FreeCast, Inc S-1/A, filed Dec 9, 2025
FreeCast, Inc. (CAST)
As filed with the Securities and Exchange Commission on December 9, 2025
Registration No. 333-275508
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
AMENDMENT NO. 9
TO
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
FREECAST, INC.
(Exact name of registrant as specified in its charter)
| Florida | 7990 | 45-2787251 | ||
| (State or other jurisdiction
of incorporation or organization) |
(Primary standard industrial classification code number) |
(I.R.S. employer identification number) |
6901 TPC Drive, Suite 200
Orlando, Florida 32822
(407) 374-1607
(Address,
including zip code, and telephone number,
including area code, of registrant’s principal executive offices)
William A. Mobley, Jr., Chief Executive Officer
FreeCast, Inc.
6901 TPC Drive, Suite 200
Orlando, Florida 32822
(407) 374-1607
(Name,
address, including zip code, and telephone number,
including area code, of agent for service)
Copies to:
Jeffery A. Bahnsen, Esq
Bahnsen Legal Group, PLLC
131 NE 1st Avenue, Suite 100
Boca Raton, Florida 33432
(727) 888-3026
Approximate date of commencement of proposed sale to the public: As soon as practicable after the effective date of this registration statement.
If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, as amended, check the following box. ☒
If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐
If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large Accelerated Filer ☐ | Accelerated filer ☐ |
| Non-accelerated filer ☒ | Smaller reporting company ☒ |
| Emerging growth company ☒ |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act. ☐
The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act, or until the registration statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.
The information in this preliminary prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell nor does it seek an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.
Subject to Completion,
Preliminary Prospectus dated
December __, 2025
FREECAST, INC.
19,782,084 shares of Class A common stock (par value, $0.0001)
This prospectus relates to the registration of the resale of up to 19,782,084 shares of our Class A common stock by our shareholders identified in this prospectus, or the Registered Shareholders in connection with our direct listing, or the Direct Listing, on the Nasdaq Global Market, or Nasdaq.
Unlike an initial public offering, the resale by the Registered Shareholders is not being underwritten on a firm-commitment basis by any investment bank. The Registered Shareholders may, or may not, elect to sell their shares of Class A common stock covered by this prospectus, as and to the extent they may determine. If a Registered Shareholder utilizes a broker-dealer in the sale of the Class A common stock being offered by this prospectus on Nasdaq, such broker-dealer may receive commissions in the form of discounts, concessions, or commissions. For more information, see “Plan of Distribution.” If the Registered Shareholders choose to sell their shares of Class A common stock, we will not receive any proceeds from the sale of shares of Class A common stock by the Registered Shareholders.
Prior to this offering, there has been no public market for our Class A common stock. However, we have a history of issuing shares of our Class A common stock in private transactions. For more information, see “Sale Price History of Our Common Stock.” Further, the listing of our Class A common stock on Nasdaq, without a firm-commitment underwritten offering, is a novel method for commencing public trading in shares of our Class A common stock, and consequently, the trading volume and price of shares of our Class A common stock may be more volatile than if shares of our Class A common stock were initially listed in connection with an initial public offering underwritten on a firm-commitment basis.
We have two classes of common stock: Class A common stock and Class B common stock. The rights of the holders of Class A common stock and Class B common stock are identical, except with respect to voting, conversion and transfer rights. Each share of Class A common stock is entitled to one vote. Each share of Class B common stock is entitled to 15 votes and may be converted at any time into one share of Class A common stock. Each share of Class B common stock will automatically convert into one share of Class A common stock upon any sale or transfer thereof, subject to certain exceptions, such as certain transfers effected for estate planning or charitable purposes. Shares of Class B common stock may only be issued to and held by William A. Mobley, Jr., our founder, Chief Executive Officer and Chairman, and certain permitted entities owned and controlled by Mr. Mobley. Upon completion of this offering, assuming all of the 6,946,980 Class B shares that are being converted into Class A shares and registered for sale by Mr. Mobley in this offering are sold and not converted back to Class B shares, Mr. Mobley will hold approximately 75.55% of the voting power of our outstanding capital stock.
