CALLAN JMB INC.

Current report

Impairment loss on property and equipment

Current report

The Company recorded an impairment charge of $542,088 related to certain property and equipment after identifying the carrying amount of the asset was not recoverable.

Current report

Other income (expense) for the year ended December 31, 2025, was $(934,752) and for the year ended December 31, 2024, it was $6,532, resulting in observed changes of $(941,284). The key driver for the decrease relates to expenses related to the ELOC Facility. Refer to the discussion under “Liquidity and Capital Resources” for further information on the ELOC Facility. The Company accounted its ELOC Facility as a purchased put option and as a derivative liability under ASC 815 as it does not meet the scope exception, indexation guidance and equity classification criteria under ASC 815. As such, the Company recognized the purchased put option as a derivative liability wherein it is recognized at fair value at each reporting period and changes to fair value are charged against the Company’s statement of operations. The initial fair value of purchased put option of $974,309 is charged against the Company’s statements of operations for year ended December 31, 2025, and is offset by the “Change in the Fair Value of the Derivative Liability” between inception date and December 31, 2025, of $603,093. The Company also recognized other transaction expenses arising from the ELOC Facility of $569,552.

Current report

The accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities and other commitments in the normal course of business. As such, the financial statements do not include adjustments for the recoverability and classification of assets and their carrying amounts, or for the amount and classification of liabilities that may result should the Company be unable to continue as a going concern. The Company has incurred net losses of $ (7,966,366) and $(2,293,648) for the years ended December 31, 2025, and 2024, respectively, and an accumulated deficit of $(10,260,014) as of December 31, 2025.

Current report

The continuation of the Company as a going concern depends on continued financial support from its shareholders, the ability to raise equity or debt financing, and the attainment of profitable operations from the Company’s future business. These factors raise substantial doubt regarding the Company’s ability to continue as a going concern.

Current report

On July 24, 2025, CJMB, entered into a Purchase Agreement with a certain investor, whereby CJMB has the right, but not the obligation, to sell to the Investor, up to an aggregate of $25 million of shares of CJMB’s common stock, par value $0.001 per share, subject to the terms and conditions set forth therein.

Current report

The Purchase Agreement has a term ending on the earlier of (i) the first day of the month following the 18-month anniversary of the Commencement Date or (ii) the date the Investor has purchased the shares equal to the agreed investment amount. Upon effectiveness of the related registration statement, the Company will issue 15,000 shares of Common Stock to the Investor as Commitment Shares. During the term, CJMB may, at its discretion, deliver Regular Purchase Notices for $500,000 to $2,000,000 per notice. Each Regular Purchase is priced at 95% of the lowest daily VWAP during the applicable measurement period (or 80% if the Company’s stock is not trading on the Nasdaq Capital Market). In connection with each Regular Purchase, CMB will provide an estimate of the number of the shares deliverable, based on 90% of the prior day’s closing price.

Current report

The Company controls the timing and amount of sales under the ELOC Facility, which automatically terminates upon reaching $25.0 million or the maturity date. The Company may terminate at any time. If less than $7.5 million has been sold, a $250,000 termination fee applies, payable in cash or stock. On August 24, 2025, the Company filed a Form S-1 registration statement for up to 6,000,000 shares related to the ELOC Facility, which became effective on September 22, 2025.

Current report

Since inception, CJMB has funded its operations through a combination of operating cash flows and external financing sources, including the Equity Line of Credit, which has 23.45 million remaining availability, subject to market conditions (please see Note 8 – Equity – Equity Line of Credit), and other sources, such as through funding from Mr. Wayne Williams, the Company’s Chief Executive Officer and largest shareholder. Management intends to continue evaluating and utilizing available funding to support the Company’s operations and growth, including operating cash flows and potential other sources of funding, such as equity or debt financing, as well as additional funding from Mr. Williams.

Current report

Actual sales of shares of common stock to Investor as a drawdown under the ELOC Facility will depend on a variety of factors to be determined by the Company from time to time, which may include, among other things, market conditions, the trading price of the Company’s common stock and determinations by the Company as to the appropriate sources of funding for our business and operations.

Current report

As of December 31, 2025, the Company has issued approximately 340,094 shares of Common Stock under the ELOC Facility for net proceeds of approximately $497,750. Additionally, as of March 31, 2026, the Company has raised $1.55 million, with $23.45 million remaining availability from such ELOC Facility. Management believes that these liquidity sources, combined with its plan to explore various strategic initiatives, investment opportunities and cost reduction strategy, will alleviate any substantial doubts regarding the Company’s ability to continue as a going concern.

