ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the consolidated financial statements and the notes thereto contained elsewhere in this report. Certain information contained in the discussion and analysis set forth below includes forward-looking statements that involve risks and uncertainties.
Unless otherwise indicated, references to the “Company,” “us” or “we” refer to Hestia Insight Inc. and its subsidiaries.
Special Note Regarding Forward-looking Statements
All statements other than statements of historical fact included in this Form 10-K including, without limitation, statements under “Management’s Discussion and Analysis of Financial Condition and Results of Operations” regarding our financial position, business strategy and the plans and objectives of management for future operations, are forward-looking statements. When used in this Form 10-K, words such as “anticipate,” “believe,” “estimate,” “expect,” “intend” and similar expressions, as they relate to us or our management, identify forward-looking statements. Such forward-looking statements are based on the beliefs of management, as well as assumptions made by, and information currently available to, our management. Actual results could differ materially from those contemplated by the forward-looking statements as a result of a number of factors, including those set forth under the risk factors and business sections in this Form 10-K.
A Strategic Shift to Artificial Intelligence
Hestia Insight Inc. has made the strategic decision to evolve into a full-fledged Artificial Intelligence (AI) technology company. This transformation will position Hestia Insight to develop and commercialize AI-powered solutions for business consulting and capital market advisory services.
The Company’s new AI product offerings will focus on enhancing key areas of business development, with particular emphasis on comprehensive fundraising support through our AI Enhanced Fundraising Services. Similar AI-driven services are also being developed by the Company for other sectors including Healthcare, Fintech and Legal Tech.
A. Pre-Raise Strategy and Asset Building
AI creation of “Vibe Coded” Intelligent Prototypes (VIPs) and Minimum Viable Products (MVPs) using AI platforms like Cursor, Replit and Lovable
AI-powered provisional patent creation to build defensible IP and prior art analysis
Non-provisional patent applications and trademark guidance
Comprehensive AI enhanced business and strategic roadmap planning
Fractional Chief Strategy Officer services
B. Market Research, Financials and White Papers for a Fundraise
AI deep research for Market studies including TAM/SAM/SOM analysis
AI-enhanced revenue scenario modeling including 4 statement web apps
Company valuation scenarios, comparable and analytics with AI
AI deep research white papers with 30-50 pages and 100+ references
C. Investor Materials Preparation
AI pitch creation on platforms like Gamma
Pitch deck critiques using our AI “Angry VC” web app and prompt system
Executive Summary development using our AI web app
Video Demos and AI Podcast creation using Eleven Labs and Pictory
AI-enhanced investor memorandum using Gemini Deep Research
AI-enhanced term sheets and share purchase agreements
AI due diligence and Carta data room preparation
D. Investor Outreach and Investor Relations
Investor CRM to manage investor pipeline and round closing
Targeted investor outreach campaigns
Investor relations strategy and ongoing narrative management
Follow-up and investor Q&A support
Roadshow planning and management
Fractional CFO services to support transaction readiness and financial reporting
In addition to developing proprietary AI products, Hestia Insight will aggressively seek to license or represent other exceptional products in its focus areas. This approach is designed to offer clients a more comprehensive and versatile suite of products and services, helping them succeed across all stages of business growth.
Through its AI technology platform, Hestia Insight aims to assist startups, small businesses, and growth-stage companies in accelerating their go-to-market strategies and preparing for investment readiness in a rapidly evolving digital economy.
Discontinuation of Legacy Operations
In alignment with this shift, Hestia Insight will discontinue its legacy operations in:
Healthy Vending Services
Portable Charging Network Business
This move allows the company to streamline resources and focus on high-growth potential opportunities in AI product development and intellectual property-based consulting.
Board Approval to Raise Capital
To support the company’s strategic transformation, Hestia Insight’s Board of Directors has approved a capital raise of up to $5 million. This will be executed through a combination of equity offerings and/or convertible debt instruments.
