10-Q: Limitless X Holdings Reports Soaring Losses, Going Concern Doubt

Limitless X Holdings Inc. reported a net loss of $42.3 million for the nine months ended September 30, 2025, alongside significant revenue declines and a material weakness in internal controls, raising substantial doubt about its ability to continue as a going concern.

Summary

• Net revenue for the nine months ended September 30, 2025, decreased by 73.5% to $802,396, down from $3,024,112 in the prior year period.
• The company experienced a substantial net loss of $42,290,005 for the nine months ended September 30, 2025, a significant increase from a $2,451,987 net loss in the same period of 2024.
• Operating expenses surged by 60.8% to $6,789,955, primarily driven by $3.8 million in stock compensation expense.
• A massive loss of $35,458,137 was recorded on debt settlement, mainly due to the conversion of loans from the CEO and principal shareholder into common stock and preferred shares.
• The company's accumulated deficit reached approximately $81.1 million as of September 30, 2025.
• Holders of Series D Preferred Stock, including the CEO and related entities, irrevocably waived $539,444 in accrued and unpaid dividends through September 30, 2025.
• Limitless Performance Inc. (LPI), an entity wholly-owned by the CEO, waived $260,602 in royalties due through September 30, 2025, and confirmed a waiver of all royalties under the LPI License Agreement until December 31, 2027.
• The company reclassified $32,306,900 from mezzanine liability to equity for Class C Convertible Preferred Stock due to a change in terms, resulting in a deemed dividend of $26,931,904 as a related party transaction.
• Notes payable to the shareholder decreased from $5,144,460 to $0, as the debt was converted into preferred C and D shares.
• Notes payable to related parties decreased from $436,747 to $188,523, with a portion converted to preferred C shares.

Sentiment

Score: 1

Explanation: The company's financial performance is extremely poor, marked by a massive net loss, significant revenue decline, and substantial doubt about its ability to continue as a going concern. While some debt was converted or waived, the underlying operational issues and internal control weaknesses present severe challenges.

Positives

• The company successfully negotiated waivers for $539,444 in accrued Series D Preferred Stock dividends from its CEO and related entities, reducing future payment obligations.
• A royalty payment of $260,602 was waived by Limitless Performance Inc. (a related party), and future royalties are waived until December 31, 2027, providing cost relief.
• Significant related party debt, including $5,144,460 in notes payable to the shareholder and a portion of $436,747 in notes payable to related parties, was converted into preferred stock, reducing current liabilities.
• The reclassification of $32,306,900 of Class C Convertible Preferred Stock from mezzanine liability to equity improved the balance sheet structure, albeit with a deemed dividend impact.

Negatives

• Net revenue plummeted by 73.5% for the nine months ended September 30, 2025, indicating a severe decline in sales performance.
• The company reported a staggering net loss of $42,290,005 for the nine months ended September 30, 2025, a 1624.7% increase from the prior year, highlighting significant operational and financial challenges.
• Operating expenses increased by 60.8% to $6,789,955, largely due to $3.8 million in stock compensation expense, indicating rising costs relative to declining revenue.
• A substantial loss of $35,458,137 was incurred on debt settlement, reflecting the high cost of converting debt to equity.
• The accumulated deficit grew to $81.1 million, raising serious concerns about the company's long-term financial viability.
• The company's cash position slightly decreased from $53,549 to $51,652, indicating limited liquidity.

Risks

• The company's accumulated deficit of $81.1 million and net loss of $42.3 million for the nine months ended September 30, 2025, raise substantial doubt about its ability to continue as a going concern.
• There is no assurance that the company can obtain additional debt financing, which is anticipated to fund future operations.
• The company has a material weakness in internal control over financial reporting due to insufficient personnel in accounting and financial reporting, leading to inadequate segregation of duties and independent review, which could result in material financial misstatements.
• The company faces concentration of credit risk with accounts receivable and other receivables, although it monitors customer credit standing.
• The company has a high concentration of supplier risk, with its single largest supplier accounting for 99% of total purchases for the three and nine months ended September 30, 2025 and 2024, respectively.

Future Outlook

The company anticipates needing to raise additional capital to fund future operations, though no current agreements or understandings exist regarding the form, time, or amount of such financing. Management believes that hiring additional personnel for accounting and financial reporting will improve internal controls and address identified material weaknesses.

