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

StemtechGlobe CorporationNet andWireless its Subsidiaries (collectively, the “Company”, or “Stemtech”)Corp was incorporated in the State of Nevada, USA on September 4, 2009 under the name Globe Net Wireless Corp. with ticker symbol “GNTW”. Our corporate name was changed to Stemtech Corporation in the state of Nevada.in August 2021. On August 19, 2021, Stemtech Corporation (“Stemtech”), a (Delaware corporation), entered into a Merger Agreement (the “Merger Agreement”) with Globe Net Wireless Corp. (“Globe Net” or “GNTW”) in exchange for the issuance of 37,060,000 shares of the Company, approximately 85% of the issued and outstanding shares of the Company. Our corporate name was changed to Stemtech Corporation in the state of Nevada in August 2021. On November 19, 2021, the Company adopted an Amendment to its Articles changing the name of the Corporation to Stemtech Corporation in the state of Nevada, and on April 14, 2022, FINRA gave final approval for said name change. Stemtech has pioneered and patented a whole new category of stem cell dietary supplements.

While sales of products obviously create the cash flow, our real business model is not just “sales”, but lateral penetration. We do this through our IBPs - “Independent Business PartnerPartners” Sales Force, and we invest much energy in growing our IBPs. Post funding, Stemtech is projecting the addition of 30,000 new independent business partner reps over the next 12 to 24 months, adding to the existing IBPs. IBPs are incentivized to build their network, attracting additional industry leaders. IBPs are a testimonial to our product and business model, lowering our customer acquisition costs. Our IBPs offer highly flexible yet steady income which is most adapted to todays “Laptop & Cellphone Lifestyle”, with structured and organized weekly Corporate training calls, a personalized website, back-office tracking, oversight and management Tools, Reports, Training Materials and Social Sharing. Management conservatively believes we can reinvigorate sales to be more consistent with the company’s previous revenue historically, as Stemtech has been recognized 4 times in the Inc 5000 Magazine’s list of fastest growing companies. Below this IBP level, we plan to have our “DTC” (Direct To Consumer) network marketing Distribution model. This integrative model allows us an immediate global presence and ability to operate in multiple countries on every continent. With a 10% money back guarantee, This method requires no up-front or required buy-in of inventory by customers, with monthly shipments available for known recurring sales. This platform has us now operating at the intersection of the ecommerce economy, social economy and gig economy.

Our discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with U.S. GAAP. Our most critical accounting estimates include: (i) Going Concern Assessment — judgment regarding future revenue recovery and ability to raise capital; (ii) Goodwill and Intangible Asset Impairment — estimation of future cash flows to support carrying values of $467,409 goodwill and $2,208,663 intangible assets; and (iii) Fair Value of Convertible Debentures — assessment of bifurcation criteria and fair value measurement under ASC 815. The preparation of our consolidated financial statements and related disclosures requires us to make estimates, assumptions and judgments that affect the reported amounts of assets, liabilities and expenses and related disclosures. Management believes that there are no critical accounting estimates in these consolidated financial statements.

Our consolidated financial statements have been prepared assuming that we will continue as a going concernconcern. and,Accordingly, accordingly,the accompanying financial statements do not include any adjustments relating to the recoverability and realization of assets and classification of recorded asset amounts or liabilities that mightmay be necessary should we be unable to continue in operation.operations. We expect we willto require additional capital to meetsupport our long-term operating requirements.requirements Weand expectmay seek to raise additional such capital through, among other things,through the saleissuance of equity or debt securities.securities, among other financing alternatives.

In spite of increasing revenues, we are not yet profitable, and we cannot provide any assurance of when we will be profitable. We incurred a net loss of $3,772,701 and $5,431,979 for the years ended December 31, 2024 and 2023, respectively. During the year ended December 31, 2024,2025, we met funded our short-term liquidity needs requirements primarily through existing cash reservesbalances and financing activities. TheseFinancing sources during the year included proceeds from notes payable of $274,689,$290,553 and net proceeds from a factoring arrangementarrangements of $529,667, and stock issued for cash of $474,812. These inflows were partially offset by repayments of notes payable totaling $282,034.$169,457. As a result, net cash provided by financing activities wastotaled $1,079,110$460,010 for the year.year ended December 31, 2025.

