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

Our business is subject to numerous risks and uncertainties (“Risk Factors”). Certain Risk Factors may have a material adverse effect on our business, financial condition, and results of operations. Investing in our shares involves a high degree of risk. You should carefully consider the following risks, together with all of the other information contained in this Annual Report on Form 10-K, including the sections titled “Cautionary Note Regarding Forward-Looking Statements”, “SUMMARY OF RISK FACTORS”, and “Management’sITEM Discussion7. andMANAGEMENT’S AnalysisDISCUSSION ofAND FinancialANALYSIS ConditionOF andFINANCIAL ResultsCONDITION ofAND OperationsRESULTS OF OPERATIONS” and our consolidated financial statements and the related notes included elsewhere in this Annual Report on Form 10-K. Any of the following risks could have an adverse effect on our business, financial condition, operating results, or prospects and could cause the trading price of our common stock to decline, which would cause you to lose all or part of your investment. Our business, financial condition, operating results, or prospects could also be harmed by risks and uncertainties not currently known to us or that we currently do not believe are material.

In the following Risk Factors, the terms “us”, “we”, “Company,” “LFTD Partners” and “Lifted” are meant to include references to LFTD Partners, Lifted (including itsLifted’s arrangement with Extrax NM, and Lifted’s collaboration with Diamond Supply Co., and Lifted’s past collaborations with Cali Sweets, Diamond Supply Co., Extrax NM,Jeeter and a subsidiary of a large publicly traded marijuana companySubCo), Highlandia, Lifted’s co-packers and co-manufacturers, future acquisition targets, and future asset purchases and/or joint ventures), Ablis, BendistilleryAblis and Bend Spirits,Bendistillery, as appropriate in the context of particular Risk Factors. These RisksRisk Factors may cause our operations to vary materially from those contemplated by our forward-looking statements. These Risk Factors include:

Our acquisition of Lifted andLifted, our prior acquisitions of 4.99% of the outstanding equity of each of Ablis, Bend Spirits and Bendistillery d/b/a Crater Lake Spirits, and Lifted’s purchase of assets of hemp-derived products maker Oculus CRS, LLC, and merger with Oculus CHS Management Corp., involve significant risk, and there can be no assurance that the business of Lifted, or 4.99% of the common stock of each of Ablis, Bend Spirits and Bendistillery d/b/a Crater Lake Spirits, will be successful or generate any profit or other financial benefit for our Company. Impairments of some or all of the value of our investments in Lifted, Ablis, Bend Spirits and/or Bendistillery may occur. An inability by LFTD Partners to achieve financial benefit from Lifted, Ablis, Bend Spirits or Bendistillery may materially adversely affect our Company. The foregoing risks may have a material adverse effect on our Company and the trading price of our common stock.

We have substantial ongoing payment obligations, including payments on our loansBusiness from Surety Bank,Loan, payroll and benefits, rent and overhead costs, inventory purchases, legal fees and other professional fees, bonuses, preferred stock dividends, other operating expenses, income taxes, excise taxes, and other liabilities. A failure to pay our financial obligations when they become due and payable may materially adversely affect our Company and the trading price of our common stock. The foregoing risks may have a material adverse effect on our Company and the trading price of our common stock.

In connection with our loans from Surety Bank, we have agreed that Surety Bank will serveserves as our principal depository bank. If Surety Bank ever were to become bankrupt or insolvent, we could potentially lose millions of dollars of our cash on hand that is held in our checking and money market accounts at Surety Bank. We do not have insurance covering that risk. That risk may have a material adverse effect on our Company and the trading price of our common stock.

We are subject to restrictions and covenants under our loansloan from Surety Bank

UnderPrior to the WCL Payoff and Loan Term Changes (terms defined below), under the terms of our loan agreements with Surety Bank, we arewere obligated to comply with certain loan covenants and restrictions, including the following: (1) the ratio of our annual EBIDA (earnings before interest, depreciation and amortization), divided by our scheduled annual debt service payments to Surety Bank, must behave been 1.5 or higher based on our tax returns, beginning with the 2023 return (although this loan covenant hashad been waived by Surety Bank in regard to 2024); (2) we must not permit the outstanding principal balance of the $3,000,000 Working Capital Loan to exceed 40% of the fair market value of the collateral securing the Working Capital Loan; and (3) we must maintainhave maintained our primary operating accounts with a $1,000,000 minimum deposit account balance with Surety Bank for the life of the $910,000 Business Loan. If for any reason we failhad failed to comply with these loan covenants and restrictions, Surety Bank would behave been entitled to declare a default under the loan agreements. Such a default could have a material adverse effect on our Company and the trading price of our common stock.

Under the SuretyBusiness Bank loan agreements,Loan, we are also subject to covenants not to take certain actions without the consent of Surety Bank, including such things as not, among other things:

If we were to violate any of these negative covenants, Surety Bank would be entitled to declare a default under the loanBusiness agreements.Loan Agreement. Such a default could have a material adverse effect on our Company and the trading price of our common stock.

Also, our efforts to grow our business may be more costly than we expect and we may not be able to increase our revenue enough to offset higher operating expenses. We may incur significant losses in the future for a number of reasons, including as a result of newly-proposed or enacting laws or regulations, such as H.R. 5371, the “Continuing Appropriations, Agriculture, Legislative Branch, Military Construction and Veterans Affairs, and Extensions Act, 2026”, unforeseen laws, regulations, restrictions, taxes, expenses, difficulties, complications and delays, the other risks described herein and other unknown events. The amount of any future net losses will depend, in part, on the growth of our future expenses and our ability to generate revenue. Any future losses will have an adverse effect on our stockholders’ equity and working capital. Because of the numerous risks and uncertainties associated with producing and selling hemp-derived, kratom-derived, psychoactive and potentially nicotine products, as outlined herein, we are unable to accurately predict our future financial results. Even if we achieve profitability in the future, we may not be able to sustain profitability in subsequent periods. If we are unable to achieve and sustain profitability, the market price of our common stock may significantly decrease and our ability to raise capital, expand our business or continue our operations may be impaired. Our failure to remain profitable would decrease the value of our Company and could impair our ability to raise capital, expand our business, diversify our product offerings and continue our operations. The foregoing risks may have a material adverse effect on our Company and the trading price of our common stock.

Our operational costs are significant. We now employ over 140100 people as employees and independent contractors. Our payroll and benefits costs, including health, dental and vision insurance for employees, are significant. We have expanded into more leased spaces. Our costs for accountants, lawyers and other consultants are significant. Our costs of raw materials, packaging, fulfillment and sales are significant. We have compensation arrangements for our salespeople that include significant commissions that are percentages of their sales. Lifted entered into an agreement with its Chief Strategy Officer (the “CSO”), effective as of April 1, 2025, pursuant to which, in addition to his base compensation of $10,000 every two weeks plus health insurance coverage, the CSO receives (1) a royalty on certain gummies manufactured by Lifted of between $0.005 and $0.01, and (2) certain quarterly and annual bonuses based upon Lifted’s quarterly and annual collected revenues on certain sales exceeding targets of $9,000,000 and $58,000,000, respectively. These and other significant operational costs may materially adversely affect our Company and the trading price of our common stock.

We may issue additional shares of common stock, and options and warrants to purchase additional shares of common stock, without stockholder approval, which would dilute the current holders of our common stock.stock

Selling equity is difficult to accomplish in the current market, especially because of the regulatory landscape of the hemp industry and because the prices of stocks of many publicly traded Cannabis Companies have experienced significant declines during the past few years. This difficulty may make future acquisitions either unlikely, or too difficult and expensive. The foregoing risks may have a material adverse effect on our Company and the trading price of our common stock.

Our investor relations efforts may not be successful. At the present time, due to the factsfact that billions of dollars of market capitalization have been lost by publicly traded corporations in the cannabis industry over the past few years, investor sentiment regarding equity or debt capital raises by Cannabis Companies is negative. This negative investor sentiment, combined with many other negative macro factors such as inflation, global conflicts, supply chain issues, tariffs, and high interest rates, has made it extremely difficult for the Company to attract Growth Capital on acceptable terms and conditions. The Company can provide no guarantee or assurance whatsoever that this profoundly negative investor sentiment could be reversed by traditional investor relations efforts. The foregoing risks may have a material adverse effect on our Company and the trading price of our common stock.

