Annual Report for Fiscal Year Ending December 31, 2025 (Form 10-K)

Management's Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our financial statements and the related notes to those statements included elsewhere in this Annual report on Form 10-K. In addition to historical financial information, the following discussion and analysis contain forward-looking statements involving risks, uncertainties, and assumptions. Our actual results and timing of selected events may differ materially from those anticipated in these forward-looking statements due to many factors, including, but not limited to, those discussed under the section titled "Risk Factors" and elsewhere in this prospectus. See the section titled "Special Note Regarding Forward-Looking Statements" elsewhere in this prospectus.

Overview

Tradewinds Universal, Inc. is a holding company focused on developing, acquiring, and commercializing businesses with long-term growth potential. Historically, the Company's operations have centered on the development and marketing of functional food products, including high-protein nutrition bars under the Universal Proteins ("UP") brand, as well as the development and licensing of a canine pain relief formula. During 2024 and 2025, the Company shifted its strategic focus away from physical product sales toward licensing, distribution rights, and technology-enabled assets, including the acquisition of intangible assets through non-cash transactions.

The Company has not yet achieved profitability and continues to incur operating losses as it invests in product development, licensing arrangements, professional services, and public company compliance. Management believes these activities are necessary to position the Company for future revenue growth, although there can be no assurance that such efforts will be successful.

Results of Operations

Comparison of the Years Ended December 31, 2025 and 2024

Revenue

For the year ended December 31, 2025, the Company generated total revenues of approximately $133,222. Revenue during 2025 was primarily derived from the sale of distribution and licensing rights. By comparison, for the year ended December 31, 2024, the Company generated revenues of approximately $171,596, which consisted primarily of affiliate marketing commissions, licensing activity, and sales of the Company's UP protein bars. The decrease in revenue of $38,374 year-over-year was attributable to the discontinuation of physical product sales and a reduction in affiliate marketing activity as the Company transitioned its business model toward licensing and distribution arrangements.

Cost of Goods Sold

For the year ended December 31, 2025, the Company recorded no cost of goods sold, as revenues were derived from licensing and distribution rights that did not carry direct production or fulfillment costs. For the year ended December 31, 2024, cost of goods sold totaled approximately $21,645, reflecting manufacturing and fulfillment costs associated with sales of the Company's UP protein bars.

Gross Profit

As a result of the absence of cost of goods sold in 2025, gross profit for the year ended December 31, 2025 was equal to total revenues of approximately $133,222, representing a gross margin of 100%. For the year ended December 31, 2024, gross profit totaled approximately $149,951, reflecting a gross margin of approximately 87%. The decline in gross profit was primarily driven by lower overall revenues, partially offset by improved margins due to the shift away from physical products.

Operating Expenses

Total operating expenses for the year ended December 31, 2025 were approximately $1,026,099, compared to approximately $219,323 for the year ended December 31, 2024. The increase in operating expenses was driven primarily by the sharp rise in consulting expense to $835,660 in 2025 from $5,133 in 2024, along with amortization of $14,800 and higher general and administrative costs, partially offset by lower marketing expense. The increase in operating expenses was primarily attributable to higher consulting and professional fees incurred in connection with business development activities, strategic advisory services, and the Company's transition toward licensing and distribution-based operations. These increases were partially offset by lower marketing expenses following the discontinuation of UP protein bar sales.

Net Loss

For the year ended December 31, 2025, the Company recorded a net loss of approximately $892,877, compared to a net loss of approximately $115,743 for the year ended December 31, 2024. The increase in net loss was primarily driven by the increase in consulting expense, including non-cash stock-based compensation/stock issued for services, plus higher amortization and general and administrative costs, partially offset by the absence of cost of goods sold in 2025.

Liquidity and Capital Resources

As of December 31, 2025, the Company had total assets of approximately $307,333, compared to total assets of approximately $31,510 as of December 31, 2024. The increase in total assets was primarily attributable to the acquisition of intangible assets and increases in accounts receivable and prepaid expenses associated with licensing and distribution activities.

The Company had no significant liabilities as of December 31, 2025. Stockholders' equity totaled approximately $307,333 at December 31, 2025, compared to approximately $31,510 at December 31, 2024. The increase in stockholders' equity was primarily the result of equity issuances for cash, services, and asset acquisitions during 2025.

Despite the increase in assets and equity, the Company had limited cash on hand at December 31, 2025 and an accumulated deficit of approximately $1,183,067. In addition the company has cash of $16,638, accounts receivable of $48,750, and prepaid expenses of $25,445.These conditions raise substantial doubt about the Company's ability to continue as a going concern. The Company will require additional capital to fund ongoing operations and future growth initiatives. Management intends to pursue additional equity financing, licensing revenue growth, and strategic partnerships; however, there can be no assurance that such financing or revenue will be available on acceptable terms, or at all.

Cash Flow Overview

The Company has historically funded operations primarily through equity issuances. During 2025, financing activities consisted mainly of proceeds from the issuance of common stock for cash, services, and asset acquisitions. Net cash used in operating activities was $(577,572) for 2025, reflecting the net loss adjusted for non-cash stock-based compensation of $894,700, amortization of $14,800, and changes in working capital, including increases in prepaid expenses and accounts receivable. Net cash used in investing activities was $(200,000), primarily related to the acquisition of intangible assets. Net cash provided by financing activities was $74,000, primarily from the issuance of common stock for cash.

Off-Balance Sheet Arrangements

The Company does not have any off-balance sheet arrangements, special purpose entities, or other relationships that would have a material effect on its financial condition or results of operations.

Critical Accounting Policies and Estimates

The Company's financial statements are prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, and expenses. Significant estimates include the valuation and impairment of intangible assets, stock-based compensation, and the recognition of revenue from licensing and distribution agreements. Actual results may differ from those estimates.

Outlook

Management expects operating expenses to remain elevated as the Company continues to develop licensing opportunities, pursue strategic acquisitions, and meet its obligations as a public company. While management believes that the Company's strategic shift toward licensing and distribution may provide improved margins and scalability, the Company expects to continue incurring net losses in the near term. The Company's ability to achieve profitability will depend on its ability to generate sustainable revenues, control operating costs, and secure additional financing as needed.