1606 Corp. 2025 Annual Report: Key Investor Takeaways

Executive Summary

1606 Corp., a Nevada corporation (trading as “CBDW” on OTC Markets), has released its Annual Report for the fiscal year ended December 31, 2025. This report is crucial for shareholders and prospective investors, offering detailed insights into the company’s financial health, operations, capital structure, and risks. Below, we present a comprehensive summary of the most important points, including price-sensitive information that could impact share values.

Key Financial Highlights

• Net Loss: The company reported a net loss of \$1,295,041 for the year ended December 31, 2025, continuing its historical trend of operating losses. This is a significant signal that the company is not yet profitable and faces ongoing challenges with liquidity and capital requirements.
• Cash Flows: Net cash used in operating activities was \$460,779, primarily due to the net loss, change in fair value of derivative liabilities (\$231,896), and gain on debt extinguishment (\$55,269). Financing activities provided cash of \$458,701, including proceeds from common stock sales, convertible notes, and a note payable to the former CEO, offset by repayments of convertible notes.
• Capital Structure: As of March 24, 2026, the company had approximately 492 shareholders of record for common stock, 49,078,759 shares of Class A Convertible Preferred Stock held by 12 record holders, and 90 shares of Series B Super Voting Preferred Stock held by one record holder.
• No Cash Dividends: The company has not paid cash dividends and has no intention to do so in the foreseeable future, opting to retain earnings for business growth.
• Penny Stock Status: 1606 Corp.’s common stock is considered penny stock under SEC rules, which restrict broker-dealer activities and may reduce liquidity and increase transaction costs.

Capital Transactions and Unregistered Securities

• Conversions of Class A Preferred Stock: In Q4 2025, 132,420,541 shares of common stock were issued upon conversion of 66,821 shares of Class A preferred stock.
• Convertible Promissory Notes: On November 19, 2025, the company issued an original issue discount note for \$89,320 with a derivative liability conversion feature. An additional \$22,005 in convertible notes was converted into 54,857,142 shares of common stock.
• Reliance on Exemptions: These securities were issued under exemptions from SEC registration, with no commissions paid.

Internal Controls and Material Weaknesses

• Internal Control Deficiencies: Management identified material weaknesses in internal controls over financial reporting, specifically inadequate segregation of duties. Disclosure controls and procedures were deemed ineffective as of December 31, 2025.
• Remedial Actions: The company completed substantive procedures to ensure the accuracy of its financial statements despite these weaknesses. No changes in internal control over financial reporting occurred during Q4 2025 that materially affected the company’s controls.

Shareholder Risks & Price-Sensitive Factors

• Liquidity Risk: The company has substantial capital requirements and remains dependent on raising funds through convertible notes, debt, or equity. There is no guarantee of successful fundraising on favorable terms.
• Emerging Growth Company Status: 1606 Corp. qualifies as an emerging growth company under the JOBS Act, allowing it to benefit from reduced disclosure and compliance requirements. It may take advantage of these provisions for up to five years or until it meets certain financial thresholds.
• Market Information: Shares are quoted on the OTC Markets under the symbol “CBDW,” and penny stock status may deter broker-dealers and decrease liquidity.
• Related Party Transactions: The company borrowed \$564,500 from its former CEO and shareholder in the form of a promissory note, later amended to accrue interest at 10% per annum with a revised principal balance of \$1,739,550. This represents a substantial related party liability.
• Off-Balance Sheet Arrangements: The company does not currently have any off-balance sheet arrangements that could materially affect its financial condition or results.

Corporate Governance & Compensation

• Executive Compensation: Current CEO, CFO, and Director Austen Lambrecht received \$95,121 in compensation for 2025. The company has not adopted an equity compensation plan and does not anticipate granting stock options to named executive officers in the near future.
• Board and Insider Policies: Compensation decisions are made by the Board. There is no insider trading policy due to limited resources and management size.

Forward-Looking Statements and Risks

The report contains numerous forward-looking statements regarding financial position, business strategy, capital deployment, and operational risks. Actual results may differ materially due to factors beyond the company’s control, such as competition, inability to obtain maximum value for holdings, economic conditions, regulatory compliance, legal liabilities, and management’s ability to execute its strategy. Past performance is not indicative of future results.

Potential Share Price Impact

• Negative: The ongoing net losses, material weaknesses in internal control, penny stock status, and substantial related-party debt are all risk factors that could negatively impact share prices and investor confidence.
• Positive: The company’s ability to raise capital through stock sales and notes, and its status as an emerging growth company, may provide some flexibility and opportunities for future growth if it can successfully execute its business plan.

Disclaimer

This article is provided for informational purposes only and does not constitute investment advice. Investors should conduct their own due diligence and consult with financial professionals before making any investment decisions. The forward-looking statements herein are subject to risks and uncertainties, and actual outcomes may differ materially from those anticipated. 1606 Corp. undertakes no obligation to update any forward-looking statements except as required by law.

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