10-Q: VoIP-Pal.com Inc. Reports Q3 2026 Results, Net Loss Widens

VoIP-Pal.com Inc. disclosed a significant increase in net loss for the nine months ended June 30, 2026, alongside a substantial decrease in working capital and identified material weaknesses in internal controls.

Summary

• VoIP-Pal.com Inc. reported a net loss of $1,216,189 for the three months ended June 30, 2026, a significant increase from the $188,187 net profit in the same period of 2025.
• For the nine months ended June 30, 2026, the net loss was $4,164,667, compared to a net loss of $1,722,879 for the same period in 2025, representing a 142% increase.
• General and administrative expenses increased by 746% for the three-month period and 141% for the nine-month period, largely driven by professional fees and services.
• Working capital decreased from $969,267 at September 30, 2025, to $168,313 at June 30, 2026.
• The company identified material weaknesses in its internal control over financial reporting, including the lack of formal codes of conduct, no dual authorization on bank disbursements, and a lack of reconciliation and reviews.
• Cash flows used in operations were $1,193,965 for the nine months ended June 30, 2026, a decrease from $1,407,716 in the prior year period, attributed to increased stock-based compensation.
• Financing activities provided $355,000 in cash from private placements for the nine months ended June 30, 2026, up from $205,000 in the prior year period.

Sentiment

Score: 2

Explanation: StockSavvy.ai views this filing as negative due to significant increases in net loss, a substantial decrease in working capital, and ongoing material weaknesses in internal controls, despite some financing activities.

Positives

• The company secured $355,000 in cash proceeds from private placements during the nine months ended June 30, 2026, an increase from $205,000 in the same period of 2025.
• Net cash used in operations decreased to $1,193,965 for the nine months ended June 30, 2026, from $1,407,716 in the prior year period, primarily due to increased stock-based compensation.
• The company is actively working on a remediation plan to address identified material weaknesses in its internal controls.

Negatives

• Net loss for the three months ended June 30, 2026, was $1,216,189, a 746% increase compared to the same period in 2025.
• Net loss for the nine months ended June 30, 2026, was $4,164,667, a 142% increase compared to the same period in 2025.
• Working capital significantly decreased from $969,267 at September 30, 2025, to $168,313 at June 30, 2026.
• General and administrative expenses increased by 746% for the three-month period and 141% for the nine-month period, largely due to increased professional fees and services.
• Material weaknesses in internal control over financial reporting were identified, including lack of formal codes of conduct, no dual authorization on bank disbursements, and lack of reconciliation and reviews.
• The company has an accumulated deficit of $113,749,602 as of June 30, 2026.
• The company states it will require additional capital to fund its operations for the next 12 months.

Risks

• The company's ability to continue operations as a going concern is dependent upon raising additional working capital, settling outstanding debts, and generating profitable operations.
• Material uncertainties raise substantial doubt about the company's ability to continue as a going concern.
• The issuance of additional stock may result in significant dilution to current shareholders.
• Obtaining commercial loans, if available, will increase liabilities and future cash commitments.
• Failure to obtain financing on acceptable terms could adversely affect the business and future success.
• The company being forced to litigate or defend its IP claims through litigation casts substantial doubt on its future to continue as a going concern.
• In the event of a failure to defend its patent claims, there can be no assurance that the company will be able to raise additional capital to pay for an appeals process or a lengthy trial.
• The outcome of any litigation process may have a significant adverse effect on the company's ability to continue as a going concern.

Future Outlook

The company states it will require additional capital to fund its operations for the next 12 months. The ability to continue as a going concern is dependent on raising additional working capital, settling outstanding debts, and generating profitable operations. There is no assurance that capital will be available on acceptable terms.

Management Comments

• Management believes that the company is making progress to remediate the 2025 Material Weaknesses relating to its lack of reconciliation and reviews.
• Management has concluded that the Companys disclosure controls and procedures were not effective to provide reasonable assurance that information is recorded, processed, summarized, and reported within SEC timelines and communicated appropriately for timely disclosure decisions.
• Management has concluded that the Companys internal control over financial reporting has not been effective as of June 30, 2026, due to material weaknesses.

Industry Context

StockSavvy.ai notes that the VoIP and patent licensing sector is highly competitive and often involves significant legal and R&D expenditures. Companies in this space frequently face challenges related to patent enforcement, litigation, and the need for continuous innovation to maintain market relevance.

Comparison to Industry Standards

• The filing does not provide specific comparable companies or detailed industry benchmarks for financial performance or operational metrics.
• The company's significant net losses and accumulated deficit are common in early-stage technology companies focused on IP development and litigation, but the scale of these losses and the identified control deficiencies are concerning.
• The reliance on private placements for funding is a common strategy for companies in this sector, but it carries risks of dilution and dependence on investor sentiment.

Corporate Governance

Legal Proceedings

• The company is involved in ongoing antitrust litigation cases, including VoIP-Pal v. AT&T, et al. (1:24-cv-03051-RDM) and Inza, et al. v. AT&T, et al. (24-cv-03054-RDM), with motions to dismiss and compel arbitration pending.
• Antitrust lawsuits against Apple, et al. (25-cv-01843-RDM) and class action lawsuits against Apple, et al. (25-cv-01970-RDM) are ongoing, with motions to dismiss and compel arbitration filed.
• Previous patent litigation cases against Amazon, Verizon, and T-Mobile have been closed.
• A non-patent litigation case with Locksmith Financial Corporation, Inc. et al. resulted in a settlement and release agreement, with the company issuing 30,000,000 restricted common shares.

Related Party Transactions

• In December 2013, the company acquired Digifonica from its CEO, involving a cash payment and company shares.
• The Share Purchase Agreement for Digifonica included an anti-dilution clause requiring the company to issue shares or warrants to the seller to maintain their ownership percentage.
• As of June 30, 2026, there was no amount owed to current officers and directors included in accounts payable and accrued liabilities (compared to $20,000 at September 30, 2025).
• Prepaid compensation to directors and officers was $36,000 as of June 30, 2026 (compared to $24,905 at September 30, 2025).

Stakeholder Impact

• Shareholders may experience significant dilution due to potential future stock issuances.
• The company's ability to continue as a going concern is uncertain, impacting all stakeholders.
• Ongoing litigation and the need for significant capital raise could affect shareholder value and creditor confidence.

Next Steps

• The company will be implementing a remediation plan to address material weaknesses in its internal controls, including enhancing formal code of conduct documentation, establishing dual authorization procedures for bank disbursements, and implementing regular review processes.
• The company will continue to monitor and evaluate the effectiveness of its internal control over financial reporting on an ongoing basis.
• The company will need to secure additional capital to fund its operations for the next 12 months.

Key Dates

Recommendation

The company exhibits significant financial distress with widening net losses, a sharp decline in working capital, and identified material weaknesses in internal controls. The ongoing reliance on private placements and the uncertainty surrounding the going concern status, coupled with substantial legal expenses and the potential for further dilution, present considerable risks that outweigh any potential positives from financing activities.

Keywords

VoIP, Intellectual Property, Patent Litigation, Warrants, Stock-based Compensation, Private Placement, Going Concern, Internal Controls