10-Q: Farmhouse Shifts to Digital Assets, Secures $20M Equity Line

Sentiment:

Quarterly Report 14 November 2025 12:52 PM

Farmhouse, Inc. reported a reduced net loss for the nine months ended September 30, 2025, driven by debt extinguishment gains, while pivoting its strategy to digital assets and securing a $20 million equity financing agreement.

Delay expectedThe Share Exchange Agreement with Thrown, LLC, entered into on September 10, 2024, has not closed as of the date of this report, and discussions are ongoing.Several notes payable, including a $45,000 convertible note (due July 2018), a $50,000 loan (due December 2021), two $5,000 notes (due October 2024), a $4,500 related party note (due February 2025), and an $8,400 note (due March 2025), are in default, indicating delays in repayment.

Capital raiseOn November 4, 2025, the company entered into an Equity Financing Agreement with GHS Investments LLC for an equity line of credit of up to $20.0 million over a 24-month term.In connection with the GHS Agreement, the company issued 500,000 restricted shares of common stock as Commitment Shares to GHS.On November 7, 2025, the company secured a Convertible Promissory Note from a private accredited investor for $50,000 in gross proceeds, issuing 100,000 shares of common stock as additional consideration.Management intends to address going concern uncertainty through continued financing from officer loans, third-party borrowings, and equity sales.The company raised $145,000 from the sale of Series 2025 Notes during the nine months ended September 30, 2025.

Better than expectedNet loss for the nine months ended September 30, 2025, was significantly lower at $174,854 compared to $362,383 in the prior year.The reduction in net loss was primarily driven by a $174,930 gain on extinguishment of debt.Working capital deficit improved from $2,334,745 to $2,046,584.

Summary

Net loss significantly reduced to $174,854 for the nine months ended September 30, 2025, compared to $362,383 in the prior year, primarily due to a $174,930 gain on extinguishment of debt.
The company generated no revenue for the nine months ended September 30, 2025, and does not expect future revenue from previous NFT licensing agreements.
Total operating expenses decreased to $303,011 for the nine months ended September 30, 2025, from $323,736 in the prior year, mainly due to lower stock-based compensation and public company filing fees.
Cash balance increased to $3,896 as of September 30, 2025, from $413 at December 31, 2024.
Working capital deficit improved to $2,046,584 as of September 30, 2025, from $2,334,745 at December 31, 2024.
The company formed Farmhouse Treasury LLC (FT) on September 19, 2025, to pursue a Digital Asset Treasury (DAT) business initiative, focusing on Bitcoin and Ethereum.
The proposed acquisition of Ledgewood Holdings, LLC, a multi-unit franchise operator with $31 million in trailing twelve-month revenue, was terminated in October 2025 to prioritize the DAT initiative.
Several notes payable, totaling $122,900 in principal, are in default as of September 30, 2025, including a $45,000 convertible note and a $50,000 loan.
Subsequent to the reporting period, the company entered into an Equity Financing Agreement with GHS Investments LLC for up to $20.0 million over 24 months and secured a $50,000 convertible promissory note from a private investor.

Sentiment

Score: 4

Explanation: The company reported a reduced net loss due to a one-time debt extinguishment gain, but continues to generate no revenue and faces substantial doubt about its ability to continue as a going concern. While new financing agreements provide potential liquidity, the company is in default on multiple notes, and its strategic pivot to digital assets is highly speculative and has not yet generated any capital or assets.

Positives

Net loss for the nine months ended September 30, 2025, significantly decreased to $174,854 from $362,383 in the prior year, largely due to a gain on extinguishment of debt.
A $174,930 gain on extinguishment of debt was recognized from converting accrued legal fees and finance charges into a Series 2025 Note.
Total operating expenses decreased by $20,725 for the nine months ended September 30, 2025, compared to the same period in 2024.
Cash balance increased to $3,896 as of September 30, 2025, from $413 at December 31, 2024.
Working capital deficit improved to $2,046,584 as of September 30, 2025, from $2,334,745 at December 31, 2024.
Secured an equity line of credit for up to $20.0 million with GHS Investments LLC on November 4, 2025, providing potential future liquidity.
Raised $50,000 in gross proceeds from a new convertible promissory note on November 7, 2025.
The formation of Farmhouse Treasury LLC provides a dedicated vehicle for exploring digital asset strategies.

