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 and analysis is intended as a review of significant factors affecting our financial condition and results of operations for the periods indicated. The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our consolidated financial statements and the accompanying notes thereto included elsewhere in this Quarterly Report on Form 10-Q. Unless the context requires otherwise, references in this Quarterly Report on Form 10-Q to "we," "us," and "our" refer to Callan JMB Inc.

Forward-Looking Statements

The information in this discussion contains forward-looking statements and information within the meaning of Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act, which are subject to the "safe harbor" created by those sections. These forward-looking statements include, but are not limited to, statements concerning our strategy, future operations, future financial position, future revenues, projected costs, prospects and plans and objectives of management. The words "anticipates," "believes," "estimates," "expects," "intends," "may," "plans," "projects," "will," "would" and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. We may not actually achieve the plans, intentions, or expectations disclosed in our forward-looking statements and you should not place undue reliance on our forward-looking statements. Actual results or events could differ materially from the plans, intentions and expectations disclosed in the forward-looking statements that we make. These forward-looking statements involve risks and uncertainties that could cause our actual results to differ materially from those in the forward-looking statements, including, without limitation, the risks set forth in our filings with the SEC. The forward-looking statements are applicable only as of the date on which they are made, and we do not assume any obligation to update any forward-looking statements.

Overview

Callan JMB is a vertically integrated logistics and fulfillment company which provides thermal management logistics solutions to the life sciences industry through a combination of proprietary packaging, information technology and specialized cold chain logistics knowhow. We provide a system that utilizes advanced predictive technology to revolutionize the supply chain by guaranteeing the safety, effectiveness, and potency of every product handled to ensure product integrity, and to provide immediate response in time-sensitive industries while ensuring environmental responsibility.

Strategy

Our strategy involves leveraging our core competitive strengths to develop and maintain ongoing relationships with a diversified group of customers while continuing to grow our service lines, ensuring that we can meet our customers' changing needs. We strive to be recognized as the premier provider of logistics and fulfillment of a broad range of value-added services based upon the breadth of those services, quality, responsiveness, customer service, information technologies, safety, and cost effectiveness.

We view our solutions as disruptive to the "older technologies" of dry ice and liquid nitrogen, in that our solutions are comprehensive and combine our competencies in configurations that are customized to our client's requirements. We provide comprehensive, reliable, economic alternatives to all existing logistics solutions and services utilized for frozen shipping in the life sciences industry (e.g., personalized medicine, cell therapies, stem cells, cell lines, vaccines, diagnostic materials, semen, eggs, embryos, cord blood, organs, bio-pharmaceuticals, infectious substances, and other commodities that require continuous exposure to cryogenic or frozen temperatures). As part of our services, we provide the ability to monitor, record and archive crucial information for each shipment that can be used for scientific and regulatory purposes.

Seasonality

Based on our industry and our historic trends, we expect our operations to vary seasonally. Typically, revenue will be highest in the third and fourth calendar quarters and lowest in the first and second calendar quarters. These seasonal variations result in fluctuations in shipment volumes due to customer demand, weather conditions and general economic activity. We also expect that our operating expenses may be higher during periods of adverse weather conditions, which can slow fulfillment and transportation activity and result in higher labor and operational costs.

Results of Operations

Three Months Ended March 31, 2026, Compared to the Three Months Ended March 31, 2025

The following table provides certain selected financial information for the periods presented:

		(Unaudited)
		Three months ended March 31,
		2026				2025				Change				Change %
Revenue		$	1,106,143			$	1,449,377			$	(343,234	)			-24	%
Cost of Revenue			678,908				833,437				(154,529	)			-19	%
Gross Profit			427,235				615,940				(188,705	)			-31	%
Operating Expenses			-				-				-				0	%
Selling, General and administrative expenses			2,128,423				1,854,316				274,107				15	%
Total operating expenses			2,128,423				1,854,316				274,107				15	%
Loss from operations			(1,701,188	)			(1,238,376	)			(462,812	)			37	%
Other income (expense)			(1,513,560	)			2,146				(1,515,706	)			-70,629	%
Loss before income taxes			(3,214,748	)			(1,236,230	)			(1,978,518	)			160	%
Provision for income taxes			306				4,360				(4,054	)			-93	%
Net Loss		$	(3,215,054	)		$	(1,240,590	)		$	(1,974,464	)			159	%

Revenue

Revenue for the three months ended March 31, 2026, was $1,106,143 as compared to $1,449,377 for the three months ended March 31, 2025, a decrease of $343,234. The decrease was primarily due to the non-renewal of a government contract and lower revenues from non-government customers compared to the prior year period.

Cost of revenue

Cost of revenue for the three months ended March 31, 2026, was $678,908 as compared to $833,437 for the three months ended March 31, 2025, a decrease of $154,529. The decrease was primarily due to lower revenue levels during the period.

