STOCK TITAN

ADM Endeavors (ADMQ) posts Q2 2026 loss and flags going concern risk

(High)
(Neutral)
Form Type
10-Q

Rhea-AI Filing Summary

ADM Endeavors, Inc. reported higher sales but continued losses and liquidity pressure for the quarter and six months ended June 30, 2026. Revenue rose to $1,307,924 for the quarter and $2,332,544 for the first half of 2026, up from $1,173,827 and $2,100,363 a year earlier, mainly from new customers and greater capacity at its new facility. Quarterly net income was $62,061, but the company posted a six‑month net loss of $70,013 and used $273,934 of cash in operating activities.

ADM ended June 30, 2026 with $278,383 in cash, a working capital deficit of $470,072, and total liabilities of $7,834,689 versus equity of $3,529,085. Management disclosed that these conditions, along with ongoing capital needs to complete a new retail facility, raise substantial doubt about the company’s ability to continue as a going concern. The company relies on secured real‑estate notes, a new $220,000 convertible note with variable pricing, and $592,309 of related‑party credit lines from its CEO for financing.

Disclosure controls and procedures were assessed as not effective, and derivative liabilities tied to convertible debt increased to $290,849. During the quarter, the CFO role transitioned from Alex Archer to Calvin Tsang under a $120,000 annual employment agreement.

Positive

  • Revenue grew over 11% year over year for the six months ended June 30, 2026, rising to $2,332,544 from $2,100,363, driven by new customers and expanded capacity at the company’s new facility.

Negative

  • Management disclosed substantial doubt about the company’s ability to continue as a going concern, citing a working capital deficit, ongoing losses, and significant capital needs for a new facility.
  • The company recorded a six‑month net loss of $70,013, compared with net income of $34,345 in the prior‑year period, and used $273,934 of cash in operating activities.
  • Leverage is high, with $7,834,689 in total liabilities including $5,877,020 of secured notes payable and $214,273 of convertible debt, versus equity of $3,529,085.
  • Disclosure controls and procedures were deemed not effective, highlighting ongoing weaknesses in the company’s financial reporting and control environment.

Filing Explained

Potential issuance includes 17,005,751 common shares from convertible debt and a facility for up to $20,000,000, creating conditional dilution exposure.

The Form 10-Q is an unaudited quarterly report. As of June 30, 2026, ADM reported $158,520,409 common shares outstanding, while its convertible debt was convertible into 17,005,751 additional common shares and its preferred stock into 20,000,000 common shares.

The filing presents those common shares as conversion rights rather than completed issuances; if issued, they would increase the share count and reduce existing holders’ percentage ownership absent offsetting changes.

A new $220,000 convertible note dated June 22, 2026 can be converted after 90 days, matures on December 2, 2026, and uses a variable price based on recent trading prices, subject to a stated floor and ceiling.

Separately, the GHS agreement gives the investor a right to purchase up to $20,000,000 of common stock in tranches of up to $500,000 after effective registration and subject to timing and ownership restrictions; the company also reports an obligation to issue 1,156,738 commitment-fee shares.

The key unresolved milestones are any conversion request after the 90-day period, the December 2, 2026 note maturity, and whether the GHS registration and tranche conditions result in actual stock sales; the filing reports no unregistered equity sales under Item 2.

Six-month revenue $2,332,544 Revenue for the six months ended June 30, 2026
Six-month net income (loss) $(70,013) Net loss for the six months ended June 30, 2026
Cash balance $278,383 Cash as of June 30, 2026
Working capital deficit $470,072 Working capital deficit as of June 30, 2026
Operating cash flow $(273,934) Net cash used in operating activities for six months ended June 30, 2026
Total liabilities $7,834,689 Total liabilities as of June 30, 2026
Secured notes payable $5,877,020 Long-term secured notes payable balance as of June 30, 2026
Derivative liabilities $290,849 Fair value of derivative liabilities as of June 30, 2026
going concern financial
"These matters raise substantial doubt about the Company’s ability to continue as a going concern"
Going concern is the accounting assumption that a company will keep operating and meeting its obligations for the foreseeable future. The phrase matters most when a company or its auditors disclose substantial doubt about it, a formal warning that the business may not have enough resources to continue without raising money, restructuring, or selling assets. That language in a filing or press release signals elevated financial risk.
working capital deficit financial
"As of June 30, 2026, the Company had a working capital deficit of $470,072"
A working capital deficit occurs when a company's short-term obligations—like bills, supplier payments and near-term debt—are larger than its readily available short-term resources such as cash, money expected from customers, and inventory that can be sold. Like a household whose monthly bills exceed its checking account, it signals potential difficulty paying immediate expenses, which matters to investors because it raises the chance the company will need outside financing or cut operations, affecting risk and value.
derivative liabilities financial
"Due to the variable conversion feature the note conversion feature was bifurcated and recorded as a derivative liability"
Derivative liabilities are obligations a company records when it owes money under financial contracts whose value depends on something else, like interest rates, stock prices, or currencies. Think of them as bets or insurance policies that can create future cash payments; they matter to investors because they can cause sudden changes in a company’s reported debt, profits and cash flow and reveal exposure to market risks that could affect valuation.
reverse acquisition financial
"The Acquisition Shares represented 61% of the voting shares and the transaction was accounted for as a reverse acquisition"
A reverse acquisition is when a private company becomes publicly traded by buying a listed company—often a low-activity “shell”—instead of going through a traditional initial public offering. For investors, it can quickly create tradable shares and access to capital but also reshuffles ownership and can bring limited disclosure or integration risks; think of it as buying an existing storefront to start selling immediately rather than building one from the ground up.
Black-Scholes-Merton option pricing model financial
"In determining the appropriate fair value, the Company uses the Black-Scholes-Merton option pricing model"
convertible promissory note financial
"the Company entered a convertible promissory note with Womack Capital Partners, in the aggregate principal amount of $220,000"
A convertible promissory note is a loan a company takes now that can later be turned into shares instead of being repaid in cash. Think of it as lending money with the option to accept ownership in the business down the road; that matters to investors because it affects who gets paid first, how much ownership existing shareholders keep, and the company’s future valuation and cash needs. Terms such as conversion price, interest and maturity determine the financial impact.
Revenue $2,332,544 Increased from $2,100,363 for the six months ended June 30, 2025
Net income (loss) $(70,013) Declined from net income of $34,345 for the six months ended June 30, 2025
Net cash from operating activities $(273,934) Improved from $(370,261) for the six months ended June 30, 2025

FAQ

How did ADM Endeavors (ADMQ) perform financially in Q2 2026?

ADM Endeavors reported Q2 2026 revenue of $1,307,924 and net income of $62,061. For the first half of 2026, revenue was $2,332,544 with a net loss of $70,013, reflecting higher sales but continued overall losses.

What is the going concern status of ADM Endeavors (ADMQ)?

Management stated there is substantial doubt about ADM Endeavors’ ability to continue as a going concern within one year, citing a $470,072 working capital deficit, ongoing losses, and significant capital needs for its new retail facility.

What is ADM Endeavors’ (ADMQ) liquidity position as of June 30, 2026?

As of June 30, 2026, ADM Endeavors held $278,383 in cash, had a $470,072 working capital deficit, and used $273,934 of cash in operating activities during the first half of 2026, indicating tight liquidity.

How leveraged is ADM Endeavors (ADMQ)?

ADM Endeavors reported total liabilities of $7,834,689 and stockholders’ equity of $3,529,085 at June 30, 2026. This includes $5,877,020 in secured notes payable and $214,273 in convertible notes, reflecting a high debt load relative to equity.

What financing arrangements does ADM Endeavors (ADMQ) have outstanding?

The company has $5,877,020 in long‑term secured notes, a $220,000 convertible note with variable conversion pricing (balance $214,273), and related‑party revolving credit lines totaling $592,309 drawn as of June 30, 2026.

Did ADM Endeavors (ADMQ) report any issues with internal controls?

Yes. The company’s Chief Executive Officer concluded that disclosure controls and procedures were not effective as of June 30, 2026, indicating weaknesses in ensuring timely and accurate reporting of required information.

Were there management changes at ADM Endeavors (ADMQ) in mid‑2026?

On or about June 15, 2026, Alex Archer resigned as CFO, and Calvin Tsang was appointed CFO under an employment agreement providing $120,000 annual salary, two weeks’ vacation, and reimbursement of reasonable business expenses.

