CNFN Cfn Enterprises Inc. - 10-K

Item 1A. Risk Factors

Our business faces risks. If any of the events or circumstances described in the following risks actually occur, our business, financial condition or results of operations could suffer, and the trading price of our common stock could decline. Our investors and prospective investors should consider the following risks and the information contained under the heading “Cautionary Statement Concerning Forward Looking Statements” before deciding to invest in our common stock.

Our independent registered public accounting firm has expressed in its reports to our 2025 and 2024 audited consolidated financial statements a substantial doubt about our ability to continue as a going concern.

We have not generated sufficient revenues from our operations to fund our activities and are therefore dependent upon external sources for financing our operations. There is a risk that we will be unable to obtain the necessary financing to continue our operations on terms acceptable to us or at all. As a result, our independent registered public accounting firm has expressed in its auditors’ reports on the consolidated financial statements for December 31, 2025 and 2024, a substantial doubt regarding our ability to continue as a going concern.

Our resources are limited and it may impact how we implement our growth strategy which may impact our operations.

Our resources are limited. Our working capital deficit at December 31, 2025 and 2024 amounted to approximately $23.8 million and $19.2 million, respectively. As we implement our growth strategy, poor strategic design or execution could impact negatively our operations and our cash flows. We expect that our expenses will continue to increase as we continue to develop and implement our products and services.

We have a history of losses.

We have a history of losses and negative cash flows from operations. We had a net loss from continuing operations of approximately $2.0 million in 2025 and a net loss from continuing operations of approximately $2.1 million in 2024. Our operations have been financed primarily through proceeds from the issuance of equity, borrowing money through the issuance of promissory notes and use of a credit facility. We may continue to incur losses in the future.

We have substantial indebtedness and obligations to pay interest.

We currently have, and will likely continue to have, a substantial amount of indebtedness and obligations to pay interest from our preferred stock. As of December 31, 2025, we had total debt outstanding of $7,548,523. As of December 31, 2025, we had 500 shares of Series A Preferred Stock, each with a stated value of $1,000 per share which bears interest at 12% per annum, and 3,000 shares of Series B Preferred Stock, each with a stated value of $1,000 per share which bears interest at 12% per annum (increased from 6% effective August 1, 2025).

The passage of H.R. 5371 banning intoxicating hemp-derived consumable products resulted in the discontinuation of our Ranco operations and may have continuing effects on our business.

On November 12, 2025, the President signed H.R. 5371 into law, which bans intoxicating hemp-derived consumable products nationally effective November 12, 2026. As a result of this legislation and the resulting regulatory uncertainty, our Board of Directors approved a plan to discontinue the operations of Ranco LLC on November 19, 2025. Ranco had been a significant contributor to our consolidated revenues and its discontinuation has materially reduced our revenue base. We may also face costs associated with the wind-down of Ranco’s operations, including potential liabilities for unpaid vendors, lease obligations, and employee-related costs. Additionally, the discontinued operations of Ranco carry significant liabilities, including $13.3 million in current liabilities of discontinued operations as of December 31, 2025.

Our wine and beverage business is subject to extensive regulation and may face challenges in scaling operations.

The production, importation, distribution and sale of alcoholic beverages is a highly regulated industry. Our subsidiaries J Street and Prestige are required to maintain federal and state permits and licenses to operate. The loss or non-renewal of any required permits or licenses could materially adversely affect our business. Additionally, our wine and beverage operations are in early stages following recent acquisitions, and we may face challenges integrating acquired assets, building customer relationships, and achieving the scale necessary to generate meaningful revenues.

Adverse macroeconomic and geopolitical conditions, including trade policies and tariffs, may have a material adverse effect on our business.

Challenging macroeconomic conditions, including changes to international trade policies, tariffs, public health crises, disruptions in global supply chains, and changes in inflation and interest rates, may negatively impact our costs and consumer demand for our products. The U.S. administration has enacted additional or enhanced tariffs in various jurisdictions relevant to our business. Implementation of tariffs or other restrictive trade measures could materially negatively impact our results of operations, both directly and indirectly through negative effects to our supply chain.

