10-Q: KINDCARD Reports Wider Q3 Loss, Faces Going Concern Doubt

Kindcard, Inc. reported a significantly wider net loss for the three and nine months ended October 31, 2025, driven by declining revenues and increased operating expenses, raising substantial doubt about its ability to continue as a going concern.

Summary

• Net loss for the three months ended October 31, 2025, was $44,881, a significant increase from $7,588 in the prior year period.
• Net loss for the nine months ended October 31, 2025, was $278,425, up from $181,175 in the prior year period.
• Total revenue decreased to $97,711 for the three months ended October 31, 2025, from $139,366 in the same period last year.
• Total revenue for the nine months ended October 31, 2025, decreased to $274,232 from $306,159 in the prior year period.
• The company has a working capital deficit of $1,050,289 and an accumulated deficit of $1,700,559 as of October 31, 2025.
• Management has identified substantial doubt about the company's ability to continue as a going concern, citing the need for additional funding.
• Disclosure controls and procedures were deemed not effective as of October 31, 2025, due to material weaknesses in internal controls over financial reporting.
• Cash Pickup Commission Revenue saw a significant decline from $25,574 in the nine months ended October 31, 2024, to $1,155 in the same period of 2025.
• The company issued 5,160,799 shares of common stock to a consultant for services on June 18, 2025.

Sentiment

Score: 2

Explanation: The company faces severe financial distress, evidenced by substantial net losses, declining revenues, a significant working capital deficit, and an explicit "going concern" warning. While there's a slight improvement in cash used in operations and a new revenue stream, these are overshadowed by overall deteriorating financial health, increasing liabilities, and ineffective internal controls. The reliance on related-party financing and the need for further capital raises highlight significant operational and financial challenges.

Positives

• Net cash used in operating activities decreased to $47,730 for the nine months ended October 31, 2025, from $92,224 in the prior year period, indicating improved operational cash burn.
• The company introduced a new revenue stream, Deb Commission Revenue, generating $6,250 for the nine months ended October 31, 2025.
• Total Due to related parties decreased to $318,900 as of October 31, 2025, from $396,875 as of January 31, 2025.
• An advisory agreement for the compliance and state licensing program was terminated, and the advisor waived $40,000 in outstanding advisory fees.
• The SBA loan accommodation plan has been extended through February 15, 2026, with reduced installment payments of $366.

Negatives

• Significant increase in net loss for both the three-month ($44,881 vs $7,588) and nine-month ($278,425 vs $181,175) periods ended October 31, 2025, compared to the prior year.
• Overall revenue decline for both the three-month ($97,711 vs $139,366) and nine-month ($274,232 vs $306,159) periods ended October 31, 2025.
• Gross profit decreased for both periods, indicating reduced profitability from core operations.
• Working capital deficit of $1,050,289 and an accumulated deficit of $1,700,559 as of October 31, 2025.
• Total assets significantly decreased from $86,018 at January 31, 2025, to $47,046 at October 31, 2025.
• Total liabilities increased from $1,132,511 at January 31, 2025, to $1,242,944 at October 31, 2025.
• Cash Pickup Commission Revenue experienced a substantial drop from $25,574 to $1,155 for the nine months ended October 31, 2025.
• Notes payable increased significantly to $347,960 at October 31, 2025, from $221,646 at January 31, 2025.

Risks

• Substantial doubt about the company's ability to continue as a going concern due to accumulated operating losses of $1,700,559, a working capital deficit of $1,050,289, and the need for additional funding.
• Reliance on private placements and advances from related parties for future funding, which may not be sufficient or available on favorable terms.
• Disclosure controls and procedures were not effective as of October 31, 2025, due to material weaknesses in internal controls over financial reporting, posing risks to financial reporting accuracy and investor confidence.
• Ongoing negotiation of a settlement arrangement with the sellers of Tendercard Assets due to their material breach in failing to deliver certain assets, which could result in further costs or operational disruptions.
• The company's plans, strategies, objectives, expectations, and intentions are subject to change at any time at management's discretion, introducing uncertainty.
• The company's plans and results of operations will be affected by its ability to manage growth, which is challenging given current financial constraints.
• The DEB Platform is still in the initial stages of production and testing, indicating potential delays or challenges in its full deployment and revenue generation.

