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

Farmhouse, Inc. (the “Company”) is a Nevada corporation that historically engaged in technology development and brand management activities. We currently operate as a public company platform focused on evaluating strategic acquisitions and emerging opportunities, including initiatives in digital assets. The Company currently generates minimal revenue and maintains limited licensing activities that are not material. The Company continues to evaluate opportunities to develop operating business lines; however, there can be no assurance that such activities will result in material revenue in future periods.

We operate through our wholly owned subsidiaries, including Farmhouse Washington, Farmhouse DTLA, Inc., and Farmhouse Treasury LLC (“FT”). Our strategic focus is to identify and complete acquisitions that enhance long-term shareholder value and to reposition the Company toward scalable business opportunities, including through our Farmhouse Treasury division and ongoing evaluation of additional operating businesses.

In September 2025, we organized Farmhouse Treasury LLC (“FT”), a wholly owned Nevada limited liability company, to support our Anti-Debasement Digital Asset Treasury (“DAT”) initiative. FT is a manager-managed entity, with the Company as sole member and our Chief Executive Officer and Chief Technical Officer serving as managers.

FT was established to develop and oversee our digital asset strategy, including treasury management, custody solutions, and capital allocation in assets aligned with an anti-debasement framework, including Bitcoin and tokenized and physical gold. This initiative is intended to position the Company to participate in the emerging digital asset market while maintaining governance, reporting, and compliance standards consistent with those of a public company.

The Company has established an enterprise custody account with BitGo, which provides institutional-grade custody solutions, including insurance coverage for digital assets held in custody. BitGo has applied for a national trust bank charter with the Office of the Comptroller of the Currency; however, such status has not been finalized as of the date of this Report.

FT is a wholly owned subsidiary and is consolidated in our financial statements. At formation, no capital was contributed and no digital assets were acquired. Accordingly, there was no impact on our consolidated financial position or results of operations for the year ended December 31, 2025.

FT provides a dedicated structure through which we evaluate and, if appropriate, may implement digital asset-related strategies in a controlled and transparent manner. As of the date of issuance of these financial statements, FT has engaged in preliminary discussions with various counterparties, including cryptocurrency financing and investment platforms, regarding potential structures to execute such strategies. These discussions remain exploratory, and no binding agreements or definitive plans have been established. There can be no assurance that any such strategy will be pursued or that it will generate the anticipated benefits.

Accounting and professional fees increased primarily due to higher audit, tax preparation, and advisory services during 2025 compared to 2024. The decrease in wages and benefits and consulting fees was primarily attributable to the absence of stock-based compensation expense in 2025 compared to 2024.

Public company-related and filing fees decreased compared to the prior year, primarily due to reduced OTC market-related costs following the Company’s change in trading status. Other general and administrative expenses increased modestly, primarily due to costs associated with attending an international Bitcoin conference and other business development activities.

Net loss for the year ended December 31, 2025 was $393,266, compared to $464,343 for 2024. The decrease in net loss was primarily attributable to the gain on extinguishment of debt offset by loss on derivative and abandoned acquisition costs. Additionally, there were lower personnel and consulting costs, partially offset by higher professional fees and interest expense.

In addition to the items discussed above, certain changes in our financial statements were driven by non-cash and non-operating items. During the year ended December 31, 2025, the Company recognized a loss related to the change in fair value of derivative liabilities associated with certain convertible debt instruments, as well as the write-off of previously recorded deposits related to an abandoned acquisition. These items contributed to period-over-period variability in reported results and are not reflective of ongoing operating performance.

Our results for the year ended December 31, 2025 reflect a continued transition in our business strategy, including the wind-down of legacy licensing activities and a focus on evaluating new strategic opportunities, including our digital asset treasury initiative.

While revenues declined as a result of reduced activity in prior business lines, operating expenses remained relatively consistent as we maintained public company infrastructure and professional support. Management continues to prioritize cost discipline while evaluating strategic transactions and capital formation opportunities intended to enhance long-term stockholder value.

Critical Accounting Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, and expenses. One of the Company’s more significant estimates relates to the valuation of derivative liabilities associated with certain convertible debt instruments.

During the year ended December 31, 2025, the Company reassessed the probability of certain contingent conversion features embedded in its convertible notes, including the 2023 and 2025 Series notes. As of December 31, 2024, management had assessed the likelihood of such features being triggered as remote. During 2025, based on changes in facts and circumstances, including the Company’s capital structure and financing activities, management revised this assessment and applied an estimated probability of 10% in its valuation models.

This change in estimate resulted in the recognition of derivative liabilities and corresponding non-cash expense for the year ended December 31, 2025. Actual outcomes could differ from these estimates, and changes in assumptions may result in further adjustments in future periods.