On the day that our shares of Class A common stock are initially listed on Nasdaq, Nasdaq will begin accepting, but not executing, pre-opening buy and sell orders and will begin to continuously generate the indicative Current Reference Price (as defined below) on the basis of such accepted orders. The Current Reference Price is calculated each second and, during a 10-minute “Display Only” period, is disseminated, along with other indicative imbalance information, to market participants by Nasdaq on its NOII and BookViewer tools. Following the “Display Only” period, a “Pre-Launch” period begins, during which Maxim Group LLC (the “Advisor” or “Maxim”), in its capacity as our financial advisor, must notify Nasdaq that our shares are “ready to trade.” Once the Advisor has notified Nasdaq that our shares of Class A common stock are ready to trade, Nasdaq will confirm the Current Reference Price for our shares of Class A common stock, in accordance with the Nasdaq rules. If the Advisor then approves proceeding at the Current Reference Price, the applicable orders that have been entered will be executed at such price and regular trading of our shares of Class A common stock on Nasdaq will commence, subject to Nasdaq conducting validation checks in accordance with the Nasdaq rules. Under the Nasdaq rules, the “Current Reference Price” means: (i) the single price at which the maximum number of orders to buy or sell can be matched; (ii) if there is more than one price at which the maximum number of orders to buy or sell can be matched, then it is the price that minimizes the imbalance between orders to buy or sell (i.e. minimizes the number of shares that would remain unmatched at such price); (iii) if more than one price exists under (ii) above, then it is the entered price (i.e. the specified price entered in an order by a customer to buy or sell) at which our shares of Class A common stock will remain unmatched (i.e. will not be bought or sold); and (iv) if more than one price exists under (iii) above, a price determined by Nasdaq in consultation with the Advisor in its capacity as our financial advisor. In the event that more than one price exists under (iii) above, the Advisor will exercise any consultation rights only to the extent that it can do so consistent with the anti-manipulation provisions of the federal securities laws, including Regulation M, or applicable relief granted thereunder. The Registered Shareholders will not be involved in Nasdaq’s price-setting mechanism, including any decision to delay or proceed with trading, nor will they control or influence the Advisor in carrying out its role as a financial adviser. The Advisor will determine when our shares of Class A common stock are ready to trade and approve proceeding at the Current Reference Price primarily based on considerations of volume, timing and price. In particular, the Advisor will determine, based primarily on pre-opening buy and sell orders, when a reasonable amount of volume will cross on the opening trade such that sufficient price discovery has been made to open trading at the Current Reference Price. For more information, see “Plan of Distribution.”
We have applied to list our Class A common stock on the Nasdaq Global Market under the symbol “CAST.” We expect our common stock to begin trading on Nasdaq on or about _____, 2025.
If our Nasdaq listing application is not approved or we otherwise determine that we will not be able to secure the listing of our Class A common stock on Nasdaq, we will not complete this offering and we will terminate the Direct Listing. The Direct Listing is a condition to the offering. No assurance can be given that our Nasdaq application will be approved and that our Class A common stock will ever be listed on Nasdaq.
We will be a “controlled company” under Nasdaq corporate governance standards because more than 50% of the voting power of our common stock following the completion of this offering will be held by William A. Mobley, Jr., our chief executive officer and chairman. As a “controlled company,” we are permitted to, and will, elect not to comply with certain Nasdaq corporate governance standards, including majority “independent director” requirements and certain requirements relating to independent compensation and nominating committees. Accordingly, you will not have the same protections afforded to shareholders of companies that are subject to all of the corporate governance requirements of the Nasdaq Stock Market.
We are an “emerging growth company” as defined under the federal securities laws and, as such, may elect to comply with certain reduced reporting requirements for this prospectus and other filings with the Securities and Exchange Commission after the listing of our Class A common stock on Nasdaq. For more information, see “Prospectus Summary—Emerging Growth Company Status.”
Investing in our securities involves a high degree of risk. You should carefully consider the risk factors beginning on page 8 of this prospectus before purchasing shares of our Class A common stock.
Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.
The date of this prospectus is , 2025.
TABLE OF CONTENTS
Neither we nor any of the Registered Shareholders have authorized anyone to provide you with information that is different from that contained in this prospectus or in any free writing prospectus we may authorize to be delivered or made available to you. When you make a decision about whether to purchase shares of our Class A common stock from the Registered Shareholders, you should not rely upon any information other than the information in this prospectus or in any free writing prospectus that we may authorize to be delivered or made available to you. Neither the delivery of this prospectus nor the sale of our Class A common stock means that the information contained in this prospectus or any free writing prospectus is correct after the date of this prospectus or such free writing prospectus. You should not assume that the information contained in this prospectus is accurate as of any date other than the date on the front of this prospectus. This prospectus is not an offer to sell or the solicitation of an offer to buy shares of our Class A common stock from the Registered Shareholders in any circumstances under which the offer or solicitation is unlawful.