Pursuant to Section 404 of the Sarbanes-Oxley Act (“Section 404”), we will be required to furnish a report by our management on our ICFR, which, after we have met certain requirements, must be accompanied by an attestation report on ICFR issued by our independent registered public accounting firm. To achieve compliance with Section 404 within the prescribed period, we will document and evaluate our ICFR, which is both costly, time-consuming and challenging. In this regard, we will need to continue to dedicate internal resources and adopt a detailed work plan to assess and document the adequacy of our ICFR, continue steps to improve control processes as appropriate, validate through testing that controls are functioning as documented, and implement a continuous reporting and improvement process for ICFR. Despite our efforts, there is a risk that we will not be able to conclude within the prescribed timeframe that our ICFR is effective as required by Section 404. This may result in one or more material weaknesses in our ICFR, which may cause an adverse reaction in the financial markets due to a loss of confidence in the reliability of our financial statements, which may have a material adverse effect on our Company and the trading price of our common stock.statements. The foregoing risks may have a material adverse effect on our Company and the trading price of our common stock.

RISK FACTORS RELATING TO LFTD PARTNERS, LIFTED (INCLUDING ITSLIFTED’S ARRANGEMENT WITH EXTRAX NM, AND LIFTED’S COLLABORATION WITH DIAMOND SUPPLY CO., AND LIFTED’S PAST COLLABORATIONS WITH CALI SWEETS, DIAMONDJEETER SUPPLYAND CO., EXTRAX NM, A SUBSIDIARY OF A LARGE PUBLICLY TRADED MARIJUANA COMPANYSUBCO), BENDISTILLERY,HIGHLANDIA, BENDLIFTED’S SPIRITS, ABLISCO-PACKERS AND CO-MANUFACTURERS, FUTURE ACQUISITION TARGETS, AND FUTURE ASSET PURCHASES AND/OR JOINT VENTURESVENTURES, ABLIS AND BENDISTILLERY (COLLECTIVELY, “LIFTED” OR THE “COMPANY”)

Write offs of inventory continue to be significant for Lifted. Because consumers’ demands change very quickly, and because of the legal and regulatory challenges that Lifted faces, Lifted may find it necessary to write off certain raw goods because they will no longer be used in production. Or, if consumers are no longer interested in certain products, and the finished goods are slow-moving, those finished goods are written off. Lifted may have to record allowances against the value of hemp-derived products in inventory each quarter end, and these allowances may increase, as November 12, 2026 (the date by which intoxicating hemp-derived consumable products are banned under the Act) approaches. Moreover, any hemp-derived products in inventory on November 12, 2026 will have to be written off. The foregoing riskrisks may have a material adverse effect on our Company and the trading price of our common stock.

Our hemp-derivedhemp-derived, kratom-derived and other products are not intended for use in the diagnosis, cure, mitigation, treatment, or prevention of a disease or condition. Lifted has not applied to the FDA for any approvals of any of Lifted’s products, and may never do so. The FDA has not approved any of Lifted’s products for any purpose, and may never do so. Lifted may be subject to cease and desist letters, lawsuits or other enforcement actions by the FDA or the DEA for failure to obtain FDA or DEA approval of its products, or for Lifted’s packaging, labeling, advertisements and promotions of its products without any FDA or DEA approvals. For example, the FDA might take action against Lifted alleging that Lifted has engaged in the promotion of an unapproved drug. Historically, the FDA has issued cease and desist letters, filed lawsuits and taken enforcement actions against Lifted and other companies selling products that are similar to the products that Lifted sells. Defending cease and desist letters, lawsuits or other enforcement actions by the FDA or DEA may cause Lifted and LFTD Partners to expend a great deal of management time and legal fees. Any cease and desist letters, lawsuits or other enforcement actions by the FDA or DEA may have a material adverse effect on our company and the trading price of our common stock. There can be no guarantee or assurance whatsoever that the FDA’s or the DEA’s regulatory concerns about hemp-derivedhemp-derived, kratom-derived or other products that Lifted sells will be resolved favorablyin forour the hemp derived products industry.favor. The foregoing risks may have a material adverse effect on our Company and the trading price of our common stock.

Investors may file litigation including class action lawsuits against Lifted and/or LFTD Partners for many different reasons, such as: (1) Lifted has not applied to the FDA for any approvals of any of Lifted’s products, and may never do so; (2) The FDA has not approved any of Lifted’s products for any medical purpose, and may never do so; (3) Lifted may be subject to cease and desist letters, lawsuits or other enforcement actions by the FDA for failure to obtain FDA approval of its products, or for Lifted’s packaging, labeling, advertisements and promotions of its products without any FDA approvals. For example, the FDA might take action against Lifted alleging that Lifted has engaged in the promotion of an unapproved drug. The FDA has issued cease and desist letters, filed lawsuits and taken enforcement actions against Lifted and other companies selling cannabinoidintoxicating products that are similar to Lifted’s products; (4) Lifted may be subject to cease and desist letters, lawsuits or other enforcement actions by the DEA alleging that Lifted’s products are illegal; and (5) Investors may file litigation including class action lawsuits against Lifted and/or LFTD Partners for other reasons associated with the formulation, packaging, labeling, lab testing, advertising, promotion, medical claims, ineffectiveness, or other characteristics of Lifted’s products. Defending any lawsuits by investors may cause Lifted and LFTD Partners to expend a great deal of management time and legal fees. The foregoing risks may have a material adverse effect on our Company and the trading price of our common stock.

The Racketeer Influenced Corrupt Organizations Act (“RICO”), which was originally designed to give prosecutors an additional tool to prosecute organized crime, is now sometimes being weaponized against cannabis companies, as Plaintiff’s attorneys sometimes add so-called “RICO” claims to ordinary commercial litigation in the cannabis industry. For example, Lifted and certain executives were recently sued by the same plaintiff’s attorney in two ordinary commercial lawsuits, and such plaintiff’s attorney chose to add RICO claims to the complaints in those cases. In one case, the judge has recently dismissed those RICO claims with prejudice. In the other case, Lifted intends to seek dismissal of the RICO claims. While we flatly deny that our Company has or is engaged in any “racketeering” activities, no assurance or guarantee can be given that RICO claims will not continue to be asserted either by plaintiff’s attorneys or by criminal prosecutors. The foregoing risks may have a material adverse effect on our Company and the trading price of our common stock.

Lifted, Cannabis Companies, or the hemp-derived, kratom-derived, marijuana, psychoactive and nicotine industries more generally, may receive unfavorable publicity or become subject to negative consumer or investor perception

The hemp-derived, kratom-derived, marijuana, psychoactive and nicotine industries are highly dependent upon positive consumer and investor perception regarding the benefits, safety, efficacy and quality of the hemp-derived, kratom-derived, marijuana, psychoactive and nicotine products sold to consumers. The perception of the hemp-derived, kratom-derived, marijuana, psychoactive and nicotine products industries, and hemp-derived, kratom-derived, marijuana, psychoactive and nicotine products, currently and in the future, may be significantly influenced by scientific research or findings, regulatory investigations, litigation, political statements, media attention and other publicity (whether or not accurate or with merit) relating to the consumption of hemp-derived, kratom-derived, marijuana, psychoactive or nicotine products, including unexpected safety or efficacy concerns arising with respect to hemp-derived, kratom-derived, marijuana, psychoactive or nicotine products or the activities of industry participants. There can be no assurance that future scientific research, findings, regulatory proceedings, litigation, media or governmental attention or other research findings or publicity will be favorable to the hemp-derived, marijuana, psychoactive or nicotine markets. Adverse future scientific research reports, findings and regulatory proceedings that are, or litigation, media attention or other publicity that is, perceived as less favorable than, or that questions earlier research reports, findings or publicity (whether or not accurate or with merit) may result in a significant reduction in the demand for Lifted’s products. Further, adverse publicity reports or other media attention regarding the safety, efficacy and quality of hemp-derived, kratom-derived, marijuana, psychoactive or nicotine products, or of Lifted’s products specifically, or associating the consumption of hemp-derived, kratom-derived, marijuana, psychoactive or nicotine products with illness or other negative effects or events, may adversely affect Lifted. This adverse publicity may arise even if the adverse effects associated with hemp-derived, kratom-derived, marijuana, psychoactive or nicotine products resulted from consumers’ failure to use such products legally, appropriately or as directed. The foregoing risks may have a material adverse effect on our Company and the trading price of our common stock.

As cyber threats continue to evolve, Lifted may be required to expand significant additional resources to continue to modify or enhance its protective measures or to investigate and remediate any information security vulnerabilities. Significant disruption to Lifted's IT system or breaches of data security may have a material adverse effect on its'its business' financial condition and results of operations. The foregoing risks may have a material adverse effect on our Company and the trading price of our common stock.

