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies and procedures may deteriorate.
Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, will be or have been detected. These inherent limitations include, but are not limited to, that judgments in decision making can be faulty, and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the control. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, controls may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate.
The Company is actively engaged in a comprehensive effort to remediate its material weaknesses in our internal control over financial reporting, but additional work is required, and no guarantee or assurance can be given as to when such work will be completed.
This Quarterly Report on Form 10-Q does not include an attestation report of our registered public accounting firm regarding internal controls over financial reporting.
Management’s report was not subject to attestation by our registered public accounting firm pursuant to temporary rules of the SEC that permit the Company to provide only management’s report in this Quarterly Report on Form 10-Q.
Notwithstanding the existence of the material weaknesses as described above, we believe that the consolidated financial statements in this Quarterly Report on Form 10-Q present fairly, in all material respects, our financial position, results of operations and cash flows as of the dates, and for the periods presented, in conformity with U.S. GAAP.
(c) Changes in internal control over financial reporting
Our Chief Executive Officer and Chief Financial Officer have concluded that there were no significant changes in our internal controls over financial reporting that occurred during our last fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
(d) Inherent Limitations on Control Systems
Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, will be or have been detected. These inherent limitations include the realities that judgments in decision making can be faulty, and that breakdowns can occur because of a simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the control. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, controls may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate.
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PART II — OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Description of Legal Proceedings
Lifted currently is involved in four pending lawsuits, two as the defendant, and two as the plaintiff. Please refer to NOTE 12 – LEGAL PROCEEDINGS for more information.
ITEM 1A. RISK FACTORS
The Risk Factors identified under the heading “ SUMMARY OF RISK FACTORS ” under Part I and the risk factors described in Item 1A. under the heading “ RISK FACTORS ” in our Annual Report on Form 10-K for the year ended December 31, 2024 filed with the SEC on March 31, 2025 continue to represent the most significant risks to the Company’s future results of operations and financial conditions, without further modification or amendment, except as follows:
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(1) |
On November 12, 2025, President Trump signed into law H.R. 5371, the “Continuing Appropriations, Agriculture, Legislative Branch, Military Construction and Veterans Affairs, and Extensions Act, 2026” (the “Act”), which makes continuing appropriations and extensions for fiscal year 2026, and which also bans intoxicating hemp-derived consumable products nationally on November 12, 2026. It is unknown to the Company whether or not the sections of the Act that impact the hemp industry will ultimately go into effect on November 12, 2026, or if those sections will be replaced, impacted or amended by subsequent acts of Congress. However, the Act in all likelihood will have a devastating impact on the Company and the price of its common stock. The material adverse effects of the Act cannot be overstated; these material adverse effects include, but are not limited to, the following: |
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The elimination of half or more of Lifted’s sales. Sales of hemp-derived products made up approximately 47% of Lifted’s sales during the three months ended September 30, 2025; thus, the Act could eliminate approximately half or more of the Company’s revenue; |
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b) |
Goodwill impairment charges. As a result of LFTD Partners' acquisition of Lifted, LFTD Partners recognized goodwill of $22,292,767 ("Lifted Goodwill"). As a result of Lifted’s purchase of assets of hemp-derived products maker Oculus CRS, LLC, and merger with Oculus CHS Management Corp., LFTD Partners recognized goodwill of $800,027 ("Oculus Goodwill"). Total goodwill reported at September 30, 2025 is $23,092,794. The Act will necessitate the calculation and recording of an impairment charge over the Lifted Goodwill and Oculus Goodwill. The impairment charge could be half or more of the Lifted Goodwill and Oculus Goodwill; |
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c) |
An investment impairment charge. The Act will necessitate the calculation and recording of an impairment of LFTD Partners’ investment in hemp-derived beverage and products maker Ablis. LFTD Partners’ investment in Ablis was reported as $399,200 as of September 30, 2025. The impairment charge could be half or more of LFTD Partners’ investment in Ablis; and |
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Significant inventory write offs. The Act will most likely negatively impact the pricing of hemp-derived products, the availability and price of raw goods and production forecasting, which will lead to increased write-offs each quarter end. Moreover, any hemp-derived products in inventory on November 12, 2026 will have to be written off. |
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(2) |
On May 21, 2025, the Governor of Tennessee signed House Bill 1376, which significantly restricts the production and sale of hemp-derived products beginning in 2026, and which could materially adversely affect our sales of hemp-derived products in Tennessee and the trading price of our common stock; |
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(3) |
In Alabama, new regulations took effect on July 1, 2025, which are intended to curb or eliminate the sales of hemp-derived products in Alabama. These regulations could materially adversely affect our sales of hemp-derived products in Alabama and the trading price of our common stock; |
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In Minnesota, new regulations take effect on January 1, 2026, which are intended to curb or eliminate the sales of hemp-derived products in Minnesota. These regulations could materially adversely affect our sales of hemp-derived products in Minnesota and the trading price of our common stock; |
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(5) |
Opponents of our industry are known to be lobbying for legislation in Texas and other states intended to prohibit or restrict sales of hemp-derived products, and if such legislation becomes law, it could materially adversely affect our sales of hemp-derived products in those jurisdictions and the trading price of our common stock; and |
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(6) |
The visibility and trading volume of our common stock are low, and any material increase in such visibility and trading volume is likely dependent upon our ability to list our common stock on a recognized stock exchange, but our ability to satisfy the listing requirements for a recognized stock exchange cannot be guaranteed or assured. A continued inability to satisfy the listing requirements for a recognized stock exchange could materially adversely affect the visibility, trading volume, and trading price of our common stock. |
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ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
Reference is hereby made to the disclosures above in the following sections, which are hereby incorporated by reference thereto:
NOTE 9 – SHAREHOLDERS’ EQUITY AND STOCK BASED COMPENSATION
Issuance of Series A Convertible Preferred Stock
Issuance of Series B Convertible Preferred Stock
Share-Based Compensation
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None; not applicable.
ITEM 4. MINE SAFETY DISCLOSURES
None; not applicable.
ITEM 5. OTHER INFORMATION
None; not applicable.
ITEM 6. EXHIBITS.
The following Exhibits have been previously filed in the below referenced filings or have been attached hereto, and in any case, as is stated on the cover of this Report, all of the below Exhibits are incorporated herein by reference.
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The following exhibits are filed with this Quarterly Report on Form 10-Q:
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101.INS |
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XBRL Instance Document |
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101.PRE |
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XBRL Taxonomy Extension Presentation Linkbase Document. |
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101.LAB |
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XBRL Taxonomy Extension Label Linkbase Document. |
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101.DEF |
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XBRL Taxonomy Extension Definition Linkbase Document. |
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101.CAL |
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XBRL Taxonomy Extension Calculation Linkbase Document. |
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101.SCH |
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XBRL Taxonomy Extension Schema Document. |
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SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
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LFTD Partners Inc. |
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Dated: November 14, 2025 |
By: |
/s/ Gerard M. Jacobs |
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Gerard M. Jacobs |
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Chief Executive Officer |
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