Annual Report for Fiscal Year Ending December 31, 2025 (Form 10-K)

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Forward-Looking Statements and Associated Risks.

This Annual Report contains certain statements that are forward-looking within the meaning of the Private Securities Litigation Reform Act of 1995. For this purpose, any statements contained in this Annual Report that are not statements of historical fact may be deemed to be forward-looking statements. Without limiting the foregoing, words such as "may," "expect," "believe," "anticipate," "estimate," or "continue," or comparable terminology are intended to identify forward-looking statements. These statements by their nature involve substantial risks and uncertainties, and actual results may differ materially depending on a variety of factors, many of which are not within our control. These factors include but are not limited to economic conditions generally and in the industries in which we may participate; competition within our chosen industry, including competition from much larger competitors; technological advances and failure to successfully develop business relationships. (See "Cautionary Note Concerning Forward-Looking Statements.")

OVERVIEW AND HISTORY

We are a multinational consumer packaged goods company that specializes in developing and offering 'Look Good, Feel Great' products, specifically within the nutrition and beauty industry, through direct response advertising and our distinctive and highly successful celebrity-backed brand awareness strategies. We possess unique capabilities to greatly enhance the reputation and impact of brands, due to our extensive knowledge and expertise in digital marketing and our successful track record in launching new consumer products.

On May 11, 2022, Bio Lab Naturals, Inc. ("Bio Lab"), entered into a Share Exchange Agreement (the "Share Exchange Agreement") with Limitless X, Inc., a Nevada corporation ("LimitlessX"), and its 11 shareholders (the "LimitlessX Acquisition") on May 11, 2022 (the "Merger"). The parties completed and closed the LimitlessX Acquisition on May 20, 2022 by issuing an aggregate of 3,233,334 shares of common stock of Bio Lab to the LimitlessX shareholders (the "Acquisition Closing"). According to the terms of the Share Exchange Agreement, Bio Lab then issued an additional 300,000 shares of common stock to the LimitlessX shareholders pro rata to their interests in approximately six months from the Acquisition Closing as part of the Limitless Acquisition. Concurrently with the LimitlessX Acquisition, Jaspreet Mathur, the founder and principal shareholder of LimitlessX, also purchased from Helion Holdings LLC, 500,000 shares of Bio Lab's Class A Preferred Convertible Stock, which at all times have a number of votes equal to 60% of all of the issued and outstanding shares of common stock of Bio Lab.

For accounting purposes, the Merger was accounted for as a "reverse merger" with LimitlessX as the accounting acquiror (legal acquiree) and Bio Lab as the accounting acquiree (legal acquiror). and, consequently, the transaction was treated as a recapitalization of Bio Lab. Since LimitlessX was deemed to be the accounting acquiror in the Merger, the historical financial information for periods prior to the Merger reflect the financial information and activities solely of LimitlessX and not of Bio Lab. No step-up in basis or intangible assets or goodwill was recorded in this transaction.

On June 10, 2022, Bio Lab changed its name to Limitless X Holdings Inc. From March 2022 through December 31, 2024, the Company's revenues were generated from the sale of its nutritional supplements.

In December 2024 and January 2025, the Company announced that it planned to make a significant impact in television and film, regenerative skin care, fintech, entertainment and real estate. As of April 1, 2025, the Company will conduct business through its 6 active subsidiary companies.

Supply Chain Disruption / COVID-19 Business Update

Due to the residual impact of the global COVID-19 pandemic, we have taken measures to secure our research and development activities, while work in facilities has been organized to reduce the risk of COVID-19 transmission. The extent of the impact of the COVID-19 pandemic on our business, operations and clinical development timelines and plans remains uncertain, and will depend on certain developments, including the duration and spread of the outbreak and its impact on development, manufacturing process, supply chain, and other third parties with whom we do business, as well as its impact on regulatory authorities and our key management personnel. While we are experiencing limited financial impacts at this time, given the global economic slowdown, the overall disruption of global supply chains and the other risks and uncertainties associated with the pandemic, our business, financial condition, and results of operations ultimately could be materially adversely affected. Some of our suppliers have experienced delays in securing critical raw materials; while this has not materially impacted their services, we have observed delays in certain activities. Therefore, we continue to closely monitor the COVID-19 pandemic as we evolve our business continuity plans, clinical development plans and response strategy.