Lifted uses computers in substantially all aspects of its business operations. It also uses mobile devices, social networking and other online activities to connect with team members and customers. Lifted relies heavily on various proprietary and third-party information systems. Its reputation for the secure handling of customer and other sensitive information is critical to the success of its business. Like other businesses, Lifted is potentially subject to a range of cyber incidents, including but not limited to state-sponsored cyber-attacks, industrial espionage, insider threats, computer denial-of-service attacks, computer viruses, ransomware and other malware, data leakage and compromise, wire fraud, phishing incidents and other cyber incidents. Due to such constant evolving nature and methods of security threats, Lifted may not detect cyber incidents and may not be able to quickly or properly respond to cyber incidents.incidents, and the cost and operational expense of implementing, maintaining and enhancing protective measures to guard against increasingly complex and sophisticated cyber threats could increase significantly. Lifted's information technology and network infrastructure may be vulnerable to attacks by hackers or breaches during routine operations, such as system upgrades, or during network or hardware failures, or due to employee error, malfeasance, malicious or disruptive software or computer viruses, malicious actions of employees or contractors, power outages, natural disasters, acts of terrorism, breaches with respect to third-party systems or vendors, or other disruptions. A cybersecurity incident and breach of its information systems could lead to theft, destruction, loss of life, damage to property, environmental issues, misappropriation or release of sensitive and/or confidential information or intellectual property, which could result in business disruption, negative publicity, violation of privacy laws, loss of customers, brand damage, adverse financial and operational results, and potential litigation.

Our management depends on relevant and reliable information for decision-making purposes, including key performance indicators and financial reporting. Any significant loss of data, failure to maintain reliable data, disruptions affecting our information systems, or delays or difficulties in transitioning to new systems could adversely affect our business, financial condition and results of operations. In addition, our ability to continue to operate our businesses without significant interruption in the event of a disaster or other disruption depends in part on the ability of our information systems to continue to operate properly. If our information systems fail and/or if our insurance does not sufficiently compensate us for any losses that we may incur, our revenues and profits could be reduced, and the reputation of our brands and our business could be adversely affected. In addition, remediation of such problems could result in significant, unplanned capital investments. The foregoing risks may have a material adverse effect on our Company and the trading price of our common stock.

We believe that, in the normal course of business, Lifted has been the target of malicious cyberattack attempts and has experienced other IT security incidents especially in regard to Lifted's banking, credit card, and other financial activities. There can be no assurance that future cyberattacks and other IT security incidents will not be material or significant. An IT security breach or incident could result in unauthorized parties obtaining access to, or the denial of authorized access to, Lifted's IT systems or data, or customers’ systems or data, including intellectual property and proprietary, sensitive or other confidential information. An IT security breach or incident could also result in litigation against us, negatively impact our future sales, disrupt our business, and lead to increases in insurance premiums and legal, regulatory and financial exposure and liability. All of the foregoing risks may have a material adverse effect on our Company and the trading price of our common stock.

We cannot guarantee that Lifted's IT systems have not been compromised or that they do not contain exploitable defects or bugs that could result in a breach of or disruption to our platform, systems and network or the systems and networks of third parties that support us and our business. Third parties may also exploit vulnerabilities in, or obtain unauthorized access to, platforms, systems, networks, or physical facilities utilized by us or our third-party vendors or service providers. Furthermore, supply chain disruptions due to wars and/or sanctions (and resulting legal or regulatory developments) and any indirect effects may further complicate any existing supply chain constraints. All of the foregoing risks may have a material adverse effect on our Company and the trading price of our common stock.

These laws and regulations, as well as changes and new laws and regulations that apply to personal data, subject the Company to, among other things, additional costs and may require changes to our business practices, security systems, policies, and procedures. Any failure by Lifted to comply with applicable laws and regulations or other obligations to which we may be subject relating to personal data, or to protect personal data from unauthorized access, use or other processing, could result in enforcement actions and regulatory investigations against us, claims for damages by customers and other affected individuals, fines, loss of consumer confidence, and damage to our brand reputation, and which may subject us to government enforcement actions (including fines and injunctions), any of which could have a material adverse effect on our operations, financial performance andperformance, business. These risks may have a material adverse effect on our Company and the trading price of our common stock.

It has been reported that experts have sounded an alarm over the global spread of a dangerous and infectious hop latent virus (HpLVd) that is threatening to potentially cause billions of dollars of losses for cannabis and hop growers. If this viroid were to cause significant problems for hemp growers in the US, it might potentially decrease the availability, and increase the cost, of hemp and hemp-derived cannabinoids that are the principal raw materials for many of our products. The foregoing risk may have a material adverse effect on our Company and the trading price of our common stock.

We rely on a combination of trademark and trade secrecy laws, confidentiality procedures and contractual provisions to protect our intellectual property rights. Failure to protect our intellectual property could harm our brandbrands and our reputation, and adversely affect our ability to compete effectively. Further, enforcing or defending our intellectual property rights, including our trademarks and trade secrets, could result in the expenditure of significant financial and managerial resources. We regard our intellectual property, particularly our trademarks and trade secrets, as crucial to our business and our success. However, the steps taken by us to protect these proprietary rights may not be adequate and may not prevent third parties from infringing or misappropriating our trademarks, trade secrets or similar proprietary rights. In addition, other parties may seek to assert infringement claims against us, and we may have to pursue litigation against other parties to assert our rights. Any such claim or litigation could be costly. In addition, any event that would jeopardize our proprietary rights or any claims of infringement by third parties could have a material adverse effect on our ability to market or sell our brands, profitably exploit our products or recoup our associated research and development costs. The foregoing risks may have a material adverse effect on our Company and the trading price of our common stock.

The Company’sLifted’s profitability is sensitive to fluctuations in the costs of raw goods, which may be impacted by changes in availability of supply (which itself depends on other factors such as weather, fuel, equipment, labor costs, raw goods costs, shipping costs, national holidays, and demand), tariffs, taxes, governmental policies, and other market conditions, all of which are factors beyond the control of theLifted. Company. The Company'sLifted's operational results are also sensitive to manufacturing costs, and the overall condition of the hempintoxicating products,product marijuana, psychoactive products, and alternative lifestyle products industries.industry. Price volatility may have a material adverse effect on the Company'sLifted's business, financial condition, and results of operations. The foregoing risks may have a material adverse effect on our Company and the trading price of our common stock.

The CompanyLifted may sustain losses that cannot be recovered through insurance or other preventative measures

There is no assurance that the CompanyLifted will not incur uninsured liabilities and losses, especially in regard to uninsured or uninsurable products, and product recalls. The foregoing risk may have a material adverse effect on our Company and the trading price of our common stock.

Our business is dependent on a number of key inputs and their related costs, including raw materials, supplies and equipment related to our operations, co-packers, as well as electricity, water and other utilities. Our suppliers, co-packers and customers are dispersed. Governments may regulate or restrict the flow of labor or products, and the Company’sLifted’s operations, suppliers, customers and distribution channels could be severely impacted. For examples: China or other nations could regulate or restrict the flow of raw materials and products to the United States; the shipment of raw materials and products by sea and/or air from China and other locations to Wisconsin,the ColoradoUnited or New MexicoStates may be banned, limited, disrupted, delayed or increased in cost; the Chinese New Year celebrations may disrupt or delay shipments of raw materials and products; andstates thein Stateswhich ofLifted Wisconsin, Colorado and/or New Mexicooperates could impose prohibitions or restrictions on the operation of “non-essential” businesses, and might characterize Lifted as a “non-essential” business. Any significant future governmental-mandated or market-related delay, interruption, price increase or negative change in the availability or economics of the supply chain for key inputs and, in particular, rising or volatile shipping and energy costs, may curtail or preclude our ability to continue production. In addition, our operations would be significantly affected by power outages, or equipment breakage. Our ability to compete is dependent on us having access, at a reasonable cost and in a timely manner, to skilled labor, equipment, parts and components. No assurances can be given that we will be successful in maintaining our required supply of labor, equipment, parts and components. The foregoing risks may have a material adverse effect on our Company and the trading price of our common stock.

Our business, financial condition, results of operations and cash flow may be negatively impacted by challenging global conditions, including high interest rates, inflation, bankruptcies, layoffs, wars, tariffs, pandemics, civil unrest, and many other factors beyond our Company’sLifted’s control. We are unable to predict the likelihood of the occurrence, duration or severity of such global economic conditions and disruptions caused thereby. Any general or market-specific economic downturn could have a material adverse effect on our business, financial condition, results of operations and cash flow. The foregoing risk may have a material adverse effect on our Company and the trading price of our common stock.

We depend on fast, cost-effective, and efficient transportation services to distribute our products to distributers,distributors, wholesalers and end users. Any prolonged disruption of third-party transportation services may have a material adverse effect on our sales volumes or satisfaction with our services. Rising costs associated with third-party transportation services used by us to ship our products may also adversely impact our profitability, and more generally our business, financial condition and results of operations. The foregoing risks may have a material adverse effect on our Company and the trading price of our common stock.

