10-Q: SecureTech Innovations Swings to Profit on AI UltraProd Acquisition

SecureTech Innovations reports significant revenue and profit growth for Q3 2025, driven by its AI UltraProd acquisition, despite ongoing internal control weaknesses and going concern doubts.

Summary

• SecureTech Innovations, Inc. (SCTH) reported a net profit attributable to shareholders of $302,746 for the nine months ended September 30, 2025, a significant improvement from a net loss of $(258,892) in the prior year period.
• Sales for the nine months ended September 30, 2025, surged to $3,736,527, up from $14,235 in the same period of 2024, primarily due to the acquisition of AI UltraProd.
• Gross profit for the nine-month period was $1,005,449, with a gross profit margin of 26.9%.
• The company's cash and equivalents increased to $394,370 as of September 30, 2025, from no cash balances at December 31, 2024.
• Total stockholders' equity improved to $10,960,803 as of September 30, 2025, from a deficit of $(440,042) at year-end 2024.
• Goodwill of $8,450,439 was recognized from the acquisition of AI UltraProd.
• The company completed Phase 1 of a share reduction program, canceling 43,100,000 common shares, reducing outstanding shares by approximately 55%.
• SecureTech uplisted its common stock to the OTCQB Venture Market under the ticker symbol SCTH on August 1, 2025.

Sentiment

Score: 6

Explanation: The company shows strong operational improvement and strategic momentum driven by the AI UltraProd acquisition, resulting in a swing to profitability and significant revenue growth. However, substantial concerns remain regarding the 'going concern' warning, material weaknesses in internal controls, and the need for significant future capital raises, which temper overall sentiment.

Positives

• Achieved a significant turnaround from an operating loss to an operating profit of $394,388 for the nine months ended September 30, 2025, compared to a loss of $(255,054) in the prior year.
• Reported a net profit attributable to SecureTech shareholders of $302,746 for the nine months ended September 30, 2025, reversing a net loss of $(258,892) in the same period of 2024.
• Experienced a substantial increase in sales to $3,736,527 for the nine months ended September 30, 2025, primarily driven by the AI UltraProd acquisition.
• Cash and equivalents increased to $394,370 as of September 30, 2025, from $0 at December 31, 2024.
• Total stockholders' equity improved significantly to $10,960,803 as of September 30, 2025, from a deficit of $(440,042) at December 31, 2024.
• Successfully completed the acquisition of AI UltraProd, which specializes in AI-powered industrial 3D manufacturing technologies and holds 24 issued patents.
• Completed Phase 1 of a strategic share reduction initiative, canceling 43,100,000 common shares, reducing the number of issued and outstanding shares by approximately 55%.
• Uplisted to the OTCQB Venture Market on August 1, 2025, enhancing transparency and visibility.
• Engaged Craft Capital Management, LLC as an exclusive investment banking partner to support capital formation and uplisting to a national exchange.

Negatives

• The company's ability to continue as a going concern is dependent on successfully executing its growth strategy, maintaining profitability, and securing additional financing, raising substantial doubt about its ability to continue within one year.
• Current liabilities of $4,288,523 exceed cash on hand of $394,370 as of September 30, 2025.
• Identified material weaknesses in internal control over financial reporting, including the absence of an Audit Committee and an independent Board of Directors.
• Diluted weighted average common shares outstanding significantly increased to 221,422,582 for the nine months ended September 30, 2025, from 78,170,883 in the prior year, indicating potential future dilution.
• Issued a convertible promissory note with a variable conversion feature at a significant discount to market price, which is accounted for as an embedded derivative liability of $84,326.

Risks

• Ability to execute growth strategies.
• Supply chain disruptions and general price inflation.
• Ability to maintain favorable relationships with suppliers and manufacturers.
• Competition from more established and better-financed competitors.
• Ability to attract and retain competent and qualified personnel.
• Regulatory changes and developments affecting the business.
• Ability to obtain additional capital to finance operations.
• Managing a just-right product inventory size and mix.
• Impacts on the business from epidemics, pandemics, or natural disasters.
• Ability to remediate the material weakness in internal control over financial reporting or additional material weaknesses or other deficiencies in the future.
• Ability to maintain effective disclosure controls and procedures and internal control over financial reporting.
• The company's ability to continue as a going concern is dependent upon successfully executing its growth strategy, maintaining profitability, and securing additional financing.