Stockholders’ deficit increased to $7,704,399 toas of December 31, 2025 from $5,226,804 as of December 31, 2024, from $2,778,765 as of December 31, 2023.2024. The increase in stockholders’ deficit was primarily due attributable to the net loss incurred during the year, partially offset by theincreases conversionin ofadditional convertiblepaid-in notescapital and the reclassification of derivative liabilitiesrelated to equity.equity issuances and debt conversions.

We have not generated positive cash flows from operating activities. For the year ended December 31, 2024,2025, net cash used in operating activities was $601,198,$483,583, primarily due attributable to a net loss of $3,772,701$4,049,840, partially offset by non-cash adjustments of $1,789,721charges and favorable changes in working capital.

Changes in operating assets and liabilities primarily included an increase in accounts payable and accrued expenses of $1,809,485, a decrease in accounts receivable of $208,255, a decrease in inventory of $149,030,$1,158,870, an increase in prepaid expenses and other current assets of $197,865, an increase in deferred revenues of $22,619,$170,022, a decrease in accounts receivable of $269,749, a decrease in inventory of $19,983, and an increase in long-term deposits of $6,776, and a decrease in deferred revenues of $54,576.$452.

Existing working capital, further advances and debt instruments, and anticipated cash flow are expected to be adequate to fund our operations over the next threetwelve months. Generally, we have financed operations to date through the proceeds of the private placement of equity and debt instruments. In connection with our business plan, management anticipates additional increases in operating expenses and capital expenditures relating to: (i) acquisition of inventory; (ii) developmental expenses associated with a start-up business; and (iii) marketing expenses. We intend to finance these expenses with further issuances of securities and director loans. Thereafter, we expect we will need to raise additional capital and generate revenues revenues to meet long-term operating requirements. Additional issuances of equity or convertible debt securities will result in dilution to our current shareholders. Additional financing may not be available upon acceptable terms, or at all. If adequate funds are not available or are not available on acceptable terms, we may not be able to take advantage of prospective new business endeavors or opportunities, which could significantly and materially restrict our business operations. We will have to raise additional funds in the next twelve months in order to sustain and expand our operations. We currently do not have a specific plan of how we will obtain such funding; however, we anticipate that additional funding will be in the form of equity financing from the sale of our common stock. We have and will continue to seek to obtain short-term loans from our directors, although no future arrangement for additional loans has been made. We do not have any agreements with our directors concerning these loans. We do not have any arrangements in place for any future equity financing.

Effective May 5, 2023,2025, the Company is authorized to issue up to 400,000,0001,500,000,000 shares of common stock, $0.001 par value. Prior to May 5, 2023, the Company was authorized to issue up to 200,000,000 shares (see Note 9). Each outstanding share of common stock entitles the holder to one vote per share on all matters submitted to a stockholder vote. All shares of common stock are non-assessable and non-cumulative, with no pre-emptive rights.

On March 27, 2023, the Company entered into a Senior Secured Convertible Promissory Note with Leviston Resources, LLC providing for a maximum principal amountborrowings of up to an aggregate principal amount of $7,000,000, subject to disbursementfunding at the lender’s discretion. ToAs date,of December 31, 2025, Leviston ResourcesResources, LLC hashad disbursedfunded four tranches totaling $1,561,660, consisting of advances of $1,000,000, $250,000, $250,000, and $61,660, respectively. The latestremaining disbursement$5.4 adheresmillion tofunding is at the termslender’s ofsole discretion and the noteCompany and priorcannot fundingguarantee obligations.that Theadditional notedraws bearswill interestbe atmade 7% per annum and is convertible into common stock at a conversion price initially set at 125% of the closing bid price on the disbursement date, subject to adjustment thereafter.available.