No action is being taken in any jurisdiction outside the United States to permit the offering or purchase of our Class A common stock from the Registered Shareholders or possession or distribution of this prospectus in that jurisdiction. Persons who come into possession of this prospectus in jurisdictions outside the United States are required to inform themselves about and to observe any restrictions as to the offering of shares of our Class A common stock by the Registered Shareholders and the distribution of this prospectus applicable to that jurisdiction.
The Registered Shareholders are offering to sell, and seeking offers to buy, their shares of our Class A common stock only in jurisdictions where offers and sales are permitted. Neither we nor any of the Registered Shareholders have done anything that would permit the use of or possession or distribution of this prospectus in any jurisdiction where action for that purpose is required, other than in the United States. Persons outside of the United States who come into possession of this prospectus must inform themselves about, and observe any restrictions relating to, the offering of the shares of our Class A common stock by the Registered Shareholders and the distribution of this prospectus outside of the United States.
i
ABOUT THIS PROSPECTUS
This prospectus is a part of a registration statement on Form S-1 that we filed with the U.S. Securities and Exchange Commission, or SEC using a “shelf” registration or continuous offering process. Under this process, the Registered Shareholders may, from time to time, sell the Class A common stock covered by this prospectus in the manner described in the section titled “Plan of Distribution.” Additionally, we may provide a prospectus supplement to add information to, or update or change information contained in, this prospectus, including the section titled “Plan of Distribution”. You may obtain this information without charge by following the instructions under the “Where You Can Find More Information” section appearing elsewhere in this prospectus. You should read this prospectus and any prospectus supplement before deciding to invest in our Class A common stock.
The information in this prospectus reflects a 1-for-2 reverse stock split effected on May 10, 2024, and the concurrent reclassification of our outstanding common stock into two classes: Class A common stock and Class B common stock. In connection with the reverse split, all of our then outstanding shares of common stock were automatically reclassified as Class A common stock, except for shares of common stock held by William A. Mobley, Jr., our founder, Chief Executive Officer and Chairman, whose shares of common stock were reclassified as Class B common stock. The reverse split also applied to any common stock issuable upon the exercise of our outstanding options and warrants, including the exercise price for any option or warrant.
ii
Market, Industry and Other Data
Unless otherwise indicated, information contained in this prospectus concerning our industry and the markets in which we operate, including our general expectations and market position, market opportunity and market share, is based on information from our own management estimates and research, as well as from industry and general publications and research, surveys and studies conducted by third parties. Third-party industry publications and forecasts generally state that the information contained therein has been obtained from sources generally believed to be reliable. Management estimates are derived from publicly available information, our knowledge of our industry and assumptions based on such information and knowledge, which we believe to be reasonable. In addition, assumptions and estimates of our and our industry’s future performance are necessarily subject to a high degree of uncertainty and risk due to a variety of factors, including those described in “Risk Factors.” These and other factors could cause our future performance to differ materially from our assumptions and estimates. See “Cautionary Note Regarding Forward-Looking Statements.”
Among others, we refer to estimates compiled by the following industry sources:
| ● | (https://www.statista.com/study/44526/digital-media-report/) |
| ● | (https://www.insiderintelligence.com/content/cord-cutting-hasn-t-lost-momentum) |
| ● | (https://www.nielsen.com/insights/2022/streaming-climbs-to-new-heights-again-in-april-despite-a-dip-in-total-tv-viewing/) |
Trademarks and Service Marks
This prospectus contains references to our trademarks and service marks and to those belonging to other entities. Solely for convenience, trademarks and trade names referred to in this prospectus may appear without the ® or ™ symbols, but such references are not intended to indicate, in any way, that we will not assert, to the fullest extent under applicable law, our rights or the rights of the applicable licensor to these trademarks and trade names. We do not intend our use or display of other companies’ trade names, trademarks or service marks to imply a relationship with, or endorsement or sponsorship of us by, any other companies.
iii
This summary highlights certain information appearing elsewhere in this prospectus. This summary does not contain all of the information you should consider before investing in our Class A common stock. For a more complete understanding of this offering of shares of our Class A common stock by the Registered Shareholders, you should read the entire prospectus carefully, including the information under “Risk Factors” and our financial statements and the related notes included elsewhere in this prospectus before investing in our Class A common stock.