The CFN Business provides services to persons engaged in the cannabis industry. Cannabis remains illegal under Federal law.

Despite the development of a regulated cannabis industry under the laws of certain states, these state laws regulating medical and adult cannabis use are in conflict with the Federal Controlled Substances Act, which classifies cannabis as a Schedule I controlled substance and makes cannabis use and possession illegal on a national level. If the U.S. Department of Justice did take action against the cannabis industry, those of our clients operating in the legal cannabis industry would be lost to us.

We face intense competition.

We compete with many established wine and beverage companies, marketing service providers, and other businesses for customers’ attention and spending. Our competitors may have substantially greater capital, longer operating histories, greater brand recognition, larger customer bases and significantly greater financial, technical and marketing resources than we do.

Our quarterly financial results will fluctuate, making it difficult to forecast our results of operations.

Our revenues and operating results may vary significantly from quarter to quarter due to a number of factors, many of which are beyond our control, including variability in demand and usage for our products and services, market acceptance of new and existing services, and governmental regulations.

Dilutive securities may adversely impact our stock price.

As of December 31, 2025, 1,198,850 shares of Common Stock were issuable pursuant to the exercise of warrants.

These securities represent, as of December 31, 2025, approximately 12% of our Common Stock on a fully diluted, as exercised basis. In addition, our preferred stock is convertible into shares of our common stock at a conversion price to be mutually determined between us and the holders in the future, and could result in the issuance of a significant number of shares of common stock. The exercise of any of these options or warrants, both of which have fixed prices, or conversion of our preferred stock, may materially adversely affect the market price of our Common Stock and will have a dilutive effect on our existing stockholders.

If we fail to maintain an effective system of internal control over financial reporting, we may not be able to accurately report our financial results or prevent fraud. As a result, current and potential stockholders could lose confidence in our financial reporting, which would harm the value of our stock.

Effective internal control over financial reporting is necessary for us to provide reliable financial reports, effectively prevent fraud and operate as a public company. We have discovered areas of our internal control over financial reporting that need improvement. If we are unable to adequately maintain or improve our internal control over financial reporting, we may report that our internal controls are ineffective. If we cannot provide reliable financial reports or prevent fraud, our reputation and operating results would be negatively impacted. Ineffective internal control over financial reporting could also cause investors to lose confidence in our reported financial information which could have a negative effect on the market price of our Common Stock and which could result in regulatory proceedings against us by, among others, the SEC.

We have not voluntarily implemented various corporate governance measures, in the absence of which stockholders may have more limited protections against interested director transactions, conflicts of interest and similar matters.

Federal legislation, including the Sarbanes-Oxley Act of 2002 and The Dodd Frank Wall Street Reform and Consumer Protection Act, has resulted in the adoption of various corporate governance measures designed to promote the integrity of the corporate management and the securities markets. Some of these measures have been adopted in response to legal requirements. Others have been adopted by companies in response to the requirements of national securities exchanges, such as the New York Stock Exchange or the Nasdaq Stock Market. Among the corporate governance measures that are required under the rules of national securities exchanges are those that address the board of directors’ independence, audit committee oversight, and the adoption of a code of ethics. We have not yet adopted some of these corporate governance measures and, since our securities are not listed on a national securities exchange, we are not required to do so. We have not adopted corporate governance measures such as an audit committee or other independent committees of our Board of Directors. In the absence of audit, nominating and compensation committees comprised of at least a majority of independent directors, decisions concerning matters such as compensation packages to our senior officers and recommendations for director nominees may be made by a majority of directors who have an interest in the outcome of the matters being decided. Prospective investors should bear in mind our current lack of corporate governance measures in formulating their investment decisions.

The limited market for our Common Stock will make our stock price more volatile. Therefore, you may have difficulty selling your shares.