Negatives

No revenue was generated for the nine months ended September 30, 2025, or the three months ended September 30, 2025 and 2024, indicating a lack of core business operations generating income.
The company has a substantial stockholders deficit of $2,503,509 as of September 30, 2025, worsening from $2,342,570 at December 31, 2024.
Net cash used in operating activities increased to $134,313 for the nine months ended September 30, 2025, from $95,254 in the prior year, indicating higher cash burn from operations.
Several notes payable, totaling $122,900 in principal, are in default as of September 30, 2025, which could impact future financing and lead to legal action.
Interest expense increased to $46,778 for the nine months ended September 30, 2025, from $40,927 in the prior year, due to new borrowings.
Disclosure controls and procedures were deemed not effective as of September 30, 2025.

Risks

Substantial doubt about the company's ability to continue as a going concern due to recurring losses from operations and a significant stockholders deficit.
Inability to secure additional financing on acceptable terms or at all, which could lead to reduction or discontinuation of operations.
Market conditions for microcap companies remain challenging, making it difficult to secure favorable financing terms.
Defaults on multiple promissory notes may impact the ability to obtain future financing and could result in potential legal action by noteholders.
The digital asset strategy is exploratory, with no assurance that it will be pursued, implemented, or generate anticipated benefits.
The acquisition of Thrown, LLC has not closed, and if it does not, the 187,500 shares issued as an equity deposit will be treated as a break-up fee and charged to expense.
The effectiveness of disclosure controls and procedures was evaluated as not effective as of September 30, 2025.

Future Outlook

Management's strategic focus is shifting towards digital asset and blockchain sectors, with the newly formed Farmhouse Treasury LLC exploring treasury and capital management strategies involving digital assets like Bitcoin and Ethereum. The company expects to use proceeds from the recently secured $20.0 million equity line of credit and other financings for general working capital and strategic initiatives, aiming to address its going concern uncertainty.

Management Comments

Our current strategic focus is to identify and complete acquisitions that enhance long-term shareholder value and to reposition the Company toward opportunities in the digital asset and blockchain sectors.
Management intends to address this uncertainty [going concern] through continued financing from officer loans, third-party borrowings, and equity sales.
While no assurance can be given, management believes these sources will provide sufficient liquidity to support operations in the near term.
We continue to evaluate the commercial prospects of the Thrown brand relative to other strategic priorities.
With the termination of discussions with Ledgewood Holdings, our near-term focus is on the development of a structured and transparent framework for potential digital asset participation through Farmhouse Treasury LLC.
There can be no assurance that any such strategy [digital asset] will be implemented or, if implemented, that it will achieve the intended results.

Industry Context

Farmhouse, Inc.'s pivot towards digital asset and blockchain sectors aligns with a broader trend of companies exploring cryptocurrency for treasury management and strategic growth, seeking to capitalize on the emerging digital economy. This move positions the company to potentially participate in a high-growth, albeit volatile, market, differentiating it from traditional brand management or beverage sectors. The termination of the Ledgewood acquisition suggests a focused shift away from traditional franchise operations towards this new, speculative area.

Comparison to Industry Standards

Corporate Governance

Change Type	Description	Effective Date	Impact Assessment
Formation of Subsidiary	Organized Farmhouse Treasury LLC (FT), a wholly owned Nevada limited-liability company, to pursue digital asset strategy. FT is manager-managed with the CEO and CTO serving as Managers and the Company as the sole Member.	2025-09-19	Establishes a dedicated vehicle for digital asset initiatives with robust governance, reporting, and compliance controls consistent with public-company standards.
Disclosure Controls and Procedures	Evaluated as not effective as of September 30, 2025.	2025-09-30	Indicates a weakness in the company's ability to ensure material information is made known and reported accurately, potentially increasing risk of misstatement or non-compliance.

