10-Q: Freedom Holdings Reports Q3 2024 Results Amidst Going Concern Uncertainty

Freedom Holdings reports its Q3 2024 results, showing a net loss and ongoing concerns about its ability to continue as a going concern.

Summary

• Freedom Holdings, Inc. reported its financial results for the quarter ended June 30, 2024, showing no revenue for both the three and nine-month periods.
• The company experienced a net loss of $234,448 for the three months and $255,137 for the nine months ended June 30, 2024.
• Operating expenses were $265,585 for the three months and $280,517 for the nine months, primarily driven by stock issued for services.
• The company's total assets were $2,184, consisting entirely of cash, while total liabilities amounted to $395,210.
• Freedom Holdings has an accumulated deficit of $10,432,885 and a working capital deficit of $270,663.
• The company's financial statements have been prepared assuming it will continue as a going concern, but there is substantial doubt about its ability to do so.
• The company is planning to raise capital to implement its strategy, but there is no guarantee that additional funding will be available.

Sentiment

Score: 2

Explanation: The document expresses significant concerns about the company's financial health, including a lack of revenue, substantial losses, and a going concern issue. The sentiment is overwhelmingly negative due to these factors.

Positives

• The company recognized a gain on the extinguishment of payables of $34,000 for both the three and nine-month periods.
• Accrued interest decreased from $330 to $8,950 from September 30, 2023 to June 30, 2024.
• Total liabilities decreased from $412,477 to $395,210 from September 30, 2023 to June 30, 2024.

Negatives

• The company has not generated any revenue for the reported periods.
• The company has a significant accumulated deficit of $10,432,885.
• There is a substantial doubt about the company's ability to continue as a going concern.
• The company has a working capital deficit of $270,663.
• The company's disclosure controls and procedures were deemed not effective.
• The company has identified a material weakness in internal controls due to a lack of segregation of duties.

Risks

• The company's ability to continue as a going concern is uncertain due to ongoing operating losses and negative cash flows.
• The company may not be able to obtain sufficient capital to fund its operations, development, and expansion plans.
• The company faces risks related to managing competitive factors and developments beyond its control.
• The company's disclosure controls and procedures were not effective, and there is a material weakness in internal controls.
• The company's future operating results are dependent on many factors outside of its control.
• The company may not be able to generate sufficient cash flow from operations or obtain additional financing on favorable terms.

Future Outlook

The company anticipates that its future liquidity requirements will arise from the need to fund growth from operations, pay current obligations, and future capital expenditures, with funding expected from cash generated from operations and raising additional funds from private sources and/or debt financing. However, there is no assurance that sufficient cash flow will be generated or additional financing will be obtained.

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 plans to raise capital to implement the company's strategy.
• Management believes that the company's officers and directors will contribute funds to pay for some of the company's expenses if needed.

Industry Context

This announcement reflects the challenges faced by early-stage companies in securing funding and achieving profitability, particularly in sectors with high development costs and uncertain market adoption. The company's reliance on stock issuance for services and the need for additional capital are common themes among similar companies.

Comparison to Industry Standards

• The company's lack of revenue and significant net losses are not uncommon for early-stage companies, especially those in the development phase.
• The reliance on stock issuance for services is a common practice for companies with limited cash resources, but it can dilute existing shareholders.
• The going concern issue is a significant concern and is often seen in companies that have not yet achieved profitability or secured sufficient funding.
• The material weakness in internal controls is a serious issue that needs to be addressed to ensure the reliability of financial reporting.

Related Party Transactions

• The company has a loan from Bruce Miller, a personal acquaintance of the CEO.
• The company had 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 issue.
• Employees may be impacted by the company's financial difficulties and potential restructuring.
• Creditors face the risk of non-payment due to the company's financial challenges.

Next Steps

• The company plans to raise capital to implement its strategy.
• 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, working capital, internal controls, disclosure controls, accumulated deficit, stock issuance