Proceeds will be allocated toward:
Expansion of the Company’s AI development team
Acceleration of research and development initiatives
Marketing and deployment of AI-powered consulting tools
General corporate purposes
This funding initiative is a critical step in positioning Hestia Insight as a market leader in AI-based business advisory services.
Focus on Growth and Innovation
With a renewed mission and sharpened focus, Hestia Insight is committed to delivering innovative, data-driven solutions that empower entrepreneurs, investors, and organizations to achieve scalable success in today’s competitive marketplace.
Going Concern
We have a limited operating history and our continued growth is dependent upon the continuation of providing medical consulting services to our clients, generating revenue, and obtaining additional financing to fund future obligations, and pay liabilities arising from normal business operations. We had accumulated deficit of $(1,057,766) at November 30, 2025. The report of our independent registered public accounting firm on our financial statements for the year ended November 30, 2025, contained an explanatory paragraph regarding our ability to continue as a going concern based upon cash used in operating activities and the current cash balance cannot be projected to cover the operating expenses for the next twelve months from the release date of this report. These factors, among others, raised substantial doubt about our ability to continue as a going concern. Our financial statements appearing elsewhere in this report do not include any adjustments that might result from the outcome of this uncertainty. There are no assurances we will be successful in our efforts to generate significant revenues or report profitable operations or to continue as a going concern, in which event investors would lose their entire investment in our company. The financial statements contained herein do not include any adjustments that might result from the outcome of this uncertainty.
Our ability to continue as a going concern is dependent upon our ability to carry out our business plan, achieve profitable operations, obtain additional working capital funds from our significant shareholders, and or through debt and equity financing. However, there can be no assurance that any additional financing will be available to us on satisfactory terms and conditions, if any.
Critical Accounting Policies and Estimates
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 accounting principles generally accepted in the United States. The preparation of these consolidated financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. We continually evaluate our estimates, including those related to bad debts, recovery of long-lived assets, income taxes and the valuation of equity transactions.
We base our estimates on historical experience and on various other assumptions that we believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Any future changes to these estimates and assumptions could cause a material change to our reported amounts of revenues, expenses, assets and liabilities. Actual results may differ from these estimates under different assumptions or conditions. We believe the following critical accounting policies affect our more significant judgments and estimates used in the preparation of the consolidated financial statements.
Revenue Recognition
We recognize revenue when persuasive evidence of an arrangement exists, delivery has occurred or products have been sold, the purchase price is fixed or determinable and collectability is reasonably assured.
We provide medical related consulting services to our clients. We are paid fees for our services by our clients under written consulting agreements. Each contract calls for a fixed payment in a fixed period of time. We recognize revenue by providing medical related consulting services under written service contracts with our customers. Revenue related to our service offerings is recognized as the services are performed and amounts are earned, using the straight-line method over the term of the related services agreement. Prepayments, if any, received from customers prior to the services being performed are recorded as advance from customers. In these cases, when the services are performed, the amount recorded as advance from customers is recognized as revenue.
Income Taxes
We are governed by the income tax laws of the United States. Income taxes are accounted for pursuant to ASC 740 “Accounting for Income Taxes,” which is an asset and liability approach that requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been recognized in our financial statements or tax returns. The charge for taxes is based on the results for the period as adjusted for items, which are non-assessable or disallowed. It is calculated using tax rates that have been enacted or substantively enacted by the balance sheet date.
Deferred tax is accounted for using the balance sheet liability method in respect of temporary differences arising from differences between the carrying amount of assets and liabilities in the financial statements and the corresponding tax basis used in the computation of assessable tax profit. In principle, deferred tax liabilities are recognized for all taxable temporary differences, and deferred tax assets are recognized to the extent that it is probably that taxable profit will be available against which deductible temporary differences can be utilized.
Deferred tax is calculated using tax rates that are expected to apply to the period when the asset is realized or the liability is settled. Deferred tax is charged or credited in the income statement, except when it is related to items credited or charged directly to equity, in which case the deferred tax is changed to equity. Deferred tax assets and liabilities are offset when they are related to income taxes levied by the same taxation authority and we intend to settle its current tax assets and liabilities on a net basis.
