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.
