10-Q: Innovative MedTech Reports Q3 2025 Results, Highlights Going Concern Uncertainty and Ticketbash Acquisition

Innovative MedTech's Q3 2025 filing reveals a net loss, going concern uncertainty, and details of the Ticketbash asset acquisition.

Summary

• Innovative MedTech, Inc. reported financial results for the quarter ended March 31, 2025.
• The company is a provider of health and wellness services with two divisions: technology and devices, and Adult Day Services.
• A distribution agreement with Near Infrared Imaging, Inc. for Vein-Eye Carry was terminated on December 15, 2024.
• The company entered into an Exclusive License Agreement with Shear Kershman Labs for Oral Thrush.
• Texas A&M University College of Dentistry and SKL signed a Memorandum of Understanding to collaborate on oral care initiatives.
• The company is planning to sell its wholly-owned subsidiaries Sarah Adult Day Services, Inc., and Sarah Day Care Centers, Inc., categorizing them as discontinued operations.
• The company reported a net loss of $2,096,614 for the nine months ended March 31, 2025, and $1,150,643 for the same period in 2024.
• As of March 31, 2025, the company had total assets of $1,063,216, total liabilities of $5,955,434, and an accumulated deficit of $46,657,824.
• Management believes that cash on hand as of March 31, 2025 is not sufficient to fund operations through June 30, 2025.
• The company will be required to raise additional funds to meet its short and long-term planned goals.
• There is substantial doubt about the company's ability to continue as a going concern.
• On April 25, 2025, the company entered into an Asset Purchase Agreement to acquire assets of Ticketbash, a ticket pricing and software development company.
• The consideration includes the issuance of 20,000,000 shares of common stock and 1,151,500 shares of Series A Convertible Preferred Stock, future payments of $2,000,000, and percentage royalties.
• The company's disclosure controls and procedures were not effective as of March 31, 2025.
• The company identified a material weakness in internal control over financial reporting due to a lack of segregation of duties.

Sentiment

Score: 3

Explanation: The document presents a concerning financial situation with a net loss, going concern uncertainty, and ineffective internal controls. While there are some positive developments, the overall sentiment is negative.

Positives

• The company entered into an Exclusive License Agreement with Shear Kershman Labs for Oral Thrush, potentially expanding its product offerings.
• Texas A&M University College of Dentistry and SKL signed a Memorandum of Understanding to collaborate on oral care initiatives, which could lead to further developments.
• The company is actively planning to sell its wholly-owned subsidiaries Sarah Adult Day Services, Inc., and Sarah Day Care Centers, Inc., which could free up capital.
• The company acquired assets of Ticketbash, a ticket pricing and software development company, potentially diversifying its business.

Negatives

• The company reported a net loss of $2,096,614 for the nine months ended March 31, 2025.
• The company's cash on hand as of March 31, 2025, was $351, raising substantial doubt about its ability to continue as a going concern.
• The company's disclosure controls and procedures were deemed ineffective as of March 31, 2025.
• A material weakness in internal control over financial reporting was identified due to a lack of segregation of duties.
• The company is currently in default under its payment obligations in connection with the acquisition of SarahCare.
• The company is in default under the majority of its outstanding legacy convertible notes.
• The company's accumulated deficit as of March 31, 2025, was $46,657,824.

Risks

• The company's limited capital resources and history of net losses and negative cash flows raise substantial doubt about its ability to continue as a going concern.
• The company's ability to generate cash flows and maintain liquidity sufficient to service its debt is uncertain.
• The company's disclosure controls and procedures were deemed ineffective, and a material weakness in internal control over financial reporting was identified.
• The company is involved in legal proceedings, including a complaint related to unpaid royalties and potential lawsuits from convertible noteholders.
• The company is currently in default under its payment obligations in connection with the acquisition of SarahCare.
• The company is currently in default under the majority of its outstanding legacy convertible notes.
• The company's ability to obtain financing at the level needed or on terms acceptable to the company is uncertain.

Future Outlook

The company believes that additional capital will be required to fund operations through June 30, 2025 and beyond, as it attempts to generate increasing revenue and develop new products, and intends to attempt to raise capital through additional equity offerings and debt obligations.