Future Outlook

The company believes mobile wallet technology will ultimately grow to become the preferred method for merchants and consumers to transact, and aims to capture significant market share through its proprietary consumer app and merchant services platform, Pay with Deb. It is dedicated to providing universal access to digital payment tools and aims to grow its user base and merchant network exponentially over the next two years. However, the company explicitly states that its ability to continue as a going concern is dependent on raising additional capital and ultimately attaining profitable operations.

Management Comments

• "The Company believes that mobile wallet technology will ultimately grow to become the preferred method for merchants and consumers to transact at the point of sale, and it is our goal to capture significant market share from the mobile wallet segment through our proprietary consumer app and merchant services platform, Pay with Deb."
• "The Company is dedicated to providing universal access to digital payment tools for all entities, persons, and governments, who accept or pay with money."
• "Combined with excellent customer service, the Company aims to grow its user base and merchant network exponentially over the next two years."
• "We anticipate that until we generate more revenue, we will require additional financing in order to fully implement our plan of operations."

Industry Context

Kindcard operates in the competitive FinTech and PayTech sectors, focusing on closed-loop payment solutions and mobile wallet technology. The company's strategy aligns with the broader industry trend towards digital and mobile payments. Its Tendercard platform for gift and loyalty programs and the developing Deb Platform for payment processing position it within the growing market for alternative payment solutions. However, its current financial performance, particularly the declining revenues and significant losses, suggests it is struggling to gain traction or compete effectively within this dynamic and capital-intensive industry. The stated goal to capture significant market share and grow exponentially over the next two years is ambitious given its current financial state and "going concern" warning.

Comparison to Industry Standards

• NA. The filing does not provide specific comparisons to industry benchmarks, competitors, or global standards. It focuses solely on the company's internal financial performance.

Corporate Governance

Legal Proceedings

• Not currently involved in any pending litigation or legal proceedings.
• A settlement arrangement is currently being negotiated between the Company and sellers of Tendercard Assets in connection with their material breach of the Purchase Agreement (failure to deliver certain assets).

Related Party Transactions

• RMR Management Group LLC, a company owned and controlled by CEO Michael Rosen, is a significant lender to Kindcard.
• A 1% Convertible Promissory Note of $296,498 was issued to RMR, convertible into common stock at $0.01 per share.
• Promissory Notes totaling $24,669 and $37,505 were issued to RMR, with maturity dates extended to December 31, 2025.
• An additional $19,398 was loaned by RMR during the period ended October 31, 2025, which now has a NIL balance after payments.
• An executive of the company provided a non-interest bearing revolving credit account for working capital purposes.
• Total Due to related parties was $318,900 as of October 31, 2025.

Stakeholder Impact

• Shareholders face significant dilution risk from potential future capital raises (e.g., private placements, conversion of related party notes at $0.01/share) and the "going concern" warning indicates a high risk of value erosion or potential business failure. The stock price is likely to be negatively impacted by the poor financial results and control weaknesses.
• Creditors face increased risk due to the company's deteriorating financial condition, rising liabilities, and "going concern" doubt. The unsecured nature of many notes payable further elevates this risk.
• Employees may experience job insecurity if the company fails to secure additional funding or achieve profitability.
• Customers/Partners may experience service disruptions or lack of confidence in the long-term viability of the company's platforms (Tendercard, Deb Platform) if financial issues persist.

Next Steps

• Raise additional capital through private placements and advances from related parties to fund business plans and attain profitable operations.
• Continue development, production, and testing of the proprietary payment processing DEB Platform.
• Negotiate a settlement arrangement with the sellers of Tendercard Assets regarding the material breach of the Purchase Agreement.
• Address material weaknesses in internal controls over financial reporting to improve disclosure controls and procedures.

Key Dates

Recommendation

The company is in a precarious financial position, marked by substantial and increasing net losses, declining revenues, a significant working capital deficit, and an explicit "going concern" warning. The disclosure of material weaknesses in internal controls over financial reporting further erodes confidence. While there's a slight reduction in cash used in operations, the overall trend is negative, with increasing liabilities and heavy reliance on related-party financing. The potential for significant dilution from future capital raises and the ongoing operational challenges in a competitive industry make this a high-risk investment with a strong likelihood of further value destruction.

Keywords

FinTech, PayTech, mobile wallet, gift card platform, loyalty program, SEC filing, 10-Q, KCRD, Kindcard, Tendercard, Deb Platform, financial results, net loss, revenue decline, going concern, related party transactions, internal controls, working capital deficit