Three-Month Period Ended MarchJune 31,30, 2026 Compared to the Three-Month Period Ended MarchJune 31,30, 2025.

During the three months ended MarchJune 31,30, 2026 and 2025, net sales were $462,957$629,312 and $868,046,$697,925, respectively, representing a decrease of $405,089.$68,613, or 9.8%. The decline in net sales was primarily attributable to aconstrained continuedproduct reduction in available inventoryavailability across certain key product lines, which constrainedlimited the Company’sCompany's ability to fulfilfulfill distributor orders across its operating markets. The Company is actively working to restore product availability through inventory financing secured subsequent to the period,financing, and management anticipates a gradual recovery in sales volume as inventory levels are replenished. Current macroeconomic conditions, including consumer spending trends and foreign exchange fluctuations across the Company’s geographic markets, may also continue to influence net sales in future periods.

During the three months ended MarchJune 31,30, 2026 and 2025, cost of goods sold was $109,304$163,639 and $147,782,$145,909, respectively, representing aan decreaseincrease of $38,478.$17,730, Theor decrease in cost of goods sold is consistent with the corresponding decline in net sales volume during the period.12.2%. Gross profit was $353,653 $465,673 for the three months ended March 31,June 30, 2026, compared to $720,264$552,016 for the same period in 2025, a decrease of $366,611.$86,343. Gross margin was 76.4% 74.0% for the three months ended MarchJune 31,30, 2026, compared to 83.0%79.1% for the same period in 2025. The compression in gross margin percentage reflects the impact of a less favorable product mix and certain fixed fulfillment and freight costs that do not decline proportionally with revenue.

During the three months ended MarchJune 31,30, 2026 and 2025, total operating expenses were $1,447,902$591,240 and $1,925,169,$853,004, respectively, reflecting a favorable decrease of $477,267.$261,764. The decrease was was driven by reductions across all expense categories, as follows:

Selling and marketing expenses decreased by $8,198,$31,040, from $12,244$33,807 to $4,046,$2,767, reflecting the Company’sCompany's continued focus on cost discipline and reduced expenditure on marketing and promotional activities during the period of constrained product availability.activities.

General and administrative expenses decreased by $328,450$158,268 from $1,727,367$697,987 to $1,398,917.$539,719. This reduction reflects management’smanagement's ongoing cost management initiatives, including reductions in personnel costs, professional fees, and overhead, partially offset by stock-based compensation expense of $101,068 recognized in the three months ended March 31, 2026, related to restricted shares issued to directors, officers, and service providers.overhead.

The resulting operating loss for the three months ended MarchJune 31,30, 2026 was $1,094,249,$125,567, compared to an operating loss of $1,204,905$300,988 for the same period in 2025, representing an improvement of of $110,656.$175,421.

During the three months ended MarchJune 31,30, 2026 and 2025, total non-operating expense (income) was $(166,791) and $4,708, respectively. Interest expense increased to $112,734 for the three months ended June 30, 2026, from $79,727 for the same period in 2025. During the three months ended June 30, 2026, the Company recognized a loss on extinguishment of debt of $60,972,$54,057, arising from the conversion of convertible notes payable held by SOHO FO LLC and 1800 Diagonal Lending LLC into shares of common stock at a 30% discount to the OTC market price, as permitted under the terms of the respective loan agreements.price. No such loss was recognized during the three months ended MarchJune 31,30, 2025.2025, which period included $84,435 of other income.

