Quarterly Report for Quarter Ending March 31, 2026 (Form 10-Q)

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

The following discussion of our financial condition and results of operations should be read in conjunction with the financial statements and related notes included elsewhere in this report and our Annual Report on Form 10-K for the year ended December 31, 2025. Certain statements in this discussion and elsewhere in this report constitute forward-looking statements. See "Cautionary Statement Regarding Forward Looking Information" elsewhere in this report. Because this discussion involves risk and uncertainties, our actual results may differ materially from those anticipated in these forward-looking statements.

Overview

CFN Enterprises Inc. operates a wine and beverage platform together with its sponsored content and marketing business, or the CFN Business. Our continuing operations consist of (i) the wine and beverage operations conducted through J Street Capital Partners, LLC, Prestige Worldwide Wine Company, LLC and Interstice Cellars LLC, and (ii) the CFN Business. We will continue to pursue strategic transactions and opportunities.

Wine and Beverage Platform

On July 1, 2025, the Company completed the acquisition of J Street Capital Partners, LLC, a Florida limited liability company. J Street has historically been engaged in the import and wholesale distribution of wines and alcoholic beverages in various U.S. states, including Nevada, New York, New Jersey, Florida and California, with customers including bars, restaurants, casinos and hotels.

On November 3, 2025, the Company, through its wholly owned subsidiary J Street, completed the acquisition of Prestige Worldwide Wine Company, LLC, a California limited liability company. Prestige is a winemaking consulting company that provides winemaking services to third parties. The acquired assets include global wine-related trademarks, intellectual property, proprietary wine formulations and distributor and customer relationships.

In October 2025, J Street participated in the formation of Interstice Cellars LLC, a Delaware limited liability company formed to operate as a developer and retailer of specialty wines. J Street serves as the managing member and holds a 51% membership interest. The remaining 49% is held by two unaffiliated members. The Company consolidates Interstice and records a non-controlling interest for the 49% not owned by J Street.

CFN Business

The CFN Business generates revenue through sponsored content, including articles, press releases, videos, podcasts, advertisements and other media, email advertisements and other marketing campaigns run on behalf of public and private companies in the cannabis industry, helping them reach accredited, retail and institutional investors. Most revenue is generated through contracts involving a monthly cash payment over service periods generally ranging from three to six months.

Discontinued Operations - Ranco LLC

During the fourth quarter of 2025, we discontinued the operations of our wholly owned subsidiary Ranco LLC, which had operated a white-label manufacturing and co-packing business for the hemp and wellness industries. Following the passage of H.R. 5371, which bans intoxicating hemp-derived consumable products nationally effective November 12, 2026, our Board of Directors formally approved a plan to discontinue and wind down Ranco's operations on November 19, 2025. Ranco is presented as a discontinued operation in our unaudited condensed consolidated financial statements for all periods presented. See Note 12 to the unaudited condensed consolidated financial statements.

Results of Operations for the Three Months Ended March 31, 2026 and 2025

The following are the results of our continuing operations for the three months ended March 31, 2026 as compared to the three months ended March 31, 2025:

	Three Months Ended
	March 31,
	2026		2025		Change		% Change
Net revenues	$87,917		$2,283		$85,634		3751%
Cost of revenue	57,247		252		56,995		22617%
Gross profit	30,670		2,031		28,639		1410%
Operating expenses:
Selling, general and administrative	1,226,514		463,931		762,583		164%
Total operating expenses	1,226,514		463,931		762,583		164%
Loss from operations	(1,195,844)		(461,900)		(733,944)		159%
Other income (expense):
Interest expense	(55,108)		(54,248)		(860)		2%
Other income	16,618		-		16,618		100%
Total other expense, net	(38,490)		(54,248)		15,758		-29%
Provision for income taxes	-		-		-
Net loss	(1,234,334)		(516,148)		(718,186)		139%
Preferred stock interest	105,000		60,000		45,000		75%
Net loss from continuing operations	(1,339,334)		(576,148)		(763,186)		132%
Net loss from discontinued operations, net of tax	60,375		(1,987,462)		2,047,837		-103%
Net loss	(1,278,959)		(2,563,610)		1,284,651		-50%

Net Revenues

Net revenues from continuing operations were $87,917 for the three months ended March 31, 2026, compared to $2,283 for the three months ended March 31, 2025, an increase of $85,634. The increase was primarily attributable to the addition of the wine and beverage operations following the acquisitions of J Street on July 1, 2025 and Prestige on November 3, 2025. Revenues from these operations consist primarily of wholesale wine and beverage sales to licensed retailers, wholesalers and other licensed entities, as well as winemaking consulting services provided through Prestige. The CFN Business generated minimal revenues during both periods as the Company's focus has shifted toward the integration and commercialization of the wine and beverage platform.

Cost of Revenue

Cost of revenue from continuing operations was $57,247 for the three months ended March 31, 2026, compared to $252 for the three months ended March 31, 2025, an increase of $56,995. Cost of revenue consists primarily of the cost of wine and beverage products sold and related shipping, freight and delivery costs incurred by the wine and beverage operations. Gross profit from continuing operations was $30,670 for the three months ended March 31, 2026, compared to $2,031 for the three months ended March 31, 2025.