AI-generated analysis. How Rhea-AI works. Not financial advice.

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended June 30, 2026

 

TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT

 

For the transition period from ______ to _______

 

Commission File Number 000-56047

 

ADM ENDEAVORS, INC.

(Exact name of registrant as specified in its charter)

 

Nevada   45-0459323
(State of incorporation)   (I.R.S. Employer Identification No.)

 

5941 Posey Lane

Haltom City, Texas 76117

(Address of principal executive offices)

 

(817) 840-6271

(Registrant’s telephone number)

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class   Trading Symbol(s)   Name of each exchange on which registered
N/A   N/A   N/A

 

Indicate by check mark whether the registrant (1) has 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. Yes ☒ No ☐

 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files). Yes ☒ No ☐

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, 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.

 

Large Accelerated Filer Accelerated Filer
Non-Accelerated Filer Smaller Reporting Company
    Emerging Growth Company

 

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 ☐ No

 

As of August 14, 2026, there were 158,520,409 shares of the registrant’s $0.001 par value common stock issued, issuable, and outstanding.

 

 

 

 

 

 

ADM ENDEAVORS, INC.

 

TABLE OF CONTENTS   Page
       
PART I. FINANCIAL INFORMATION   3
       
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)   4
       
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS   18
       
ITEM 3. QUALITATIVE AND QUANTITATIVE DISCLOSURES ABOUT MARKET RISK   20
       
ITEM 4. CONTROLS AND PROCEDURES   20
       
PART II. OTHER INFORMATION   21
       
ITEM 1. LEGAL PROCEEDINGS   21
       
ITEM 1A. RISK FACTORS   21
       
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS   21
       
ITEM 3. DEFAULTS UPON SENIOR SECURITIES   21
       
ITEM 4. MINE SAFETY DISCLOSURES   21
       
ITEM 5. OTHER INFORMATION   21
       
ITEM 6. EXHIBITS   22

 

2

 

 

PART I – FINANCIAL INFORMATION

 

TABLE OF CONTENTS

 

Index to Financial Statements   Page
     
Consolidated Balance Sheets as of June 30, 2026 and December 31, 2025 (unaudited)   4
     
Consolidated Statements of Operations for the three and six months ended June 30, 2026 and 2025 (unaudited)   5
     
Consolidated Statements of Shareholders’ Equity for the six months ended June 30, 2026 and 2025 (unaudited)   6
     
Consolidated Statements of Cash Flows for the six months ended June 30, 2026 and 2025 (unaudited)   7
     
Notes to the Consolidated Financial Statements (unaudited)   8

 

3

 

 

ITEM 1. FINANCIAL STATEMENTS

 

ADM Endeavors, Inc. and Subsidiaries

Consolidated Balance Sheets

(Unaudited)

 

   As of   As of 
   June 30,   December 31, 
   2026   2025 
         
ASSETS          
Current assets          
Cash  $278,383   $358,955 
Accounts receivable, net   435,132    405,373 
Other receivable, related party   6,298    12,442 
Inventory   648,152    537,942 
Prepaid expenses and other current assets   106,402    167,713 
Total current assets   1,474,367    1,482,425 
           
Noncurrent assets          
Property and equipment, net   9,127,419    8,658,148 
Goodwill   688,778    688,778 
Deferred financing costs   73,210    53,210 
Total assets  $11,363,774   $10,882,561 
           
LIABILITIES AND STOCKHOLDERS’ EQUITY          
           
Current liabilities          
Accounts payable  $167,862   $97,720 
Accounts payable - related party   -    246,206 
Accrued expenses   519,886    506,539 
Accrued interest - related party   12,924    - 
Income tax payable   146,336    146,336 
Lines of credit - related party   592,309    - 
Convertible note payable   214,273    106,092 
Derivative liabilities   290,849    251,792 
Total current liabilities   1,944,439    1,354,685 
           
Noncurrent liabilities          
Deferred tax liability   13,230    13,230 
Notes payable - secured, net of discount   5,877,020    5,915,548 
Total noncurrent liabilities   5,890,250    5,928,778 
           
Total liabilities   7,834,689    7,283,463 
           
Commitments and contingencies   -      
           
Stockholders’ equity          
Preferred stock, $0.001 par value, 80,000,000 shares authorized, 2,000,000 shares outstanding as of June 30, 2026 and December 31, 2025   2,000    2,000 
Common stock, $0.001 par value, 800,000,000 shares authorized, 158,520,409 shares issued and outstanding at June 30, 2026 and December 31, 2025   158,520    158,520 
Additional paid-in capital   1,525,329    1,525,329 
Retained earnings   1,843,236    1,913,249 
Total stockholders’ equity   3,529,085    3,599,098 
Total liabilities and stockholders’ equity  $11,363,774   $10,882,561 

 

See accompanying notes to unaudited consolidated financial statements.

 

4

 

 

ADM Endeavors, Inc. and Subsidiaries

Consolidated Statements of Operations

For the Three and Six Months Ended June 30, 2026 and 2025

(Unaudited)

 

   2026   2025   2026   2025 
  

For the three months ended

June 30,

  

For the six months ended

June 30,

 
   2026   2025   2026   2025 
                 
Revenue                    
School uniform sales  $99,348   $164,402   $183,107   $272,652 
Promotional sales   1,208,576    1,009,425    2,149,437    1,827,711 
Total revenue   1,307,924    1,173,827    2,332,544    2,100,363 
                     
Operating expenses                    
Direct costs of revenue   859,960    799,484    1,645,483    1,523,798 
General and administrative   398,792    427,538    782,107    770,909 
Marketing and selling   10,070    6,706    23,376    17,139 
Total operating expenses   1,268,822    1,233,728    2,450,966    2,311,846 
Operating income (loss)   39,102    (59,901)   (118,422)   (211,483)
                     
Other income (expense)                    
Gain (loss) on change in fair value of derivative liabilities   31,207    (10,344)   78,571    (13,683)
Other income   6,130    5,680    8,856    278,265 
Interest expense   (14,378)   (4,545)   (39,018)   (18,754)
Total other income (expense)   22,959    (9,209)   48,409    245,828 
Income (loss) before tax provision   62,061    (69,110)   (70,013)   34,345 
                     
Provision for income taxes   -    -    -    - 
                     
Net income (loss)  $62,061   $(69,110)  $(70,013)  $34,345 
                     
Net income (loss) per share - basic  $0.00   $(0.00)  $(0.00)  $0.00 
Net income (loss) per share - diluted  $0.00   $(0.00)  $(0.00)  $0.00 
                     
Weighted average number of shares outstanding                    
basic   158,520,409    156,900,609    158,520,409    156,769,604 
diluted   195,526,160    156,900,609    195,526,160    156,769,604 

 

See accompanying notes to unaudited consolidated financial statements.

 

5

 

 

ADM Endeavors, Inc. and Subsidiaries

Consolidated Statements of Shareholders’ Equity

For the Six Months Ended June 30, 2026 and 2025

(Unaudited)

 

                   Additional             
   Preferred Stock   Common Stock   Paid In   Stock   Retained     
   Shares   Amount   Shares   Amount   Capital   Payable   Earnings   Total 
                                 
Balance at December 31, 2025   2,000,000   $2,000    158,520,409   $158,520   $1,525,329   $-   $1,913,249   $3,599,098 
Net loss   -    -    -    -    -    -    (132,074)   (132,074)
Balance at March 31, 2026   2,000,000    2,000    158,520,409    158,520    1,525,329    -    1,781,175    3,467,024 
Net income   -    -    -    -    -    -    62,061    62,061 
Balance at June 30, 2026   2,000,000   $2,000    158,520,409   $158,520   $1,525,329   $-   $1,843,236   $3,529,085 
                                         
Balance at December 31, 2024   2,000,000   $2,000    156,637,143   $156,637   $1,447,222   $15,988   $1,426,990   $3,048,837 
Net income   -    -    -    -    -    -    103,455    103,455 
Balance at March 31, 2025   2,000,000    2,000    156,637,143    156,637    1,447,222    15,988    1,530,445    3,152,292 
Stock-based compensation   -    -    726,528    727    26,053    (15,988)   -    10,792 
Net loss   -    -    -    -    -    -    (69,110)   (69,110)
Balance at June 30, 2025   2,000,000   $2,000    157,363,671   $157,364   $1,473,275   $-   $1,461,335   $3,093,974 

 

See accompanying notes to unaudited consolidated financial statements.

