10-Q: Two Hands Corp. Reports Q3 Loss, Zero Revenue Amid Strategic Shift

Two Hands Corporation reported a net loss of $416,336 for Q3 2025 with no revenue, as it pivots from grocery delivery to exploring digital asset, fintech, and gig economy ventures.

Summary

• Net loss for the three months ended September 30, 2025, was $416,336, an increase from $333,117 in the prior year period.
• Net loss for the nine months ended September 30, 2025, was $1,083,086, an improvement from $1,610,304 in the prior year period.
• The company reported $0 in sales for both the three and nine months ended September 30, 2025, compared to $179,502 and $569,268 respectively in 2024, following the asset sale of its gocart.city and Grocery Originals businesses in May 2024.
• Total operating expenses decreased by 14% to $259,977 for the three months ended September 30, 2025, and by 21% to $724,648 for the nine months ended September 30, 2025.
• Cash on hand was $9,632 as of September 30, 2025, down from $11,958 in the prior year.
• The company has a working capital deficiency of $3,294,442 and a total stockholders' deficit of $3,289,706 as of September 30, 2025.
• Management announced a strategic shift in June 2025 to reinvigorate its legacy business and explore opportunities in digital asset, fintech, and gig economy spaces.
• The company's disclosure controls and procedures were deemed ineffective due to material weaknesses including inadequate segregation of duties and insufficient written policies.

Sentiment

Score: 2

Explanation: The company faces severe financial distress with zero revenue, increasing net losses in the recent quarter, and a significant cash burn. The going concern warning is prominent, and internal controls are ineffective. While there's a strategic pivot, it's speculative and unfunded, leading to high uncertainty and risk for investors.

Positives

• Net loss for the nine months ended September 30, 2025, improved to $1,083,086 from $1,610,304 in the prior year period.
• Total operating expenses decreased by 14% for the three months and 21% for the nine months ended September 30, 2025, primarily due to lower salaries, benefits, and consulting costs.
• The line of credit with The Cellular Connection Ltd. was fully converted and paid off, reducing a significant liability.
• The company recorded a gain of $215,904 due to the change in fair value of derivative liabilities for the nine months ended September 30, 2025.
• Stockholders' deficit slightly improved to $(3,289,706) from $(3,568,234) year-over-year.

Negatives

• The company reported $0 in sales and gross profit for both the three and nine months ended September 30, 2025, indicating a complete cessation of its primary revenue-generating operations.
• Net loss for the three months ended September 30, 2025, increased to $416,336 from $333,117 in the comparable prior year period.
• Cash used in operating activities significantly increased to $492,840 for the nine months ended September 30, 2025, from $239,157 in the prior year, indicating a higher cash burn.
• Cash on hand remains critically low at $9,632 as of September 30, 2025.
• The company has a substantial working capital deficiency of $3,294,442 and an accumulated deficit of $95,603,234.
• Significant dilution occurred with weighted average common shares outstanding increasing from 741,361,000 to 5,587,944,630 for the nine months ended September 30, 2024 and 2025, respectively.
• Amortization of debt discount and interest expense increased significantly by 134% to $321,941 for the nine months ended September 30, 2025.
• The company is heavily reliant on advances from its CEO and other financing activities to sustain operations, with no formal agreements for future funding.

Risks

• **Going Concern Uncertainty**: The company's recurring net losses ($1,083,086 for nine months ended Sep 30, 2025), negative cash flows from operations ($492,840 used for nine months ended Sep 30, 2025), and significant accumulated deficit ($95,603,234) raise substantial doubt about its ability to continue as a going concern.
• **Capital Raising Dependency**: The company is dependent on raising additional capital through equity placements, private loans, or an equity line of credit, with no assurance of success. Failure to secure funds could lead to curtailment or termination of business.
• **Dilution Risk**: Future capital raises through the sale of equity or convertible debt securities, or compensation of service providers with stock, will result in significant dilution to existing stockholders.
• **Internal Control Weaknesses**: Disclosure controls and procedures were not effective due to inadequate segregation of duties, ineffective risk assessment, and insufficient written policies for accounting and financial reporting. Remediation is dependent on securing additional financing.
• **Operational Shift Risk**: The company is pivoting from its legacy grocery business to exploring ventures in digital asset, fintech, and gig economy spaces, which are new and potentially high-risk areas for the company.
• **Related Party Dependence**: The company relies on cash advances from its Chief Executive Officer, note holders, and shareholders, without formal agreements, posing a liquidity risk if these advances cease.
• **Foreign Exchange Risk**: Revenue derived from Canadian operations is adversely impacted by an increase in the value of the U.S. dollar relative to the Canadian dollar.
• **Market Risk**: The company is exposed to risks from changes in foreign exchange rates, interest rates, and market prices that affect its financial liabilities, financial assets, and future transactions.

Future Outlook

The company plans to reinvigorate its legacy business and actively evaluate new opportunities within the digital asset, fintech, and gig economy sectors. It anticipates spending approximately $300,000 in cash over the next 12 months for operations, legal, and accounting services, and hopes to use stock-based compensation for independent contractors to conserve cash. The company is currently in discussions for private loans and an equity line of credit to secure additional capital.