Operating Expenses

Selling, General and Administrative Expenses

Our selling, general and administrative costs include personnel costs, consulting and professional fees, and other overhead expenses. Selling, general and administrative expenses for the three months ended March 31, 2026, were $2,128,423, compared to $1,854,316 for the three months ended March 31, 2025, an increase of $274,107. Operating expenses increased during the three months ended March 31, 2026, as compared to the prior year period. Payroll expenses increased approximately $87,400 primarily due to executive compensation increases pursuant to employee agreements, while Board of Directors compensation increased approximately $7,293 due to the recognition of a full quarter of director compensation in 2026 as compared to prorated amounts in the prior year period. Consulting and professional fees increased approximately $43,000 primarily due to the use of additional consultants and professional service providers in 2026 compared to the prior year period. Facility rental expense increased approximately $57,000 primarily due to lease expenses associated with the Company's new corporate office, which did not exist in the prior year period. Information technology support expenses increased approximately $9,697 due to expanded company support services, while dues and subscriptions increased approximately $47,800 primarily due to additional post-IPO subscriptions and public company compliance costs. The Company also recognized an increase in stock-based compensation expense of approximately $63,500. Partially mitigating these increases were decreases in travel and meals expense of approximately $24,000 and other facility expenses of approximately $14,000.

Other income (expense)

Other income (expense) for the three months ended March 31, 2026, was $(1,513,560) and $2,146 for the three months ended March 31, 2025, resulting in an increase in other expense of $1,515,706. The key driver for the decrease relates to changes in the fair value of the ELOC facility as well as related expenses. Refer to the discussion under Note 6 "Equity" for further information on the ELOC Facility. The change in the fair value of the Derivative Liability during the three months ended March 31, 2026, was $338,229. The Company also recognized other transaction expenses arising from the ELOC Facility of $1,177,223 during the three months ended March 31, 2026.

Liquidity and Capital Resources

Our principal liquidity requirements are for working capital to fund our operations and growth. To date, we have funded our liquidity requirements through a combination of cash on hand, cash flows from operations, and funding from various sources, including from the CEO. As of March 31, 2026, we had $1,415,566 cash and cash equivalents.

On April 7, 2026, the Company received a deficiency letter (the "Notice") from the Listing Qualifications Department of The Nasdaq Stock Market LLC ("Nasdaq") notifying the Company that it is not in compliance with Nasdaq Listing Rule 5550(b)(1), which requires the Company to maintain a minimum of $2,500,000 in stockholders' equity for continued listing on The Nasdaq Capital Market. The Notice has no immediate effect on the listing or trading of the Company's common stock; however, the Company must submit a plan to regain compliance by May 22, 2026, and there can be no assurance that Nasdaq will accept the plan or that the Company will be able to regain compliance within any period granted by Nasdaq.

		(Unaudited)
		For three months Ended
		March 31,
		2026				2025				Change
Cash used in operating activities		$	(1,679,880	)		$	(1,561,698	)		$	(118,182	)
Cash used in investing activities			(35,312	)			(15,000	)			(20,312	)
Cash provided by (used in) financing activities			1,000,000				4,698,682				(3,698,682	)
Increase (decrease) in cash		$	(715,192	)		$	3,121,984			$	(3,837,176	)

Cash provided by (used in) operating activities

For the three months ended March 31, 2026, cash used in operating activities was $1,679,880 compared to cash used in operating activities of $1,561,698 during the three months ended March 31, 2025, an increase of $118,182. This increase in cash used in operating activities was primarily due to the higher net loss of $1,974,464, increased accounts receivable of $284,563 and increased other current assets of $183,054, partially offset by non-cash ELOC-related expenses of $1,092,222, a change in the fair value of derivative liability of $338,229, a favorable change in the right-of-use liability, net adjustment of $272,115, a favorable change in accounts payable and accrued expenses of $184,478, the absence of a $199,491 use of cash for prepaid insurance in the prior-year period, a decrease in inventory of $82,893, a favorable change in deferred revenue of $89,052 and an increase in stock-based compensation of $63,500.

Cash provided by (used in) investing activities

For the three months ended March 31, 2026, cash used in investing activities was $35,312 compared to cash used in investing activities of $15,000 for the three months ended March 31, 2025, an increase of $20,312. The increase is a result of additional expenses related to the corporate office build out recognized during the three months ended March 31, 2026.

Cash provided by (used in) financing activities

During the three months ended March 31, 2026, cash provided by financing activities was $1,000,000 compared to $4,698,682 during the three months ended March 31, 2025, a decrease of $3,698,682. Our financing activities for the three months ended March 31, 2026 compared to March 31, 2025 included an increase in proceeds from the offering of ELOC shares of $1,000,000, which is offset by prior year proceeds raised from IPO and overallotment of $4,680,013.

Off-Balance Sheet Arrangements

We have no off-balance sheet financing arrangements.