In this prospectus, unless otherwise stated or the context otherwise requires, references to “FreeCast®,” “Company,” “we,” “us” and “our” or similar references mean FreeCast, Inc.
Unless we indicate otherwise or the context otherwise requires, all references in this prospectus to “common stock” refer to our Class A common stock and Class B common stock, except that for historical periods it refers to our single class of common stock.
Our Company
FreeCast is a technology-driven streaming entertainment aggregator offering a unified, à la carte service for TV entertainment through a comprehensive Platform-as-a-Service (PaaS) model. Our proprietary platform consolidates available entertainment content, advertising, and delivery infrastructure into a single, centralized ecosystem, reducing the complexity for consumers who would otherwise need to navigate multiple streaming services. Leveraging our SmartGuide® digital interactive technology, users can organize and access streaming content in a familiar, cable-like TV guide format across all Wi-Fi-enabled devices, including Smart TVs, streaming devices, mobile phones, tablets, and computers.
FreeCast’s business model is built on licensing its advanced streaming technology to a diverse range of partners, including commercial entities, device manufacturers, consumer brands, and digital out-of-home (DOOH) advertising networks. Our platform supports co-branding for Consumer Direct Platforms (CDPs) with large user bases, enabling rapid market expansion and efficient scaling through B2B2C partnerships. Rather than acquiring individual subscribers, we partner with CDPs.
Designed for broad accessibility, FreeCast operates as a non-competitive, agnostic “omnichannel streaming platform,” meaning users do not need multiple apps to access their favorite content. Instead, our technology aggregates all content into one seamless interface, available directly to consumers under the FreeCast.com brand and distributed through third-party partners under licensed brand names. By integrating our SmartGuide® technology, CDPs can provide their users with a centralized platform to access all streaming apps and content in one place, enhancing service offerings and creating new revenue opportunities through advertising and commissions.
We offer subscribers and CDPs a centralized place to access their online media subscriptions, along with approximately 750 additional channels, including leading news and entertainment content, both live and on demand. Our proprietary content aggregation technology automatically crawls the Internet to locate additional commercial-quality entertainment content from thousands of sources, including free, paid and subscription-based content.
Our SmartGuide® integrates this information and presents it in an easy-to-use, cable-like TV guide format. Our services are accessible via the Internet as a software application on all Wi-Fi-enabled devices, including Smart TVs, streaming devices, mobile phones, tablets, and computers.
Our service is available directly to consumers under the FreeCast.com brand and is also distributed by third parties under licensed brand names and partnerships. Additionally, our service is available to CDPs and can be co-branded to align with their established user base.
Our strategy is to expand domestically and globally by securing licensing agreements with CDPs that already have a substantial user base. We continually enhance customer experience by expanding our content catalog, refining our user interface, and extending our service to more Internet-connected devices. Telecoms (Fixed Wireless, Broadband, ISPs). In addition to mobile carriers, we partner with fixed wireless and broadband ISPs to bundle our aggregated streaming service with connectivity. These partnerships can include (i) revenue sharing on ad inventory generated by the ISP’s subscribers on our platform, (ii) promotional bundles of our premium channel packages, and (iii) data driven advertising opportunities leveraging our first party viewing signals to improve targeting (subject to privacy compliance). We believe this model can raise ARPU and reduce ISP churn while avoiding traditional set top hardware and retransmission fee costs through our software first approach.
Broadcasters and Programmers. We provide a turnkey path for local and niche programmers to distribute channels in a streaming environment, including FAST channel assembly, distribution on our platform, and ad monetization. We anticipate a revenue model comprising: (i) monthly platform/hosting fees; (ii) time and materials fees for channel buildouts; and (iii) revenue sharing on advertisements sold by us and by the programmer, with the programmer retaining 100% of locally sold ad inventory and sharing in platform sold inventory. Our roadmap also contemplates integration with next generation broadcast standards (e.g., ATSC 3.0) to deliver hybrid broadcast enabled streaming experiences. FreeCast’s flexible distribution model and advanced technology position us to disrupt the current streaming industry, delivering convenience to consumers and value to our partners.