Companies and regulators in the marijuana industryand alcohol industries are often hostile to the hemp-derived products industry, and sometimes use their political strength to seek prohibition, regulation and/or taxation of hemp-derived products including products, such as those containing delta-8-THC and delta-9-THC

Companies and regulators in the marijuana industryand alcohol industries are often hostile to the hemp-derived products industry, as they witness the growing popularity of hemp-derived products taking sales away from state-licensed marijuana dispensaries.dispensaries, or alcohol sales. They sometimes use their political strength to seek prohibition, stricter regulations and/or additional taxation of hemp-derived products, including for example, products containing delta-8-THC and delta-9-THC. Prohibitions, restrictions and taxes are now imposed on the shipment and/or sale of certain hemp-derived products in many states, and are being considered by other states. These restrictions, prohibitions and taxes may have a material adverse effect on our Company.Lifted. The foregoing risks may have a material adverse effect on our Company and the trading price of our common stock.

Certain events or developments in the cannabis industryand psychoactive products industries more generally may impact our reputation

Damage to our reputation can result from the actual or perceived occurrence of any number of events, including any negative publicity, whether true or not. As a producer and distributor of hemp-derived and other psychoactive products, there is a risk that our business might attract negative publicity. There is also a risk that the actions of other companies and service providers in the cannabis industryand psychoactive products industries may negatively affect the reputation of the industryindustries as a whole and thereby negatively impact our reputation. The increased usage of social media and other web-based tools used to generate, publish and discuss user-generated content and to connect with other users has made it increasingly easier for individuals and groups to communicate and share negative opinions and views in regards to our activities and the cannabis industryand psychoactive products industries in general, whether true or not. We do not ultimately have direct control over how we or the cannabis industryor ispsychoactive products industries are perceived by others. Reputational issues may result in decreased investor confidence, increased challenges in developing and maintaining community relations and present an impediment to our overall ability to advance our business strategy and realize on our growth prospects. This may also impact our ability to attract and/or maintain business partners that are not primarily engaged in the cannabis industry,and psychoactive products industries, such as major convenience stores. The foregoing risks may have a material adverse effect on our Company and the trading price of our common stock.

Some companies in the cannabis industryand psychoactive products industries are owned or controlled by people with criminal backgrounds or by people with little regard for compliance with applicable laws, rules and regulations

The cannabis industryand psychoactive products industries includes people with criminal backgrounds or who operated their cannabis and psychoactive products businesses illegally for many years. In addition, the cannabis industryand includespsychoactive products industries include people who seem to have little regard for compliance with all applicable laws, rules and regulations. This has sometimes resulted in a competitive environment in which publicly traded companies are at a relative disadvantage to certain privately held companies. This “unlevel playing field” may have a material adverse effect on our Company.Lifted. The foregoing risks may have a material adverse effect on our Company and the trading price of our common stock.

The hemp-derivedhemp-derived, psychoactive and consumable goods productsindustries industry isare ever-evolving. Lifted cannot accurately predict future sales of particular products that Lifted sells. Some products sell faster than expected, and some products sell slower than expected. And some products sell fast, but then sales unexpectedly drop off quickly. When Lifted overstocks raw goods or finished goods, and the demand for finished goods is not as expected, then Lifted is required to take significant inventory markdowns or write-offs, which reduces profitability. Such inventory markdowns or write-offs are not uncommon. Also, if too many customers access Lifted’s websites within a short period of time due to increased demand, Lifted may experience system interruptions that make its website unavailable or prevent Lifted from efficiently fulfilling orders, which may reduce the volume of goods it sells and the attractiveness of its products and services. The foregoing risks may have a material adverse effect on our Company and the trading price of our common stock.

A significant component of our growth strategy focuses on acquiring majority equity ownership interests in Cannabiscompanies Companies.outside However,of the hemp-derived and psychoactive products industries (“Outside Companies”). One of the challenges we have faced while having merger discussions with Outside Companies is that management of the Outside Companies is apprehensive of merging their companies with Lifted, given the tremendous regulatory challenges that Lifted faces. We generally have pursued a conservative mentality regarding the potential issuance of additional common stock of the Company, and regarding the pricing, term and other conditions of potential borrowings by the Company, so we may not be able to identify, audit, or acquire such equity ownership interests on acceptable terms, if at all. No guarantee or assurance whatsoever can be given that discussions/negotiations with any potential acquisition candidates will result in any letter of intent or definitive acquisition agreement. If we do enter any letter of intent or definitive acquisition agreement, we may need to finance all or a portion of the purchase price for an acquisition by incurring indebtedness or by selling shares of our common stock or convertible preferred stock. There can be no assurance that we will be able to obtain financing on terms that are favorable, if at all, which will limit our ability to acquire such equity ownership interests in the future. Target companies may not decide to proceed forward with mergers that are the subject of letters of intent. Failure to acquire such equity ownership interests on acceptable terms, if at all, may have a material adverse effect on our ability to increase assets, revenues and net income, and on the trading price of our common stock. The foregoing risks may have a material adverse effect on our Company and the trading price of our common stock.

Lifted and other Cannabis Companies are subject to risks associated with the federal government’s and state and local governments’ evolving regulation of hemp, hemp-derived products, kratom-derived products, marijuana, psychoactive substances, tobacco, nicotine, and other consumable products. We can provide no assurance that one or more federal agencies, such as the FDA or the DEA, or state and local governments, will not attempt to impose rules, regulations, moratoriums, prohibitions, restrictions, limitations, taxes, or other impediments upon Cannabis Companies, and companies involved in selling productshemp-derived containingproducts, kratom-derived products, marijuana, psychoactive substancessubstances, ortobacco, nicotine.nicotine, and other consumable products. For example, the US federal government has recently enacted a law that may makemakes it more difficult to sell online and ship nicotine, vape and other products. In addition, the FDA and certain states have enacted laws and regulations that prohibit or otherwise negatively impact the sale of certain hemp-derived, kratom-derived, psychoactive and nicotine products. Moreover, if Lifted or Cannabis Companies or companies involved in selling productshemp-derived containingproducts, kratom-derived products, marijuana, psychoactive substancessubstances, tobacco, or nicotine expand internationally (of which there is no guarantee that they ever would), we can provide no guarantee or assurance that these companies will be able to comply with all applicable governmental laws and regulations.regulations related to the sales of the products. Any failure to comply with all of such rules, regulations, moratoriums, prohibitions, restrictions, limitations, taxes, or other impediments upon Cannabis Companies, and companies involved in selling productsthe containingaforementioned psychoactive substances or nicotine,products, could potentially result in lawsuits, substantial fines and penalties, and/or other negative governmental actions. The foregoing risks may have a material adverse effect on our Company and the trading price of our common stock.

Lifted’s sales are dependent upon the sale of delta-8-THChemp-derived, kratom-derived and other hemp-derived cannabinoidpsychoactive products, which may be restricted or prohibited by the FDA, the DEA or other governmental agencies, laws or regulations

Lifted’s sales are significantly dependent upon the sale of productshemp-derived, containing delta-8-THCkratom-derived and otherpsychoactive hemp-derived cannabinoids.products. The FDA, the DEA and other federal, state and local governments and agencies may impose laws, rules, regulations and executive orders that effectively prohibit Lifted from selling products containing delta-8-THChemp-derived, kratom-derived or otherpsychoactive hemp-derived cannabinoids.products. For example, the DEA has sent a letter saying that delta-9-THCO and delta-8-THCO “do not occur naturally in the cannabis plant and can only be obtained synthetically, and therefore do not fall under the definition of hemp”, and there could be a crackdown by the DEA or other regulatory authorities on products containing delta-9-THCO and/or delta-8-THCO, even though we believe that such products are federally lawful pursuant to the so-called "Farm Bill". Consequently, Lifted’s and LFTD Partners’ future financial prospects are uncertain, and no guarantee or assurance whatsoever can be made that Lifted and LFTD Partners will be able to continue to pay their financial obligations when they become due and payable in the future. The foregoing risks may have a material adverse effect uponon Lifted’sour businessCompany and the trading price of our common stock.

As used in this Annual Report on Form 10-K, references to the “Company,” “LFTD Partners,” “LIFD,” “Lifted,” “Highlandia”, “we,” “our” or “us” refer to LFTD Partners Inc. and Lifted, unless the context otherwise indicates.

Ablis, BendistilleryAblis and Bend SpiritsBendistillery

Lifted Purchase of Assets of Oculus CRS, LLC, and Merger With Oculus CHS Management Corp.

Manufacturing, Sales and Marketing Agreement With Subsidiary of a Large, Publicly TradedSubCo

On February 24, 2020, the Company acquired 100% of the ownership interests of Lifted. All of the Company’s sales are generated by the Company’s wholly owned subsidiary Lifted; LFTD Partners by itself generates no sales. We also do not recognize any revenue or earnings from our investments in Bendistillery,Bendistillery Ablisand orAblis. BendLFTD Spirits.Partners’ other wholly owned subsidiary, Highlandia Inc., does not generate any sales.