The market for our Common Stock is limited and we cannot assure you that a larger market will ever be developed or maintained. Currently, our Common Stock is quoted on the OTCQB Marketplace. Securities quoted on the OTCQB Marketplace typically have low trading volumes. Market fluctuations and volatility, as well as general economic, market and political conditions, could reduce our market price. As a result, this may make it difficult or impossible for our shareholders to sell our Common Stock.

There are generally no restrictions on the resale of our outstanding Common Stock. Sales by existing shareholders may depress the share price of our Common Stock and may impair our ability to raise additional capital through the sale of equity securities when needed.

The possibility that substantial amounts of outstanding Common Stock may be sold in the public market may adversely affect prevailing market prices for our Common Stock. This could negatively affect the market price of our Common Stock and could impair our ability to raise additional capital through the sale of equity securities.

Sales of shares of our Common Stock to the public may adversely impact our stock price.

Sales of shares of our Common Stock in the public market, or the perception that these sales might occur, could depress the market price of our Common Stock and may make it more difficult for our stockholders to sell their common stock at desirable prices. We are unable to predict the effect that sales may have on the prevailing market price of our Common Stock.

Some of the shares issued and options granted under our stock plan may have been issued in transactions that were not exempt from registration under certain state securities laws, the result of which is that the holders of these shares and/or options may have rescission rights that could require us to reacquire the shares and/or options.

Some of the shares issued and options granted under our equity compensation plan may not have been exempt from registration or qualification under the securities laws of certain states. We previously became aware that we may not have had a valid exemption for the issuance of these options and shares exercised upon exercise of these options under certain state laws. Because of the lack of registration and, potentially, the lack of a valid exemption from registration, the options we granted and the shares issued upon exercise of these options may have been issued in violation of certain state securities laws and may be subject to rescission.

If such shares and options are subject to rescission, we could be required to make payments to the holders of these shares and options in an amount not yet determinable by us. If any or all of the offerees reject the rescission offer, we may continue to be liable under state securities laws for payments to the offerees. If it is determined that we offered

securities without properly registering them under state law, or securing an exemption from registration, regulators could impose monetary fines or other sanctions as provided under these laws.

Our Common Stock is subject to the “penny stock” rules of the SEC, and the trading market in our Common Stock is limited. This makes transactions in our Common Stock cumbersome and may reduce the value of your shares.

The SEC has adopted Rule 3a51-1 which establishes the definition of a “penny stock,” for the purposes relevant to us, as any equity security that has a market price of less than $5.00 per share or with an exercise price of less than $5.00 per share, subject to certain exceptions. For any transaction involving a penny stock, unless exempt, Rule 15g-9 requires:

that a broker or dealer approve a person’s account for transactions in penny stocks; and

the broker or dealer receive from the investor a written agreement to the transaction, setting forth the identity and quantity of the penny stock to be purchased.

In order to approve a person’s account for transactions in penny stocks, the broker or dealer must:

Obtain financial information and investment experience objectives of the person; and

make a reasonable determination that the transactions in penny stocks are suitable for that person and the person has sufficient knowledge and experience in financial matters to be capable of evaluating the risks of transactions in penny stocks.

The broker or dealer must also deliver, prior to any transaction in a penny stock, a disclosure schedule prescribed by the SEC relating to the penny stock market, which, in highlight form:

sets forth the basis on which the broker or dealer made the suitability determination; and

that the broker or dealer received a signed, written statement from the investor prior to the transaction.

Generally, brokers may be less willing to execute transactions in securities subject to the “penny stock” rules. This may make it more difficult for investors to dispose of our Common Stock and cause a decline in its market value.

Disclosure also has to be made about the risks of investing in penny stocks in both public offerings and in secondary trading and about the commissions payable to both the broker-dealer and the registered representative, current quotations for the securities and the rights and remedies available to an investor in cases of fraud in penny stock transactions. Finally, monthly statements have to be sent disclosing recent price information for the penny stock held in the account and information on the limited market in penny stocks.