 

6

 

 

ADM Endeavors, Inc. and Subsidiaries

Consolidated Statements of Cash Flows

For the Six Months Ended June 30, 2026 and 2025

(Unaudited)

 

   2026   2025 
Cash flows from operating activities:          
Net income (loss)  $(70,013)  $34,345 
Adjustments to reconcile net income (loss) to net cash provided by continuing operations:          
Bad debt expense   114    - 
Stock-based compensation   -    10,792 
Depreciation and amortization   44,786    53,615 
Amortization of debt discount   5,809    9,021 
Change in derivative liability   (78,571)   13,683 
Loss on disposal of fixed assets   34,053    - 
Gain on insurance claim   -    (264,514)
Changes in operating assets and liabilities:          
Accounts receivable   (29,873)   (9,601)
Other receivable, related party   6,144    34,992 
Inventory   (110,210)   (217,491)
Prepaid expenses and other assets   61,311    (30,694)
Accounts payable   70,142    2,757 
Accounts payable - related party   (246,206)   (1,201)
Accrued expenses   25,656    (5,965)
Accrued interest - related party   12,924    - 
Net cash used in operating activities   (273,934)   (370,261)
           
Cash flows from investing activities:          
Purchase of property and equipment   (538,420)   (2,718,841)
Proceeds from insurance   -    374,930 
Net cash used in investing activities   (538,420)   (2,343,911)
           
Cash flows from financing activities:          
Repayments on notes payable   (48,218)   (25,350)
Proceeds from line of credit - related party   580,000    - 
Proceeds from convertible note payable   200,000    - 
Proceeds from note payable   -    2,455,749 
Net cash provided by financing activities   731,782    2,430,399 
           
Net change in cash   (80,572)   (283,773)
           
Cash at beginning of period   358,955    412,449 
           
Cash at end of period  $278,383   $128,676 
Supplemental disclosure of cash flow information:          
           
Cash paid for interest  $188,156   $30,009 
           
Cash paid for taxes  $-   $- 
           
Non-cash investing and financing activities:          
Capitalized loan costs  $9,690   $7,301 
Deferred financing costs  $20,000   $7,301 
Expenses paid on behalf of the Company  $12,309   $- 
Debt discount created by derivative liability  $117,628   $- 

 

See accompanying notes to unaudited consolidated financial statements.

 

7

 

 

ADM ENDEAVORS, INC. and Subsidiaries

Notes to the Consolidated Financial Statements

June 30, 2026

(Unaudited)

 

NOTE 1 – ORGANIZATION AND DESCRIPTION OF BUSINESS

 

On January 4, 2001, we were incorporated in North Dakota as ADM Enterprises, Inc. On May 9, 2006, the Company changed its name to ADM Endeavors, Inc. (“ADM Endeavors,” “ADM,” “we,” “us,” “our,” or the “Company”) and its domicile to the state of Nevada. On July 1, 2008, the Company acquired all of the assets of ADM Enterprises, LLC (“ADM Enterprises”), a sole proprietorship owned by Ardell and Tammera Mees, in exchange for 10,000,000 newly issued shares of our common stock. As a result, ADM Enterprises became a wholly owned subsidiary of the Company. ADM then provided installation services to grocery décor and design companies primarily in North Dakota.

 

On April 19, 2018, the Company acquired Just Right Products, Inc. (“JRP”), a Texas corporation. JRP was incorporated on January 17, 2010. The acquisition of 100% of JRP from its sole shareholder, Marc Johnson, was through a stock exchange whereby the Company issued 2,000,000 shares of restricted Series A preferred stock (the “Acquisition Shares”) to Mr. Johnson in consideration of the acquisition of 100% of JRP from Mr. Johnson. Each share of the Series A preferred stock is convertible into ten shares of common stock, and each share has 100 votes on a fully diluted basis. The Acquisition Shares represented 61% of the voting shares of the Company, and thus there was a change of voting control in connection with the transaction, and the transaction was accounted for as a reverse acquisition.

 

On April 27, 2023, the Company entered into an Asset Purchase Agreement with Innovative Impressions, Inc., a Texas corporation (the “Seller”), pursuant to which the Company acquired (the “Acquisition”) embroidery equipment, inventory, and related assets from the Seller.

 

JRP is focused on being an added value reseller with concentration in embroidery, screen printing, importing and uniforms for businesses, schools and individuals in the State of Texas.

 

NOTE 2 - GOING CONCERN AND MANAGEMENT’S PLANS

 

As of June 30, 2026, the Company had a working capital deficit of $470,072, and for the six months ended June 30, 2026, a net loss of $70,013 and cash used in operating activities of $273,934. The Company expects to continue to invest a significant amount of capital to complete the construction of a new retail facility and to obtain additional financing through lines of credit and equity issuances, or the possible sale of unused land. Even if the Company returns to profitable, it may not be able to sustain or increase profitability on a quarterly or annual basis. The Company cannot predict when, or if, it will return to profitable. There can be no assurance that the opening of the new retail facility or the Company’s access to financing will result in increased sales or a return to profitability.

 

These consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. These matters raise substantial doubt about the Company’s ability to continue as a going concern for a reasonable period of time, which is defined as within one year after the date that the consolidated financial statements are issued. The consolidated financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from uncertainty related to our ability to continue as a going concern.

 

8

 

 

NOTE 3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Basis of Presentation

 

The Company follows the accrual basis of accounting in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”) and has a year-end of December 31.

 

Management further acknowledges that it is solely responsible for adopting sound accounting practices, establishing and maintaining a system of internal accounting control and preventing and detecting fraud. The Company’s system of internal accounting control is designed to assure, among other items, that 1) recorded transactions are valid; 2) valid transactions are recorded; and 3) transactions are recorded in the proper period in a timely manner to produce financial statements which present fairly the financial condition, results of operations and cash flows of the Company for the respective periods being presented.

 

The unaudited consolidated financial statements of the Company for the three and six month periods ended June 30, 2026 and 2025 have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and pursuant to the requirements for reporting on Form 10-Q and Regulation S-K. Accordingly, they do not include all the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. However, such information reflects all adjustments (consisting solely of normal recurring adjustments), which are, in the opinion of management, necessary for the fair presentation of the financial position and the results of operations. Results shown for interim periods are not necessarily indicative of the results to be obtained for a full fiscal year. The balance sheet information as of December 31, 2025, was derived from the audited financial statements included in the Company’s financial statements as of and for the year ended December 31, 2025, included in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission (the “SEC”) on March 31, 2026. These financial statements should be read in conjunction with that report.

 

Principles of Consolidation

 

The accompanying unaudited consolidated financial statements include all of the accounts of the Company and its wholly owned subsidiary, JRP, at June 30, 2026. All significant intercompany balances and transactions have been eliminated.

 

Use of Estimates

 

The preparation of the Consolidated Financial Statements in accordance with U.S. GAAP requires management to make use of certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the Consolidated Financial Statements and the reported amounts of revenue and expenses during the reported periods. The Company bases its estimates on historical experience and on various other assumptions that management believes are reasonable under the circumstances, the results of which form the basis for making judgments about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results could differ from those estimates. Significant estimates are related to allowance for credit losses, inventory obsolescence, goodwill, derivative liability, stock-based compensation and deferred tax valuations.

 

Stock-Based Compensation

 

Stock-based compensation expense is recorded in accordance with FASB ASC Topic 718, Compensation – Stock Compensation, for stock and stock options awarded in return for services rendered. The expense is measured at the grant-date fair value of the award and recognized as compensation expense on a straight-line basis over the service period, which is the vesting period. The Company estimates forfeitures that it expects will occur and records expense based upon the number of awards expected to vest. During the six months ended June 30, 2026 and 2025, the Company issued no shares related to stock compensation, respectively, with no vesting period.

 

Cash Equivalents

 

The Company considers all highly liquid investments with an original maturity of three months or less when purchased to be cash equivalents. At June 30, 2026, and December 31, 2025, the Company had no cash equivalents. Periodically, the Company may carry cash balances at financial institutions in excess of the federally insured limit of $250,000. The amount in excess of the FDIC insurance at June 30, 2026, was $24,417. The Company has not experienced losses on these accounts and management believes, based upon the quality of the financial institutions, that the credit risk with regard to these deposits is not significant.