NetIn comparison, net cash used in operating activities was $960,067 for the year ended December 31, 2024.2024; During the year ended December 31, 2024, net cash used in operating activities primarilythis resulted from a net loss of $1,857,429,$1,857,429 whichdecreased includesby net, non-cash expenses of $3,861,942,$3,861,942 offsetand increased by cashchanges usedin fornet workingoperating capital, primarily inventory,assets and paydownsliabilities of accounts payable and accrued liabilities.$2,964,580. Non-cash expenses are primarily related to spoiled and written off inventory of $1,550,599, bad debt expense of $1,469,078, and the loss on the Jeeter collaboration of $1,349,467. Changes in net operating assets and liabilities primarily related to net purchases of inventory totaling $2,552,003.

Net cash provided by operating activities was $638,925 for the year ended December 31, 2023.2023; Netthis cash provided by operating activities in 2023 was primarily generatedresulted from net income of $2,159,007,$2,159,007 whichincreased includesby net, non-cash chargesexpenses forof $4,328,412 and reduced by changes in net operating assets and liabilities of $5,848,494. Non-cash expenses are primarily related to Deferred Contingent Stock Compensation expense of $2,138,175 and spoiled and written off inventory of $2,056,603,$2,056,603. offsetChanges byin cashnet usedoperating forassets workingand capital,liabilities primarily inventory,related andto incomenet taxes.purchases of inventory totaling $5,936,752.

In comparison, netNet cash used in investing activities was $916,119$121,639 during the year ended December 31, 2022.2025, Netand cashwas used in investing activities in 2022 relateddue to netthe purchasespurchase of fixed assets.

The following table summarizes our Company’s current assets, current liabilities and working capital as of December 31, 20242025 and December 31, 2023.2024:

As of December 31, 2024,2025, we had cash and restrictedunrestricted cash of $3,146,947$1,767,123; in comparison, as of December 31, 2023,2024, we had cash and restrictedunrestricted cash of $5,357,539.$2,146,947.

As of December 31, 2024 and December 31, 2023,2024, our other assets primarily included goodwill of $23,092,794, which was comprised of $22,292,767 of goodwill from the acquisition of Lifted on February 24, 2020,2020 ("Lifted Goodwill"), and $800,027 of goodwill from Lifted’s purchase of nearly all of the assets of Oculus CRS, LLC, and Lifted’s merger with Oculus CHS Management Corp. in April 2023.2023 ("Oculus Goodwill").

Also, as of both December 31, 2024 and December 31, 2023,2024, our other assets included our investments in hemp-derived beverage and products maker Ablis, and distillers Bendistillery and Bend Spirits, which total $1,896,200. NetIn fixedthe assetssecond asquarter of December2025, 31,Bend 2024Spirits andwas Decembermerged 31,into 2023Bendistillery werefor $2,704,615operational and $2,996,387, respectively.efficiency.

In addition, as of both December 31, 2024 and December 31, 2023,2024, our other assets also included restricted cash of $1,000,000. WePrior areto the Loan Term Changes, we were required by our Business Loan Agreement with Surety Bank to maintain a minimum depository balance of $1,000,000 with Surety Bank for the duration of our Business Loan. The Business Loan matures on December 14, 2028.

As of December 31, 2024,2025, current liabilities of $6,084,011$5,162,410 primarily consisted of accounts payable and accrued expenses of $4,563,464,$3,326,650 and deferred revenue of $1,380,049. In comparison, as of December 31, 2024, current liabilities of $6,388,029 primarily consisted of accounts payable and accrued expenses of $4,867,481, the current portion of the notes payable to Surety Bank of $559,418, and deferred revenue of $674,676. The year-to-date decline in current liabilities was primarily attributable to a year-to-date reduction in our accounts payable and accrued expenses due to the timing of payments to suppliers and other vendors.

ReferenceThe legal and regulatory risks facing the Company’s business are particularly acute at this point in time. In particular, reference is hereby made to the description of the business of LFTD Partners Inc.Inc., and to risks and uncertainties therewith, in the following section,sections, which isare hereby incorporated by reference thereto:

On February 24, 2020, the Company acquired 100% of the ownership interests of Lifted. All of the Company’s sales are generated by the Company’s wholly-ownedwholly owned subsidiary Lifted; LFTD Partners by itself generates no sales. We also do not recognize any revenue or earnings from our investments in Bendistillery and Ablis. Prior to its dissolution in May 2026, LFTD Partners’ other wholly owned subsidiary, Highlandia Inc., doesdid not generate any sales.

The Company'sCompany’s cash needs for working capital, capital expenditures, growth opportunities, the payments of Series A and Series B Preferred Stock dividends, bonuses, its financial obligations under its loan agreements with Surety Bank, and other obligations, are expected to be met with current cash on hand and cash flows provided by operating activities.

The Company has a history of losses as evidenced by the accumulated deficit at MarchJune 31,30, 2026 of $33,003,164.$34,444,821. We plan to sustain the Company as a going concern by taking the following actions: (1) continuing to operate Lifted; (2) acquiring and/or developing profitable businesses that will create positive income from operations; and/or (3) completing private placements of our common stock and/or preferred stock. We believe that by taking these actions, we will be provided with sufficient future operations and cash flow to continue as a going concern. However, there can be no assurance that we will be successful in consummating such actions on acceptable terms, if at all. Moreover, many of such actions can be expected to result in substantial dilution to the existing shareholders of the Company.

The following table summarizes our Company’s cash flows for the threesix months ended MarchJune 31,30, 2026 and 2025:

Net cash providedused byin operating activities was $458,860$96,085 for the threesix months ended MarchJune 31,30, 2026;2026, thisconsisting resulted fromof a net loss of $4,159,949$5,598,239, decreasedoffset by changes in net,net non-cash expenses of $4,926,553$6,616,285, andwith increased bynet changes in net operating assets and liabilities using cash of $307,744.$1,114,131. Non-cash expenses are primarily related to Inventoryinventory Reservereserve Expenseexpense (Allowanceallowance) of $5,061,673.$6,596,096. Changes in net operating assets and liabilities primarily related to $1,006,738a of$1,044,065 decrease in deferred revenue.

In comparison, net cash provided by operating activities was $351,751$86,143 for the threesix months ended MarchJune 31,30, 2025;2025, thisconsisting resulted fromof a net loss of $303,042$571,992, decreasedoffset by net,net non-cash expenses of $129,983$1,027,812, andwith net changes in net operating assets and liabilities using cash of $524,810.$369,677. Non-cash expenses are primarily related to spoiled and written offwritten-off inventory of $464,521.$780,929.

Net cash used in investing activities was $119,682$138,998 and $77,147$84,551 during the quarterssix months ended MarchJune 31,30, 2026 and 2025, respectively, driven by the purchase of fixed assets in both periods.

During the threesix months ended MarchJune 31,30, 2026, net cash used in financing activities was $15,171,$27,743, primarily consisting of payments on the Surety Bank loan of $8,325$16,396 and payments onof thedividends Relatedto Party Note (defined below)holders of $3,846.preferred stock of $7,500. In comparison, during the quartersix months ended MarchJune 31,30, 2025, net cash used in financing activities was $141,590,$32,487, primarily consisting of proceeds of $350,000 from the Related Party Note (defined below), offset by payments on the Surety Bank loans of $138,589,$278,833, and payments on the Related Party Note of preferred stock dividends totaling $3,000.$96,154.

During the quartersix months ended MarchJune 31,30, 2026, net cash increaseddecreased by $324,006,$262,826, and we had $2,091,129$1,504,297 of unrestricted cash at MarchJune 31,30, 2026. During the quartersix months ended MarchJune 31,30, 2025, net cash increaseddecreased by $133,015$30,895, and we had $2,279,962$2,116,052 of unrestricted cash and $1,000,000 of restricted cash at MarchJune 31,30, 2025.

Comparison of the Consolidated Balance Sheets as of MarchJune 31,30, 2026 and December 31, 2025

The following table summarizes our Company’s current assets, current liabilities and working capital as of MarchJune 31,30, 2026 and December 31, 2025.

As of MarchJune 31,30, 2026 and December 31, 2025, we had unrestrictedreported cash and cash equivalents of $2,091,129$1,504,297 and $1,767,123, respectively.

As of MarchJune 31,30, 2026, we reported prepaid expenses of $356,953,$175,237, primarily consisting of prepaid inventory of $278,181.$106,338. In comparison, as of December 31, 2025, we reported prepaid expenses of $348,667, primarily consisting of prepaid inventory of $272,968.

Accounts receivable of $2,246,020,$2,915,373, net of $1,523,796$1,207,367 allowance for doubtful accounts, were outstanding as of MarchJune 31,30, 2026. In comparison, accounts receivable of $2,531,524, net of $1,269,590 allowance for doubtful accounts, were outstanding as of December 31, 2025.

