10-Q: Freedom Holdings Reports Q1 2024 Results Amidst Going Concern Uncertainty

Freedom Holdings reports a net loss for the quarter ending March 31, 2024, and expresses substantial doubt about its ability to continue as a going concern.

Summary

• Freedom Holdings, Inc. reported its financial results for the quarter ended March 31, 2024, showing no revenue for both the three and six-month periods.
• The company experienced a net loss of $17,435 for the three months and $20,689 for the six months ended March 31, 2024.
• Operating expenses decreased significantly, with professional fees dropping by approximately 47-48% and selling, general, and administrative expenses decreasing by approximately 91-95% compared to the same periods in 2023.
• The company's total assets decreased to $21, while total liabilities increased to $431,099.
• The company has an accumulated deficit of $10,198,437 as of March 31, 2024.
• Management has expressed substantial doubt about the company's ability to continue as a going concern due to ongoing losses and negative cash flows.
• The company is exploring options for raising additional capital, including private offerings of securities.

Sentiment

Score: 2

Explanation: The document expresses significant concerns about the company's financial health and its ability to continue as a going concern, leading to a very negative sentiment.

Positives

• Operating expenses decreased significantly, indicating cost-cutting measures.
• Professional fees decreased by approximately 47-48% due to lower fees associated with being a full reporting company.
• Selling, general and administrative expenses decreased by approximately 91-95% due to operations.

Negatives

• The company reported no revenue for the three and six months ended March 31, 2024.
• The company has incurred a net loss of $17,435 for the three months and $20,689 for the six months ended March 31, 2024.
• The company's total assets are very low at $21.
• The company's total liabilities are high at $431,099.
• The company has a significant accumulated deficit of $10,198,437.
• Management has expressed substantial doubt about the company's ability to continue as a going concern.
• The company has a working capital deficit of $304,728.
• The company's cash balance is very low at $21.

Risks

• The company's ability to continue as a going concern is in doubt due to ongoing losses and negative cash flows.
• The company needs to secure additional funding to execute its business plan.
• The company faces risks related to managing its business with continuing operating losses and negative cash flows.
• The company's ability to obtain sufficient capital to fund operations, development, and expansion plans is uncertain.
• The company faces competitive factors and developments beyond its control.
• The company's ability to maintain and protect its intellectual property is a risk.
• The company's ability to obtain patents based on current and future applications is uncertain.
• The company's ability to manage other factors discussed in the report and in the Risk Factors section of the annual report is a risk.

Future Outlook

The company plans to raise capital to implement its strategy and is considering private offerings of securities. However, there is no guarantee that additional funding will be available on favorable terms, if at all.

Management Comments

• Management has expressed substantial doubt about the company's ability to continue as a going concern.
• Management believes that the company's officers and directors will contribute funds to pay for some of the expenses if adequate funds are not available.
• Management has not made any arrangements or agreements with the officers and directors regarding such advancement of funds.

Industry Context

The company's financial struggles are not uncommon for early-stage companies, particularly those in the development phase. The lack of revenue and reliance on external funding highlight the challenges faced by many startups.

Comparison to Industry Standards

• The company's lack of revenue and significant losses are not uncommon for early-stage companies, but the magnitude of the accumulated deficit and the going concern warning are concerning.
• Compared to other development-stage companies, Freedom Holdings' cash position is extremely weak, with only $21 in cash.
• Many similar companies rely on venture capital or angel investors for funding, and Freedom Holdings' reliance on loans from related parties and potential private offerings suggests a lack of access to traditional funding sources.
• The company's operating expenses are low, but this is likely due to the lack of activity and revenue generation, rather than efficient operations.

Related Party Transactions

• The company has a note payable to Bruce Miller, a personal acquaintance of the CEO.
• The company received a loan from a previously related party, Mr. Brian Kistler (New Opportunity Business Solutions).

Stakeholder Impact

• Shareholders face significant risk due to the company's financial instability and going concern uncertainty.
• Employees may be impacted by potential layoffs or restructuring if the company cannot secure additional funding.
• Creditors face the risk of non-payment if the company is unable to continue as a going concern.

Next Steps

• The company plans to raise capital to implement its strategy.
• The company may engage in one or more private offerings of its securities.
• The company plans to remediate the material weakness in internal controls over the next 12 months.

Key Dates

Keywords

going concern, financial results, net loss, operating expenses, capital raise, liquidity, working capital, debt, equity, professional fees, cash flow