 

9

 

 

Allowance for Credit Losses

 

The Company establishes an allowance for credit losses to ensure trade and notes receivable are not overstated due to non-collectability. The Company’s allowance is based on a variety of factors, including age of the receivable, significant one-time events, historical experience, and other risk considerations. The Company had no allowance as of June 30, 2026 and December 31, 2025.

 

Inventory

 

Inventory is valued at the lower of cost or net realizable value. During the six months ended June 30, 2026 and 2025, cost was determined using a FIFO. The Company decreases the value of inventory for estimated obsolescence equal to the difference between the cost of inventory and the estimated market value, based upon an aging analysis of the inventory on hand, specifically known inventory-related risks, and assumptions about future demand and market conditions. The Company has inventory of $648,152 and $537,942 as of June 30, 2026, and December 31, 2025, respectively.

 

One vendors accounted for approximately 72% of inventory purchases during the six months ended June 30, 2026. Three vendors accounted for approximately 80% of inventory purchases during the six months ended June 30, 2025.

 

Derivative Instruments

 

Derivatives are measured at their fair value on the balance sheet. In determining the appropriate fair value, the Company uses the Black-Scholes-Merton option pricing model. Changes in fair value are recorded in Other Income (Expense) of the consolidated statements of operations.

 

Fair Value of Financial Instruments

 

The Company measures its financial assets and liabilities in accordance with U.S. GAAP. For certain of our financial instruments, including cash, accounts payable, accrued expenses, and short-term loans, the carrying amounts approximate fair value due to their short maturities.

 

We follow accounting guidance for financial and non-financial assets and liabilities. This standard defines fair value, provides guidance for measuring fair value and requires certain disclosures. This standard does not require any new fair value measurements, but rather applies to all other accounting pronouncements that require or permit fair value measurements. This guidance does not apply to measurements related to share-based payments. This guidance discusses valuation techniques, such as the market approach (comparable market prices), the income approach (present value of future income or cash flow), and the cost approach (cost to replace the service capacity of an asset or replacement cost). The guidance utilizes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. The following is a brief description of those three levels:

 

  Level 1: Observable inputs such as quoted prices (unadjusted) in active markets for identical assets or liabilities.
     
  Level 2: Inputs other than quoted prices that are observable, either directly or indirectly. These include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active.
     
  Level 3: Unobservable inputs in which little or no market data exists, therefore developed using estimates and assumptions developed by us, which reflect those that a market participant would use.

 

The Company adopted the provisions of FASB ASC 820 (the Fair Value Topic) which defines fair value, establishes a framework for measuring fair value under U.S. GAAP, and expands disclosures about fair value measurements.

 

The Company had no assets or liabilities other than derivative liabilities measured at fair value on a recurring basis at June 30, 2026, and December 31, 2025.

 

10

 

 

Fixed Assets

 

Fixed assets are recorded at cost. Expenditures for major additions and betterments are capitalized. Maintenance and repairs are charged to operations as incurred. Depreciation is computed by the straight-line method over the assets estimated useful life, except for land which is not depreciated. Upon the sale or retirement of property and equipment, the related cost and accumulated depreciation are removed from the accounts and any gain or loss is reflected in consolidated statements of operations.

 

Classification   Estimated Useful Lives
Buildings   39 years
Equipment   5 to 7 years
Leasehold improvements   Shorter of useful life or lease term
Furniture and fixtures   4 to 7 years
Websites   3 years

 

Goodwill

 

Goodwill represents the excess of purchase price and related costs over the value assigned to the net tangible assets of businesses acquired. Goodwill is not amortized, but instead assessed for impairment. We perform our annual impairment review of goodwill in our fiscal fourth quarter or when a triggering event occurs between annual impairment tests. No impairment was recorded in fiscal 2026 or 2025 as a result of our qualitative assessments over our single reporting segment.

 

The Company performs a qualitative assessment for each of its reporting units to determine if the two-step process for impairment testing is required. If the Company determines that it is more likely than not that the fair value of a reporting unit is less than its carrying amount, the Company would then evaluate the recoverability of goodwill using a two-step impairment test approach at the reporting unit level. In the first step, the fair value for the reporting unit is compared to its book value including goodwill. In the case that the fair value of the reporting unit is less than the book value, a second step is performed which compares the implied fair value of the reporting unit’s goodwill to the book value of the goodwill. The fair value for the goodwill is determined based on the difference between the fair values of the reporting unit and the net fair values of the identifiable assets and liabilities of such reporting unit. If the implied fair value of the goodwill is less than the book value, the difference is recognized as impairment.

 

Operating leases

 

The Company recognizes its leases in accordance with ASC 842 - Leases. Under ASC 842, operating lease right-of-use (“ROU”) assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. The initial lease liability is equal to the future fixed minimum lease payments discounted using the Company’s incremental borrowing rate, on a secured basis. The lease term includes option renewal periods and early termination payments when it is reasonably certain that the Company will exercise those rights. The initial measurement of the ROU asset is equal to the initial lease liability plus any initial direct costs and prepayments, less any lease incentives. The Company elected the short-term lease exemption for contracts with lease terms of 12 months or less. The Company accounts for the lease and non-lease components of its leases as a single lease component. Lease expense is recognized on a straight-line basis over the lease term.

 

In determining the classification of a lease as operating or finance, ASC 842 allows for the use of judgment in determining whether the lease term is for a major part of the remaining economic life of the underlying asset and whether the present value of lease payments represents substantially all of the fair value of the underlying asset. The Company applies the bright line thresholds referenced in ASC 842-10-55-2 to assist in evaluating leases for appropriate classification.

 

Impairment of Long-lived Assets

 

The Company follows paragraph 360-10-05-4 of the FASB Accounting Standards Codification for its long-lived assets. The Company’s long-lived assets, such as intellectual property, are required to be reviewed for impairment annually, or whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable.

 

11

 

 

The Company assesses the recoverability of its long-lived assets by comparing the projected undiscounted net cash flows associated with the related long-lived asset or group of long-lived assets over their remaining estimated useful lives against their respective carrying amounts. Impairment, if any, is based on the excess of the carrying amount over the fair value of those assets. Fair value is generally determined using the asset’s expected future discounted cash flows or market value, if readily determinable. If long-lived assets are determined to be recoverable, but the newly determined remaining estimated useful lives are shorter than originally estimated, the net book values of the long-lived assets are depreciated over the newly determined remaining estimated useful lives.

 

The Company determined that there were no impairments of long-lived assets at June 30, 2026 and December 31, 2025.

 

Revenue Recognition

 

We recognize revenue for merchandise sales, net of expected returns and sales tax, at the time of in-store purchase or delivery of the product to our customer. When merchandise is shipped to our customers, we estimate receipt based on historical experience. Revenue is deferred and a liability is established for sales returns based on historical return rates and sales for the return period. We recognize an asset and corresponding adjustment to the cost of sales for our right to recover returned merchandise. At each financial reporting date, we assess our estimates of expected returns, refund liabilities and return assets. For merchandise sold in our stores and online, tender is accepted at the point of sale. When we receive payment before the customer has taken possession of the merchandise, the amount received is recorded as deferred revenue until the transaction is complete. Our performance obligations for unfulfilled merchandise orders are typically satisfied within one week. Shipping and handling fees charged to guests relate to fulfilment activities and are included in net sales with the corresponding costs recorded in cost of sales.

 

Cost of Sales

 

Cost of sales includes the actual cost of merchandise sold and services performed; the cost of transportation of merchandise from vendors to our distribution network, stores, or customers; shipping and handling costs from our stores or distribution network to customers; and the operating cost and depreciation of our sourcing and distribution network and online fulfilment centers.

 

Net Income (Loss) per Share

 

The Company computes basic and diluted income per share amounts pursuant to section 260-10-45 of the FASB Accounting Standards Codification. Basic income per share is computed by dividing net income available to common shareholders, by the weighted average number of shares of common stock outstanding during the period, excluding the effects of any potentially dilutive securities. Diluted income per share is computed by dividing net income available to common shareholders by the diluted weighted average number of shares of common stock during the period. The diluted weighted average number of common shares outstanding is the basic weighted number of shares adjusted as of the first day of the year for any potentially diluted debt or equity.