Our capital structure includes convertible debt instruments, certain of which are in default and contain derivative features that may result in additional non-cash expense and dilution.

We have evaluated events and conditions that may mitigate these risks. Our plans to alleviate the conditions giving rise to substantial doubt include seeking additional equity and/or debt financing, renegotiating or restructuring existing debt obligations, and continuing to reduce operating expenditures while focusing resources on initiatives intended to generate future revenues. We are also evaluating strategic transactions and other capital-raising alternatives consistent with our business plan.

Our ability to continue as a going concern is dependent upon our ability to successfully execute these plans. These plans are not wholly within our control, and there can be no assurance that additional financing will be available on acceptable terms, if at all, or that we will be able to generate sufficient cash flows from operations to meet our obligations as they come due.

·Received $50,000 on a convertible note payable from unrelated individual. The note has a stated principal amount of $55,555, reflecting an original issue discount (“OID”), bears interest at 15% per annum (simple interest), and matures on September 7, 2026.

·Received $130,000 on a convertible note payable from unrelated individuals.

·Received $25,000 on a convertible note payable from the spouse of a Company director. This note was issued on the same terms as those offered to unaffiliated investors and was executed on an arm’s length basis.

·Borrowed $12,067 through related party short-term advances.

During the year ended December 31, 2024, we completed the following funding transactions:

The Company has engaged in transactions with related parties, including the issuance of convertible debt and short-term advances. During the year ended December 31, 2025, the Company received $25,000 in proceeds from a convertible note issued to the spouse of a Company director. This transaction was executed on terms consistent with those offered to unaffiliated investors and was considered to be conducted on an arm’s length basis. The Company also received short-term advances from related parties to support working capital needs.

Management believes that all related party transactions were conducted on terms no less favorable to the Company than could be obtained from unaffiliated third parties. Additional information regarding related party transactions is included in the consolidated financial statements and related notes.

On February 18, 2026, we issued a $10,000 convertible promissory note to an investor. The terms of this note are substantially consistent with our existing convertible notes.

On March 13, 2026, we received an advance of $100,000 from an investor in connection with a proposed convertible promissory note financing currently under discussion. Pursuant to an understanding with the investor, the advance is intended to be applied toward the investor’s participation in a larger proposed financing, if consummated. We are currently evaluating a potential financing with the investor of approximately $2.0 million, which may include a combination of cash and non-cash digital asset consideration. In the event the financing is completed, the advance will be credited toward the investor’s subscription in such offering. If the proposed financing is not consummated, the advance will automatically be deemed invested in a convertible promissory note of the Company on terms substantially consistent with our other convertible notes. As of the date of issuance of these consolidated financial statements, the proposed financing has not been finalized, and no assurances can be provided that the transaction will be completed.

Reference is made to Note 13 in the Consolidated Financial Statements included under Item 8 in this Report.

During the six months ended June 30, 2026, the Company commenced implementation of its digital asset treasury strategy. In connection with the Axiom Holdings Group, LLC financing described below, the Company received digital assets consisting primarily of Bitcoin. As of June 30, 2026, the Company held 7.21 Bitcoin with a fair value of $422,165 and 2.02 PAXG with a fair value of $8,086. The Company recognized an unrealized loss on its crypto assets of $61,977 during the six months ended June 30, 2026.

In addition, FT maintains an investment brokerage account through which it acquired securities during the period. As of June 30, 2026, these investments had an aggregate fair value of $35,182.

Total operating expenses increased by $66,301, or approximately 32%, for the six months ended June 30, 2026 compared to the same period in 2025. The increase was primarily attributable to a $33,720 increase in other general and administrative expenses related to increased travel to digital asset conferences and cryptocurrency platform fees and a $24,690 increase in consulting expense. Accounting and professional fees increased by $2,864, wages and benefits increased by $3,152, and public company related and filing fees increased by $1,875.

Total other expense for the six months ended June 30, 2026 was $2,804,078, compared to other income of $144,466 for the same period in 2025, as shown below.

The change from other income of $144,466 for the six months ended June 30, 2025 to other expense of $2,804,078 for the six months ended June 30, 2026 was primarily attributable to a $1,765,482 loss on the change in fair value of derivative liabilities, $445,619 of debt financing cost, a $61,977 unrealized loss on crypto assets, and an increase in interest expense to $531,222. In the prior-year period, the Company recognized a $174,935 gain on settlement of debt.

The Company also recognized a loss on the change in fair value of derivative liabilities of $1,765,482 during the six months ended June 30, 2026. The increase in derivative liabilities was primarily associated with convertible financing arrangements, including the Axiom financing completed during the period.

Three months Ended June 30, 2026 Compared to Three months Ended June 30, 2025.