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion of our financial condition and results of operations should be read in conjunction with the financial statements and related notes included elsewhere in this report. Certain statements in this discussion and elsewhere in this report constitute forward-looking statements. See “Cautionary Statement Regarding Forward Looking Information” elsewhere in this report. Because this discussion involves risk and uncertainties, our actual results may differ materially from those anticipated in these forward-looking statements.

Overview

CFN Enterprises Inc. is a consumer brand platform focused on the wine and beverage sector. Through our subsidiaries, including Prestige Worldwide Wine Company and J Street Capital Partners, we develop, produce, and scale beverage brands using direct-to-consumer commerce, performance marketing, and strategic distribution.

During 2025, we undertook significant strategic actions, including the acquisition of J Street (July 1, 2025) and Prestige (November 3, 2025), the formation of the Interstice Cellars LLC joint venture, and the discontinuation of our Ranco subsidiary following the passage of H.R. 5371.

Our continuing operations now consist primarily of the wine and beverage business conducted through J Street and Prestige, together with the CFN Media business.

Results of Operations for the Years Ended December 31, 2025 and 2024

Year Ended

December 31,

Change

% Change

Net revenues

Cost of revenue

Gross profit

Operating expenses:

Selling, general and administrative

Total operating expenses

Loss from operations

Other income (expense):

Interest expense

Other income

Interest income

Loss on conversion of accrued interest

Total other expense, net

Provision for income taxes

Net loss

Net Revenues

Net revenues from continuing operations decreased to $36,297 for the year ended December 31, 2025, compared to $321,352 for the year ended December 31, 2024. The decrease was primarily attributable to reduced sponsored content activity in the CFN Media business during fiscal 2025, partially offset by revenue from the newly acquired J Street and Prestige operations which commenced operations in the second half of 2025. Continuing operations revenue for fiscal 2025 consisted primarily of CFN Media sponsored content services and initial wine sales from J Street and Prestige.

Cost of Revenue

Cost of revenue from continuing operations decreased to $352 for the year ended December 31, 2025, compared to $25,445 for the year ended December 31, 2024, commensurate with the decrease in revenues from continuing operations.

Operating Expenses

Selling, general and administrative expenses from continuing operations were $1,748,162 for the year ended December 31, 2025, compared to $2,274,779 for the year ended December 31, 2024. The decrease of $526,617 was primarily due to reduced compensation and professional fees in the CFN Media business and a reduction in overhead costs as the Company streamlined its continuing operations, partially offset by increased costs associated with the new wine and beverage operations and transaction costs related to the J Street and Prestige acquisitions.

Other Income (Expense)

Total other expense, net from continuing operations was $71,332 for the year ended December 31, 2025, compared to other income, net of $120,642 for the year ended December 31, 2024. Interest expense was $219,380 for fiscal 2025 compared to $218,611 for fiscal 2024. Other income of $208,048 in fiscal 2025 resulted primarily from the reversal of the Ranco contingent consideration liability. The Company also incurred a $60,000 loss on conversion of accrued interest in connection with shares issued to extend the maturity of a promissory note.

Net Loss from Continuing Operations

Net loss from continuing operations was $1,783,549 for the year ended December 31, 2025, compared to $1,858,230 for the year ended December 31, 2024.

Discontinued Operations

Net loss from discontinued operations was $4,716,689 for the year ended December 31, 2025, compared to $2,431,132 for the year ended December 31, 2024. The loss from discontinued operations in 2025 included revenue of $31,246,881, cost of revenue of $27,182,144, selling general and administrative expenses of $7,805,684, impairment of long-lived assets of $1,998,538, and bad debt expense. The increase in the discontinued operations loss was primarily attributable to impairment charges and increased bad debt expense recognized in connection with the wind-down of Ranco’s operations.