Legal Proceedings

As of the date of this report, there were no material pending legal proceedings against the company.

Related Party Transactions

Loans from Company officers totaled $57,777 as of September 30, 2025, and $69,549 as of December 31, 2024, representing cash advances and direct payments for operating expenses. These are non-interest bearing and unsecured.
Accrued liability to contracted CFO (Lanny R. Lang) totaled $254,000 as of September 30, 2025, for services provided since 2021.
A Note Payable to Officer (CEO Evan Horowitz) for $4,500, bearing 20% interest, was due February 12, 2025, and is currently in default.
On April 18, 2025, a $25,000 Series 2025 Note was issued for cash to the spouse of a Company director, considered a related party transaction but issued on arms-length terms.
On July 16, 2025, an RSA of 400,000 shares of common stock was granted to Lang Financial Services, Inc. (LFSI), an entity controlled by the CFO, fully vested at issuance.
For the nine months ended September 30, 2025, Company officers advanced $13,474 and were repaid $20,678 in cash and $4,568 through personal charges to the company's credit card.

Stakeholder Impact

Shareholders face potential dilution from future equity raises (GHS agreement, convertible notes) and uncertainty due to the going concern warning. There is potential for value creation if the digital asset strategy succeeds, but also high risk given its speculative nature and lack of current revenue.
Creditors face risk of non-payment due to multiple notes in default and the going concern uncertainty. New convertible notes increase the debt burden.
Employees/Contractors may be impacted by delayed payments, as indicated by the accrued liability to the contracted CFO, which could affect morale or retention.
Customers/Suppliers are not directly impacted as the company has no current revenue-generating operations.

Next Steps

Continue discussions with Thrown, LLC management regarding closing conditions for the Share Exchange Agreement.
File a registration statement on Form S-1 with the SEC to enable draws from the GHS Equity Financing Agreement.
Explore, structure, and potentially implement digital asset initiatives through Farmhouse Treasury LLC, including the purchase and custody of digital assets.
Actively explore additional financing alternatives, including equity and debt offerings and potential strategic partnerships, to support operations and strategic initiatives.
Evaluate the impact of ASU 2024-03 on financial statements.

