APPlife Digital Solutions Inc

We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.

An investment in our common stock involves a high degree of risk. You should carefully consider the following risks and all of the other information contained in this Annual Report before deciding whether to invest in our

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common stock. If any of the following risks are realized, our business, financial condition and results of operations could be materially and adversely affected. In that event, the trading price of our common stock could decline, and you could lose all or part of your investment in our common stock. Additional risks of which we are not presently aware or that we currently believe are immaterial may also harm our business and results of operations. Some statements in this Annual Report, including such statements in the following risk factors, constitute forward-looking statements. See the section entitled Cautionary Note Regarding Forward-Looking Statements.

We have added and updated the risk factors below to reflect developments during fiscal year 2026. Although as a smaller reporting company we are not required to provide risk-factor disclosure under Item 1A, we have elected to provide the following.

There is substantial doubt about our ability to continue as a going concern.

We are a development-stage company with a limited operating history, recurring losses, negative cash flows from operations and a significant accumulated deficit. Our independent registered public accounting firms report contains an explanatory paragraph expressing substantial doubt about our ability to continue as a going concern. If we are unable to obtain additional financing on acceptable terms, we may be required to curtail or cease operations, and investors could lose their entire investment.

We will need substantial additional capital, and financings are likely to be highly dilutive to existing stockholders.

We do not generate sufficient revenue to fund our operations and depend on external financing. To date we have financed operations primarily through the issuance of convertible and promissory notes and an equity line of credit, many of which convert into common stock at a discount to prevailing market prices. Additional equity or convertible-debt financings will dilute existing stockholders, potentially substantially, and the terms of any such financings may include rights senior to those of our common stockholders.

Our outstanding variable-rate convertible notes could result in the issuance of a substantial number of shares and a decline in our stock price (death spiral risk).

A number of our convertible notes convert at a discount (in certain cases 35%) to the lowest trading prices over a trailing period, and contain full-ratchet or other anti-dilution and reset provisions. As our stock price declines, these notes become convertible into increasingly large numbers of shares, which may cause further downward pressure on our stock price and further dilution. Certain notes also contain most-favored-nation provisions that can cause terms to cross-contaminate across holders. These features could result in the issuance of shares materially in excess of our current outstanding share count and could adversely affect the market price of, and market for, our common stock.

We are in default under several of our debt obligations, and our lenders could accelerate repayment or take other action against us.

As of the date of this Annual Report, we are in default under (i) the convertible promissory note issued to Labrys Fund II, L.P. on August 1, 2025, which went into default on January 30, 2026 when we failed to make a required amortization payment; (ii) the two convertible promissory notes issued to C/M Capital Master Fund, LP on November 20, 2025 in the original principal amounts of $150,000 and $225,000, which matured on August 20, 2026 and were not repaid; and (iii) the credit card facility provided to our subsidiary by our Chief Executive Officer, which has been in default since April 22, 2026. Upon a default, our lenders may declare all amounts owed immediately due and payable, charge default interest and fees, convert their notes at increased discounts and pursue collection. A default under one of our financing agreements may also permit other lenders to accelerate their obligations. We do not have sufficient cash to repay these obligations. Our defaults may also prevent us from satisfying the conditions to selling shares to C/M Capital Master Fund, LP under our equity line of credit, which require, among other things, that no default or event of default exist under our indebtedness. If our lenders exercise their remedies, we may be forced to curtail or cease operations or to seek protection under the bankruptcy laws.

Our recent reverse stock split and reduced authorized share capital may limit our ability to satisfy conversions and raise capital.

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Effective June 12, 2026, we effected a 1-for-250 reverse stock split and reduced our authorized common stock to 20,000,000 shares. Given our substantial number of outstanding convertible securities and warrants, we may not have sufficient authorized and unissued shares to satisfy all conversions and exercises, which could require us to seek stockholder approval to increase authorized shares, could place us in default under certain instruments, and could limit our ability to raise additional capital. A reverse stock split may also not achieve its intended benefits and may adversely affect the liquidity and market price of our common stock.

A small number of insiders control a substantial majority of our voting power.

Our officers and directors and their affiliates, together with holders of our preferred stock, control a substantial majority of our voting power. As a result, these persons are able to control the outcome of matters requiring stockholder approval, including the election of directors and significant corporate transactions, and their interests may differ from those of other stockholders.

We engage in related-party transactions that present conflicts of interest.

We have entered into transactions with related parties, including a consulting arrangement with the son of our Chief Executive Officer, an outstanding obligation to a director, and issuances of preferred stock to officers and directors. Because we do not have an independent audit or compensation committee, these transactions are not reviewed by independent directors, and conflicts of interest may not be resolved in favor of our unaffiliated stockholders.

We depend on key personnel and third parties.

We depend heavily on the continued service of our Chief Executive Officer and Chief Financial Officer, and on third-party suppliers, fulfillment providers and e-commerce and payment platforms. The loss of key personnel or disruption in these third-party relationships could materially harm our business.

Tariffs, trade policy and supply-chain disruptions could increase our costs and reduce demand.

A significant portion of automotive parts and accessories are manufactured or sourced abroad. Changes in U.S. trade policy, including the imposition of tariffs, and disruptions in global supply chains, could increase our product costs, reduce our margins, cause inventory shortages, and reduce consumer demand, any of which could materially and adversely affect our results of operations.

We face intense competition.

We compete with large, well-capitalized e-commerce marketplaces such as Amazon and eBay, automotive parts retailers, and original-equipment manufacturers, many of which have substantially greater resources, brand recognition and scale than we do.

Cybersecurity incidents could disrupt our business and expose us to liability.

Our business depends on the confidentiality, integrity and availability of our information systems and those of our third-party providers. A cybersecurity incident, data breach or system failure could disrupt our operations, compromise customer or Company data, and subject us to liability and reputational harm. We have limited resources dedicated to cybersecurity. See Item 1C. Cybersecurity.

We have identified material weaknesses in our internal control over financial reporting.

Management has concluded that our disclosure controls and procedures and our internal control over financial reporting were not effective as of June 30, 2026 due to material weaknesses, including insufficient written documentation of internal control policies and insufficient accounting resources. If we fail to remediate these material weaknesses, we may be unable to report our financial results accurately or on a timely basis, which could harm investor confidence and the market price of our common stock.

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Our common stock is a penny stock and is thinly traded.

Our common stock is quoted on OTC Markets, is subject to the SECs penny stock rules, and is thinly traded. These factors may make it more difficult for stockholders to sell shares, may increase transaction costs, and may result in significant volatility in our stock price. We can provide no assurance that we will be able to uplist to a national securities exchange.

We do not intend to pay dividends.

We have never paid cash dividends and do not anticipate paying dividends in the foreseeable future. Any return on investment will depend on appreciation, if any, in the market price of our common stock.