Following the end of the product lifecycle of our legacy product, Rabbit TV, and the conclusion of our partnership with Telebrands Corp. in 2017, we spent over two years rebuilding our product. This development not only improved our proprietary technology but also positioned us to capitalize on the fast-moving nature of the industry and capture new revenue streams. During this transition, sales primarily stemmed from legacy Rabbit TV sales, which declined over time, as expected.
1
Our revenue streams include:
| ● | Advertising Revenue – Generated through ad placements within the platform. |
| ● | Subscription Revenue – From additional monthly content bundles. |
| ● | Product Revenue – From selling digital high-definition TV antennas. |
| ● | Licensing Revenue – From partnerships with CDPs and third-party distributors. |
| ● | Referral Fees – Earned through partnerships with content providers. |
The following table shows the aggregate number of subscribers at the end of each reporting period presented in this prospectus.
| For the Period Ended | ||||||||
| Subscribers (1) | September 30, 2025 | June 30, 2025 | ||||||
| Ad-Supported (2) | 974,222 | 958,439 | ||||||
| Paid (3) | 13,936 | 17,062 | ||||||
| Total Subscribers: | 988,158 | 975,501 | ||||||
| (1) | “Subscriber” refers to any individual or entity that has registered for access to our platform, whether on a paid or free (ad-supported) tier basis, subject to the terms of our service. |
| (2) | As of July 1, 2022, all subscribers’ accounts were converted to a free account, allowing every subscriber to view content on our platform for free while being exposed to advertisements. |
| (3) | As of April 11, 2023, we started offering pay-per-view content and packages consisting of third-party premium channels to which subscribers could upgrade for a fee that varies by the content or packages purchased. |
The basis of our service platform is our proprietary content aggregation technology that automatically crawls the Internet to locate commercial-quality entertainment content from thousands of sources, including free, paid and subscription-based content. Additionally, we subscribe to the top entertainment data services such as Gracenote (owned by Nielsen), Xperi, and Reelgood whom provide real-time updates. Our technology then sorts through and manages all available commercial-quality digital media, including both live and on-demand video from free subscription and pay-per-view (PPV) services.
2
The SmartGuide is presented to consumers in a familiar, easy-to-use cable-like TV guide format, accessible via the Internet and as a software application on all Wi-Fi enabled devices, including computers, smartphones, tablets, streaming devices, and smart TVs. The SmartGuide uses images and related information on customized guide pages to provide subscribers with an intuitive way to explore all available media choices from one centralized account, regardless of device or location.
Upon selecting content, subscribers are directed to the original source of the content. If content is available for free, the subscriber is transferred to the website providing the content. If content is available through a subscription service (such as Netflix or Hulu), the subscriber can log in through our SmartGuide and is then directed to the subscription service’s website. For PPV content, the subscriber is directed to the payment page for the PPV service. We do not manipulate, store, retransmit, or distribute the source content; the provider of the content retains all rights and management of their content.
Because we link subscribers directly to third-party content sources and in no way manipulate, store, retransmit or distribute this content, we are not subject to licensing fees or restrictions by third-party content suppliers. We are not responsible for the availability or content of these external websites, nor do we endorse, warrant or guarantee the products, services or information described or offered. All logos and trademarks used in the guide are the sole property of their respective owners. We believe that this is a complementary relationship in which we directly supply free traffic to content suppliers, much like the print-based model employed by TV Guide in past decades.
Our SmartGuide technology is available directly to consumers, branded as FreeCast.com, and is also distributed by third parties, both as FreeCast.com and under other licensed brand names and partnerships. Through commercial partnerships, device integrations, and co-branding arrangements with Consumer Direct Platforms (CDPs), FreeCast expands its reach and provides a unified entertainment experience to a broad and diverse user base.
We have incurred recurring losses from operations since inception, and as of September 30, 2025, had an accumulated deficit of $198,097,550. Consequently, we raise substantial doubt that we will be able to continue operations as a going concern, and our independent auditors included an explanatory paragraph regarding this uncertainty in their report on our financial statements for the year ended June 30, 2025. Our continuation as a going concern is contingent upon our ability to obtain additional financing and to generate revenue and cash flow to meet our obligations on a timely basis.
Relationship with Nextelligence, Inc.
