10-Q: Hammer Tech Narrows Loss, Faces Going Concern Doubt

Hammer Technology Holdings Corp. reported a reduced net loss for Q1 2026, driven by lower operating expenses, but continues to face substantial doubt about its ability to continue as a going concern due to lack of revenue and working capital deficiency.

Summary

• Net loss from continuing operations significantly decreased to $148,875 for the three months ended October 31, 2025, from $412,675 in the prior year.
• Total operating expenses decreased by 54% to $165,107, primarily due to a substantial reduction in depreciation and amortization expense following the full impairment of a customer contract asset in July 2025.
• The company generated no revenue from continuing operations for the three months ended October 31, 2025, as its HammerPay mobile payments platform has not yet launched.
• Cash and cash equivalents increased to $40,828 as of October 31, 2025, from $18,054 at July 31, 2025.
• Working capital deficiency improved by $154,001, from $(858,359) at July 31, 2025, to $(704,358) at October 31, 2025.
• Several related party convertible notes totaling $61,800 were forgiven on August 9, 2025, recorded as a capital contribution.
• The company continues to operate under substantial doubt about its ability to continue as a going concern, citing consistent losses, no revenue, and a significant working capital deficiency.
• Disclosure controls and procedures were deemed ineffective as of October 31, 2025, due to staffing limitations.

Sentiment

Score: 2

Explanation: The company faces severe financial challenges, including a going concern warning, no revenue from its primary business, and ineffective internal controls. While the net loss decreased and working capital improved, these are overshadowed by fundamental operational and solvency issues.

Positives

• Net loss from continuing operations decreased by 64% to $148,875 for the three months ended October 31, 2025, compared to $412,675 in the prior year.
• Total operating expenses decreased by 54% ($190,479) to $165,107, primarily due to lower depreciation and amortization.
• Cash and cash equivalents increased by $22,774 to $40,828 as of October 31, 2025.
• Working capital deficiency improved by $154,001, reducing from $(858,359) to $(704,358).
• Related party debt forgiveness totaling $61,800 was recorded as a capital contribution, reducing liabilities.
• The company recorded a gain of $18,600 on the change in fair value of warrant liability, compared to a loss of $56,937 in the prior year.

Negatives

• No revenue was generated from continuing operations for the three months ended October 31, 2025, or 2024, as the mobile payments platform has not yet launched.
• The company incurred a net loss from continuing operations of $148,875 for the quarter.
• A significant working capital deficiency of $704,358 persists as of October 31, 2025.
• Interest expense increased significantly by 1,458% to $2,368 for the quarter.
• The promissory note of $24,253 was past due and in default as of October 31, 2025.
• The company has consistently sustained losses since its inception.

Risks

• Substantial doubt exists about the company's ability to continue as a going concern due to consistent net losses, cash used in operating activities ($187,226 for the quarter), $0 revenue from continuing operations, and a working capital deficiency of $704,358.
• Management's plans are not expected to alleviate the substantial doubt about the company's ability to continue as a going concern.
• The company's continuation as a going concern is dependent on increasing revenues, controlling operating expenses, and raising financing from third parties, with no assurance of success.
• Disclosure controls and procedures were deemed ineffective as of October 31, 2025, due to inherent staffing limitations to properly segregate duties and provide adequate monitoring.
• The company relies on equity sales of common shares for funding, and additional issuances may dilute existing stockholders.
• There is no assurance that additional funding will be available on favorable terms or at all.
• Potential trust fund recovery penalty (TFRP) taxes of $26,000 may be assessed against former directors or officers, who may seek indemnification from the company.
• The promissory note of $24,253 is past due and in default.

Future Outlook

The company plans to generate positive cash flow from the expansion of its fintech initiatives, such as its mobile payments platform. It will continue to rely on equity sales of common shares to fund business operations and may also seek additional funds through public or private equity or debt financings, a bank line of credit, borrowings from affiliates, or other arrangements.

Management Comments

• Management's plans are not expected to alleviate the substantial doubt about the Company's ability to continue as a going concern.
• We plan to generate positive cash flow from the expansion of our fintech initiatives, such as our mobile payments platform.
• We will continue to rely on equity sales of our common shares in order to continue to fund business operations.
• Our Principal Executive Officer and Principal Financial Officer concluded that, as of October 31, 2025, the disclosure controls and procedures of our Company were not effective.

Industry Context

Hammer Technology Holdings Corp. is pivoting its focus entirely to financial services technology, specifically mobile payments via its HammerPay platform, after divesting its telecommunications assets. This move aligns with the broader industry trend of digital transformation and the increasing demand for fintech solutions, particularly in developing markets for remittances and banking transactions. However, the company's current lack of revenue from this segment and significant financial challenges indicate it is in the very early stages of establishing its presence in this competitive sector.

Management Changes

Corporate Governance

Legal Proceedings

• The company is not currently involved in any litigation believed to have a material adverse effect on its financial condition or results of operations.
• An accrued liability of $26,000 exists for potential trust fund recovery penalty (TFRP) taxes which may be assessed against former directors or officers, who may seek indemnification from the company.

Related Party Transactions

• Convertible notes from Andrea Levitt ($7,500), Andera Capital, LLC ($12,000), Somerset Health Care Advisors ($6,000), and Erik Levitt ($36,300) were forgiven on August 9, 2025, resulting in a $61,800 capital contribution.
• The company has an open loan facility (May 2025 Convertible Note) with Caban Global Reach Private Equity LP (CGRPE), where Michael Sevell and Michael Cothill (Directors of the company) are also Directors. The outstanding balance increased from $85,946 to $295,946 during the quarter.
• The company received $55,000 in proceeds from the May 2025 Convertible Note between November 1, 2025, and November 19, 2025.

Stakeholder Impact

• Shareholders: Potential for significant dilution if additional equity financing is pursued. The going concern warning and lack of revenue pose substantial risks to investment value.
• Creditors: The company's working capital deficiency and default on a promissory note indicate elevated credit risk.
• Management/Employees: Ineffective internal controls due to staffing limitations could lead to increased workload or scrutiny. Former directors/officers face potential TFRP taxes.
• Customers: The delayed launch of the HammerPay platform means customers cannot yet utilize the service.

Next Steps

• Increase revenues from fintech initiatives.
• Adequately control operating expenses.
• Raise additional financing from third parties through debt and equity.
• Expand fintech initiatives, such as the mobile payments platform.
• Address and improve disclosure controls and procedures.

Key Dates

Recommendation

The company faces severe fundamental challenges, including a 'going concern' warning, zero revenue from its continuing operations, and a significant working capital deficiency. The explicit statement that management's plans are not expected to alleviate the going concern doubt, coupled with ineffective disclosure controls, indicates a high level of operational and financial risk. While the net loss decreased, this is primarily due to accounting adjustments (asset impairment) rather than improved operational performance. The reliance on related-party debt and future dilutive equity raises in the absence of revenue generation makes the stock a high-risk, speculative investment with significant downside potential.

Keywords

Fintech, Mobile Payments, HammerPay, SEC Filing, 10-Q, Financial Technology, Going Concern, Working Capital, Net Loss, Operating Expenses, Convertible Notes, Related Party Transactions, Hammer Technology Holdings Corp., HMMR