Quarterly Report for Quarter Ending June 30, 2026 (Form 10-Q)

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 prospectus. 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 ("Tradewinds" or the "Company") is a holding company focused on acquiring and developing businesses with long-term value, resilience, and growth potential. Our initial operations focused on the development and distribution of high-nutrition foods and beverages, including edible insect protein-based bars marketed under the Universal Proteins (UP) brand. In 2022, we also acquired a canine pain relief formula for development into pet treats.

On August 19, 2025, we entered into a non-binding Letter of Intent with Scar Holdings LLC, also known as Peppermint Hippo(TM), regarding the potential formation of a division focused on the acquisition and development of nightlife and hospitality venues under the Peppermint Hippo brand. The first proposed acquisition contemplated by the LOI is Peppermint Hippo Toledo, located in Toledo, Ohio, and the LOI further contemplates that we may evaluate possible acquisitions of additional Peppermint Hippo-branded venues over time. No definitive acquisition agreement has been entered into, and any acquisition would be subject to due diligence, definitive agreements, required consents, financing, and regulatory and licensing approvals. Accordingly, there can be no assurance that any proposed acquisition or nightlife and hospitality division will be completed or established.

We successfully completed the development, manufacturing, and initial distribution of two protein bar SKUs (Chocolate Almond and Peanut Butter Fruit) in 2023 through our partnership with YouBar, Inc. In 2024, we entered into a purchase agreement with a distributor for 1,040 cases of UP bars, all of which were sold by September 30, 2024. We continue to market our bars online and to retail outlets, but larger-scale distribution agreements remain uncertain. Development of additional SKUs is ongoing.

Looking ahead, we intend to keep expanding our UP product line, move forward with commercializing our canine pain relief formula, explore licensing and distribution opportunities, and evaluate opportunities in the nightlife and hospitality markets. We expect operating expenses to remain elevated as we develop new product lines, pursue strategic opportunities, and continue as a public company. Net losses are likely to vary depending on the timing of marketing efforts, research and development activities, professional fees, and potential acquisitions. We are working on securing funding through additional equity or debt financing to support our growth plans.

Comparison of the Three and Six Months Ended June 30, 2026 and June 30, 2025

Revenue

For the three months ended June 30, 2026, the Company generated revenue of $25,000, compared to $20,000 for the three months ended June 30, 2025, an increase of $5,000, or 25%. For the six months ended June 30, 2026, revenue was $46,800, compared to $32,972 for the six months ended June 30, 2025, an increase of $13,828, or approximately 42%. Revenue for the three months ended June 30, 2026 consisted of management fee income. Revenue for the six months ended June 30, 2026 consisted of $25,000 of management fee income, $6,800 of distribution income, and $15,000 of product sales. The comparable 2025 periods included management fee and distribution income.

Gross Profit

Gross profit was $25,000 for the three months ended June 30, 2026 and $46,800 for the six months ended June 30, 2026, compared to $20,000 and $32,972 for the three and six months ended June 30, 2025, respectively. The Company did not report cost of sales for any period presented; therefore, gross profit equaled revenue.

Operating Expenses

Total operating expenses for the three months ended June 30, 2026 were $2,891,860, compared to $45,143 for the three months ended June 30, 2025, an increase of $2,846,717. For the six months ended June 30, 2026, total operating expenses were $3,039,001, compared to $59,227 for the six months ended June 30, 2025, an increase of $2,979,774. The 2026 six-month expenses included consulting expense of $2,858,498, professional fees of $51,083, marketing expense of $90,313, amortization expense of $20,000, and general and administrative expense of $19,107.

The increase in operating expenses was primarily attributable to substantially higher consulting costs, together with increased professional fees, marketing activity, amortization, and general and administrative costs incurred in connection with business development activities, strategic initiatives, capital-raising activities, and the Company's public-company obligations.

Net Loss

For the three months ended June 30, 2026, the Company recorded a net loss of $2,866,860, compared to a net loss of $25,143 for the three months ended June 30, 2025. For the six months ended June 30, 2026, the Company recorded a net loss of $2,992,201, compared to a net loss of $26,255 for the six months ended June 30, 2025. The increase in net loss was primarily driven by the increase in operating expenses, particularly consulting expense, including stock-based compensation. Basic and diluted net loss per share was $0.02 and $0.04 for the three- and six-month 2026 periods, respectively, compared to $0.00 for each comparable 2025 period.