Reference is hereby made to the disclosures above in the following sections, which are hereby incorporated by reference thereto:

Inventory is valued at the lower of average cost or market value (net realizable value). Inventory consisted of the following at MarchJune 31,30, 2026 and December 31, 2025:

Overhead expenses related to leases, utilities, insurance, and indirect labor are allocated to finished goods based on the estimated percentage cost toward the finished goods. Depreciation expense related to certain machinery and equipment is also allocated to finished goods. At MarchJune 31,30, 2026, $388,105$345,325 of overhead expenses were allocated to finished goods. At December 31, 2025, $373,269 of overhead expenses were allocated to finished goods. Reference is hereby made to the disclosures above in the following sections, which are hereby incorporated by reference thereto:

Reference is hereby made to the disclosures above in the following sections, which are hereby incorporated by reference thereto:

The Act necessitated the calculation and recording of an impairment charge on the Lifted Goodwill and Oculus Goodwill. As of December 31, 2025, LFTD Partners recorded a goodwill impairment charge on the Lifted Goodwill and Oculus Goodwill, reducing the carrying value of both to $0. Reference is hereby made to the disclosures in the following section, which are hereby incorporated by reference thereto:

Net fixed assets as of June 30, 2026 and December 31, 2025 were $643,021 and $2,273,377, respectively. In addition, as of June 30, 2026, the Company classified the 5511 Building, related building improvements and land, with an aggregate carrying amount of $1,294,211, as assets held for sale. The combined carrying amount of net fixed assets and assets held for sale was $1,937,232 as of June 30, 2026. Excluding the reclassification, the decrease was driven primarily by impairments of hemp-specific fixed assets totaling $208,049, and $254,967 of depreciation, partially offset by $138,998 of capital expenditures. The Act is expected to materially reduce or eliminate the utility and marketability of fixed assets used primarily in the manufacture of hemp-derived products, which is why the impairments were recorded. If the Act materially reduces our revenue from hemp-derived products, our cash flow may be insufficient to support ongoing operating expenses. In that event, we may be required to sell fixed assets or other assets to generate liquidity, which could occur at unfavorable prices and materially adversely affect our financial condition. Reference is hereby made to the disclosures above in the following sections, which are hereby incorporated by reference thereto:

As of MarchJune 31,30, 2026, current liabilities of $4,542,477$3,647,586 primarily consisted of accounts payable and accrued expenses of $3,449,351.$2,757,476. In comparison, as of December 31, 2025, current liabilities of $5,162,410 primarily consisted of accounts payable and accrued expenses of $3,326,650 and deferred revenue of $1,380,049. The quarter-to-date decline in current liabilities was primarily attributable to the recognition of deferred revenue from December 31, 2025 as revenue as of March 31, 2026.

As of MarchJune 31,30, 2026, non-current liabilities of $1,439,919$1,351,994 consisted of the non-current portion of the loan payable to Surety Bank of $804,706$796,551 and operating lease liability of $635,213.$555,444. In comparison, as of December 31, 2025, non-current liabilities of $1,477,877 consisted of the non-current portion of the loan payable to Surety Bank of $797,597, and operating lease liability of $680,280.

In prior years, the Company’s payables have been greater than its cash on hand. Prior to the Company’s acquisition of Lifted, the Company had inconsistent income-generating ability and was therefore reliant on raising money from loans or stock sales. The Company had an accumulated deficit of $33,003,164$34,444,821 and $28,839,889 as of MarchJune 31,30, 2026 and December 31, 2025, respectively.

Comparison of Operations for the Three and Six Months Ended MarchJune 31,30, 2026 to MarchJune 31,30, 2025

During the three months ended March 31, 2026, the Company recognized netNet sales of $9,158,206. In comparison, during the three and six months ended MarchJune 31,30, 2025,2026 thewere Company$8,705,194 recognizedand $17,863,400, respectively, compared to net sales during the three and six months ended June 30, 2025 of $9,123,850.$10,325,336 and $19,449,186, respectively. Some of the business challenges that we face include, but are not limited to: prohibitionthe of,adoption or tighterproposal regulationof of,federal and state legislation and regulations that prohibit or more tightly regulate intoxicating hemp-derived and kratom-derived productsproducts, has been adopted or proposedincluding in many states that are significant markets for Lifted, such as in Florida, Texas, Illinois, Missouri and California; greater competition in the marketplace for branded hemp-derived and psychoactive products that are similar to those that Lifted sells; more distributors creating their own brands and selling their own branded products at a lower price than Lifted’s products; increased competition for products containing more milligrams of cannabinoids or active ingredients per unit at a lower price point; and other competing brands paying distributors and wholesalers more than what Lifted is willing to pay (if anything), for valuable shelf space. Reference is hereby made to the disclosures above in the following sections, which are hereby incorporated by reference thereto:

Lifted'sLifted’s industry, and customer preferences, are constantly and quickly evolving. The regulatory landscape at the municipal, state and federal levels in which Lifted operates is unstable and unpredictable. Consequently, Lifted finds it extremely difficult to predict future sales of its products and to anticipate raw goods needs for future production. These factors mayhave causecaused Lifted to record a significant inventory reserve (allowance) against its inventory. LiftedA may also have to record significant write offs of obsolete raw goods and slow-moving finished goods, causing an increase in cost of goods sold. Antotal inventory reserve of $4,720,659 was taken against Lifted's hemp-derived inventory as of March 31, 2026. No inventory reserve was taken against Lifted's hemp-derived inventory as of December 31, 2025. An inventory reserve of $341,014$6,596,096 was recorded against Lifted’s 7-OH inventory as of MarchJune 31, 2026. During the quarters ended March 31,30, 2026; of which, $5,007,427 was recorded against its hemp-derived or hemp-related inventory, $1,434,458 was recorded against its kratom-derived or kratom-related inventory, and 2025,$154,211 $89,104was andrecorded $464,521against of obsolete and spoiledother inventory was written off, respectively. Reference is hereby madeunrelated to thehemp disclosuresor above in the following sections, which are hereby incorporated by reference thereto:kratom.

Reference is hereby made to the disclosures above in the following section, which are hereby incorporated by reference thereto:

Operating expenses include accounts such as payroll expense, deferred contingent stock expense, company-wide management bonus pool, professional fees, bank charges and merchant fees, advertising and marketing, bad debt (recovery)/expense, impairment of hemp-specific fixed assets, depreciation and amortization, collaboration commission and royalty expense, and other operating expenses. Total operating expenses increasedduring the three months ended June 30, 2026 were $2,178,388 compared to $2,859,181 for the quarter ended March 31, 2026, up from $2,545,779$3,356,034 during the quarterthree months ended MarchJune 31,30, 2025. This $1,177,646 decline was primarily due to an $899,466 reduction in bad debt expense, and a $177,240 reduction in other operating expense.

Payroll Expense includes sales commissions paid to independent contractors. If the Act materially reduces demand for our hemp-derived products, or if kratom-derived products containing 7-OH are banned,classified as a Schedule I controlled substance under the Controlled Substances Act (“CSA”), we may be required to reduce our workforce and terminate relationships with independent contractors. Such actions could disrupt our operations, result in restructuring costs, and adversely affect our ability to operate or pursue future business opportunities. During the quarter ended March 31, 2026, the Company reported $1,318,781 of payroll expenses. In comparison, during the quarter ended March 31, 2025, the Company reported $1,299,570 of payroll expenses. In March 2025, an Employee Retention Tax Credit (“ERC”) of $22,357 related to the second quarter of 2020 was recovered. The $22,357 ERC is accounted for as a reduction in payroll expenses in the first quarter of 2025.

Advertising and marketing costs are expensed as incurred. Advertising and marketing expenses primarily relate to marketing campaigns, trade shows, digital marketing, and promotional expenses. Lifted has been engaging with third party specialists to increase its presence in the direct-to-consumer space. DuringAdvertising and marketing expenses during the quartersthree and six months ended MarchJune 31,30, 2026 andwere 2025, the Company incurred $341,401$490,770 and $415,572$832,171, inrespectively, compared to advertising and marketing expenses.expenses during the three and six months ended June 30, 2025 of $531,873 and $947,445, respectively.

