10-Q: Authentic Holdings Reports Wider Loss Amid Growth

Authentic Holdings, Inc. reported a significantly wider net loss for the first half of 2025 despite substantial revenue growth, facing severe liquidity challenges and debt defaults.

Summary

• Authentic Holdings, Inc. reported a net loss of $1,024,138 for the six months ended June 30, 2025, a significant increase from the $151,861 net loss in the same period of 2024.
• Revenue for the six months ended June 30, 2025, increased to $250,477, up from $67,572 in the prior year period.
• The company's total assets grew to $10,908,625 as of June 30, 2025, primarily due to the acquisition of the Goliath movie library valued at $10,790,000.
• A substantial working capital deficit of $6,231,539 was reported as of June 30, 2025, worsening from $5,324,664 at December 31, 2024.
• The company has an accumulated deficit of $40,383,043 as of June 30, 2025.
• Significant debt is currently in default, including $1,542,827 in convertible notes, $497,150 in related party promissory notes, and $135,833 in self-liquidating promissory notes.
• Cash and cash equivalents decreased to $2,726 as of June 30, 2025, from $5,890 at December 31, 2024.
• Operating expenses increased to $759,061 for the six months ended June 30, 2025, from $451,726 in the prior year, driven by higher general and administrative costs and research and development for the NFT platform.

Sentiment

Score: 2

Explanation: Despite significant revenue growth and strategic acquisitions, the company's severe financial distress, including a widening net loss, substantial accumulated and working capital deficits, critically low cash, and over $2.1 million in defaulted debt, indicates a highly precarious financial position. The explicit 'going concern' doubt and internal control weaknesses further underscore the negative outlook, overshadowing any operational positives.

Positives

• Revenue for the six months ended June 30, 2025, increased significantly to $250,477 from $67,572 in the prior year, indicating growth in operations.
• Gross profit for the six months ended June 30, 2025, rose to $178,387 from $25,153, demonstrating improved profitability on sales.
• The company formally acquired the Goliath Motion Picture Library for $10,790,000, enhancing its content portfolio and strategic positioning.
• Maybacks Global Entertainment, a wholly-owned subsidiary, expanded its network from 25 to 42 channels, increasing its reach.
• New revenue-sharing partnerships were established with Whale TV and LIME X, expected to drive future advertising revenue.
• The Authentic Heroes division secured a licensing agreement with NFL Quarterback Tommy DeVito, with a product launch anticipated for the NFL 2025 season.
• Development of an NFT platform capable of housing millions of music NFTs has been completed, with plans for future monetization.

Negatives

• Net loss for the six months ended June 30, 2025, widened substantially to $1,024,138 from $151,861 in the prior year period.
• The company has an accumulated deficit of $40,383,043 as of June 30, 2025, indicating a history of significant losses.
• A working capital deficit of $6,231,539 as of June 30, 2025, highlights severe short-term liquidity issues.
• Cash and cash equivalents are critically low at $2,726 as of June 30, 2025.
• A significant portion of the company's debt is in default, totaling $1,542,827 in convertible notes, $497,150 in related party promissory notes, and $135,833 in self-liquidating promissory notes.
• The company is unable to hire outside counsel for ongoing litigation due to cash flow constraints, potentially exposing it to adverse judgments.
• Material weaknesses in internal controls over financial reporting were identified, including a lack of written documentation and inadequate communication, posing risks to financial accuracy and compliance.
• The company faces challenges in recapturing 146,000 vinyl albums stored in China due to US Customs issues and 250% tariffs, impacting potential sales.

Risks

• The company's ability to continue as a going concern is in substantial doubt due to accumulated deficits, working capital deficit, and defaulted debt.
• Inability to raise additional capital through debt or equity markets could impair business operations and lead to cessation of business.
• Lenders of defaulted notes may call the notes, potentially leading to asset seizure for secured notes and business failure.
• Competition from larger, more financially resourced media companies like Sling TV poses a significant challenge to gaining market share.
• Ongoing litigation matters, for which the company cannot afford outside counsel, could result in adverse judgments totaling approximately $81,595.
• The company's business plan is subject to risks inherent in new enterprises, including high debt, limited capital resources, and competition.
• Regulatory uncertainties regarding the NFT business line may delay or prevent its full market launch.

