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

Freedom Holdings reports a net loss of $3,254 for the quarter ended December 31, 2023, with ongoing concerns about its ability to continue as a going concern.

Summary

• Freedom Holdings, Inc. reported its financial results for the first quarter of fiscal year 2024, ending December 31, 2023.
• The company experienced a net loss of $3,254 for the quarter, compared to a net loss of $5,199 for the same period in the previous year.
• Total operating expenses were $360, a decrease from $2,135 in the prior year, primarily due to a reduction in selling, general, and administrative expenses.
• The company's total assets decreased to $93 from $588 at the end of the previous quarter, consisting solely of cash.
• Total liabilities increased slightly to $415,236 from $412,477, including accounts payable, accrued interest, accrued expenses, and notes payable.
• The company has an accumulated deficit of $10,181,002 as of December 31, 2023.
• The financial statements have been prepared assuming the company will continue as a going concern, but there is substantial doubt about its ability to do so.
• The company's working capital deficit is $288,793.
• The company did not generate any revenue for the three months ended December 31, 2023 and 2022.
• The company is planning to raise capital to implement its strategy.

Sentiment

Score: 2

Explanation: The document paints a very negative picture due to the company's significant losses, lack of revenue, low cash balance, and going concern uncertainty. The company's reliance on private capital raises and potential director loans further underscores the precarious financial situation.

Positives

• The net loss decreased compared to the same quarter last year, from $5,199 to $3,254.
• Operating expenses decreased significantly, from $2,135 to $360, indicating some cost control.
• Professional fees increased by approximately 6.1% due to fees associated with being full reporting company.
• Selling, general and administrative expenses decreased by approximately 96.5% due to operations.

Negatives

• The company has an accumulated deficit of $10,181,002.
• The company's cash balance is very low at $93.
• There is substantial doubt about the company's ability to continue as a going concern.
• The company has a working capital deficit of $288,793.
• The company did not generate any revenue for the three months ended December 31, 2023 and 2022.
• Interest expense increased by approximately 5.5%.

Risks

• The company's ability to continue as a going concern is uncertain 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 future operating results are dependent on many factors outside of its control.
• The company may not be able to obtain sufficient capital to fund its operations, development, and expansion plans.
• The company may not be able to manage competitive factors and developments beyond its control.
• The company may not be able to maintain and protect its intellectual property.
• The company may not be able to obtain patents based on its current and/or future patent applications.
• The company may not be able to obtain and maintain other rights to technology required or desirable to conduct or expand its business.

Future Outlook

The company plans to raise capital to implement its strategy and continue operations, but there is no guarantee that additional funding will be available on favorable terms.

Management Comments

• Management acknowledges the substantial doubt about the company's ability to continue as a going concern.
• Management states that the company is presently able to meet its obligations as they come due through the support of the CEO.
• Management anticipates that the company may engage in one or more private offerings of its securities.

Industry Context

This report reflects the challenges faced by early-stage companies in securing funding and achieving profitability, particularly in a competitive market. The company's lack of revenue and significant accumulated deficit are common issues for startups.

Comparison to Industry Standards

• The company's financial performance is significantly below industry standards for established companies, particularly in terms of revenue generation and profitability.
• Many early-stage companies in the technology or development sectors experience similar challenges with negative cash flow and the need for continuous capital raising.
• The company's reliance on debt and equity financing is typical for companies in its stage, but the lack of revenue generation is a significant concern.
• Compared to companies with similar market capitalization, Freedom Holdings' financial metrics indicate a higher level of risk and uncertainty.

Related Party Transactions

• The company received a $56,978 Demand Instalment Loan from Bruce Miller, a personal acquaintance with the CEO.
• During the year ended September 30, 2023, a previously related party, Mr. Brian Kistler (New Opportunity Business Solutions) loaned the company $8,531 for operations.

Stakeholder Impact

• Shareholders face significant risk due to the company's financial instability and going concern uncertainty.
• Employees may be impacted by potential cost-cutting measures or the company's inability to continue operations.
• Creditors face the risk of non-payment due to the company's financial difficulties.

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, net loss, operating expenses, financial statements, capital raise, working capital, accumulated deficit, share issuance, debt financing, liquidity