Reference is hereby made to the disclosures above in the following section, which are hereby incorporated by reference thereto:

Bad Debt (Recovery)/Expense

TheBad Companydebt reportedrecovery during the three and six months ended June 30, 2026 was $249,829 and $623, respectively, compared to bad debt expense of $249,206 during the quarterthree and six months ended MarchJune 31,30, 2026. In comparison, the Company reported a benefit from bad debt recovery2025 of $403,869$649,637 duringand the$245,768, quarter ended March 31, 2025.respectively. Bad debt expense stems from the change in the Company’s allowance for doubtful accounts, which stems from the Company’s CECL Model analysis. The delay in Lifted’s receipt of payments from certain customers— – primarily distributors—have – has increasingly become an issue for Lifted. Certain customers have become slower to pay Lifted for products purchased product (“Slow Paying Customers”), and the Slow Paying Customers disregard payment terms. Management speculatesbelieves that some Slow Paying Customers may be slow-payingdelaying payments to Lifted because of their own salesaccounts receivable collection issues, which may in part be caused by the regulatory uncertainty over ourthe industry.industries in which Lifted participates. The Company has an accounting protocol which effectively causes the Company to recognize an allowance for doubtful accounts for all invoices older than 90 days. Consequently, the delay in Lifted’s receipt of payments from certain customers has a direct impact on the Company’s net receivables, net income, and earnings per share. Reference is hereby made to the disclosures above in the following sections,section, which are hereby incorporated by reference thereto:

DuringCollaboration commission and royalty expense during the quartersthree and six months ended MarchJune 31,30, 2026 andwas 2025,$0, thecompared Company reportedto collaboration commission and royalty expense ofduring $0the three and $67,098,six months ended June 30, 2025 of $5,742 and $72,840, respectively. The change in collaboration commission and royalty expense primarily stems from decreased sales of the products covered by respective collaborations. Lifted has been de-emphasizing its collaboration efforts with outside brands due to the collaborations’ lack of traction in sales. As of MarchJune 31,30, 2026 and as of December 31, 2025, the only Manufacturing, Sales and Marketing Agreement still in effect was the Diamond Agreement.

Other operating expenses include, for example, software expenses, travel, insurance expense, rent expense, repairs and maintenance, state license and filing fees, excise and sales tax expense, health benefits, warehouse and lab expenses below the Company’s capitalization threshold, and other expenses. Other operating expenses were $503,364 during the three months ended March 31, 2026, compared to $651,331 during the three months ended March 31, 2025.

Other Income or /(Expenses)

Reference is hereby made to the disclosures above in the following sections, which are hereby incorporated by reference thereto:

ReferenceThe legal and regulatory risks facing the Company’s business are particularly acute at this point in time. In particular, reference is hereby made to the description of the business of LFTD Partners Inc.Inc., and to risks and uncertainties therewith, in the following section,sections, which isare hereby incorporated by reference thereto:

On February 24, 2020, the Company acquired 100% of the ownership interests of Lifted. All of the Company’s sales are generated by the Company’s wholly-ownedwholly owned subsidiary Lifted; LFTD Partners by itself generates no sales. We also do not recognize any revenue or earnings from our investments in Bendistillery and Ablis. Prior to its dissolution in May 2026, LFTD Partners’ other wholly owned subsidiary, Highlandia Inc., doesdid not generate any sales.

The Company'sCompany’s cash needs for working capital, capital expenditures, growth opportunities, the payments of Series A and Series B Preferred Stock dividends, bonuses, its financial obligations under its loan agreements with Surety Bank, and other obligations, are expected to be met with current cash on hand and cash flows provided by operating activities.

The Company has a history of losses as evidenced by the accumulated deficit at MarchJune 31,30, 2026 of $33,003,164.$34,444,821. We plan to sustain the Company as a going concern by taking the following actions: (1) continuing to operate Lifted; (2) acquiring and/or developing profitable businesses that will create positive income from operations; and/or (3) completing private placements of our common stock and/or preferred stock. We believe that by taking these actions, we will be provided with sufficient future operations and cash flow to continue as a going concern. However, there can be no assurance that we will be successful in consummating such actions on acceptable terms, if at all. Moreover, many of such actions can be expected to result in substantial dilution to the existing shareholders of the Company.

The following table summarizes our Company’s cash flows for the threesix months ended MarchJune 31,30, 2026 and 2025:

Net cash providedused byin operating activities was $458,860$96,085 for the threesix months ended MarchJune 31,30, 2026;2026, thisconsisting resulted fromof a net loss of $4,159,949$5,598,239, decreasedoffset by changes in net,net non-cash expenses of $4,926,553$6,616,285, andwith increased bynet changes in net operating assets and liabilities using cash of $307,744.$1,114,131. Non-cash expenses are primarily related to Inventoryinventory Reservereserve Expenseexpense (Allowanceallowance) of $5,061,673.$6,596,096. Changes in net operating assets and liabilities primarily related to $1,006,738a of$1,044,065 decrease in deferred revenue.

In comparison, net cash provided by operating activities was $351,751$86,143 for the threesix months ended MarchJune 31,30, 2025;2025, thisconsisting resulted fromof a net loss of $303,042$571,992, decreasedoffset by net,net non-cash expenses of $129,983$1,027,812, andwith net changes in net operating assets and liabilities using cash of $524,810.$369,677. Non-cash expenses are primarily related to spoiled and written offwritten-off inventory of $464,521.$780,929.

Net cash used in investing activities was $119,682$138,998 and $77,147$84,551 during the quarterssix months ended MarchJune 31,30, 2026 and 2025, respectively, driven by the purchase of fixed assets in both periods.

During the threesix months ended MarchJune 31,30, 2026, net cash used in financing activities was $15,171,$27,743, primarily consisting of payments on the Surety Bank loan of $8,325$16,396 and payments onof thedividends Relatedto Party Note (defined below)holders of $3,846.preferred stock of $7,500. In comparison, during the quartersix months ended MarchJune 31,30, 2025, net cash used in financing activities was $141,590,$32,487, primarily consisting of proceeds of $350,000 from the Related Party Note (defined below), offset by payments on the Surety Bank loans of $138,589,$278,833, and payments on the Related Party Note of preferred stock dividends totaling $3,000.$96,154.

During the quartersix months ended MarchJune 31,30, 2026, net cash increaseddecreased by $324,006,$262,826, and we had $2,091,129$1,504,297 of unrestricted cash at MarchJune 31,30, 2026. During the quartersix months ended MarchJune 31,30, 2025, net cash increaseddecreased by $133,015$30,895, and we had $2,279,962$2,116,052 of unrestricted cash and $1,000,000 of restricted cash at MarchJune 31,30, 2025.

Comparison of the Consolidated Balance Sheets as of MarchJune 31,30, 2026 and December 31, 2025

The following table summarizes our Company’s current assets, current liabilities and working capital as of MarchJune 31,30, 2026 and December 31, 2025.

As of MarchJune 31,30, 2026 and December 31, 2025, we had unrestrictedreported cash and cash equivalents of $2,091,129$1,504,297 and $1,767,123, respectively.

As of MarchJune 31,30, 2026, we reported prepaid expenses of $356,953,$175,237, primarily consisting of prepaid inventory of $278,181.$106,338. In comparison, as of December 31, 2025, we reported prepaid expenses of $348,667, primarily consisting of prepaid inventory of $272,968.

Accounts receivable of $2,246,020,$2,915,373, net of $1,523,796$1,207,367 allowance for doubtful accounts, were outstanding as of MarchJune 31,30, 2026. In comparison, accounts receivable of $2,531,524, net of $1,269,590 allowance for doubtful accounts, were outstanding as of December 31, 2025.

Reference is hereby made to the disclosures above in the following sections, which are hereby incorporated by reference thereto:

Inventory is valued at the lower of average cost or market value (net realizable value). Inventory consisted of the following at MarchJune 31,30, 2026 and December 31, 2025:

Overhead expenses related to leases, utilities, insurance, and indirect labor are allocated to finished goods based on the estimated percentage cost toward the finished goods. Depreciation expense related to certain machinery and equipment is also allocated to finished goods. At MarchJune 31,30, 2026, $388,105$345,325 of overhead expenses were allocated to finished goods. At December 31, 2025, $373,269 of overhead expenses were allocated to finished goods. Reference is hereby made to the disclosures above in the following sections, which are hereby incorporated by reference thereto:

Reference is hereby made to the disclosures above in the following sections, which are hereby incorporated by reference thereto:

The Act necessitated the calculation and recording of an impairment charge on the Lifted Goodwill and Oculus Goodwill. As of December 31, 2025, LFTD Partners recorded a goodwill impairment charge on the Lifted Goodwill and Oculus Goodwill, reducing the carrying value of both to $0. Reference is hereby made to the disclosures in the following section, which are hereby incorporated by reference thereto:

Net fixed assets as of June 30, 2026 and December 31, 2025 were $643,021 and $2,273,377, respectively. In addition, as of June 30, 2026, the Company classified the 5511 Building, related building improvements and land, with an aggregate carrying amount of $1,294,211, as assets held for sale. The combined carrying amount of net fixed assets and assets held for sale was $1,937,232 as of June 30, 2026. Excluding the reclassification, the decrease was driven primarily by impairments of hemp-specific fixed assets totaling $208,049, and $254,967 of depreciation, partially offset by $138,998 of capital expenditures. The Act is expected to materially reduce or eliminate the utility and marketability of fixed assets used primarily in the manufacture of hemp-derived products, which is why the impairments were recorded. If the Act materially reduces our revenue from hemp-derived products, our cash flow may be insufficient to support ongoing operating expenses. In that event, we may be required to sell fixed assets or other assets to generate liquidity, which could occur at unfavorable prices and materially adversely affect our financial condition. Reference is hereby made to the disclosures above in the following sections, which are hereby incorporated by reference thereto:

As of MarchJune 31,30, 2026, current liabilities of $4,542,477$3,647,586 primarily consisted of accounts payable and accrued expenses of $3,449,351.$2,757,476. In comparison, as of December 31, 2025, current liabilities of $5,162,410 primarily consisted of accounts payable and accrued expenses of $3,326,650 and deferred revenue of $1,380,049. The quarter-to-date decline in current liabilities was primarily attributable to the recognition of deferred revenue from December 31, 2025 as revenue as of March 31, 2026.