Stock-based Compensation
Stock based compensation is accounted for based on the requirements of the Share-Based Payment topic of Accounting Standards Codification (“ASC”) 718 which requires recognition in the financial statements of the cost of employee and director services received in exchange for an award of equity instruments over the period the employee or director is required to perform the services in exchange for the award. The Accounting Standards Codification also requires measurement of the cost of employee and director services received in exchange for an award based on the grant-date fair value of the award.
Pursuant to ASC Topic 505-50, for share-based payments to consultants and other third-parties, compensation expense is determined at the “measurement date.” The expense is recognized over the period of services or the vesting period, whichever is applicable. Until the measurement date is reached, the total amount of compensation expense remains uncertain. We record compensation expense based on the fair value of the award at the reporting date. The awards to consultants and other third-parties are then revalued, or the total compensation is recalculated based on the then current fair value, at each subsequent reporting date.
Executive Compensation
On June 10, 2025, the Board of Directors of Hestia Insight Inc. determined that it is in the best interest of the Company to formalize compensation arrangements for its Chief Executive Officer.
Accordingly, the Board approved a compensation package for the Company’s Chief Executive Officer, Edward C. Lee, effective immediately. The approved compensation structure includes an annual base salary of $100,000, payable in accordance with the Company’s standard payroll practices and/or in the form of equivalent value of the Company’s common stock, as determined by the Board from time to time.
In addition to the base salary, the Chief Executive Officer may be eligible for bonus or performance-based incentives, stock options or other equity-based awards, and additional benefits, the terms and conditions of which are to be determined by the Board of Directors in accordance with the Company’s compensation policies and applicable governance standards.
Recent Accounting Pronouncements
In November 2024, the FASB issued ASU 2024-07, “Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures,” which requires a public entity to disclose significant segment expenses and other segment items on an annual and interim basis and to provide in interim periods all disclosures about reportable segment’s profit or loss and assets that are currently required annually. ASU 2024-07 is effective for fiscal years beginning after December 15, 2024, and interim periods within fiscal years beginning after December 15, 2025, with early adoption permitted. The Company adopted this ASU on December 1, 2025. The adoption of this ASU had no impact on the Company’s consolidated financial statements.
In December 2024, the FASB issued ASU 2024-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures,” which enhances the transparency and decision usefulness of income tax disclosures by requiring; (1) consistent categories and greater disaggregation of information in the rate reconciliation and (2) income taxes paid disaggregated by jurisdiction. It also includes certain other amendments to improve the effectiveness of income tax disclosures. ASU 2024-09 is effective for fiscal years beginning after December 15, 2025, with early adoption permitted. These amendments are to be applied prospectively, with retrospective application permitted. The Company is currently evaluating the impact this standard will have on its consolidated financial statements.
RESULTS OF OPERATIONS
Comparison of Results of Operations for the Year Ended November 30, 2025, and the Year Ended November 30, 2024.
Revenue
During the year ended November 30, 2025, total revenues amounted to $8,000. For the year ended November 30, 2024, revenue was $1,249,884. The decrease of $1,241,884 in revenue was due to an decrease in consulting revenue.
Operating Expenses
For the years ended November 30, 2025, 2024, general and administrative expenses were $312,919 and $398,355, respectively. The decline in general and administrative expenses amount was largely due to a reduction in professional fees to $ 99,137 for the year ended November 30, 2025 compared to professional fees of $ to $126,804 for the year ended November 30, 2024.
Other Income and Expenses
The Company recognized changes in fair value of equity securities of $(694,114) and ($115,524) during the years ended November 30, 2025 and 2024, respectively. The change is the result of declines in the fair value of the out investments in equity securities as a result of the changing prices in the markets in which these securities are traded.
During the year ended November 30, 2025 the Company sold certain fixed assets and recognized a loss of ($20,277). There were no sales of fixed assets during the year ended November 30, 2024.
