S-1/A: Freedom Holdings Faces Going Concern, Auditor Fraud Charges

Freedom Holdings, Inc. (FHLD) files S-1/A, revealing substantial doubt about its ability to continue as a going concern, material financial restatements, and its auditor facing SEC fraud charges.

Summary

• Freedom Holdings, Inc. (FHLD), operating as The Awareness Group (TAG), is an integrated service provider for the alternative energy industry, primarily solar, through its TAG GRID platform.
• The company's business model integrates financing, sales, procurement, and installation solutions, serving solar sales organizations and licensed contractors.
• TAG's revenue streams are diversified across five segments: TAG Financial (54%), TAG Networks (14%), TAG Capital (12%), TAG Distribution (11%), and TAG Construction (9%).
• For the six months ended March 31, 2025, the company reported revenues of $677,152 and a net loss of $255,118.
• As of March 31, 2025, cash and cash equivalents were $40,389, with an accumulated deficit of $10,689,228.
• The company's auditors have expressed substantial doubt about its ability to continue as a going concern, estimating a need for approximately $1,000,000 in capital for the next twelve months.
• FHLD entered into a Standby Share Purchase Agreement (SPA) on January 30, 2025, with ClearThink Capital Partners, LLC, for the sale of up to $10 million in common stock, which will result in significant dilution.
• The company's auditor, Olayinka Oyebola & Co., and its principal, Olayinka Oyebola, have been charged by the SEC with aiding and abetting antifraud violations related to fake audit reports.
• Previously issued audited financial statements for the fiscal years ended September 30, 2024, and 2023, were restated due to material misstatements, including overstatement of accounts receivable and premature revenue recognition.

Sentiment

Score: 2

Explanation: The sentiment is highly negative due to the explicit 'going concern' warning from auditors, the severe financial restatement of prior periods, the ongoing SEC fraud charges against the company's auditor, and the significant increase in net loss in the most recent reporting period. While the company is attempting to raise capital, the underlying financial and governance issues present substantial risks.

Positives

• The company has established a diversified revenue model through its TAG GRID platform, integrating various aspects of the solar energy value chain.
• TAG generated $677,152 in revenues for the six months ended March 31, 2025, a significant increase from $0 in the prior comparable period, indicating initial operational traction post-merger.
• The company's proprietary NO FICO Prepaid PPAs and financial structuring model aim to enhance project profitability and customer savings, potentially differentiating it in the market.
• The reverse merger with The Awareness Group (TAG) in September 2024 brought in an established alternative energy business and management team.

Negatives

• The company's auditors have expressed substantial doubt about its ability to continue as a going concern, citing a history of unprofitability and insufficient capital.
• Net loss for the six months ended March 31, 2025, increased significantly to $255,118 from $20,689 in the prior year period.
• Cash and cash equivalents decreased from $95,815 on September 30, 2024, to $40,389 on March 31, 2025.
• The company has an accumulated deficit of $10,689,228 as of March 31, 2025, and negative working capital.
• The acquisition of Renewable Energy Products Manufacturing Corp. (REPM) was mutually unwound on June 26, 2025, as REPM did not fulfill anticipated needs, indicating a failed strategic initiative.
• The company does not have a traditional credit facility, limiting its access to capital for expansion.
• The common stock is subject to 'penny stock' rules, which can make transactions cumbersome and reduce liquidity and market value.

Risks

• Substantial doubt exists about the company's ability to continue as a going concern, requiring significant additional capital that may not be available on reasonable terms.
• The company's auditor, Olayinka Oyebola & Co., and its principal, Olayinka Oyebola, have been charged by the SEC with aiding and abetting antifraud violations, potentially leading to a need for a new auditor, restatements, delays in regulatory filings, or reputational harm.
• The previously issued financial statements for September 30, 2024, and 2023, were materially misstated and restated, raising concerns about financial reporting reliability.
• The sale of common stock under the Standby Share Purchase Agreement (SPA) will cause significant dilution to existing shareholders, and the actual number of shares issued may be substantially greater than registered.
• Reliance on Pablo Diaz, the Chief Executive Officer, and other third-party consultants and suppliers for business development poses a key person risk.
• The company has not voluntarily implemented various corporate governance measures, such as independent board directors or audit committees, which may limit shareholder protections.
• Non-performance by suppliers on sale commitments and customers on purchase commitments could disrupt business and lead to financial losses.
• Intense competition in the alternative energy market from larger, better-capitalized corporations could adversely affect revenues.
• Current and future litigation, including a recent complaint alleging owed compensation, could incur substantial costs and divert management time.
• The volatility of the common stock price, influenced by factors unrelated to operating performance, could adversely affect the ability to raise future equity capital.

Future Outlook

The company expects to need approximately $1,000,000 in capital to continue as a going concern for the next twelve months. It intends to raise capital through sales of multi-media and entertainment related products and services, borrowings, and private placements of common stock. Future growth is expected in TAG Capital and increased contribution from the Construction and Distribution silos. The company will likely require significant additional financing to advance its growth strategy and maintain operations, with future equity financings likely resulting in substantial dilution.