On June 30, 2011, we entered into a Technology License and Development Agreement, which was amended and restated on October 19, 2012, amended on July 1, 2013, amended and restated a second time on July 31, 2014 and further revised to terminate all payments to Nextelligence pursuant to the agreement, effective on June 30, 2016 (the “Technology Agreement”), with Nextelligence, Inc., or Nextelligence, which is majority owned and controlled by William A. Mobley, Jr., our founder, Chief Executive Officer and Chairman. The Technology Agreement, which terminates on June 30, 2054, provides us with an exclusive license to a web-based application that installs in the end-user’s browser and any supported email functions or chat functions with search and certain other features (the “Technology”) from Nextelligence and for Nextelligence to provide all further development, improvement, modification, maintenance, management and enhancement services related to the Technology.
Emerging Growth Company Status
We qualify as an “emerging growth company” as defined in the Jumpstart Our Business Startups Act of 2012, or JOBS Act. As a result, we are permitted to, and intend to, rely on exemptions from certain disclosure requirements that are applicable to other companies that are not emerging growth companies. Accordingly, we have included detailed compensation information for only our three most highly compensated executive officers and have not included a compensation discussion and analysis of our executive compensation programs in this prospectus. In addition, for so long as we are an “emerging growth company,” we will not be required to:
| ● | engage an auditor to report on our internal controls over financial reporting pursuant to Section 404(b) of the Sarbanes–Oxley Act of 2002, or Sarbanes–Oxley Act; |
| ● | comply with any requirement that may be adopted by the Public Company Accounting Oversight Board (PCAOB) regarding mandatory audit firm rotation or a supplement to the auditor’s report providing additional information about the audit and the financial statements (i.e., an auditor discussion and analysis); |
| ● | submit certain executive compensation matters to shareholder advisory votes, such as “say-on-pay,” “say-on-frequency,” and “say-on-golden parachutes;” or |
| ● | disclose certain executive compensation related items such as the correlation between executive compensation and performance and comparison of the chief executive officer’s compensation to median employee compensation. |
3
In addition, the JOBS Act provides that an “emerging growth company” can use the extended transition period for complying with new or revised accounting standards, which we have elected to take advantage of.
We will remain an “emerging growth company” until the earliest to occur of:
| ● | our reporting $1.07 billion or more in annual gross revenues; |
| ● | our issuance, in a three-year period, of more than $1 billion in non-convertible debt; |
| ● | the end of the fiscal year in which the market value of our Class A common stock held by non-affiliates exceeds $700 million on the last business day of our second fiscal quarter; or |
| ● | June 30, 2031. |
Our Corporate Information
We were incorporated on June 21, 2011, in the State of Florida. Our principal executive offices are located at 6901 TPC Drive, Suite 200 Orlando, Florida 32822. Our telephone number is (407) 374-1607. We maintain a website at www.FreeCast.com. The information contained on our website is not, and should not be interpreted to be, a part of this prospectus.
Trademark and Service Mark Notice
FreeCast, SmartGuide and SelectTV are registered service marks of FreeCast, Inc. We use these registered service marks in connection with the operation of our business, including our corporate name, logos and website names. Other trademarks, service marks and trade names appearing in this prospectus are the property of their respective owners. Solely for convenience, some of the trademarks, service marks, and trade names referred to in this prospectus are listed without the ® and ™ symbols.
Shares Eligible for Future Sale
| Class A common stock outstanding before this offering: | 26,931,820 shares | |
| Class A common stock being offered by selling shareholders: | 19,782,084 shares | |
| Class A common stock to be outstanding after this offering: | 33,878,800 shares | |
| Class B common stock outstanding before this offering: | 13,925,640 shares | |
| Class B common stock to be outstanding after this offering: | 6,978,660 shares | |
| Total Class A and Class B common stock to be outstanding after this offering: | 40,857,460 shares |
William A. Mobley, Jr., our Chief Executive Officer and majority shareholder, intends to convert 6,946,980 Class B shares into Class A shares and register the shares for sale in this offering. Any Class A shares not sold by Mr. Mobley in connection with this offering will be automatically reclassified as Class B shares.