 

The dilutive effect of outstanding convertible securities and preferred stock is reflected in diluted earnings per share by application of the if-converted method.

 

During the three and six months ended June 30, 2026, the impact of 9,021,429 shares issuable from convertible notes 20,000,000 shares issuable from preferred stock were considered for their dilutive effects. During the three and six months ended June 30, 2025, the impact of 7,286,538 shares issuable from convertible notes 20,000,000 shares issuable from preferred stock were excluded from the calculation as their impact would be anti-dilutive.

 

12

 

 

The following is a reconciliation of basic and diluted earnings (loss) per common share for the three and six months ended June 30, 2026 and 2025:

 

   2026   2025   2026   2025 
   For the Three Months Ended   For the Six Months Ended 
   June 30,   June 30, 
   2026   2025   2026   2025 
Basic earnings per common share                    
Numerator:                    
Net income (loss) available to common shareholders  $62,061   $(69,110)  $(70,013)  $34,345 
Denominator:                    
Weighted average common shares outstanding   158,520,409    156,900,609    158,520,409    156,769,604 
                     
Basic earnings (loss) per common share  $0.00   $(0.00)  $(0.00)  $0.00 
                     
Diluted earnings per common share                    
Numerator:                    
Net income (loss) available to common shareholders  $62,061   $(69,110)  $(70,013)  $34,345 
Derivative (gain) loss associated with convertible debt   (31,207)   10,344    (78,571)   13,683 
Add convertible debt interest   8,215    2,325    10,540    4,650 
Net income (loss) available to common shareholders  $39,069   $(56,441)  $(138,044)  $52,678 
Denominator:                    
Weighted average common shares outstanding   158,520,409    156,900,609    158,520,409    156,769,604 
Preferred shares   20,000,000    -    20,000,000    - 
Convertible debt   17,005,751    -    17,005,751    - 
Adjusted weighted average common shares outstanding   195,526,160    156,900,609    195,526,160    156,769,604 
Diluted earnings (loss) per common share  $0.00   $(0.00)  $(0.00)  $0.00 

 

Income Taxes

 

The Company accounts for income taxes in accordance with FASB ASC 740, “Income Taxes.” Deferred tax assets and liabilities are recognized for the future tax consequences attributable to temporary differences between the financial statements carrying amounts of existing assets and liabilities and loss carry forwards and their respective tax bases.

 

Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income (loss) in the years in which those temporary differences are expected to be recovered or settled.

 

The effect of a change in tax rules on deferred tax assets and liabilities is recognized in operations in the year of change. A valuation allowance is recorded when it is “more likely-than-not” that a deferred tax asset will not be realized.

 

Tax benefits of uncertain tax positions are recognized only if it is more likely than not that the Company will be able to sustain a position taken on an income tax return. The Company has no liability for uncertain tax positions as of June 30, 2026, and December 31, 2025. Interest and penalties, if any, related to unrecognized tax benefits would be recognized as interest expense. The Company does not have any accrued interest or penalties associated with unrecognized tax benefits, nor was any significant interest expense recognized during the three and six months ended June 30, 2026 and 2025.

 

Segment Information

 

In accordance with the provisions of ASC 280-10, “Disclosures about Segments of an Enterprise and Related Information,” the Company is required to report financial and descriptive information about its reportable operating segments. The Company has one operating segment as of June 30, 2026, and December 31, 2025.

 

The Company manages its operations as a single segment for the purpose of assessing performance and making operating decisions. The Company’s Chief Operating Decision Maker (“CODM”) is its executive management committee. The CODM allocates resources and evaluates the performance of the Company using information about combined net income from operations. All significant operating decisions are based upon an analysis of the Company as one operating segment, which is the same as its reporting segment.

 

13

 

 

Effect of Recent Accounting Pronouncements

 

Recently Issued Accounting Standards Not Yet Adopted

 

The Company has reviewed all recently issued, but not yet adopted, accounting standards, in order to determine their effects, if any, on its results of operations, financial position or cash flows. Based on that review, the Company believes that no other pronouncements will have a significant effect on its financial statements.

 

NOTE 4 – COMMITMENTS AND CONTINGENCIES

 

Legal Matters

 

From time to time, we may be involved in litigation relating to claims arising out of our operations in the normal course of business. As of August 14, 2026, there were no pending or threatened lawsuits.

 

Franchise Agreement

 

The Company has a franchise agreement effective February 19, 2014, expiring in February 2024, with a right to renew for an additional five years to operate stores and websites in the Company’s exclusive territory. In March 2024, the agreement was renewed for an additional five years, expiring on March 4, 2029. The Company is obligated to pay 5% of gross revenue for use of systems and manuals.

 

During the six months ended June 30 2026 and 2025, the Company paid $10,866 and $11,808, respectively, for the franchise agreement.

 

Uniform Supply Agreement

 

The Company has an agreement to be the exclusive provider of school uniforms and logos for a charter school. The Company is obligated to provide a 3% donation to the charter school for each school year. The agreement is for each year from October 1 through September 30.

 

During the six months ended June 30, 2026 and 2025, the Company paid $0  for the uniform supply agreement.

 

NOTE 5 – PROPERTY AND EQUIPMENT

 

Property and equipment and finance lease right of use assets, stated at cost, less accumulated depreciation at June 30, 2026, and December 31, 2025, consisted of the following:

 

   June 30, 2026   December 31, 2025 
Land  $970,455   $970,455 
Equipment   854,655    856,509 
Autos and trucks   34,680    34,680 
Construction in process   7,869,148    7,377,561 
           
Less: accumulated depreciation   (601,519)   (581,057)
Property and equipment, net  $9,127,419   $8,658,148 

 

Depreciation expense for the six months ended June 30, 2026, and 2025, was $44,786 and $53,615, respectively.

 

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NOTE 6 – CONVERTIBLE NOTE PAYABLE AND NOTES PAYABLE

 

Convertible Note Payable

 

On April 1, 2018, the Company assumed a convertible promissory note in connection with the reverse acquisition. The Company received total funding of $106,092 as of December 31, 2018. The note had fees of $53,046 which were recorded as a discount to the convertible promissory note and are being amortized over the life of the loan using the effective interest method. The maturity of the note is March 5, 2023. On March 5, 2023, the note was extended to September 5, 2023, and since then has been continuously extended. Subsequent to December 31, 2025, the note was extended to October 31, 2026.

 

The note is convertible into common stock at a price of 35% of the lowest three trading prices during the ten days prior to conversion or 35% of an estimated fair value if not traded.

 

On June 22, 2026, the Company entered a convertible promissory note with Womack Capital Partners, in the aggregate principal amount of $220,000. The note bears interest at 1.5% per month, with an origination fee of $20,000, which was recorded to deferred financing costs and will be amortized over the life of the note. The note matures on December 2, 2026, and is convertible after 90 days into shares of the Company’s common stock. The conversion price per share shall be equal to the average closing price of the Company common stock during the five lowest priced closing values with the ninety day calendar day period immediately preceding the date on which the conversion is requested, multiplied by a premium of 15%.The conversion price share be subject to the following floor and ceiling: (i) floor – the conversion price shall not be less than $0.017 per share, resulting in a minimum conversion price of $0.02 per share (ii) ceiling – the conversion price shall not exceed $0.087 per share, resulting in a maximum conversion price of $0.10 per share. Due to the variable conversion feature the note conversion feature was bifurcated from the note and recorded as a derivative liability. The day one derivative liability was $117,628 which was recorded as a discount on the convertible notes payable. As of June 30, 2026, the convertible debt balance was $108,181, net of unamortized discount of $111,819 was $200,000.

 

As of June 30, 2026 and December 31, 2025, the convertible note balance was $214,273 and $106,092, with accrued interest of $113,503 and $108,852, respectively. As of June 30, 2026 and December 31, 2025, the convertible debt was convertible into 17,005,751 and 7,381,169 common shares, respectively.

 

Derivative liabilities

 

The conversion features embedded in the convertible notes were evaluated to determine if such conversion feature should be bifurcated from its host instrument and accounted for as a freestanding derivative. In the convertible notes with variable conversion terms, the conversion feature was accounted for as a derivative liability. The derivatives associated with the term convertible notes were recognized as a discount to the debt instrument and the discount is amortized over the expected life of the notes with any excess of the derivative value over the notes payable value recognized as additional interest expense at the issuance date.