Management Comments

• We expect that we will need approximately $1,000,000 in capital to continue as a going concern for the next twelve months from the date of this prospectus.
• We intend to raise capital to fund our operations through sales of multi-media and entertainment related products and services, borrowings, and private placements of our common stock.
• Our largest source of revenue is currently TAG Financial Services, but we expect future growth in TAG Capital and increased contribution from the Construction and Distribution silos.
• Management's plan to obtain additional capital resources includes obtaining capital from the sale of its securities and short-term borrowings from shareholders or related parties when needed.

Industry Context

The solar and alternative energy industry is shifting from vertically integrated models to more specialized, decentralized business models. Freedom Holdings, through its TAG GRID platform, aims to fill the need for support infrastructure that bridges the gap between sales and installation, allowing contractors and sales organizations to focus on core functions while relying on TAG for operational, financial, and logistical support. This model is designed to reduce client overhead, increase transaction velocity, and improve project outcomes.

Comparison to Industry Standards

• TAG's proprietary payout model aims to enhance project-level profitability by more than 25% compared to standard third-party financed installations, by integrating internal loan origination, margin-based material procurement, ITC monetization, and securitization of consumer receivables.
• Each solar project is evaluated to ensure the end-user realizes a minimum of 10% electricity cost savings in the first year compared to their utility baseline, a competitive offering for customers.
• Unlike many lenders in the solar space, TAG will approve contractors with less than two years in business, potentially expanding its network more rapidly than competitors with stricter requirements.

Management Changes

Corporate Governance

Legal Proceedings

• On April 25, 2025, the company was named as a defendant in a complaint alleging owed compensation for services rendered in relation to the acquisition of The Awareness Group by the company's prior management team.

Related Party Transactions

• Pablo Diaz, the President and CEO, has advanced approximately $1,160,000 to the company to fund working capital and operations, treated as loans accruing interest at an annual rate of 12.75%.
• On April 22, 2025, TAG entered into a promissory note with a related party for $196,000, bearing interest at 15% per annum and payable in full by July 22, 2025.
• The company has outstanding notes payable to Bruce Miller, a personal acquaintance of a former CEO, totaling $86,289 as of March 31, 2025, with interest rates of 12% and 15% per annum.
• The company has an outstanding note payable to New Opportunity Business Solutions (Brian Kistler, a former related party) totaling $36,074 as of March 31, 2025.

Stakeholder Impact

• **Shareholders**: Face significant dilution from the Standby Share Purchase Agreement (SPA) and potential future equity financings. Existing shareholders' ownership interest and voting power will decrease. The penny stock classification and auditor issues could negatively impact share price and liquidity.
• **Employees**: The company employs 11 full-time corporate staff, with project-level labor, sales agents, contractors, and brokers being independent. The going concern risk could impact job security for corporate staff.
• **Customers (Service Providers/End Users)**: TAG aims to improve customer satisfaction by acting as a project guarantor and ensuring a minimum of 10% electricity cost savings for end-users. However, the company's financial instability and auditor issues could raise concerns about long-term reliability and service continuity.
• **Creditors**: The company's reliance on related-party loans and the going concern warning indicate elevated risk for creditors, particularly those without secured positions.
• **Regulatory Authorities**: The SEC charges against the company's auditor highlight a significant regulatory concern, potentially leading to increased scrutiny for the company itself.

Next Steps

• The company will continue efforts to raise approximately $1,000,000 in capital to support ongoing operations for the next twelve months.
• The company may need to register additional shares beyond the 105,000,000 currently registered to maximize the Standby Share Purchase Agreement (SPA).
• Management plans to obtain capital from the sale of its securities and short-term borrowings from shareholders or related parties.
• The company anticipates professional fees and selling, general, and administrative expenses to increase as operations scale up.

Key Dates

Recommendation

The company faces severe fundamental issues, including an explicit 'going concern' warning from its auditors, indicating a high risk of business failure without substantial, uncertain future financing. The material restatement of prior financial results, coupled with the company's auditor facing SEC fraud charges for aiding in fake audit reports, severely undermines financial credibility and investor trust. The significant increase in net loss in the most recent quarter and the substantial dilution from the ongoing capital raise further exacerbate the negative outlook. The stock's 'penny stock' status and lack of robust corporate governance measures add to the inherent risks. Given these compounding factors, the investment risk is exceptionally high, and a strong sell recommendation is warranted to avoid potential total loss of capital.

Keywords

Alternative Energy, Solar, Renewable Energy, SEC Filing, S-1/A, Going Concern, Financial Restatement, Auditor Fraud, Dilution, Capital Raise, OTC Markets, Power Purchase Agreements, Investment Tax Credits, Corporate Governance, Penny Stock