Selling, General and Administrative Expenses

Selling, general and administrative expenses from continuing operations were $1,226,514 for the three months ended March 31, 2026, compared to $463,931 for the three months ended March 31, 2025, an increase of $762,583. The increase was primarily attributable to (i) stock-based compensation and settlement expense of approximately $409,800 recognized during the three months ended March 31, 2026 in connection with the issuance of 365,000 shares of common stock for services and settlement, with no comparable activity in the prior year period, and (ii) additional operating costs associated with the integration and operation of the J Street and Prestige wine and beverage operations, including personnel, professional fees, and other administrative costs.

Loss from Operations

Loss from continuing operations was $1,195,844 for the three months ended March 31, 2026, compared to $461,900 for the three months ended March 31, 2025, an increase in loss of $733,944. The increase was primarily due to the higher selling, general and administrative expenses described above, partially offset by the increase in gross profit from the wine and beverage operations.

Other Income (Expense)

Total other expense, net, from continuing operations was $38,490 for the three months ended March 31, 2026, compared to $54,248 for the three months ended March 31, 2025. The change reflects (i) interest expense of $55,108 for the three months ended March 31, 2026 compared to $54,248 for the three months ended March 31, 2025, and (ii) other income of $16,618 recognized during the three months ended March 31, 2026, with no comparable amount in the prior year period.

Provision for Income Taxes

There was no provision for income taxes for the three months ended March 31, 2026 and 2025.

Net Loss from Continuing Operations

Net loss from continuing operations attributable to common stockholders, after preferred stock interest of $105,000 (2026) and $60,000 (2025), was $1,339,334 for the three months ended March 31, 2026, compared to $576,148 for the three months ended March 31, 2025.

Discontinued Operations

Net income from discontinued operations, net of tax, was approximately $60,375 for the three months ended March 31, 2026, compared to a net loss of approximately $1,987,462 for the three months ended March 31, 2025. The change reflects the wind-down of Ranco's operations following the November 2025 Board-approved plan to discontinue Ranco. During the three months ended March 31, 2026, Ranco had limited operating activity as it continued the wind-down process. See Note 12 to the unaudited condensed consolidated financial statements.

Net Loss

Net loss for the three months ended March 31, 2026 was $1,278,959, compared to $2,563,610 for the three months ended March 31, 2025. The decrease in net loss was primarily attributable to the reduced loss from discontinued operations following the wind-down of Ranco, partially offset by the higher loss from continuing operations.

Liquidity, Capital Resources and Going Concern

As of March 31, 2026, we had cash of $103,525, a working capital deficit of $24,833,441, and an accumulated deficit of $87,046,420. For the three months ended March 31, 2026, we incurred a net loss of $1,278,959.

Our resources are limited. As we implement our growth strategy, poor strategic design or execution could impact negatively our operations and our cash flows. We expect that our expenses will continue to increase as we continue to integrate and commercialize the wine and beverage operations and continue the wind-down of Ranco.

We have a history of losses and negative cash flows from operations. Our operations have been financed primarily through proceeds from the issuance of equity, borrowing money through the issuance of promissory notes and use of a credit facility. We may continue to incur losses in the future.

These conditions raise substantial doubt about our ability to continue as a going concern within one year after the date that the unaudited condensed consolidated financial statements are issued. Management's plans to address these conditions include the continued integration and commercialization of the J Street, Prestige and Interstice Cellars businesses, the pursuit of additional debt or equity financing, and the wind-down of Ranco's discontinued operations. There can be no assurance that management's plans will be successful. The unaudited condensed consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Cash Flows

The following is a summary of our cash flows for the three months ended March 31, 2026 and 2025:

		Three Months Ended March 31,
		2026		2025
Net cash (used in) provided by operating activities		$(118,233)		$72,608
Net cash used in investing activities		$-		$(48,163)
Net cash provided by (used in) financing activities		$23,807		$(27,193)

Cash (Used in) Provided by Operating Activities

Net cash used in operating activities from continuing operations was $(227,983) during the three months ended March 31, 2026. Net cash provided by operating activities from discontinued operations was $109,750. Total net cash used in operating activities was $(118,233).

Cash Used in Investing Activities

There was no cash used in or provided by investing activities from continuing or discontinued operations during the three months ended March 31, 2026 compared to purchase of property and equipment of $48,163 from discontinued operations during the three months ended March 31, 2025.

Cash Provided by Financing Activities

Net cash provided by financing activities from continuing operations during the three months ended March 31, 2026 reflected a $26,000 loan receipt partially offset by repayment of notes of $2,193. Net cash used in financing activities from continuing operations during the three months ended March 31, 2025 reflected repayment of notes of $2,193 and repayment of notes of $25,000 from discontinued operations.

Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.

Critical Accounting Policies and Estimates

There have been no material changes to our critical accounting policies and estimates from those disclosed in our Annual Report on Form 10-K for the year ended December 31, 2025. For a discussion of our critical accounting policies and estimates, please refer to our Annual Report on Form 10-K for the year ended December 31, 2025.

Recent Accounting Pronouncements

For a discussion of recent accounting pronouncements, see Note 2 - Summary of Significant Accounting Policies to the unaudited condensed consolidated financial statements.