 

The following table presents information about the Company’s liabilities measured at fair value on a recurring basis and the Company’s estimated level within the fair value hierarchy of those assets and liabilities as of June 30, 2026, and December 31, 2025:

 

               Fair value at 
   Level 1   Level 2   Level 3   June 30, 2026 
Liabilities:                    
Derivative liabilities  $-   $-   $290,849   $290,849 

 

               Fair value at 
   Level 1   Level 2   Level 3   December 31, 2025 
Liabilities:                    
Derivative liabilities  $-   $-   $251,792   $251,792 

 

As of June 30, 2026 and December 31, 2025, the derivative liability was calculated using the Black-Scholes method over the expected terms of the convertible debt and the following assumptions: volatility of 130% and 102%, exercise price of $0.0118 - $0.0276 and $0.0144, and risk-free rate of 4.01% and 3.59%, respectively. Included in Derivative Loss in the accompanying consolidated statements of operations is expense arising from the gain on change in fair value of the derivatives of $78,571 and loss on change in fair value of $13,683 during the six months ended June 30, 2026 and 2025, respectively.

 

Fair value at December 31, 2025  $251,792 
Fair value on the date of issuance recorded as a debt discount   117,628 
Gain on change in fair value of derivative liabilities   (78,571)
Fair value at June 30, 2026  $290,849 

 

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Notes Payable

 

On October 25, 2022, the Company entered into a secured promissory note in the amount up of $4,618,960. The note is secured by the deed of trust on the property and bears interest at 5.5% and is due on October 25, 2032. On October 25, 2027, the rate shall be adjusted to the daily rate reported in the Credit Markets section (or similar section) of The Wall Street Journal as the U.S. “Prime Rate” (“Index”), as announced from time to time, without notice to Maker, plus one percent (1.00%) (the sum being the “Adjusted Rate”); provided that in no event shall the Rate or Adjusted Rate exceed the lesser of eighteen percent (18%) per annum or the maximum rate permitted under applicable law. Monthly payments of accrued and unpaid interest shall commence on November 25, 2022, and continue on the same date of each succeeding calendar month through and including April 25, 2024. Thereafter, monthly principal and interest (“Payments”) in the amount of $26,459 will be paid, which is the amount necessary to amortize the stated principal balance. The Company recorded $94,072 of loan cost as a debt discount and will be amortized over the life of the note. During the six months ended June 30, 2026, the Company repaid $32,523 of principal related to this note. During the six months ended June 30, 2026, the Company capitalized $4,661 of loan costs and $126,771 of interest related to this note. As of June 30, 2026, the loan balance was $4,479,735, net of $59,462 of debt discount. As of December 31, 2025, the loan balance was $4,507,597, net of $64,123 of debt discount.

 

On March 27, 2025, the Company entered into a secured promissory note in the amount up of $1,500,000. The note is secured by the deed of trust on the property and bears interest at 8.5% and is due on March 27, 2032. On March 27, 2030, the rate shall be adjusted to the daily rate reported in the Credit Markets section (or similar section) of The Wall Street Journal as the U.S. “Prime Rate” (“Index”), as announced from time to time, without notice to Maker, plus one percent (1.00%) (the sum being the “Adjusted Rate”); provided that in no event shall the Rate or Adjusted Rate exceed the lesser of eighteen percent (18%) per annum or the maximum rate permitted under applicable law. Monthly payments of accrued and unpaid interest shall commence on April 27, 2025, and continue on the same date of each succeeding calendar month through and including March 27, 2032. The Company recorded $76,990 of loan cost as a debt discount and will be amortized over the life of the note. During the six months ended June 30, 2026, the Company repaid $15,694 of principal related to this note. During the six months ended June 30, 2026, the Company capitalized $5,029 of loan costs and $61,385 of interest related to this note. As of June 30, 2026, the loan balance was $1,397,285, net of $64,209 of debt discount. As of December 31, 2025, the loan balance was $1,407,951, net of $69,238 of debt discount.

 

As of June 30, 2026, the secured notes payable balance was $5,877,020, consisting of long term notes payable of $5,877,020 and current portion of notes payable of $0. As of December 31, 2025, the secured notes payable balance was $5,915,548, consisting of long term notes payable of $5,915,148 and current portion of notes payable of $0.

 

NOTE 7 – ACCRUED EXPENSES

 

The Company had total accrued expenses of $519,886 and $506,539 as of June 30, 2026, and December 31, 2025, respectively. See breakdown below of accrued expenses:

 

   June 30, 2026   December 31, 2025 
Credit cards payable  $270,826   $200,416 
Accrued interest   124,237    120,776 
Other accrued expenses   124,823    185,347 
Total accrued expenses  $519,886   $506,539 

 

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NOTE 8 – RELATED PARTY TRANSACTIONS

 

The majority shareholder, director and officer, is the owner of M & M Real Estate, Inc. (“M & M”). M & M leases the Haltom City, Texas facility to the Company. The monthly lease payment, under a month-to-month lease, is currently $6,500. The Company incurred lease expense, including equipment rental expense of $44,065 and $49,930 to M & M for the six months ended June 30, 2026, and 2025, respectively.

 

On March 27, 2026, the Company entered into a revolving credit agreement up to $500,000 with the Chief Executive Officer. The revolving credit line is due on demand, bears interest at 6.0% per annum, and all principal and accrued interest are secured by assets of the Company. During the six months ended June 30, 2026, the Company received $440,000 in cash proceeds and $12,309 of non-cash proceeds from this revolving credit agreement. As of June 30, 2026, the balance on the revolving credit line was $452,309, with accrued interest of $12,247.

 

On June 1, 2026, the Company entered into a revolving credit agreement up to $140,000 with the Chief Executive Officer. The revolving credit line is due on demand, bears interest at 6.0% per annum, and all principal and accrued interest are secured by assets of the Company. During the six months ended June 30, 2026, the Company received $140,000 in cash proceeds from this revolving credit agreement. As of June 30, 2026, the balance on the revolving credit line was $140,000, with accrued interest of $677.

 

NOTE 9 – STOCKHOLDERS’ EQUITY

 

Our Articles of Incorporation authorize the issuance of 800,000,000 shares of common stock and 80,000,000 shares of preferred stock, $0.001 par value per share. There were 158,520,409 outstanding shares of common stock at June 30, 2026, and December 31, 2025, respectively. There were 2,000,000 outstanding shares of preferred stock as of June 30, 2026, and December 31, 2025, respectively. Each share of preferred stock has 100 votes per share and is convertible into 10 shares of common stock. The preferred stock pays dividends equal with common stock and has preferential liquidation rights to common stockholders.

 

On December 19, 2025, the Company entered into an equity financing agreement (the “Equity Financing Agreement”) with GHS Investments LLC (“GHS”), pursuant to which GHS will purchase up to $20,000,000 of Company common stock (the “Put Shares”) in tranches of up to $500,000, following an effective registration of the shares and subject to restrictions regarding the timing of each sale and total percentage stock ownership held by GHS. The purchase price for each tranche of Put Shares will be (i) prior to the Company listing its common stock on the Nasdaq Capital Market or another national exchange (the “Nasdaq Listing”), 80% of the lowest trading price during the 10-day period prior to each sale (the “Pricing Period”), or (ii) following the Nasdaq listing, 90% of the lowest volume-weighted average price during the Pricing Period subject to a $1.00 floor. Pursuant to the Equity Financing Agreement, the Company is also obligated to immediately issue an additional 1,156,738 shares of common stock to GHS as a commitment fee. The shares were valued at approximately $53,210 and were recorded as deferred financing costs on the balance sheet. The deferred charges will be charged against paid-in capital upon future proceeds from the sale of common stock under this agreement. As of June 30, 2026 and December 31, 2025, deferred financing costs totaled $53,210.

 

NOTE 10 – CONCENTRATION OF CUSTOMERS

 

Concentration of Revenue

 

For the six months ended June 30, 2026 and 2025, no customer made up over 10% of revenues.

 

Concentration of accounts receivable

 

One customer accounted for 10% or more of accounts receivable as of June 30, 2026 and one customer accounted for 11% of accounts receivable as of December 31, 2025.