Management Comments

• "To support our existing and planned business model, the Company needs to raise additional capital to fund our future operations."
• "The Company has not experienced any difficulty in raising funds through loans and has not experienced any liquidity problems in settling payables in the normal course of business and repaying loans when they fall due."
• "Management believes that the hiring of additional personnel who have the technical expertise and knowledge with the non-routine or technical issues we have encountered in the past will result in both proper recording of these transactions and a much more knowledgeable finance department as a whole."
• "Additional personnel will also ensure the proper segregation of duties and provide more checks and balances within the department."
• "We will continue to monitor and evaluate the effectiveness of our disclosure controls and procedures and our internal controls over financial reporting on an ongoing basis and are committed to taking further action and implementing additional enhancements or improvements, as necessary and as funds allow."

Industry Context

Limitless X Holdings Inc. operates in the health and wellness industry, focusing on performance marketing, digital services, and direct-to-consumer e-commerce for products like nutritional supplements. The reported decline in product sales and shift in marketing strategies suggest challenges within the competitive digital marketing and e-commerce landscape, potentially impacted by evolving platform algorithms or increased competition for customer acquisition.

Management Changes

Corporate Governance

Legal Proceedings

• No material legal actions or claims were reported that would have a material effect on the company's financial condition or results of operations.

Related Party Transactions

• The CEO, Jaspreet Mathur, is the founder and principal shareholder of LimitlessX and also owns at least 50% of Limitless Performance Inc. (LPI), SMILZ INC., DIVATRIM INC., and AMAROSE INC. (Licensors).
• Jaspreet Mathur purchased 500,000 shares of Bio Lab's Class A Preferred Convertible Stock, which carries 60% of all voting power.
• The company had various notes payable to its CEO, Jaspreet Mathur, totaling $5,144,460 as of December 31, 2024, which were converted to preferred C and D shares during the nine months ended September 30, 2025.
• The company had notes payable to other related parties (companies owned by the CEO) totaling $436,747 as of December 31, 2024, with $188,523 outstanding as of September 30, 2025, after some conversions to preferred C shares.
• The CEO and related entities (Emblaze One, Inc. and EM1 Capital, LLC, both wholly owned by the CEO) waived $539,444 in accrued and unpaid dividends on Series D Preferred Stock through September 30, 2025.
• Limitless Performance Inc. (LPI), owned by the CEO, waived $260,602 in royalties due through September 30, 2025, and confirmed a waiver of all royalties under the LPI License Agreement until December 31, 2027.
• A deemed dividend of $26,931,904 was recorded due to the reclassification of Class C Convertible Preferred Stock from mezzanine liability to equity, as this was a related party transaction.

Stakeholder Impact

• **Shareholders**: Common shareholders face significant dilution from the issuance of new preferred and common shares for debt conversion and compensation. The substantial net loss and going concern doubt negatively impact shareholder value. Preferred shareholders (especially Class C and D) have seen their debt converted to equity, and Series D holders waived dividends, indicating a restructuring of obligations.
• **Employees**: Accrued salaries of $1,266,670 were converted into common shares, potentially impacting employee liquidity but also aligning their interests with the company's equity performance. Stock options and restricted stock grants were issued as compensation.
• **Creditors**: Related party creditors (including the CEO) converted significant debt into preferred equity, reducing the company's immediate debt burden but shifting their claim to a different class of security. Other creditors may face increased risk due to the company's going concern issues.
• **Suppliers**: The company's reliance on a single largest supplier for 99% of purchases creates a concentration risk for both the company and the supplier, potentially impacting supply chain stability.

Next Steps

• The company plans to hire additional personnel for its accounting and financial reporting functions to address material weaknesses in internal controls.
• The company anticipates needing to raise additional capital to fund future operations, though specific plans are not yet disclosed.
• The royalty waiver from Limitless Performance Inc. is in effect until December 31, 2027, after which royalty payments will resume.

Key Dates

Recommendation

The company's financial health is in severe distress, evidenced by a massive net loss of $42.3 million, a 73.5% decline in revenue, and an accumulated deficit of $81.1 million. The explicit 'going concern' warning, coupled with a material weakness in internal controls, signals profound operational and financial instability. While debt conversions and waivers provide some short-term relief, they come at a high cost (e.g., $35.5 million loss on debt settlement) and indicate a desperate attempt to manage liabilities rather than a return to profitability. The high reliance on related party transactions for financing and debt relief raises corporate governance concerns. Given the severe losses, declining sales, and fundamental solvency issues, the stock presents an extremely high risk with little to no clear path to recovery in the near to medium term. Investors should consider a strong sell to mitigate further losses.

Keywords

Limitless X Holdings Inc., LIMX, SEC 10-Q, Quarterly Report, Financial Results, Net Loss, Revenue Decline, Going Concern, Debt Settlement, Preferred Stock Conversion, Dividend Waiver, Royalty Waiver, Internal Controls, Stock Compensation, Related Party Transactions, Health and Wellness, Digital Marketing, E-commerce