CBDW 10-K & 10-Q changes, risk factors and insider trading

On September 4, 2024.2024, we announced that we signed a nonbinding Letter of Intent (LOI) to acquire a strategic stake in Adnexus, a company at the forefront of Artificial Intelligence innovations in early drug discovery and infectious disease research. This LOI has expired and the Company has no plans to move forward.

Net Revenue. For the year ended December 31, 2024 and 2023,2025, we generated revenuesno fromrevenue. For the saleyear ofended CBDDecember products31, 2024, we generated revenue of $7,195 andfrom $1,603,consulting respectively.services Theto Companyone willpotential noBOT longer be selling CBD products.customer.

Gross Loss. As a result of the foregoing, we had a gross loss of $0 for the year ended December 31, 2025, compared with a gross loss of $118 for the year ended December 31, 2024, compared with a gross profit of $608 for the year ended December 31, 2023.2024.

Operating Expenses. For the year ended December 31, 20242025 and 2023,2024, total operating expenses were $4,138,157$485,738 and $1,620,580,$4,138,157, respectively. The increasedecrease was primarily due to stock-based compensation of approximately $3$3.033 million during the year ended December 31, 2024; there was no such expense during the year ended December 31, 2023.2025.

Net Loss. For the year ended December 31, 20242025 and 2023,2024, net loss was $4,514,971$1,295,041 and $1,580,733,$4,514,971, respectively. The increasedecrease in net loss was primarily due to higherlower operating expenses as discussed above.

To continue operations for the next 12 months, we will have a cash need of approximately $1,000,000. Should we not be able to fulfill our cash needs through the increaseforegoing of revenue,sources, we will need to raise money through outside investors through convertible notes, debtdebt, or similar instrument(s).instruments. Our plans to pay off current liabilities through sales and increasing revenue through sales of our services and or products, or through financing activities as mentioned above, although thereThere is no guarantee that we will ultimatelybe able to do so.so on acceptable terms, or at all.

Net cash used in operating activities was $890,986$460,779 for the year ended December 31, 2024,2025, primarily as a result of our net loss of $4,514,971,$1,295,041 and change in fair value of derivative liabilities of $77,228,$231,896, and gain on debt extinguishment of $37,461,$55,269, offset by sharesinitial issuedderivative for services providedexpense of $3,033,400$142,726, amortization of debt discount of $360,847,$850,785, and net changes in operating assets and liabilities of $250,074.$112,916.

Net cash used in operating activities was $747,104$890,986 for the year ended December 31, 2023,2024, primarily as a result of our net loss of $1,580,733 and$4,514,971, change in fair value of derivative liabilities of $192,759,$77,228, and gain on debt extinguishment of $37,461, offset by shares issued for services provided of $288,546,$3.033 financing costs of $200,616, $65,000 for the write-off of investments,million amortization of debt discount of $119,324,$360,847, and net changes in operating assets and liabilities of $352,862.$250,074.

Critical Accounting Policies and Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities of the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Notes to the Financial Statements describes the significant accounting policies and methods used in the preparation of the Financial Statements. Estimates are used for, but not limited to, contingencies and taxes. Actual results could differ materially from those estimates. The following critical accounting policies are impacted significantly by judgments, assumptions, and estimates used in the preparation of the Financial Statements.

In November 2025, the Company signed a non-binding Letter of Intent ("LOI") with Sim Agro Inc. ("Sim Agro"), a privately held power plant operations and energy infrastructure company with international experience in high-efficiency generation projects, including operations across India, Europe, South Korea, the Middle East, and the United States. As originally contemplated, Sim Agro would acquire a controlling interest in the Company, creating a public platform for Sim Agro's strategic expansion into power generation and data center infrastructure.Company. On May 4,2, 2026, 1606 Corp. (the “Company”) entered into aan definitiveAgreement agreementand Plan of Stock Exchange with Sim Agro Inc., pursuant to which the Company will acquire a majority controlling interest in Sim Agro Inc., a global power-plant operations and energy infrastructure company.Agro. The transaction has not closed and remains subject to customary closing conditions.conditions, including stockholder approvals and the other conditions described in Note 7 to the financial statements.

The Company has also engaged Moody Capital Solutions, Inc. as its sole exclusive placement agent and financial advisor to advise on capital markets and financing matters in connection with these initiatives. As originally executed, Moody Capital served as the Company’s sole and exclusive placement agent and financial advisor; as described below, that engagement was subsequently modified to a non-exclusive basis effective August 7, 2026.