Net Loss

Total net loss was $6,815,238 for the year ended December 31, 2025, compared to $4,529,362 for the year ended December 31, 2024.

Liquidity, Capital Resources and Going Concern

As of December 31, 2025, we had $197,951 in cash and $3,504,440 in notes payable, as well as $4,044,083 in notes payable classified within discontinued operations.

The Company had a working capital deficit of $23,975,387 and an accumulated deficit of $85,767,461 as of December 31, 2025. The Company also had a net loss of $6,815,238 for the year ended December 31, 2025.

Management’s plan to continue as a going concern includes raising capital in the form of debt or equity, growing the J Street and Prestige wine and beverage businesses, managing and reducing operating and overhead costs, and continuing to pursue strategic transactions and opportunities.

These matters, among others, raise substantial doubt about the ability of the Company to continue as a going concern. These financial statements do not include any adjustments to the amounts and classification of assets and liabilities that may be necessary should the Company be unable to continue as a going concern.

Cash Flows

Year Ended

December 31,

Net cash provided by (used in) operating activities

Net cash used in investing activities

Net cash provided by (used in) financing activities

Net cash used in operating activities from continuing operations was $(2,134,692) during the year ended December 31, 2025. Net cash provided by operating activities from discontinued operations was $2,049,125. Total net cash used in operating activities was $(85,567).

Net cash used in investing activities was $(233,544) during the year ended December 31, 2025, consisting entirely of investing activities of discontinued operations (purchases of property and equipment by Ranco).

Net cash provided by financing activities was $143,228 during the year ended December 31, 2025, consisting of $165,000 in advances from related parties and $60,000 in capital contributions from the Interstice Cellars joint venture partners, partially offset by $8,772 in note repayments from continuing operations and $73,000 used in financing activities of discontinued operations.

Description of Indebtedness

The following is a summary of the Company’s notes payable from continuing operations as of December 31, 2025 and 2024. Notes payable related to the discontinued operations of Ranco LLC ($4,044,083 at December 31, 2025) are presented within current liabilities of discontinued operations on the consolidated balance sheet. See Note 12 – Discontinued Operations.

The December 31, 2024 balances presented below include Ranco’s notes payable as the prior-period balance sheet is not retrospectively reclassified for discontinued operations under ASC 205-20.

On September 10, 2019, the Company entered into a promissory note payable whereby the Company borrowed $500,000 bearing interest at 8% per annum. Interest on the note is payable quarterly. In 2022, the maturity date was extended to 2024. In April 2025, the Company and the holder reached an agreement to extend the maturity date to December 31, 2027. In connection with the extension, the Company issued 60,000 shares of its common stock to the noteholder in consideration of the extension and in lieu of $60,000 of interest accrued on the note through March 31, 2025. The issuance of shares was recorded as a loss on conversion of accrued interest of $60,000 in the consolidated statement of operations. The outstanding balance of the note was $500,000 at both December 31, 2025 and December 31, 2024.

On October 28, 2019, the Company’s subsidiary CNP Operating, LLC entered into a promissory note payable with Complete Business Solutions Group, Inc. (“CBSG”) whereby the Company borrowed $3,050,000. The outstanding balance of the note was $2,218,000 at both December 31, 2025 and December 31, 2024. The note is currently in default and personally guaranteed by Anthony Zingarelli.

On September 30, 2019, the Company’s subsidiary CNP Operating, LLC entered into a promissory note payable with Eagle Six Consultants, Inc. (“Eagle”) whereby the Company borrowed $550,000 bearing interest at 16% per annum. The outstanding balance of the note was $302,489 at both December 31, 2025 and December 31, 2024. The note is currently in default.