Key Dates

Date	Description
2018-07-01	Original maturity date of a $45,000 convertible note payable, currently in default.
2021-05-01	Board of Directors approved the Farmhouse, Inc. 2021 Omnibus Incentive Plan (2021 OIP).
2021-12-16	Maturity date of a $50,000 loan agreement with an unaffiliated individual, currently in default.
2023-05-01	Board of Directors authorized an offering of up to $1,000,000 of Series 2023 10% Mandatorily Convertible Notes.
2024-05-17	Board granted Restricted Stock Awards totaling 340,000 shares of common stock under the 2021 OIP.
2024-05-28	Issued 62,500 shares of common stock for $25,000 cash in a private placement.
2024-07-06	Issued 187,500 shares to Thrown, LLC as an equity deposit for a proposed acquisition.
2024-08-12	Entered into an unsecured promissory note with the CEO for $4,500, due February 12, 2025, now in default.
2024-09-06	Board granted an RSA of 10,000 shares of common stock under the 2021 OIP.
2024-09-10	Entered into a Share Exchange Agreement with Thrown, LLC for a proposed acquisition.
2024-10-26	Maturity date of two $5,000 notes payable to unaffiliated individuals, currently in default.
2025-01-02	Maturity date of a note payable to an unaffiliated individual for $11,667, which was converted into a Series 2025 Note.
2025-02-09	Maturity date of a note payable to an unaffiliated individual for $5,500, which was converted into a Series 2025 Note.
2025-02-12	Maturity date of the $4,500 related party note to the CEO, currently in default.
2025-02-24	Issued a $10,000 Series 2025 Note to an unrelated individual.
2025-03-18	Issued a $61,000 Series 2025 Note to an individual investor, including $26,000 from converted accrued liabilities and $35,000 new cash.
2025-03-30	Maturity date of an $8,400 note payable, currently in default.
2025-03-31	Board approved the exchange of certain outstanding liabilities into Series 2025 Notes, including $424,930 in legal fees for a $250,000 note.
2025-04-16	Issued a $25,000 Series 2025 Note to an unrelated individual.
2025-04-18	Issued a $25,000 Series 2025 Note to the spouse of a Company director (related party transaction).
2025-04-21	Issued a $12,500 Series 2025 Note to an unrelated individual.
2025-04-28	Issued a $12,500 Series 2025 Note to an unrelated individual.
2025-06-09	Entered into a non-binding term sheet with Ledgewood Holdings, LLC for a proposed acquisition (later terminated).
2025-06-23	Issued a $10,000 Series 2025 Note to an unrelated individual.
2025-07-16	Board granted an RSA of 400,000 shares of common stock to Lang Financial Services, Inc. (CFO-controlled entity), fully vested.
2025-08-15	Issued a $15,000 Series 2025 Note to an unrelated individual.
2025-09-19	Organized Farmhouse Treasury LLC (FT) to pursue the Digital Asset Treasury (DAT) business initiative.
2025-09-30	End of the quarterly reporting period.
2025-10-01	Board of Directors determined not to pursue the proposed acquisition of Ledgewood Holdings, LLC.
2025-10-20	Issued a $10,000 Series 2025 Note to an unrelated individual investor (subsequent event).
2025-11-04	Entered into an Equity Financing Agreement with GHS Investments LLC for up to $20.0 million.
2025-11-07	Entered into a Convertible Promissory Note with a private accredited investor for $50,000 gross proceeds.
2025-11-13	Number of shares of common stock outstanding is 18,925,950.
2025-11-14	Date of filing and certifications.
2026-12-15	Effective date for fiscal years beginning after this date for ASU 2024-03 (Income Statement Reporting Comprehensive Income Expense Disaggregation Disclosures).
2027-12-15	Effective date for interim periods within fiscal years beginning after this date for ASU 2024-03.
2028-02-24	Maturity date of a $10,000 Series 2025 Note.
2028-03-18	Maturity date of a $61,000 Series 2025 Note.
2028-03-31	Maturity date of several Series 2025 Notes totaling $277,700.
2028-04-16	Maturity date of a $25,000 Series 2025 Note.
2028-04-18	Maturity date of a $25,000 Series 2025 Note (related party).
2028-04-21	Maturity date of a $12,500 Series 2025 Note.
2028-04-28	Maturity date of a $12,500 Series 2025 Note.
2028-06-23	Maturity date of a $10,000 Series 2025 Note.
2028-08-15	Maturity date of a $15,000 Series 2025 Note.

Recommendation

sell

Despite a reported reduction in net loss, this was primarily due to a one-time gain on debt extinguishment, not improved operations. The company has no revenue, a significant and worsening stockholders' deficit, and a 'going concern' warning, indicating severe financial distress. Multiple notes are in default, signaling liquidity issues and potential legal challenges. While new financing agreements offer a lifeline, they also introduce further dilution risk. The strategic pivot to digital assets is highly speculative, lacks immediate capital contribution or asset acquisition, and carries no assurance of success. Given the fundamental lack of revenue, ongoing losses, substantial debt defaults, and high operational risk, a seasoned investor would likely recommend selling to avoid further capital erosion.

Keywords

Digital Asset Treasury, Blockchain, Cryptocurrency, Bitcoin, Ethereum, SEC Filing, Form 10-Q, Financial Report, Going Concern, Equity Financing, Convertible Notes, Corporate Governance, Microcap, Nootropic Beverage, Esports Beverage

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