 

NOTE 11 – LEASE LIABILITY

 

Operating Leases

 

The Company leases office space. Leases with an initial term of 12 months or less are not recorded on the balance sheet. Leases with initial terms in excess of 12 months are recorded as operating or financing leases in our consolidated balance sheet. Lease expense is recognized on a straight-line basis over the term of the lease. For leases beginning in 2018 and later, the Company accounts for lease components separately from the non-lease components. Most leases include one or more options to renew. The exercise of the lease renewal options is at the sole discretion of the Company. The depreciable life of the assets and leasehold improvements are limited by the expected lease term, unless there is a transfer of title or purchase option reasonably certain of exercise.

 

The Company leases approximately 18,000 square feet of space in Haltom City, Texas, pursuant to a month-to-month lease. This facility serves as our corporate headquarters, manufacturing facility and showroom. The lease is with M & M Real Estate, Inc. (“M & M”), a company owned solely by our majority shareholder and director of the Company.

 

NOTE 12 – SUBSEQUENT EVENTS

 

The Company has evaluated subsequent events through the filing date of this Form 10-Q and determined that no subsequent events have occurred that would require recognition in the consolidated financial statements or disclosures in the notes thereto.

 

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION OR PLAN OF OPERATION

 

SPECIAL NOTE CONCERNING FORWARD-LOOKING STATEMENTS

 

We believe that it is important to communicate our future expectations to our security holders and to the public. This report, therefore, contains statements about future events and expectations which are “forward-looking statements” within the meaning of Sections 27A of the Securities Act of 1933 and 21E of the Securities Exchange Act of 1934, including the statements about our plans, objectives, expectations and prospects under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” You can expect to identify these statements by forward-looking words such as “may,” “might,” “could,” “would,” “will,” “anticipate,” “believe,” “plan,” “estimate,” “project,” “expect,” “intend,” “seek” and other similar expressions. Any statement contained in this report that is not a statement of historical fact may be deemed to be a forward-looking statement. Although we believe that the plans, objectives, expectations and prospects reflected in or suggested by our forward-looking statements are reasonable, those statements involve risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by these forward-looking statements, and we can give no assurance that our plans, objectives, expectations and prospects will be achieved.

 

Important factors that might cause our actual results to differ materially from the results contemplated by the forward-looking statements are contained in the “Risk Factors” section of and elsewhere in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025, and in our subsequent filings with the Securities and Exchange Commission. The following discussion of our results of operations should be read together with our financial statements and related notes included elsewhere in this report.

 

Company Overview

 

On January 4, 2001, ADM Endeavors, Inc. (“ADM Endeavors,” “ADM,” “we,” “us,” “our” or the “Company”) was incorporated in North Dakota as “ADM Enterprises, Inc.” On May 9, 2006, the Company changed its name to “ADM Endeavors, Inc.” and its domicile to the State of Nevada. On July 1, 2008, the Company acquired all of the assets of ADM Enterprises, LLC (“ADM Enterprises”) in exchange for 10,000,000 newly issued shares of Company common stock. As a result, ADM Enterprises became a wholly owned subsidiary of the Company. ADM then provided installation services to grocery décor and design companies primarily in North Dakota.

 

On April 19, 2018, the Company acquired Just Right Products, Inc. (“Just Right Products”), a Texas corporation, from its sole shareholder, Marc Johnson, through a share exchange transaction whereby the Company acquired 100% of Just Right Products and issued 2,000,000 shares of Series A Convertible Preferred stock (“Series A Preferred Stock”) to the shareholder of Just Rights Products. Each share of the Series A Preferred Stock is convertible into 10 shares of Company common stock and each share has 100 votes on a fully diluted basis. The preferred shares represented 61% of the Company’s voting shares and constituted a change of voting control of the Company, with the transaction accounted for as a reverse acquisition. As a result of the transaction, Just Right Products became a wholly owned subsidiary of the Company.

 

Since that time, the Company has exclusively focused on its Just Right Productions operations, which includes a diverse vertical integrated business consisting of a retail sales division, screen print promotions, embroidery production, digital production, import wholesale sourcing, and uniforms.

 

On April 27, 2023, the Company entered into an Asset Purchase Agreement with Innovative Impressions, Inc., a Texas corporation (the “Seller” or “Innovative Impressions”), pursuant to which the Company acquired embroidery equipment, inventory, and related assets from the Seller, which was paid by the issuance by the Company of a $200,000 secured promissory note (with a fair value of $143,637) to the Seller’s principal.

 

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For the Three Months Ended June 30, 2026 and 2025

 

Revenues

 

Our revenue was $1,307,924 for the three months ended June 30, 2026, compared to $1,173,827 for the three months ended June 30, 2025, resulting in an increase of $134,097, or 11.4%, between the periods. The increase was due to new customer sales. This is a direct result of our new location’s increased exposure and expanded capacity. As construction on our new retail facility nears completion, we expect this trend to continue.

 

Operating Expenses

 

Direct costs of revenues were $859,960 and $799,484 for the three months ended June 30, 2026, and 2025, respectively, resulting in an increase of $60,476, or 7.6%, between the periods. The increase in direct costs of revenue is a normal biproduct of our increased revenue in the most recent comparative period.

 

General and administrative expenses were $398,792 for the three months ended June 30, 2026, compared to $427,538 for the same period in 2025, resulting in a decrease of $28,746, or 6.7%, between the periods. The decrease was due to the consolidation of our operations into our new location and operational efficiencies and costs savings resulting from that consolidation.

 

Marketing and selling expenses were $10,070 for the three months ended June 30, 2026, compared to $6,706 for the same period in 2025. The increase in marketing and selling expenses was tied to our continued investment in our online visibility and required updates to our web assets linked to our new facility.

 

Other income was $22,959 for the three months ended June 30, 2026, compared to other expense of $9,209 for the same period in 2025. This change was primarily due to the gain on change in fair value of derivative liabilities during the three months ended June 30, 2026.

 

Net income was $62,061 for the three months ended June 30, 2026, compared to net loss of $69,110 for the three months ended June 30, 2025, for the reasons stated above.

 

For the Six Months Ended June 30, 2026 and 2025

 

Revenues

 

Our revenue was $2,332,544 for the six months ended June 30, 2026, compared to $ 2,100,363 for the six months ended June 30, 2025, resulting in an increase of $232,181, or 11.1%, between the periods. The increase was due to new customer sales. This is a direct result of our new location’s increased exposure and expanded capacity. As construction on our new retail facility nears completion, we expect this trend to continue.

 

Operating Expenses

 

Direct costs of revenues were $1,645,483 and $ 1,523,798 for the six months ended June 30, 2026, and 2025, respectively, resulting in an increase of $121,685, or 8.0%, between the periods. The increase in direct costs of revenue is a normal biproduct of our increased revenue in the most recent comparative period.

 

General and administrative expenses were $782,107 for the six months ended June 30, 2026, compared to $770,909 for the same period in 2025, resulting in an increase of $11,198, or 1.5%, between the periods. General and administrative expenses increased due to the expense of moving from our old facility to our new fully completed 100,000 square foot manufacturing facility.

 

Marketing and selling expenses were $23,376 for the six months ended June 30, 2026, compared to $17,139 for the same period in 2025. The increase in marketing and selling expenses was tied to our continued investment in our online visibility and required updates to our web assets linked to our new facility.

 

Other income was $48,409 for the six months ended June 30, 2026, compared to other income of $245,828 for the same period in 2025. The decrease was primarily due to $264,514 in net proceeds from an insurance claim in 2025.

 

19

 

 

Net loss was $70,013 for the six months ended June 30, 2026, compared to net income of $34,345 for the six months ended June 30, 2025, for the reasons stated above.

 

Liquidity and Capital Resources

 

Liquidity and Capital Resources during the six months ended June 30, 2026, compared to the six months ended June 30, 2025

 

We had cash used in operations of $273,934 for the six months ended June 30, 2026, compared to $370,261 for the six months ended June 30, 2025. The change in cash flow from operating activities for the six months ended June 30, 2026, was primarily attributable to the net loss for the period, the change in derivative liability, gain on insurance claim, and changes to operating assets and liabilities.

 

We had cash used in investing activities of $538,420 for the six months ended June 30, 2026, and $2,343,911 for the six months ended June 30, 2025. The change in cash flow from investing activities for the six months ended June 30, 2026 was mainly attributable to a decrease in the purchase of property and equipment and the decrease in proceeds from insurance.