General and Administrative Expenses

General and administrative expenses consist of administrative functions, as well as fees paid for legal, consulting fees and facilities costs not otherwise included in research and development expense. Legal costs include general corporate legal fees and patent costs. We expect to incur additional expenses as a result of becoming a public company, including expenses related to compliance with the rules and regulations of the SEC and NYSE, additional insurance, investor relations and other administrative expenses and professional services.

RESULTS OF OPERATION

For the Years Ended December 31, 2025 Compared to the Year Ended December 31, 2024.

		Years Ended December 31,
		2025								2024								Changes
						% of								% of
		Amount				Sales				Amount				Sales				Amount				%
Revenue
Product sales		$	946,563				100.0	%		$	3,355,961				100.0	%		$	(2,409,398	)			-71.8	%
Total revenue			946,563				100.0	%			3,355,961				100.0	%			(2,409,398	)			-71.8	%
Cost of sales
Cost of sales			233,581				24.7	%			1,105,879				33.0	%			(872,298	)			-78.9	%
Total cost of sales			233,581				24.7	%			1,105,879				33.0	%			(872,298	)			-78.9	%
Gross profit			712,982				75.3	%			2,250,082				67.0	%			(1,537,100	)			-68.3	%
Operating expenses:
General and administrative			1,559,242				164.7	%			1,087,459				32.4	%			471,783				43.4	%
Advertising and marketing			544,777				57.6	%			1,997,123				59.5	%			(1,452,346	)			-72.7	%
Salaries and compensation			2,215,221				234.0	%			2,879,870				85.8	%			(664,649	)			-23.1	%
Stock compensation expense			5,498,021				580.8	%			168,555				5.0	%			5,329,466				3161.9	%
Total operating expenses			9,817,261				1037.1	%			6,133,007				182.7	%			3,684,254				60.1	%
Income (loss) from operations			(9,104,279	)			-961.8	%			(3,882,925	)			-115.7	%			(5,221,354	)			134.5	%
Other income (expense)
Interest expense			(954,668	)			-100.9	%			(512,619	)			-15.3	%			(442,049	)			86.2	%
Other income			36,186				3.8	%			10,477				0.3	%			25,709				245.4	%
Gain (Loss) on debt settlement			(35,458,137	)			-3746.0	%			216,914				6.5	%			(35,675,051	)			-16446.6	%
Loss on settlement			(636,705	)			-67.3	%			-				0.0	%			(636,705	)			n/a
Gain on disposal of assets			-				0.0	%			(26,035	)			-0.8	%			26,035				-100.0	%
Other expense			-				0.0	%			(7,825	)			-0.2	%			7,825				-100.0	%
Total other income (expense), net			(37,013,2324	)			-3910.3	%			(319,088	)			-9.5	%			(36,694,236	)			11499.7	%
Income (loss) before income tax provision			(46,117,603	)			-4872.1	%			(4,202,013	)			-125.2	%			(41,915,590	)			997.5	%
Income tax provision			-				0.0	%			915				0.0	%			(915	)			-100.0	%
Net income (loss)		$	(46,117,603	)			-4872.1	%		$	(4,202,928	)			-125.2	%		$	(41,914,675	)			997.3	%

Product Sales - Our product sales decreased by $2.4 million to $0.9 million for the year ended December 31, 2025 as compared to $3.4 million for the year ended December 31, 2024. The sales decrease was primarily attributable to changing affiliate marketing strategy to in-house sales through digital marketing. In 2024 partially, there was a shift in our marketing strategies, including strategic advertisement placements with celebrities rather than depending on affiliate marketers who charge significant amount of marketing and affiliate costs.

Cost of Sales

Our cost of sales decreased by $0.9 million to $0.2 million, for the year ended December 31, 2025 compared to $1.1 million. This increase was primarily due to decrease in product revenue and a result of operations decreasing during the period.

Gross Profit

Gross profit for the year ended December 31, 2025 was $0.7 million or 75.3% of total revenue compared to $2.3 million and 67.0% of total revenue for the year ended December 31, 2024. The decrease in gross profit of $1.5 million was primarily due to decrease product revenue due to decrease in number of customer transactions and volume resulting from reduction in using affiliate third-party marketing. Our gross margin decrease was primarily due to slight increase in product costs.