Our net loss for the three months ended MarchJune 30, 31, 2026 was $1,252,880,$292,358, compared to a net loss of $1,458,726$296,280 for the same period in 2025, an improvement of $3,922. Net loss attributable to non-controlling interest was $0 and $3,135 for the three months ended June 30, 2026 and 2025, respectively. Net loss available to common stockholders was $292,358 for the three months ended June 30, 2026, compared to $293,145 for the same period in 2025. Despite a significant decline in net sales, the net loss improved by $205,846, or 14.1%, period over period. This improvement was primarily driven by a reduction in total operating expenses of $477,267 and a reduction in interest expense of $147,709, partially offset by the loss on extinguishment of debt of $60,972 recognized in the current period. Net loss available to common stockholders was $1,252,880 for the three months ended March 31, 2026, compared to $1,455,591 for the same period in 2025.

We are not currently profitable, and we cannot provide any assurance of when we will be profitable. We incurred a net loss of $1,252,880$1,453,418 and $1,458,726 $1,755,006 for the threesix months ended March 31,June 30, 2026 and 2025, respectively. During the threesix months ended MarchJune 31,30, 2026, we met our short-term liquidity requirements primarily through the conversion of outstanding convertible debt obligations into equity and the utilization of our factoring facility.

As of MarchJune 31,30, 2026, our current assets were $571,233, $602,589, compared to $457,062 as of December 31, 2025. The increase in current assets was primarily attributable to a build-upincreases in inventory of $325,700 as the Company beginsbegan to replenish product levels, an increase in prepaid expenses and other current assets of $10,066, and a $9,195 increase in accounts receivable.levels.

As of MarchJune 31,30, 2026, our current liabilities were were $11,064,353,$11,112,964, compared to $10,587,013 as of December 31, 2025. Current liabilities at MarchJune 31,30, 2026 were comprised of $5,746,706 $5,920,378 of accounts payable and accrued expenses, $2,333,815$2,564,020 in notes payable, $1,825,645$1,832,414 in convertible debentures net of discounts, $822,968 $792,918 in factoring liabilities, and $335,219$3,234 of deferred revenues. Our working capital deficit at MarchJune 31,30, 2026 was $10,461,764$10,541,731 compared to a working capital deficit of $10,129,951 at December 31, 2025. The Company continues to carry a significant working capital deficit, which raises substantial doubt about its ability to continue as a going concern. See Note 1 to the accompanying condensed consolidated financial statements.

For the six months ended June 30, 2026, net cash used in operating activities was $480,727, compared to $635,555 for the same period in 2025, reflecting a decrease in cash used of $154,827. The primary non-cash adjustments to reconcile net loss to operating cash flows for the threesix months ended MarchJune 31,30, 2026 included: depreciation and amortization of $41,873$83,746; non-cash stock-based compensation of $108,260$217,723 relatedand to the vesting of equity awards; non-cash stockshares issued for services of $243,336$296,723; and a non-cash loss on extinguishment of debt of $60,972 arising from the conversion of convertible debt into common stock at a discount to fair value.$115,029.

Changes in working capital accounts during the three six months ended MarchJune 31,30, 2026 included an increase in inventory of $108,362, reflecting the Company’s ongoing efforts to rebuild product availability across its markets$93,939; an increase in prepaid expenses and other current assets of $10,066$11,705; a net an increase in accounts payable and accrued expenses of $510,516; and ana increasedecrease in deferred revenues of $163,734,$168,251, reflecting advancethe paymentsnet effect receivedof fromcustomer customersprepayments for unfulfilledand orders.subsequent order fulfillment.

DuringFor the threesix months ended MarchJune 31,30, 2026, net cash used in financing activities was $177,316, compared to net cash provided by financing activities of $552,134 for the same period in 2025. During the six months ended June 30, 2026, financing activities consisted primarily of net proceeds from notes payable of $227,466, offset by net repayments on factoring arrangements of $50,150. During the six months ended June 30, 2026, the Company also completed significant non-cash financing transactions: 886,941,0432,035,398,016 shares of common stock were issued upon the conversion of $152,516$328,609 of outstanding convertible principal and accrued interest by SOHO FO LLC and 1800 Diagonal Lending LLC under the terms of existing convertible note agreements. No cash proceeds were received in connection with these conversions.