 

We had cash provided by financing activities of $731,782 for the six months ended June 30, 2026, compared to cash provided by financing activities of $2,430,399 for the same period in 2025. Cash used in financing activities consisted of proceeds from line of credit – related party and proceeds from a convertible note payable offset by repayments on notes payable.

 

We will likely have to raise funds to pay for growth and acquisitions. We may have to borrow money from shareholders or issue debt or equity or enter into a strategic arrangement with a third party. There can be no assurance that additional capital will be available to us. We currently have no arrangements or understandings with any person to obtain funds through bank loans, lines of credit or any other sources.

 

Critical Accounting Policies

 

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires us to make a number of estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements. Such estimates and assumptions affect the reported amounts of revenues and expenses during the reporting period. We base our estimates on historical experiences and on various other assumptions that we believe to be reasonable under the circumstances. Actual results may differ materially from these estimates under different assumptions and conditions. We continue to monitor significant estimates made during the preparation of our financial statements. On an ongoing basis, we evaluate estimates and assumptions based upon historical experience and various other factors and circumstances. We believe our estimates and assumptions are reasonable in the circumstances; however, actual results may differ from these estimates under different future conditions.

 

See Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and Note 1, “Summary of Significant Accounting Policies” in our audited financial statements for the year ended December 31, 2025, included in our Annual Report on Form 10-K as filed on March 31, 2026, for a discussion of our critical accounting policies and estimates.

 

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

 

A smaller reporting company, as defined by Item 10 of Regulation S-K, is not required to provide the information required by this item.

 

ITEM 4. CONTROLS AND PROCEDURES

 

Disclosure Controls and Procedures

 

The Company does not currently maintain controls and procedures that are designed to ensure that information required to be disclosed by the Company in the reports it files or submits under the Exchange Act are recorded, processed, summarized, and reported within the time periods specified by the Commission’s rules and forms.

 

Disclosure controls and procedures would include, without limitation, controls and procedures designed to provide reasonable assurance that information required to be disclosed by the Company in the reports it files or submits under the Exchange Act is accumulated and communicated to management, including the Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

 

Under the supervision and with the participation of management, including the Company’s Chief Executive Officer, the effectiveness of the Company’s disclosure controls and procedures (as such term is defined in Rule 13a-15(e) and 15d-15(e) under the Exchange Act) as of June 30, 2026, have been evaluated, and based upon this evaluation, the Company’s Chief Executive Officer has concluded that these controls and procedures are not effective in providing reasonable assurance of compliance.

 

Changes in Internal Control over Financial Reporting

 

Management will continue to monitor and evaluate the effectiveness of the Company’s internal controls and procedures and the Company’s internal controls over financial reporting on an ongoing basis and are committed to taking further action and implementing additional enhancements or improvements, as necessary and as funds allow. There were no changes in Internal Control Over Financial Reporting during the quarter ended June 30, 2026, except that Alex Archer resigned as our CFO, and Calvin Tsang was appointed as our CFO, on or about June 15, 2026.

 

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PART II - OTHER INFORMATION

 

ITEM 1. LEGAL PROCEEDINGS.

 

There are no pending legal proceedings in which we are a party or in which any of our directors, officers or affiliates, any owner of record or beneficiary of more than 5% of any class of our voting securities is a party adverse to us or has a material interest adverse to us. Our property is not the subject of any pending legal proceedings.

 

ITEM 1A. RISK FACTORS.

 

We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.

 

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

 

None.

 

ITEM 3. DEFAULTS UPON SENIOR SECURITIES.

 

None.

 

ITEM 4. MINE SAFETY DISCLOSURES.

 

Not Applicable.

 

ITEM 5. OTHER INFORMATION.

 

On or about June 15, 2026, Alex Archer resigned as our CFO, and Calvin Tsang was appointed as our CFO. Mr. Archer’s resignation was not as a result of any dispute with the Company, and instead facilitated the appointment of Mr. Tsang as our full-time CFO. Mr. Tsang, age 62, is an experienced financial professional who was employed by Newkirk Logistics Inc. from October of 2021 through June of 2026 as a Director of Accounting. In connection with Mr. Tsang’s appointment, our subsidiary, Just Right Products, Inc. d/b/a FW Promo, entered into an employment agreement with Mr. Tsang, dated June 15, 2026, providing that Mr. Tsang will be paid $120,000 per year, will receive two weeks paid vacation per year, and will be reimbursed for reasonable and necessary business expenses incurred while performing his duties. The foregoing description of the employment agreement is qualified in its entirety by reference to the employment agreement, a copy of which is filed as Exhibit 10.10 hereto and incorporated by reference herein.

 

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ITEM 6. EXHIBITS

 

Exhibit Number   Description
     
3.1   Articles of Incorporation (incorporated by reference to our Registration Statement on Form S-1, filed on October 8, 2013)
3.2   Bylaws (incorporated by reference to our Registration Statement on Form S-1, filed on October 8, 2013)
10.1   Texas Commercial Lease between M&M Real Estate Inc. and Just Right Products Inc., dated January 1, 2018 (incorporated by reference to our Annual Report on Form 10-K, filed on March 15, 2022)
10.2   Construction Loan Agreement, dated as of October 25, 2022, by and among ADM Endeavors, Inc., Just Right Products, Inc., and CapTex Bank (incorporated by reference to our Current Report on Form 8-K, filed on November 1, 2022)
10.3   Promissory Note, dated as of October 25, 2022, by ADM Endeavors, Inc., and Just Right Products, Inc., in favor of CapTex Bank (incorporated by reference to our Current Report on Form 8-K, filed on November 1, 2022)
10.4   Asset Purchase Agreement, dated April 27, 2023, by Just Right Products, Inc., and Innovative Impressions, Inc. (incorporated by reference to our Current Report on Form 8-K, filed on April 28, 2023)
10.5   Promissory Note, dated April 27, 2023, by Just Right Products, Inc., in favor of Robert Breese (incorporated by reference to our Current Report on Form 8-K, filed on April 28, 2023)
10.6   Pledge and Security Agreement, dated April 27, 2023, by Just Right Products, Inc., and Robert Breese (incorporated by reference to our Current Report on Form 8-K, filed on April 28, 2023)
10.7   Independent Consulting Agreement, dated April 27, 2023, by Just Right Products, Inc., and Robert Breese (incorporated by reference to our Current Report on Form 8-K, filed on April 28, 2023)
10.8  

Equity Financing Agreement, dated December 19, 2025, by and between ADM Endeavors, Inc. and GHS Investments LLC (incorporated by reference to our Current Report on Form 8-K, filed on December 23, 2025)

10.9   Registration Rights Agreement, dated December 19, 2025, by and between ADM Endeavors, Inc. and GHS Investments LLC (incorporated by reference to our Current Report on Form 8-K, filed on December 23, 2025)
10.10 (1)   Employment Agreement, dated June 15, 2026, by and between FW Promo and Calvin Tsang
31.1   Certification of Principal Executive Officer of ADM Endeavors, Inc. required by Rule 13a-14(1) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2   Certification of Principal Accounting Officer of ADM Endeavors, Inc. required by Rule 13a-14(1) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1   Certification of Principal Executive Officer of ADM Endeavors, Inc. pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and Section 1350 Of 18 U.S.C. 63
32.2   Certification of Principal Accounting Officer of ADM Endeavors, Inc. pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and Section 1350 Of 18 U.S.C. 63
     
101.INS (2)   Inline XBRL Taxonomy Extension Instance Document
101.SCH (2)   Inline XBRL Taxonomy Extension Schema Document
101.CAL (2)   Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF (2)   Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB (2)   Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE (2)   Inline XBRL Taxonomy Extension Presentation Linkbase Document
104 (2)   Cover Page Interactive Data file

 

(1) Filed herewith.

(2) XBRL (Extensible Business Reporting Language) information is furnished and not filed or a part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections.

 

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SIGNATURES

 

In accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

  ADM ENDEAVORS, INC.
     
Dated: August 14, 2026   /s/ Marc Johnson
  By: Marc Johnson
  Its: Chief Executive Officer
     
Dated: August 14, 2026   /s/ Calvin Tsang
  By: Calvin Tsang
  Its: Chief Financial Officer

 

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