Results from Operations – For the three months ended MarchJune 31,30, 2026, as compared to MarchJune 31,30, 2025

Net Revenue. For the three months ended MarchJune 31,30, 2026 and 2025, we generated no revenue.revenues.

Cost of Goods Sold. For the three months ended MarchJune 31,30, 2026 and 2025, there were no cost of goods sold.

Gross Loss. As a result of the foregoing, we had a gross loss of $0 for the three months ended MarchJune 31,30, 2026,2026 and 2025.

Operating Expenses. For the three months ended MarchJune 31,30, 2026 and 2025, total operating expenses were $168,472$154,746 and $174,232,$117,084, respectively. The decreaseincrease was primarily due to aan decreaseincrease in marketingprofessional expenses.and other operating costs.

Net Loss. For the threesix months ended MarchJune 31,30, 2026 and 2025, net loss was $1,066,516$1,187,579 and $208,339,$418,450, respectively. The significant increase in net loss was primarily due to a substantial increase inhigher interest expenseexpense, of $544,468 (compared to $62,054 in the prior year period), driven by theincluding amortization of debt discount on convertible notes,discount, and the recognition of a $250,000 non-refundablean acquisition extension feefee, partially offset by a gain on the change in connectionfair withvalue theof Jeffersonderivative Enterprise Energy Purchase and Sale Agreement.liabilities.

As of MarchJune 31,30, 2026, we have yet to achieve profitable operations, and while we hope to achieve profitable operations in the future, if not, we may need to raise capital from stockholders or other sources to sustain operations and to ultimately achieve viable operations. These factors raise substantial doubt about our ability to continue as a going concern. Our principal sources of liquidity have been cash provided by operating activities, as well as our ability to raise capital. Our operating results for future periods are subject to numerous uncertainties and it is uncertain if we will be able to become profitable and continue growth for the foreseeable future. If management is not able to increase revenue and/or manage operating expenses, we may not be able to achieve profitability. Our ability to continue in existence is dependent on our ability to achieve profitable operations.

To continue operations for the next 12 months, exclusive of the Texas property acquisition, we estimate a cash need of approximately $1,000,000. In addition, the Company is obligated under the Purchase and Sale Agreement, as amended by the First Amendment dated April 13, 2026,amended, to pay $7,000,000 in cash at the closing of the Texas property acquisition, currently scheduled to occur on or before MayOctober 22,31, 2026. The $250,000 previously deposited as earnest money has been deemed fully earned by the Seller as a non-refundable extension fee and will not be credited against the purchase price. Under the Second Amendment to the Purchase and Sale Agreement dated May 27, 2026, the Company agreed to pay an additional extension fee of $312,000, of which $200,000 had been paid as of June 30, 2026 pursuant to the Third Amendment dated June 2, 2026. Pursuant to the Fourth Amendment dated July 10, 2026, the remaining $112,000 balance is payable in four equal monthly installments of $28,000 due on July 15, August 15, September 15, and October 15, 2026. The acquisition of the property and plant in Lufkin is still pending. Should we not be able to fulfill our cash needs through the increase of revenue, we will need to raise money through outside investors through convertible notes, debt or similar instrument(s). Our plans to pay off current liabilities through sales and increasing revenue through sales of our services and or products, or through financing activities as mentioned above, although there is no guarantee that we will ultimately do so.

Net cash used in operating activities was $422,059$726,261 for the threesix months ended MarchJune 31,30, 2026, primarily as a result of our net loss of $1,066,516$1,187,579 and change in fair value of derivative liabilities of $113,396,$654,704, and gain on debt extinguishment of $9,820,$56,989, offset by amortization of debt discount of $462,049,$968,115, and net changes in operating assets and liabilities of $53,832.$164,896.

Net cash used in operating activities was $157,678$276,685 for the threesix months ended MarchJune 31,30, 2025, primarily as a result of our net loss of $208,339$418,450 and change in fair value of derivative liabilities of $145,638,$93,721, and gain on debt extinguishment of $25,035,$47,046, offset by initial derivative expense of $142,726, amortization of debt discount of $58,695,$116,773, and net changes in operating assets and liabilities of $19,913.$23,031.

There was no cash used in investing activities during the threesix months ended MarchJune 31,30, 2026 and 2025.2026.

During the threesix months ended MarchJune 31,30, 2025,2026, our financing activities provided cash of $155,885,$726,549, including $50,277$61,612 from the sale of our common stock, $76,000$393,000 in net proceeds from convertible notes, and $163,000$339,500 in net proceeds from the note payable to our former CEO. We also repaid $133,392$67,563 of convertible notes.