Operating Expenses

During the year ended December 31, 2025, we recognized $9.8 million in operating expenses compared to $6.1 million for the year ended December 31, 2024. The increase of $3.7 million was due to decrease in advertising and marketing and payroll and off-set by increase in stock compensation expense of $5.3 million.

Other Income (Expense)

For the year ended December 31, 2025, the Company incurred $1.0 million related to interest expense compared to $0.5 million of interest expense for the year ended December 31, 2024. The Company recorded loss on extinguishment of debt of $35.5 million for the year ended December 31, 2025 compared to gain of $0.2 million for the year ended December 31, 2024. The Company recognized loss on settlement of 0.6 million for the year ended December 31, 2025 and none in the previous year.

LIQUIDITY AND CAPITAL RESOURCES

We have a history of operating losses and negative cash flow in operating activities. We have incurred recurring net losses, including net losses from operations before income taxes of $46.1 million for the year ended December 31, 2025 and an accumulated deficit of $84.9 million at December 31, 2025. As of December 31, 2025, we had $7,169 in cash on hand. We expect our existing cash resources will not be sufficient to meet our anticipated cash resources during the next 12 months. These factors raise substantial doubt as to our ability to continue as a going concern, and our independent registered public accounting firm has included a going concern uncertainty explanatory paragraph in our report for 2025.

We intend to meet the balance of our cash requirements for the next 12 months through advances from related parties as well as a combination of equity financing through private placements or a registered public offering, subject to SEC approval. Regardless, there is no assurance that we will be successful in completing any private placement or other financings. If we are unsuccessful in obtaining sufficient funds through our capital raising efforts, we may review other financing options.

Cash Used in Operating Activities

During the year ended December 31, 2025, net cash used in operating activities was $1.6 million. The cash used in operating activities was primarily due to a net loss of $46.1 million off-set by stock compensation and loss on settlement of debt add back and increase and decrease in accounts payable, inventories, accrued expenses and royalty payable. During the year ended December 31, 2024 net cash used in operating activities was $0.7 million. The cash used in operating activities was primarily due to a net loss of $13.9 million off-set by changes in accounts payable and accrued expenses, royalty payable and inventories.

Cash Provided by Financing Activities

Net cash provided by financing activities for the year ended December 31, 2025 was $1.6 million. This amount was incurred by increased borrowings from related parties, and shareholders. Net cash provided by financing activities for the year ended December 31, 2024 was $0.6 million. This amount was incurred by increased borrowings from shareholders and convertible debt.

CRITICAL ACCOUNTING ESTIMATES

The preparation of financial statements and related disclosures in conformity with accounting principles generally accepted in the United States of America requires management to make judgments, assumptions and estimates that affect the amounts reported in our financial statements and the accompanying notes. The amounts of assets and liabilities reported on our balance sheet and the amounts of revenues and expenses reported for each of our fiscal periods are affected by estimates and assumptions, which are used for, but not limited to, the accounting for revenue recognition, stock-based compensation and the valuation of deferred taxes. Actual results could differ from these estimates. The following critical accounting policies are significantly affected by judgments, assumptions and estimates used in the preparation of the financial statements:

Revenue Recognition

We recognize revenue when performance obligations under the terms of a contract with our customers are satisfied. We have determined that fulfilling and delivering products is a single performance obligation. Revenue is recognized at the point in time when we have satisfied our performance obligation, and the customer has obtained control of the products. This generally occurs when the product is delivered to or picked up by the customer based on applicable shipping terms, which is typically within 15 days. Revenue is measured as the amount of consideration expected to be received in exchange for fulfilled product orders,

While customers generally have a right to return defective or non-conforming products, past experience has demonstrated that product returns have been immaterial. Customer remedies for defective or non-conforming products may include a refund or exchange. As a result, the right of return is estimated and recorded as a reduction in revenue at the time of sale, if necessary.

Our customer contracts identify product quantity, price, and payment terms. Payment terms are granted consistent with industry standards. Although some payment terms may be more extended, the majority of the payment terms are less than 30 days. As a result, revenue is not adjusted for the effects of a significant financing component. Amounts billed and due from customers are classified as Accounts Receivables on the Balance Sheet.