As of MarchJune 31,30, 2026, non-current liabilities of $1,439,919$1,351,994 consisted of the non-current portion of the loan payable to Surety Bank of $804,706$796,551 and operating lease liability of $635,213.$555,444. In comparison, as of December 31, 2025, non-current liabilities of $1,477,877 consisted of the non-current portion of the loan payable to Surety Bank of $797,597, and operating lease liability of $680,280.

In prior years, the Company’s payables have been greater than its cash on hand. Prior to the Company’s acquisition of Lifted, the Company had inconsistent income-generating ability and was therefore reliant on raising money from loans or stock sales. The Company had an accumulated deficit of $33,003,164$34,444,821 and $28,839,889 as of MarchJune 31,30, 2026 and December 31, 2025, respectively.

Comparison of Operations for the Three and Six Months Ended MarchJune 31,30, 2026 to MarchJune 31,30, 2025

During the three months ended March 31, 2026, the Company recognized netNet sales of $9,158,206. In comparison, during the three and six months ended MarchJune 31,30, 2025,2026 thewere Company$8,705,194 recognizedand $17,863,400, respectively, compared to net sales during the three and six months ended June 30, 2025 of $9,123,850.$10,325,336 and $19,449,186, respectively. Some of the business challenges that we face include, but are not limited to: prohibitionthe of,adoption or tighterproposal regulationof of,federal and state legislation and regulations that prohibit or more tightly regulate intoxicating hemp-derived and kratom-derived productsproducts, has been adopted or proposedincluding in many states that are significant markets for Lifted, such as in Florida, Texas, Illinois, Missouri and California; greater competition in the marketplace for branded hemp-derived and psychoactive products that are similar to those that Lifted sells; more distributors creating their own brands and selling their own branded products at a lower price than Lifted’s products; increased competition for products containing more milligrams of cannabinoids or active ingredients per unit at a lower price point; and other competing brands paying distributors and wholesalers more than what Lifted is willing to pay (if anything), for valuable shelf space. Reference is hereby made to the disclosures above in the following sections, which are hereby incorporated by reference thereto:

Lifted'sLifted’s industry, and customer preferences, are constantly and quickly evolving. The regulatory landscape at the municipal, state and federal levels in which Lifted operates is unstable and unpredictable. Consequently, Lifted finds it extremely difficult to predict future sales of its products and to anticipate raw goods needs for future production. These factors mayhave causecaused Lifted to record a significant inventory reserve (allowance) against its inventory. LiftedA may also have to record significant write offs of obsolete raw goods and slow-moving finished goods, causing an increase in cost of goods sold. Antotal inventory reserve of $4,720,659 was taken against Lifted's hemp-derived inventory as of March 31, 2026. No inventory reserve was taken against Lifted's hemp-derived inventory as of December 31, 2025. An inventory reserve of $341,014$6,596,096 was recorded against Lifted’s 7-OH inventory as of MarchJune 31, 2026. During the quarters ended March 31,30, 2026; of which, $5,007,427 was recorded against its hemp-derived or hemp-related inventory, $1,434,458 was recorded against its kratom-derived or kratom-related inventory, and 2025,$154,211 $89,104was andrecorded $464,521against of obsolete and spoiledother inventory was written off, respectively. Reference is hereby madeunrelated to thehemp disclosuresor above in the following sections, which are hereby incorporated by reference thereto:kratom.

Reference is hereby made to the disclosures above in the following section, which are hereby incorporated by reference thereto:

Operating expenses include accounts such as payroll expense, deferred contingent stock expense, company-wide management bonus pool, professional fees, bank charges and merchant fees, advertising and marketing, bad debt (recovery)/expense, impairment of hemp-specific fixed assets, depreciation and amortization, collaboration commission and royalty expense, and other operating expenses. Total operating expenses increasedduring the three months ended June 30, 2026 were $2,178,388 compared to $2,859,181 for the quarter ended March 31, 2026, up from $2,545,779$3,356,034 during the quarterthree months ended MarchJune 31,30, 2025. This $1,177,646 decline was primarily due to an $899,466 reduction in bad debt expense, and a $177,240 reduction in other operating expense.

Payroll Expense includes sales commissions paid to independent contractors. If the Act materially reduces demand for our hemp-derived products, or if kratom-derived products containing 7-OH are banned,classified as a Schedule I controlled substance under the Controlled Substances Act (“CSA”), we may be required to reduce our workforce and terminate relationships with independent contractors. Such actions could disrupt our operations, result in restructuring costs, and adversely affect our ability to operate or pursue future business opportunities. During the quarter ended March 31, 2026, the Company reported $1,318,781 of payroll expenses. In comparison, during the quarter ended March 31, 2025, the Company reported $1,299,570 of payroll expenses. In March 2025, an Employee Retention Tax Credit (“ERC”) of $22,357 related to the second quarter of 2020 was recovered. The $22,357 ERC is accounted for as a reduction in payroll expenses in the first quarter of 2025.

Advertising and marketing costs are expensed as incurred. Advertising and marketing expenses primarily relate to marketing campaigns, trade shows, digital marketing, and promotional expenses. Lifted has been engaging with third party specialists to increase its presence in the direct-to-consumer space. DuringAdvertising and marketing expenses during the quartersthree and six months ended MarchJune 31,30, 2026 andwere 2025, the Company incurred $341,401$490,770 and $415,572$832,171, inrespectively, compared to advertising and marketing expenses.expenses during the three and six months ended June 30, 2025 of $531,873 and $947,445, respectively.

Reference is hereby made to the disclosures above in the following section, which are hereby incorporated by reference thereto:

Bad Debt (Recovery)/Expense

TheBad Companydebt reportedrecovery during the three and six months ended June 30, 2026 was $249,829 and $623, respectively, compared to bad debt expense of $249,206 during the quarterthree and six months ended MarchJune 31,30, 2026. In comparison, the Company reported a benefit from bad debt recovery2025 of $403,869$649,637 duringand the$245,768, quarter ended March 31, 2025.respectively. Bad debt expense stems from the change in the Company’s allowance for doubtful accounts, which stems from the Company’s CECL Model analysis. The delay in Lifted’s receipt of payments from certain customers— – primarily distributors—have – has increasingly become an issue for Lifted. Certain customers have become slower to pay Lifted for products purchased product (“Slow Paying Customers”), and the Slow Paying Customers disregard payment terms. Management speculatesbelieves that some Slow Paying Customers may be slow-payingdelaying payments to Lifted because of their own salesaccounts receivable collection issues, which may in part be caused by the regulatory uncertainty over ourthe industry.industries in which Lifted participates. The Company has an accounting protocol which effectively causes the Company to recognize an allowance for doubtful accounts for all invoices older than 90 days. Consequently, the delay in Lifted’s receipt of payments from certain customers has a direct impact on the Company’s net receivables, net income, and earnings per share. Reference is hereby made to the disclosures above in the following sections,section, which are hereby incorporated by reference thereto:

DuringCollaboration commission and royalty expense during the quartersthree and six months ended MarchJune 31,30, 2026 andwas 2025,$0, thecompared Company reportedto collaboration commission and royalty expense ofduring $0the three and $67,098,six months ended June 30, 2025 of $5,742 and $72,840, respectively. The change in collaboration commission and royalty expense primarily stems from decreased sales of the products covered by respective collaborations. Lifted has been de-emphasizing its collaboration efforts with outside brands due to the collaborations’ lack of traction in sales. As of MarchJune 31,30, 2026 and as of December 31, 2025, the only Manufacturing, Sales and Marketing Agreement still in effect was the Diamond Agreement.

Other operating expenses include, for example, software expenses, travel, insurance expense, rent expense, repairs and maintenance, state license and filing fees, excise and sales tax expense, health benefits, warehouse and lab expenses below the Company’s capitalization threshold, and other expenses. Other operating expenses were $503,364 during the three months ended March 31, 2026, compared to $651,331 during the three months ended March 31, 2025.

Other Income or /(Expenses)