Future Outlook

SecureTech Innovations is repositioning its strategic focus for accelerated growth, operational efficiency, and long-term shareholder value. The company plans to strengthen its capital structure through bridge financing, intermediate funding, and long-term capital solutions. It intends to pursue aggressive M&A opportunities, further reduce common shares to under 20 million by the end of fiscal year 2025, and prepare for an uplisting to the NASDAQ Capital Market or NYSE. Additionally, SecureTech plans to spin off its Top Kontrol product line into a separately traded entity on the OTCQB Venture Market, with loyal shareholders receiving a special dividend. Management projects AI UltraProd's FY2025 revenue to be approximately US$10 million.

Management Comments

• Management believes the share reduction is a material enhancement to SecureTech's capital structure and shareholder value.
• Management believes that existing cash resources, together with anticipated operating cash flows, will be sufficient to meet near-term obligations.
• Management anticipates the need for bridge financing, longer-term debt facilities, and/or equity issuances to support operations, planned uplisting to a national exchange, and the spinoff of Top Kontrol.
• Management is actively pursuing financing arrangements and implementing cost controls to mitigate going concern uncertainties.
• Management believes that addressing the identified material weaknesses requires the addition of at least three independent directors with appropriate professional business and accounting experience, a solid understanding of U.S. GAAP, and familiarity with securities regulatory compliance and financial reporting requirements.

Industry Context

SecureTech Innovations is strategically expanding its presence in high-growth technology sectors, particularly AI-powered industrial 3D printing and manufacturing through its AI UltraProd acquisition. This move positions the company to capitalize on the rapidly expanding global 3D concrete printing market, projected to reach US$315.4 billion by 2033. The company's focus on Web3 security protocols and anti-theft automotive systems also aligns with increasing demand for digital security and vehicle protection. The planned spin-off of Top Kontrol and uplisting initiatives reflect a broader trend among emerging tech companies to optimize portfolio value and enhance capital market access.

Comparison to Industry Standards

• AI UltraProd's AI-driven efficiency, enabling up to 80% profit margins on select jobs with only 20% capital input, suggests a strong competitive advantage compared to traditional manufacturing.
• AI UltraProd's accelerated time-to-market, delivering 3D printed shoe molds in under 24 hours versus traditional 7-10 day cycles, significantly outperforms industry norms for OEM launch timelines.
• AI UltraProd's sustainability leadership, utilizing patented UHPC mixes with fly ash and steel slag waste, positions it favorably against competitors in environmentally conscious construction, such as ICON and COBOD.
• Top Kontrol's patented autonomous anti-carjacking defense is highlighted as a key differentiator, unmatched by competitors like Viper, Clifford, and OEM-integrated immobilizers, addressing a critical need in the automotive security market where U.S. vehicle thefts surged 105% since 2019.

Management Changes

Corporate Governance

Legal Proceedings

• No director, executive officer, or promoter has been involved in legal proceedings requiring disclosure under Item 103 of Regulation SK during the past ten years.
• The company is not a party to any pending legal proceedings that, individually or in the aggregate, are expected to have a material adverse effect on its business, financial condition, results of operations, or cash flows.