On May 12, 2021, the Company’s subsidiary CNP Operating, LLC restructured the CBSG note payable of $2,957,000, the Eagle #1 note payable of $550,000 and the Eagle #2 note payable of $300,000 by entering into a payment and indemnification agreement with the receivers/trustee of CBSG and Eagle. The receiver agreed that the balance of the outstanding amounts will be paid over 24 months in equal payments of $158,625. Further, the Company shall pay $20,000 per month toward the balance and Anthony Zingarelli (“Zingarelli”) and Colorado Sky Industrial Supply LLC (“CSIS”) agreed to personally pay $138,625 per month. Zingarelli is the only member of CNP Operating, LLC that signed a personal guarantee on the loans and Zingarelli is the sole member of CSIS. Zingarelli and CSIS have agreed to indemnify and hold the Company harmless from any and all losses, liabilities and claims. This note is currently in default.

On June 24, 2020, the Company entered into a Loan Authorization and Agreement with the SBA under which the Company borrowed $150,000 and issued to the SBA a note and security agreement. Outstanding borrowings accrue interest at a rate of 3.75% per annum, and installment payments, including principal and interest, of $731 are due monthly beginning 12 months from the date of the loan agreement. The balance of any remaining principal and interest is due 30 years from the date of the loan agreement. As collateral, the Company granted the SBA a security interest in substantially all assets of the Company. The outstanding balance of the note was $119,671 at December 31, 2025 (of which $8,772 was classified as current and $110,899 as long-term) and $119,671 at December 31, 2024.

On October 19, 2021, the Company borrowed $250,000 from a lender and issued a promissory note. The note is unsecured, originally had a maturity date of December 31, 2024, and all principal is due upon maturity. The amount borrowed accrues interest at 12% per annum and accrued interest is payable monthly. The note contains customary events of default. The outstanding balance of the note was $250,000 at both December 31, 2025 and December 31, 2024. The note is currently in default.

In November 2020 and 2022, the Company’s subsidiary CNP Operating, LLC purchased equipment totaling $113,111 which was financed at zero interest rate with monthly payments of $968 for 60 months. Imputed interest was not material. The outstanding balance was $48,513 at December 31, 2025.

Ranco Notes (Discontinued Operations)

On May 8, 2023, the Company entered into a promissory note with two lenders for aggregate proceeds of $1,150,000. The notes are unsecured and have a maturity date 15 months following their issuance.  Beginning on the fourth month after issuance, the Company will make monthly repayments totaling $143,750, including principal and interest.  Total principal and interest to be repaid is $1,725,000, and any remaining outstanding balance is due at maturity. As of December 31, 2025, note payable, net of unamortized discount of $0, was $643,250 for these two notes.

On July 1, 2023, the Company entered into a promissory note with two lenders for aggregate proceeds of $3,850,000. The notes are unsecured and have a maturity date 15 months following their issuance. As of December 31, 2025, note payable, net of unamortized discount of $0, was $3,400,833 for these two notes.

On July 1, 2023, the May and July notes were rolled over to Ranco, LLC for an aggregate of $5,000,000 (the “Ranco Notes”).  The Ranco Notes have a 15 month term and are subject to mandatory equal repayments commencing on the fourth month following issuance. The Ranco Notes are secured by the assets of Ranco and guaranteed by the Company.

Future scheduled maturities of long-term debt are as follows:

December 31,

Thereafter

Obligations Under Preferred Stock

On June 20, 2019, existing debtholders were issued an aggregate of 500 shares of Series A Preferred Stock, each with a stated value per share of $1,000, as conversion of $500,000 worth of outstanding promissory notes. The Series A Preferred Stock bears interest at 12% per annum.

On June 20, 2019, we issued 3,000 shares of Series B Preferred Stock, each with a stated value of $1,000 per share, to Emerging Growth, LLC as part of the Emerging Growth Agreement. The Series B Preferred Stock originally bore interest at 6% per annum. On August 14, 2025, the dividend rate was amended to 12% per annum, effective August 1, 2025.

For the year ended December 31, 2025 and 2024, the Company incurred $315,000 and $240,000, respectively, of interest from the outstanding preferred stock.

Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements.