10-Q: Vocodia Holdings Corp Reports Q3 2024 Results: Revenue Declines Amid Product Update, Faces Delisting

Sentiment:

Quarterly Report 13 January 2025 4:01 PM

Vocodia Holdings Corp's Q3 2024 results reveal a significant revenue decrease due to a temporary suspension of DISA product sales, increased operating expenses from being a public company, and ongoing efforts to address delisting from the Cboe BZX Exchange.

Capital raiseThe company states that it may continue to raise funds to support our operations in 2024 and beyond, however it has no plans to do so at this time.The company completed an IPO in February 2024, raising $5.95 million in gross proceeds.The company intends to generally rely on cash from operations and equity and debt offerings to the extent necessary and available, to satisfy our liquidity needs.

Worse than expectedThe company's revenue decreased significantly due to the suspension of DISA product sales.The company's operating expenses increased due to costs associated with being a public company.The company's stock and warrants were delisted from the Cboe BZX Exchange.The company has a substantial working capital deficiency.There is substantial doubt about the company's ability to continue as a going concern.

Summary

Vocodia Holdings Corp reported a net loss of $9.83 million for the nine months ended September 30, 2024, compared to a net loss of $7.15 million for the same period in 2023.
Revenue decreased by 80% to $50,231 for the nine months ended September 30, 2024, due to the suspension of DISA product sales for updates.
Operating expenses increased by 22% to $5.71 million for the nine months ended September 30, 2024, primarily due to increased general and administrative expenses related to operating as a public company.
The company's common stock and warrants were delisted from the Cboe BZX Exchange and began trading on the OTC Pink Market on September 11, 2024.
The company is working to improve its DISA product and anticipates relaunching it in the first quarter of 2025.
As of September 30, 2024, the company had a working capital deficiency of $2,120,245 and cash and cash equivalents of $1,216, raising substantial doubt about its ability to continue as a going concern.
The company is involved in several legal proceedings, including an arbitration and a charge filed with the EEOC.

Sentiment

Score: 3

Explanation: The document presents a negative outlook due to significant revenue decline, increased expenses, delisting, working capital deficiency, and going concern uncertainty, despite the IPO completion.

Positives

The company completed an IPO in February 2024, raising $5.95 million in gross proceeds.
The company is actively working to improve its DISA product, with a planned relaunch in Q1 2025.
Current liabilities decreased by $5,564,301, or 70%, to $2,329,828 as of September 30, 2024 from $7,894,129 as of December 31, 2023.
Revenue increased by $40,536, or 421%, to $50,156 for the three months ended September 30, 2024 as compared to $9,620 for the three months ended September 30, 2023.

Negatives

The company experienced a significant decrease in revenue due to the suspension of DISA product sales.
Operating expenses increased, driven by costs associated with being a public company.
The company's stock and warrants were delisted from the Cboe BZX Exchange.
The company has a substantial working capital deficiency.
There is substantial doubt about the company's ability to continue as a going concern.
The company is involved in multiple legal proceedings.

Risks

The company's ability to continue as a going concern is uncertain.
The company may need to raise additional capital to support its operations.
The company faces risks related to legal proceedings.
The company's reliance on cash from operations and equity/debt offerings may not be sufficient.
The company's efforts to generate positive cash flow and profitability may not be successful.
The company's internal controls are not yet fully effective.

Future Outlook

The company anticipates launching its improved DISA product in the first quarter of 2025 and intends to apply to have its common stock quoted on the OTCQB Venture Market on the OTC Markets.

Industry Context

The company operates in the conversational AI technology sector, which is experiencing rapid growth. However, the company's financial results and delisting from the Cboe BZX Exchange highlight the challenges faced by smaller companies in this competitive market.

Comparison to Industry Standards

It is difficult to compare Vocodia's results directly to industry standards due to its unique business model and stage of development.
However, the company's revenue decline and net losses are concerning compared to larger, more established players in the AI sector, such as IBM, Microsoft, and Google, which have significant resources and diversified revenue streams.
The delisting from the Cboe BZX Exchange is also a negative indicator, as it reduces the company's visibility and access to capital markets compared to companies listed on major exchanges like the NYSE or NASDAQ.
Comparable companies in the AI space that are also smaller and publicly traded include Remark Holdings and AIkido Pharma, but their financial performance and market capitalization vary significantly, making direct comparisons challenging.

Legal Proceedings

The Company received a letter dated August 28, 2023, from an attorney hired on behalf of a former employee of the Company alleging sexual harassment and wrongful termination.
On December 20, 2023, an individual filed a putative class action lawsuit against a customer of the Company that was using the Companys DISAs, adding the Company as a party.
ProofPositive LLC commenced an arbitration against the Company, Brian Podolak and his wife on or about May 31, 2024, asserting claims under the Arizona Securities Act.

Related Party Transactions

During the three months ended September 30, 2024 and 2023, the Company incurred approximately $10,000 and $0 respectively, in investor marketing and relations services from a company owned by the former chief strategy officer.
On August 1, 2022, the Company entered into a lending arrangement with a related party, the prior owner of Click Fish Media.
During the three months ended September 30, 2024 and 2023, 47 Capital Management LLC, an entity wholly owned by the former CFO billed the Company $0 and $43,197, respectively.
During the three months ended September 30, 2024 and 2023, Thornhill Advisory Group, Inc. (f/k/a EverAsia Financial Group), an entity majority owned by the former CFO, billed the Company $134,000 and $13,250 for consulting fees, respectively.
In January 2024, 38,404 shares, valued at $2.00 per share, for a total value of $77,095 were issued to our CEO for settlement to related parties for accounts payable.
In January 2024, 47,584 shares, valued at $2.00 per share, for a total value of $95,165 were issued to our Chief Product Officer for settlement to related parties for accounts payable.
In January 2024, 10,625 shares, valued at $2.00 per share, for a total value of $21,250 were issued to a company owned by our CFO for settlement to related parties for accounts payable.

Stakeholder Impact

Shareholders face potential losses due to the company's financial difficulties and delisting.
Employees may face job insecurity due to the company's cost control measures.
Customers may experience disruptions in service due to the company's product updates and financial challenges.
Suppliers and creditors face increased risk of non-payment due to the company's financial difficulties.

Next Steps

The company plans to relaunch its improved DISA product in Q1 2025.
The company intends to apply to have its common stock quoted on the OTCQB Venture Market on the OTC Markets.
The company will continue to defend itself in ongoing legal proceedings.

Key Dates

Date	Description
2019-11-29	Click Fish Media, Inc. (CFM) was incorporated in the State of Florida.
2021-04-27	Vocodia Holdings Corp was incorporated in the State of Wyoming.
2022-08-02	Vocodia purchased all outstanding shares of CFM.
2023-07-12	Former employee's resignation was accepted.
2023-08-28	Received a letter from an attorney hired on behalf of a former employee of the Company.
2023-09-27	The company has amended the certificate of designation to authorize 3,000 preferred shares, par value $0.0001, as Series B Preferred Stock.
2023-11-02	The Company issued 120,000 restricted stock awards (RSAs) representing 120,000 shares of common stock to EverAsia Financial Group. Inc, a company owned by our Chief Financial Officer.
2023-11-09	The Companys stockholders approved the 2022 Equity Compensation Plan, or the 2022 Plan.
2023-12-20	An individual filed a putative class action lawsuit against a customer of the Company that was using the Companys DISAs.
2024-02-14	The removal of the voting rights became effective when the SEC declared our Registration Statement on Form S-1 effective.
2024-02-22	Our Common Stock, Series A Warrants and Series B Warrants began trading on the BZX Exchange, a division of Cboe Global Markets, under the ticker symbols VHAI, VHAI+A and VHAI+B, respectively.
2024-02-26	We completed our initial public offering (the IPO) of 1,400,000 units.
2024-05-31	ProofPositive LLC (ProofPositive) commenced an arbitration (Arbitration) before the American Arbitration Association (AAA) against the Company, Brian Podolak and his wife (under a pseudonym) (Respondents).
2024-06-14	Vocodia Holdings Corp. (the Company) received a letter (the Letter) from the Listing Qualifications Department of The Cboe BZX Exchange, Inc. (Cboe) notifying the Company that Cboe had decided to exercise its discretionary authority pursuant to Exchange Rule 14.2 to delist the Company and suspend trading of the Companys Common Stock (VHAI), Series A Warrants (VHAI+A) and Series B Warrants (VHAI+B) on June 24, 2024.
2024-07-01	The Respondents filed their answer to the demand for Arbitration on July 1, 2024, in which they denied the material allegations contained in the demand for Arbitration and asserted affirmative defenses.
2024-08-02	The Company issued a Certificate of Designation of Series C Convertible Preferred Stock designating 7,000 shares of its authorized and unissued preferred stock as Series C Preferred Stock with a stated value of $1,000.00 per share (the Stated Value).
2024-08-02	The Company issued a Certificate of Designation of Series D Preferred Stock designating 20,000 shares of its authorized and unissued preferred stock as Series D Preferred Stock with a stated value of $0.0001 per share (the Stated Value).
2024-08-02	The Company entered into a Securities Purchase Agreement (the SPA) with certain accredited investors (the Purchasers) for the sale of (i) 2,800 shares of Series C Convertible Preferred Stock, par value $0.0001 per share (the Series C Preferred Stock, and the closing of such sale the Second Closing) at a purchase price of $1,000 per share for a total of $2,800,000 and (ii) 20,000 shares of Series D Redeemable Preferred Stock, par value $0.0001 per share (the Series D Preferred Stock and the closing of such sale, the First Closing) at a purchase price of $0.0001 per share for a total of $2.00 (the Offering).
2024-08-08	An appeal hearing was held on August 8, 2024 before a two-member Panel (the Panel).
2024-09-06	The Company received notice that the Panel rejected the Companys appeal and determined to delist the Companys securities.
2024-09-10	The trading of the Companys Common Stock and Warrants was suspended at the close of business on September 10, 2024, and delisted from Cboe, as indicated in the Panels letter.
2024-09-11	The Companys common stock began trading under the trading symbols VHAI, VHAI+A, and VHAI+B on the OTC Pink Market operated on the OTC Markets system effective with the open of the markets on September 11, 2024.
2024-09-17	Pursuant to section 8 of the SPA, the Purchasers and the Company have terminated the SPA and any and all obligations therein for both the Company and the Purchasers under the SPA and any related transaction documents.
2024-09-18	Entered into a Convertible Note with a principal amount of $105,300 including $15,300 debt discount at a 22% interest rate per annum.
2024-10-15	The parties agreed to attend mediation on October 15, 2024.
2024-12-09	The EEOC issued a Determination and Notice of Rights in which the EEOC dismissed all charges and stated the former employee has 90 days from the receipt of the Notice to file a lawsuit in state or federal court.
2024-12-16	The Company issued a Note Payable in the amount of $40,000 bearing interest at 22% per annum and has a maturity date 180 days from the date of the Note.
2024-12-20	The On September 18, 2024, entered into a Convertible Note with a principal amount of $60,000 including $10,000 debt discount at a 20% interest rate per annum and has a maturity date of June 20, 2025.
2025-Q1	The company anticipates launching its improved DISA product in the first quarter of 2025.
2025-01-13	Report date.

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