Related Party Transactions

• Founders Shares: On March 2, 2017, 175,000,000 common shares were issued as Founders Shares with $0 value to officers, an entity controlled by a director, and outside consultants. As of September 30, 2025, 100,100,000 Founders Shares have been returned and canceled.
• Share Exchange and Cancellations: During the nine months ended September 30, 2025, Kao Lee and Abdikarim Farah (Founders) exchanged 42,100,000 common shares for 4,210 Series A Preferred Stock. All common shares received were canceled.
• Accrued Payroll: During the nine months ended September 30, 2025, 322,448 common shares were issued to settle $322,448 in unpaid wages and commissions owed to employees and an independent sales representative. As of September 30, 2025, $70,331 in related party accrued payroll was outstanding.
• Amounts Due to Related Parties and Imputed Interest: As of September 30, 2025, $188,914 was outstanding to related parties with interest rates between 0% and 10%. Related parties agreed to suspend maturity dates until sufficient funds are raised. Imputed interest expense of $5,152 was recorded.
• Patent Royalties: The company has a Patent License Agreement with Shongkawh, LLC (controlled by executive officers Kao Lee and Anthony Vang) for U.S. Patent No. 8,436,721. The agreement was amended on March 13, 2024, to adjust royalty payments to $1 per annum.
• Amounts Due From Related Parties: During the nine months ended September 30, 2025, AI UltraProd Group Limited advanced $69,900 to related parties for business expenditures.

Stakeholder Impact

• Shareholders: Potential for increased value from strategic growth, uplisting, and share reduction program, but also significant dilution risk from convertible debt and Series A preferred shares, and uncertainty from going concern issues and internal control weaknesses. Loyal shareholders are expected to receive a special dividend from the Top Kontrol spin-off.
• Employees: Issuance of common stock to settle accrued payroll indicates a reliance on equity compensation, which could impact employee morale or retention if stock performance is volatile. The acquisition of AI UltraProd increased the total employee count to 29.
• Customers: The acquisition of AI UltraProd expands product offerings in AI-powered 3D manufacturing, potentially offering more advanced and efficient solutions. Top Kontrol continues to offer enhanced automotive security.
• Suppliers/Creditors: The 'going concern' warning and reliance on future financing could raise concerns for creditors and suppliers regarding repayment ability, although related parties have agreed to suspend maturity dates on notes payable.
• Regulatory Authorities: The company is actively working to remediate material weaknesses in internal controls and enhance disclosure practices, which is crucial for maintaining compliance and trust with the SEC and other regulatory bodies.

Next Steps

• Complete Phase 2 of the Share Reduction Program, aiming to reduce total issued and outstanding common shares to under 20 million by the end of fiscal year 2025.
• Actively prepare for an uplisting to either the NASDAQ Capital Market or the New York Stock Exchange.
• Spin off the Top Kontrol product line into a separately traded entity listed on the OTCQB Venture Market, subject to regulatory approval and market conditions, with loyal shareholders receiving a special dividend.
• Launch a comprehensive investor relations initiative to expand communication and raise brand awareness.
• Actively recruit qualified independent director candidates and appoint a minimum of three new independent board members during the fiscal quarter ending December 31, 2025, to establish an Audit Committee and remediate material weaknesses in internal control over financial reporting.
• Perform the next annual goodwill impairment assessment as of December 31, 2025.
• AI UltraProd plans for 2026 entry into the U.S. market.

Key Dates

Recommendation

SecureTech Innovations has demonstrated a remarkable operational turnaround, swinging to profitability and achieving substantial revenue growth driven by the strategic acquisition of AI UltraProd. The aggressive strategic roadmap, including further share reduction, uplisting plans, and the Top Kontrol spin-off, presents significant long-term growth potential. However, these positives are heavily counterbalanced by critical risks: the explicit 'going concern' warning, material weaknesses in internal control over financial reporting, and the substantial increase in diluted shares from convertible debt and preferred stock. While the growth narrative is compelling, the underlying financial stability and governance issues introduce a high degree of uncertainty. A seasoned investor would likely hold to monitor the successful remediation of internal control weaknesses, the securing of necessary additional capital, and the execution of the uplisting and spin-off plans before considering further investment, as these factors are crucial for de-risking the investment.

Keywords

AI UltraProd, 3D printing, industrial manufacturing, artificial intelligence, blockchain, cybersecurity, Top Kontrol, anti-theft, carjacking, SEC filing, Form 10-Q, quarterly report, financial results, corporate governance, capital structure, OTCQB, NASDAQ uplisting, spin-off, patent, goodwill