Future Outlook

The company anticipates increased revenues in future quarters from expanding Maybacks' markets, new advertising agreements, and the monetization of the acquired Goliath content library through Video on Demand and partnerships. It plans to tokenize its movie and TV titles and launch music NFTs once regulatory guidelines are clear. The Authentic Heroes division expects to launch NFL Fan-Wear in the 2025 season and is pursuing additional athlete licenses. The company intends to expand its vinyl record business beyond existing inventory through licensing and purchasing music assets, and expects the launch of its iDreamCTV app with LIME X in late 2025. Future operations are dependent on raising capital through debt and/or equity markets or other traditional financing sources until positive cash flow is achieved.

Management Comments

• "We are hopeful more advertising agreements are signed and more ad pressions are sold to generate future revenue for our company."
• "While these are signs that progress in our company has been made, we are not profitable and still face several challenges."
• "The Goliath acquisition is expected to allow us to become both vertically and horizontally integrated and give Maybacks the ability to create several different revenue sources apart from ad revenue."
• "We believe that PPV is another solid revenue source for Maybacks since it owns its own proven Live Stream that is capable of streaming to extremely large audiences without the need for third party assistance or expense."
• "We have now completed the building of our NFT platform and are in the process of making certain that any of our future offerings are compliant with regulatory guidelines."
• "We are also in discussions for licenses with several other Tier 1 athletes, which we anticipate will be signed subsequent to the Tommy DeVito rollout."
• "With the tariffs of 250% being levied against merchandise imported from China we are taking a wait and see posture until the tariff matters are ameliorated or significantly reduced."
• "It is our intention to create a vinyl record business beyond any sales of the already created inventory through licensing or the purchasing of music assets."
• "The Company's ability to continue as a going concern is dependent on managements plans, which include the raising of capital through debt and/or equity markets with some additional funding from other traditional financing sources, including term notes, until such time that funds provided by operations are sufficient to fund working capital requirements."

Industry Context

The company operates in the multi-faceted media and merchandising industry, aiming to capitalize on the 'cutting the cord' phenomenon with its Over-the-Air and platform-driven television network, Maybacks Global Entertainment. Its strategy involves content acquisition (Goliath movie library), digital asset tokenization (NFTs), and fan-wear merchandising. The company faces intense competition from larger, more established players like DISH Network's Sling TV, which possess greater financial, technical, and marketing resources. Its focus on niche markets like combat sports streaming (Swerve TV partnership) and leveraging content libraries for AVOD and FAST channels aligns with current industry trends towards diverse content distribution and monetization models. The venture into NFTs and blockchain for provenance reflects a broader industry exploration of new digital asset classes and fan engagement, though regulatory clarity remains a challenge.

Comparison to Industry Standards

• Maybacks' growth from 25 to 42 channels in a year demonstrates strong expansion in network reach, comparable to agile, emerging streaming platforms that rapidly scale content offerings.
• The 70% revenue share agreement with Whale TV for content distribution is a favorable term, potentially exceeding typical content licensing splits for smaller players in the streaming ecosystem.
• The company's ability to stream live Pay-Per-View (PPV) events without third-party assistance or expense positions it competitively against platforms that rely on external infrastructure for large-scale live events.
• The acquisition of a 14,000+ title movie and TV library, similar to content libraries held by major studios, provides a significant asset base for long-term content monetization, though the company's financial capacity to fully leverage it is limited compared to industry giants.
• The development of an NFT platform for 80 million music NFTs is ambitious, aiming to compete with established NFT marketplaces and music industry blockchain initiatives, but its success hinges on regulatory clarity and market adoption.
• The licensing agreement with NFL Quarterback Tommy DeVito for Fan-Wear is a strategic move akin to major sports merchandising companies, leveraging athlete endorsements to drive sales, but the scale is currently much smaller than industry leaders like Nike or Fanatics.