Current report

For the year ended December 31, 2025, cash used in operating activities was $4,546,724 compared to cash provided by operating activities of $540,353 during the year ended December 31, 2024, a decrease of $5,087,077. This decrease was primarily due to an increase in net loss of $5,557,366, a decrease in changes in accounts receivable of $(2,350,061) and offset by non-cash adjustment to net loss for stock based compensation of $1,559,756 and fair value of derivative liability of $371,216 and other non-cash expenses relating to ELOC Facility of $519,552. Additionally, the Company recognized a $542,088 loss on impairment related to certain property and equipment.

Current report

The asset or liability fair value measurement level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement.

Current report

The Company’s financial instruments primarily consist of cash and cash equivalents, accounts receivable, accounts payable and derivative liabilities.

Current report

The carrying amounts of cash and cash equivalents, accounts receivable, and accounts payable approximate their respective fair values because of the short-term maturities or expected settlement dates of these instruments. This is considered a Level I valuation technique.

Current report

The derivative liability is valued using a Monte Carlo simulation model utilizing a variety of inputs and assumptions such as volatility, risk-free rates, volume weighted average price and cash flow assumptions. This is considered a Level III valuation technique. Please see Note 11, “Equity” for information on these assumptions and fair value of this derivative liability as of September 30, 2025.

Current report

There are no assets or liabilities measured at fair value as of December 31, 2024.

Current report

In November 2024, the FASB issued ASU 2024-03, Income Statement Reporting-Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40), Disaggregation of Income Statement Expenses. The standard update improves the disclosures about a public business entity’s expenses by requiring more detailed information about certain types of costs and expenses in the notes to the financial statements. The guidance will be effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027. Early adoption is permitted. The standard updates are to be applied prospectively, with the option to apply them retrospectively. We are currently evaluating the impact of the new standard’s disclosure requirements on our financial statements.

Current report

For a discussion of recently issued accounting standards, see Note 1 to our consolidated financial statements included herein.

Previous report

Other income (expense) for the year ended December 31, 2024, was $6,532 and $2,045 for the year ended December 31, 2023, respectively, an increase in other income of $4,487. This increased income was the result of an increase in interest income of $1,728, offset by decreases in interest expense of $2,759.

Previous report

For the year ended December 31, 2024, cash provided by operating activities was $540,353 compared to cash provided by operating activities of $6,995,646 during the year ended December 31, 2023, a decrease of $6,455,293. This decrease was primarily due to a decrease in net income of $4,474,756, a decrease in provision for credit losses of $408,000, a decrease in accounts receivable of $2,266,336, a decrease in inventory of $8,329, a decrease in tax refund receivable of $6,377, decrease in other current assets of $158,539, a decrease in corporate taxes payable of $1,000, offset by increase in depreciation and amortization of $40,890, an increase in right of use asset of $16,331, an increase in accounts payable and accrued expenses of $713,500, an increase in deferred revenue of $53,721 and an increase in deferred income taxes payable of $43,602.

Previous report

Fair value estimates discussed herein are based upon certain market assumptions and pertinent information available to management for the respective periods. The respective carrying value of certain financial instruments approximated their fair values due to the short-term nature of these instruments. These financial instruments include cash and cash equivalents, short-term notes payable, accounts payable and accrued expenses. The carrying value of long-term debt approximates fair value, as the variable interest rates approximate current market rates.

Previous report

In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income TaxDisclosures (ASU 2023-09). ASU 2023-09 is intended to enhance the decision usefulness of income tax disclosures and requires the disclosure of various disaggregated information, including an entity’s effective tax rate reconciliation as well as additional information on taxes paid. This ASU is effective on a prospective basis for annual periods beginning after December 15, 2024 with early adoption allowed. The Company is in the process of evaluating the effect of ASU 2023-09 on the financial statements.

Previous report

In November 2023, the FASB issued ASU 2023-07*“Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures.”*These amendments require, among other things, that a public entity that has a single reportable segment provide all the disclosures required by the amendments in this ASU and all existing segment disclosures in Topic 208. The ASU is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted. A public entity should apply the amendments retrospectively to all periods presented in the consolidated financial statements. The Company adopted ASU 2023-07 for the year ending December 31, 2024 and it did not have a material impact on its consolidated financial statements. See Note 10, Segments for new disclosures related to significant expenses, the CODM and other segment items.