Liquidity and Capital Resources
Liquidity is the ability of a company to generate funds to support its current and future operations, satisfy its obligations and otherwise operate on an ongoing basis. On November 30, 2025 and 2024, we had cash balances of $28,871 and $41,163, respectively. These funds are kept in financial institutions located in United States. We had total liabilities of $278,245 for the year ended November 30, 2025, of which $173,931 is payable to a related party, and $206,306 for the year ended November 30, 2024. As of November 30, 2025, and 2024, the Company had accumulated deficits of $(1,057,766) and $(114,322), respectively.
We currently have no agreements and arrangements with any person to obtain funds through bank loans, lines of credit or any other sources. Since the Company has no such arrangements or plans currently in effect, its inability to raise funds for the above purposes will have a severe negative impact on its ability to remain a viable company.
Cash flows from Operating Activities
Operating activities used $134,272 in cash for the year ended November 30, 2025, as compared with using $168,805 for the year ended November 30, 2024.
Cash flows from Investing Activities
For the year ended November 30, 2025, the Company’s net cash flow provided by investing activities was $9,480, and for the year ended November 30, 2024, the Company’s net cash flow used by investing activities was $37,147.
Cash flows from Financing Activities
For the year ended November 30, 2025, the Company received $112,500 of net cash for financing activities, and for the year ended November 30, 2024, the Company was provided $78,931 of cash flow from financing activities.
Our capital requirements for the next twelve months primarily relate to cash to pay salaries, consulting fees and fees related to third parties’ professional services. All funds received have been expended in the furtherance of growing the business. The following trends are reasonably likely to result in a material decrease in our liquidity over the near to long term:
An increase in working capital requirements to finance our current business;
Addition of administrative and sales personnel as the business grows; and
The cost of being a public company.
We will need to raise additional funds, particularly if we are unable to generate positive cash flow as a result of our operations. We estimate that based on current plans and assumptions, that our available cash will be insufficient to satisfy our cash requirements under our present operating expectations. Other than working capital and advance received from related parties and funds received pursuant to securities purchase agreements, we presently have no other significant alternative source of working capital. We have used these funds to fund our operating expenses, pay our obligations and grow our company. We will need to raise significant additional capital to fund our operations and to provide working capital for our ongoing operations and obligations. Therefore, our future operation is dependent on our ability to secure additional financing. Financing transactions may include the issuance of equity or debt securities, obtaining credit facilities, or other financing mechanisms. However, the trading price of our common stock and a downturn in the U.S. equity and debt markets could make it more difficult to obtain financing through the issuance of equity or debt securities. Even if we are able to raise the funds required, it is possible that we could incur costs and expenses or experience cash requirements that would us to seek alternative financing. Furthermore, if we issue additional equity or debt securities, stockholders may experience additional dilution or the new equity securities may have rights, preferences or privileges senior to those of existing holders of our common stock. The to obtain additional capital may restrict our ability to grow and may reduce our ability to continue to conduct business operations. If we are to obtain additional financing, we will be required to our operations. To date, we have not considered this alternative, nor do we view it as a likely occurrence.
Going Concern
The Company’s financial statements have been prepared on a going concern basis, which contemplates the realization of assets and settlement of liabilities and commitments in the normal course of business. The Company generated net Losses of ($943,444) for the year ended November 30, 2025, and a net income of $642,205 for the year ended November 30, 2024. The Company had accumulated deficits of $1,057,766 and $114,322 as of November 30, 2025 and 2024, respectively. These factors, among others, raise substantial doubt about the Company’s ability to continue as a going concern.
Off-balance Sheet Arrangements
We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.
Since inception, our principal sources of operating funds have been proceeds from equity financing including the sale of our Common Stock to initial investors known to management and principal shareholders of the Company. We do not expect that our current cash on hand will fund our existing operations. We will need to raise additional capital in order execute our business plan and growth goals for at least the next twelve-month period thereafter. If the Company is unable to raise sufficient additional funds, it will have to execute a slower than planned growth path, reduce overhead and scale back its business plan until sufficient additional capital is raised to support further operational expansion and growth. There can be no assurance that such a plan will be successful.