Management Changes

Corporate Governance

Legal Proceedings

• Randazzo LLC v. Avani Holdings LLC & Global Fashion Technologies, Inc.: Plaintiff seeking $26,595 for unpaid rent and eviction. Company denies liability, did not operate from premises.
• Patricia Witthuhn v. Global Fashion Technologies, Inc.: Plaintiff seeking approximately $15,000 for alleged unpaid wages. Company denies hiring plaintiff or acquiring Avani Holdings, LLC; unable to hire outside counsel due to cash flow.
• William Corso v. Global Fashion Technologies, Inc.: Plaintiff seeking approximately $40,000 for alleged unpaid wages. Company denies hiring plaintiff or acquiring Avani Holdings, LLC; unable to hire outside counsel due to cash flow.

Related Party Transactions

• Advances from related parties totaled $443,335 as of June 30, 2025.
• Promissory note payable to a related party (from AH Originals, Inc. acquisition) totaled $529,081 (principal and accrued interest) as of June 30, 2025, and is in default.
• Convertible notes payable to a related party totaled $90,818 (principal and accrued interest) as of June 30, 2025, and is in default.
• Related party loans from CEO Paul Serbiak totaled $285,509 (principal and accrued interest) as of June 30, 2025.
• Debt Exchange Agreements were entered into on March 13, 2025, with President Chris Giordano and CEO Paul Serbiak to convert an aggregate of $2,000,000 in debt into Series E Preferred Stock, common stock, and secured promissory notes. Share conversions not yet executed as of June 30, 2025.

Stakeholder Impact

• Shareholders: Significant dilution risk due to ongoing issuance of common and preferred stock for debt conversion and capital raises; substantial accumulated deficit and going concern doubt pose high investment risk.
• Employees (Management): Accrued compensation due to current and former management totaled $763,753, indicating potential payment delays or non-payment.
• Creditors: A significant portion of debt is in default, increasing the risk of non-payment and potential legal action or asset seizure.
• Customers/Partners: Continued operations and service delivery are at risk due to severe liquidity constraints and going concern doubt, potentially impacting reliability of content distribution and new ventures.
• Suppliers: Risk of delayed or non-payment for services and goods due to cash flow constraints.

Next Steps

• Raise capital through debt and/or equity markets or other traditional financing sources to fund operations and address liquidity issues.
• Rectify US Customs challenges and reduce tariffs to recapture and sell 146,000 'Old is Gold Christmas' vinyl albums from China.
• Launch the Authentic Heroes Fan-Wear line with NFL Quarterback Tommy DeVito at the start of the NFL 2025 season.
• Finalize negotiations with HISENSE GROUP Ltd. for a Vast Tag ad partnership.
• Complete the procedures and testing phase with another streaming industry player for content distribution and Vast Tag ad partnership.
• Launch Maybacks' Vast Tag ad programs with Whale TV and LIME X in late 2025.
• Expand the exclusive license on 17,000 Master Recordings with Maestro Entertainment to include streaming and music NFTs.
• Create 'Authentic Events Group, LLC' for the distribution of Pay-Per-View (PPV) events.
• Take remedial action to address identified material weaknesses in internal controls over financial reporting during fiscal year 2025.

Key Dates

Recommendation

The company faces severe financial distress, evidenced by a widening net loss, a substantial accumulated deficit, a critical working capital deficit, and extremely low cash reserves. Over $2.1 million in debt is in default, and the company explicitly states substantial doubt about its ability to continue as a going concern. While there are positive developments in revenue growth and strategic acquisitions, these are heavily outweighed by the fundamental financial instability, high operational risk, and material weaknesses in internal controls. The inability to fund legal counsel for ongoing litigation further highlights the precarious situation. A seasoned investor would recognize these as significant red flags, indicating a high probability of further share price decline and potential business failure.

Keywords

Media, Entertainment, SEC Filing, 10-Q, Financial Report, Going Concern, Debt Default, NFT, Streaming, Content Distribution, Maybacks Global Entertainment, Goliath Motion Picture Promotions, Authentic Heroes, Financial Distress, Liquidity, Revenue Growth, Net Loss, Preferred Stock, Convertible Notes, Related Party Transactions, Internal Controls