Operating Expenses

Total operating expenses for the three months ended June 30, 2026 were $165,204, compared to $117,558 for the same period in 2025, as shown below.

Total operating expenses increased by $47,646, or approximately 41%, for the three months ended June 30, 2026 compared to the same period in 2025. The increase was primarily attributable to a $33,744 increase in other general and administrative expenses related to increased travel to digital asset conferences and cryptocurrency platform fees and a $25,065 increase in consulting expense. These increases were partially offset by a $15,086 decrease in accounting and professional fees. Wages and benefits increased by $3,152 and public company related and filing fees increased by $771.

Other Income (Expenses)

Total other expense for the three months ended June 30, 2026 was $2,758,100, compared to other expense of $14,616 for the same period in 2025, as shown below.

The increase in other expense for the three months ended June 30, 2026 compared to the same period in 2025 was primarily attributable to a $1,751,270 loss on the change in fair value of derivative liabilities, $445,619 of debt financing cost, a $60,786 unrealized loss on crypto assets, and an increase in interest expense to $500,647.

During the three months ended June 30, 2026, the Company recognized an unrealized loss on crypto assets of $60,786 reflecting changes in the fair value of digital assets held during the period.

The Company also recognized a loss on the change in fair value of derivative liabilities of $1,751,270 during the three months ended June 30, 2026. The increase in derivative liabilities was primarily associated with convertible financing arrangements, including the Axiom financing completed during the period.

Interest expense was $500,647 for the three months ended June 30, 2026, compared to $14,616 for the same period in 2025, primarily due to the Axiom financing and amortization of related debt discounts.

Net Income (Loss)

The Company reported a net loss of $2,923,304 for the three months ended June 30, 2026, compared to a net loss of $132,174 for the same period in 2025. The increase in net loss was primarily attributable to the loss on the change in fair value of derivative liabilities, the debt financing cost, increased interest expense, the unrealized loss on crypto assets, and higher operating expenses.

The Company measures derivative liabilities at fair value at inception and at each reporting date. During the six months ended June 30, 2026, the Company recognized derivative liabilities associated with convertible debt instruments, including the Axiom Note. The fair value of certain derivative liabilities was estimated using option-pricing models, including the Black-Scholes model, and other valuation techniques incorporating significant unobservable inputs. Accordingly, these derivative liabilities are classified as Level 3 measurements under the fair value hierarchy.

As of June 30, 2026, the aggregate fair value of the Company’s derivative liabilities was $4,301,556, compared to $89,455 as of December 31, 2025. Changes in valuation assumptions, including the Company’s stock price, volatility, remaining contractual term, risk-free interest rate and other factors, could result in significant changes in the fair value of these liabilities and the amount of gain or loss recognized in future periods.

As of June 30, 2026, we had total current assets of $1,687,415 and total current liabilities of $7,004,260, resulting in a working capital deficit of $5,316,845, compared to a working capital deficit of $2,215,329 as of December 31, 2025. The increase in the working capital deficit was primarily attributable to the recognition and subsequent remeasurement of derivative liabilities associated with convertible instruments, including the Axiom financing. As of June 30, 2026, derivative liabilities totaled $4,301,556, compared to $89,455 as of December 31, 2025. These derivative liabilities are non-cash liabilities that are remeasured at fair value at each reporting date, with changes in fair value recognized in earnings.

On May 4, 2026, the Company completed a financing transaction with Axiom Holdings Group, LLC through the issuance of a convertible promissory note with an original principal amount of $2,222,222. The financing provided total consideration of $2.0 million, consisting of $1.0 million in cash and $1.0 million of digital asset consideration. The Company received a $100,000 advance in March 2026 that was applied toward the financing upon closing and received approximately $884,000 of additional net cash funding at closing after approximately $16,000 of investor legal fees.

During the six months ended June 30, 2026, Axiom transferred a portion of the required digital asset consideration to the Company. As of June 30, 2026, $532,852 of the required digital asset consideration remained due from Axiom.

The Axiom Note bears interest at 15% per annum and matures ten months from issuance. The Note contains mandatory conversion provisions and an embedded conversion feature accounted for as a derivative liability. At inception, the Company recognized a derivative liability of $2,445,619, a debt discount of $2,222,222, and debt financing cost of $445,619 due to the derivative liability exceeding the proceeds. During the six months ended June 30, 2026, the Company recognized $416,666 of amortization expense related to the debt discount. The carrying value of the Axiom Note was $416,666 as of June 30, 2026.

During the six months ended June 30, 2026, the Company repaid in full the outstanding advances previously made by officers, as well as a $4,500 promissory note issued to the Company’s Chief Executive Officer and related accrued interest. The settlement of officer advances resulted in a $1,000 amount due from a related party as of June 30, 2026.