Liquidity and Capital Resources

As of June 30, 2026, the Company had total assets of $276,331, compared to $307,333 as of December 31, 2025. Current assets at June 30, 2026 were $79,831, consisting of cash and cash equivalents of $8,636, accounts receivable of $70,750, and prepaid expenses of $445. Intangible assets, net, were $196,500 at June 30, 2026, compared to $216,500 at December 31, 2025. The decrease in intangible assets reflects $20,000 of amortization expense recorded during the six months ended June 30, 2026.

As of June 30, 2026, the Company had total liabilities of $92,000, consisting of accounts payable of $27,000 and a loan payable of $65,000, compared to no liabilities reported at December 31, 2025. Stockholders' equity totaled $184,331 at June 30, 2026, compared to $307,333 at December 31, 2025. The decrease in stockholders' equity was primarily attributable to the net loss of $2,992,201, partially offset by issuances of common stock.

At June 30, 2026, the Company had 129,810,580 shares of common stock issued and outstanding, compared to 42,690,580 shares at December 31, 2025. Common stock totaled $129,811 at June 30, 2026, compared to $42,691 at December 31, 2025. Additional paid-in capital was $4,412,599 at June 30, 2026, compared to $1,447,709 at December 31, 2025. The Company also recorded a stock subscription receivable of $182,810 as contra-equity at June 30, 2026. The accumulated deficit increased to $4,175,269 at June 30, 2026 from $1,183,067 at December 31, 2025.

On January 29, 2026, the Company entered into a Common Stock Purchase Agreement and related Registration Rights Agreement with RH2 Equity Partners, L.P. under an equity line of credit that permits the Company, at its election and subject to the agreement's terms and limitations, to sell up to $10,000,000 of common stock. On June 21, 2026, the Company issued 5,920,000 shares to RH2 pursuant to the equity line of credit agreement and recorded aggregate consideration of $182,810. The issuance increased common stock by $5,920 and additional paid-in capital by $176,890. Because the consideration had not been received as of June 30, 2026, the Company recorded a $182,810 stock subscription receivable as a contra-equity account. Consequently, the issuance increased the number of shares issued and outstanding but did not provide cash liquidity as of June 30, 2026.

The Company continues to have limited cash resources. At June 30, 2026, cash and cash equivalents were $8,636. The recurring losses, accumulated deficit of $4,175,269, and $141,002 of cash used in operating activities during the six months ended June 30, 2026 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, debt financing, revenue growth, and strategic partnerships; however, there can be no assurance that financing or revenue will be available on acceptable terms, or at all.

Cash Flows

Operating Activities

Net cash used in operating activities was $141,002 for the six months ended June 30, 2026, compared to net cash provided by operating activities of $120 for the six months ended June 30, 2025. The 2026 amount was primarily attributable to the net loss of $2,992,201 and an increase in accounts receivable of $22,000, partially offset by $20,000 of non-cash amortization, $2,801,200 of stock issued for services, a $25,000 decrease in prepaid expenses, a $27,000 increase in accounts payable, and a $1 rounding adjustment.

Investing Activities

The Company had no cash provided by or used in investing activities for the six months ended June 30, 2026 and June 30, 2025.

Financing Activities

Net cash provided by financing activities was $133,000 for the six months ended June 30, 2026, consisting of $68,000 of proceeds from the sale of common stock and $65,000 of proceeds from notes payable. The Company also issued 5,920,000 shares to RH2 Equity Partners, L.P. on June 21, 2026 pursuant to the equity line of credit agreement and recorded aggregate consideration of $182,810. Because payment had not been received as of June 30, 2026, the Company recorded the amount as a stock subscription receivable within contra-equity, and the transaction was excluded from cash provided by financing activities and disclosed as a supplemental non-cash financing activity. The Company had no cash provided by or used in financing activities for the six months ended June 30, 2025.

As a result of the foregoing, cash and cash equivalents decreased by $8,002 during the six months ended June 30, 2026, from $16,638 at December 31, 2025 to $8,636 at June 30, 2026. For the six months ended June 30, 2025, cash and cash equivalents increased by $120, from $210 at December 31, 2024 to $330 at June 30, 2025.

Off Balance Sheet Items

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.

Significant 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, evaluate opportunities in the nightlife and hospitality sector, and meet its obligations as a public company. While management believes that the Company's strategic shift toward licensing, distribution, and selected acquisitions 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.