Management Comments

• "After fully evaluating the legacy business, the Company is taking steps to reinvigorate it and establish a new pathway in the same business space."
• "The Company will continue to evaluate opportunities both inside and outside the food industry, including, but not limited to, ventures within the digital asset, fintech and gig economy spaces."
• "We are currently funding our operations by way of cash advances from our Chief Executive Officer, note holders, shareholders and others; however, we do not have any oral or written agreements with them or others to loan or advance funds to us."
• "We expect to be able to secure additional capital through advances from our Chief Executive Officer in order to pay expenses such as organizational costs, filing fees, accounting fees and legal fees, however, we do not have any written or oral agreements with any other third parties which require them to fund our operations."
• "We are currently in discussions with investors for private loans and an equity line of credit."

Industry Context

The company's pivot away from its core grocery delivery and brick-and-mortar operations (gocart.city, Grocery Originals) to focus solely on wholesale food distribution (Cuore Food Services) and explore nascent sectors like digital assets, fintech, and the gig economy, reflects a significant strategic shift. This move suggests an attempt to find new growth avenues after exiting less successful ventures, potentially aligning with broader market trends towards digitalization and alternative asset classes, but also introduces substantial execution risk given the company's limited resources and lack of established presence in these new industries.

Comparison to Industry Standards

• The company's complete cessation of sales in its primary business segments (gocart.city, Grocery Originals) and subsequent zero revenue for the reported periods is a stark contrast to established grocery delivery or wholesale food distribution companies, which typically demonstrate consistent revenue streams.
• The significant accumulated deficit of over $95 million and persistent going concern warning indicate a financial position far below industry standards for sustainable operations.
• The reliance on related party advances and convertible debt for financing, coupled with substantial shareholder dilution, is characteristic of distressed micro-cap companies rather than healthy industry players.
• The stated intention to explore digital asset, fintech, and gig economy ventures without specific projects or established expertise makes direct comparison difficult, but generally, successful entry into these competitive sectors requires substantial capital, specialized talent, and a clear strategic roadmap, which are not evident in the filing.

Management Changes

Corporate Governance

Legal Proceedings

• The company may be involved from time to time in ordinary litigation, negotiation, and settlement matters that will not have a material effect on operations or finances. Management is not aware of any pending or threatened litigation against the company or its officers and directors that could have a material impact.

Related Party Transactions

• As of September 30, 2025, $441,749 (comprising $428,100 advances and $13,649 interest) was due to Emil Assentato, the company's Chief Executive Officer. This note is unsecured, earns 8% interest per annum, and is due on demand.
• During the nine months ended September 30, 2025, Emil Assentato provided $210,000 in cash advances and paid $218,100 of expenses on behalf of the company.
• On December 30, 2024, Jordan Turk assigned a non-redeemable convertible note (carrying value $100,000) to Emil Assentato. As of September 30, 2025, the carrying amount of this note is $114,959.
• During the nine months ended September 30, 2024, the company accrued salary of $609,041 due to Nadav Elituv, the former CEO.
• On February 26, 2024, the company issued 8,000,000 common shares to settle $296,000 (CAD $400,000) of accrued salary and expenses due to Nadav Elituv.
• Compensation expenses of $212,917 were incurred for the Chief Executive Officer, Chief Financial Officer, and a Director during the nine months ended September 30, 2025.
• In 2024, a consulting agreement with 2130555 Ontario Limited, a company controlled by Nadav Elituv, involved a monthly consulting fee of CAD $24,000.

Stakeholder Impact

• **Shareholders**: Face significant dilution risk from ongoing and future equity issuances to settle debt and raise capital. The going concern warning and lack of revenue pose a high risk of capital loss.
• **Creditors**: Existing creditors, particularly those with unsecured notes, face elevated risk due to the company's precarious financial position and dependence on further financing.
• **Employees/Management**: Compensation for officers and directors continues, but the overall financial instability and reliance on stock-based compensation for contractors indicate potential instability for personnel.
• **Customers**: The cessation of gocart.city and Grocery Originals operations means former customers of these services are no longer served by the company. Cuore Food Services customers may face uncertainty given the company's financial health.

Next Steps

• Reinvigorate legacy business and establish a new pathway in the same business space.
• Evaluate opportunities within the digital asset, fintech, and gig economy spaces.
• Secure additional capital through private loans and an equity line of credit.
• Appoint additional qualified personnel to address inadequate segregation of duties and ineffective risk management.
• Adopt sufficient written policies and procedures for accounting and financial reporting, subject to obtaining additional financing.
• Issue remaining 200,000,000 common shares as part of the October 20, 2025 promissory note conversion agreement.
• Complete conditions precedent for definitive agreements with More Capital Ltd. (issue 40,000,000 shares, transfer $65,000 cash) and More Money Ltd. (issue 110,000,000 shares, transfer $200,000 cash).

Key Dates

Recommendation

The company exhibits severe financial distress, marked by zero revenue in the current periods, increasing quarterly net losses, and a significant cash burn from operations. The explicit 'going concern' warning, coupled with a substantial accumulated deficit and working capital deficiency, indicates a high probability of business failure or extreme dilution. While a strategic pivot to digital assets and fintech is mentioned, it lacks concrete plans or funding, making it highly speculative. The ineffective internal controls further compound the risk. Current and prospective investors face substantial risk of capital loss and significant dilution from ongoing and future financing activities, which are essential for the company's survival but offer no guarantee of success.

Keywords

Two Hands Corporation, 10-Q, Quarterly Report, SEC Filing, Financial Results, Net Loss, Going Concern, Capital Raise, Dilution, Internal Controls, Digital Assets, Fintech, Gig Economy, Wholesale Food Distribution, Cuore Food Services, Convertible Notes, Related Party Transactions, TWOH