Management Comments

• Management believes that cash on hand as of March 31, 2025 is not sufficient to fund operations through June 30, 2025.
• Management has concluded that our internal control over financial reporting had the following deficiency: We were unable to maintain any segregation of duties within our business operations due to our reliance on a single individual fulfilling the role of sole officer.

Industry Context

The company operates in the health and wellness services industry, with a focus on technology and devices, and adult day services. The acquisition of Ticketbash suggests a diversification into the event ticketing and software development space. The company's focus on wound care and collaboration with Texas A&M University College of Dentistry indicate a commitment to innovation in healthcare.

Comparison to Industry Standards

• It is difficult to compare Innovative MedTech's results to industry standards without more specific information on its competitors and their financial performance.
• However, the company's negative cash flow and accumulated deficit are concerning and suggest that it is underperforming compared to industry benchmarks.
• The company's focus on wound care and collaboration with Texas A&M University College of Dentistry could provide a competitive advantage in the long term.
• The acquisition of Ticketbash could diversify the company's revenue streams and reduce its reliance on the healthcare industry.

Legal Proceedings

• Sarah Adult Day Services, Inc. was named as a defendant in a complaint filed in the Summit County Court of Common Please, Summit County Courthouse in Akron, OH (case no.: CV-2024-10-4369), by Premier Wadsworth Property, LLC (the Plaintiff), who is the owner and landlord for the Stow Professional Center.
• The Company was notified that a complaint had been filed against it in the United States District Court for the Northern District of Ohio, Eastern Division (case no. 5:24-cv-00687), by Merle Griff, Adam Griff and Brian Froelich (the Plaintiffs), who are the original shareholders of SarahCare, which is wholly owned by the Company, alleging breach of breach of contract and related causes of action in connection with unpaid royalties pursuant to the Companys original purchase agreement in connection with SarahCare.
• The matter was resolved and dismissed by the courts for improper jurisdiction.
• Additionally, we currently have thirteen (13) convertible promissory notes that are in default, and we may be subject to legal proceedings or lawsuits from any number of those convertible noteholders, including the below.
• On April 7, 2013, three note holders (Brook Hazelton, Benjamin M. Manalaysay, Jr., and Diego McDonald, the Plaintiffs), whom together invested a total principal amount of $45,000 in the form of Convertible Promissory Notes (the Notes) to the Company, together filed a Notice of Commencement of Action Subject to Mandatory Electronic Filing in the Supreme Count of the State of New York, County of New York.
• On or about February 24, 2014, the three Plaintiffs received judgment against the Company from the court in the amounts of $33,686, $8,546 and $33,696 respectively.

Related Party Transactions

• The Company maintains its corporate address in at 2310 York Street, Suite 200, Blue Island, IL, 60406, which is provided by the Companys Chairman, Charles Everhardt, a related party, on a rent free basis at the present time.
• On February 1, 2025, the Company, entered into a lease (the Lease Agreement or the Lease) for Suite 690, consisting of 9,500 square feet within the premises located at 11680 Great Oaks Way, Alpharetta, GA. The Companys landlord for this location is Georgia Commercial Holdings, LLC, a limited liability company which our Chairman, Charles Everhardt is a Managing Member.
• As of June 30, 2024, a company founded and partially owned by the Companys Chairman, Charles Everhardt, has been assigned the $3,750,000 in payables to a Company owned by Charles Everhardt for the Vitality Card, this amount included $750,000 which was included in accounts payable and accrued expenses as of March 31, 2025.

Stakeholder Impact

• Shareholders face significant risk due to the company's financial instability and potential inability to continue as a going concern.
• Employees may be affected by potential layoffs or restructuring if the company is unable to secure additional funding.
• Customers of SarahCare may experience disruptions in service if the subsidiaries are sold.
• Suppliers and creditors face increased risk of non-payment due to the company's financial difficulties.

Next Steps

• The company intends to attempt to raise capital through additional equity offerings and debt obligations.
• The company is planning to sell its wholly-owned subsidiaries Sarah Adult Day Services, Inc., and Sarah Day Care Centers, Inc.
• The company is negotiating an amendment to the Asset Acquisition Agreement to provide for the payoff of the lender at closing.

Key Dates

Keywords

Innovative MedTech, financial results, going concern, Ticketbash, acquisition, SarahCare, discontinued operations, net loss, convertible notes, internal control, disclosure controls, Oral Thrush, Vein-Eye Carry