The total number of shares of our common stock outstanding as of the date of this prospectus is 40,857,460 which will be the same number of shares of our common stock outstanding after the listing of our Class A common stock on Nasdaq, and does not take into account:
| ● | 8,056,087 shares of Class A common stock issuable upon the exercise of outstanding warrants as of September 30, 2025, at a weighted average exercise price of $4.76 per share. |
| ● | 931,779 shares of common stock issuable upon exercise of outstanding options, of which 871,789 have vested and are exercisable as of September 30, 2025, at a weighted average exercise price of $4.13 per share. |
| ● | 2,068,221 shares of Class A common stock available for future issuance under our 2021 Incentive Award Plan as of September 30, 2025. |
4
Summary Financial Data
The following table presents a summary of our historical financial data for the periods presented and should be read in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the financial statements and notes thereto included elsewhere in this prospectus. The statements of operations data for the three months ended September 30, 2025, and 2024 are derived from our audited financial statements included elsewhere in this prospectus. Our historical results are not necessarily indicative of the results to be expected in the future.
| For the three months ended | ||||||||
| September 30, | ||||||||
| 2025 | 2024 | |||||||
| Statements of Operations Data: | ||||||||
| Total Revenue | $ | 195,860 | $ | 118,407 | ||||
| Total Cost of Revenue | 58,239 | 102,243 | ||||||
| Total Operating Expenses | 2,945,208 | 3,527,025 | ||||||
| Loss From Operations | (2,807,587 | ) | (3,510,861 | ) | ||||
| Total Other (Expense) Income | (54,762 | ) | (48,944 | ) | ||||
| Net Loss | (2,862,349 | ) | (3,559,805 | ) | ||||
| Net Loss per share, basic and diluted | $ | (0.07 | ) | $ | (0.09 | ) | ||
Summary of Risk Factors
Investing in our Class A common stock involves a high degree of risk. You should carefully consider all the information in this prospectus prior to investing in our Class A common stock. These risks are discussed more fully in the next section entitled “Risk Factors.” These risks and uncertainties include, but are not limited to, the following:
| ● | We are reliant on a limited number of customers, and the loss of one or more of these customers would adversely affect our business. |
| ● | If our efforts to build strong brand identity and improve subscriber satisfaction and loyalty are not successful, we may not be able to attract or retain subscribers, and our operating results may be adversely affected. |
| ● | If we are unable to continue using our current marketing channels, our ability to attract new subscribers may be adversely affected. |
| ● | Although we do not distribute content through our service, if we are sued for content accessed through our service, our results of operations would be adversely affected. |
| ● | Any significant disruption in our computer systems or those of third-parties that we utilize in our operations could result in a loss or degradation of service and could adversely impact our business. |
| ● | We rely upon third parties to host certain aspects of our service and any disruption of, or interference with, our use of such third-party services would impact our operations and our business would be adversely impacted. |
| ● | We rely heavily on our proprietary technology to locate and organize online video, radio and games and to manage other aspects of our operations, and the failure of this technology to operate effectively could adversely affect our business. |
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| ● | Privacy concerns could limit our ability to leverage our subscriber data and our disclosure of or unauthorized access to subscriber data could adversely impact our business and reputation. |
| ● | Our reputation and relationships with subscribers would be harmed if our subscriber data, particularly billing data, were to be accessed by unauthorized persons. |
| ● | Intellectual property claims against us could be costly and result in the loss of significant rights related to, among other things, our Web site, technology, title selection processes and marketing activities. |
| ● | We depend on key management as well as experienced and capable personnel generally, and any failure to attract, motivate and retain our staff could severely hinder our ability to maintain and grow our business. |
| ● | Our Chief Executive Officer and Chief Financial Officer also serve as executive officers of other companies and such other positions may create conflicts of interest for such officers in the future. |
| ● | Changes in consumer viewing habits, including more widespread usage of demand methods of entertainment video consumption could adversely affect our business. |
| ● | Our business depends on continued and unimpeded access to the Internet at non-discriminatory prices, and Internet access providers and Internet backbone providers may be able to block, limit, degrade or charge for access to certain of our products and services, which could lead to additional expenses and the loss of users. |
| ● | Changes in how network operators handle and charge for access to data that travel across their networks could adversely impact our business. |
| ● | Our listing differs significantly from an initial public offering conducted on a firm-commitment basis. |
| ● | Limitations on investors’ ability to trace their shares to this registration statement may preclude claims under Sections 11 and 12 of the Securities Act of 1933, as amended, or the Securities Act, potentially reducing our liability exposure and limiting investor remedies. |
| ● | Our shares of Class A common stock currently have no public market. An active trading market may not develop or continue to be liquid and the market price of our shares of Class A common stock may be volatile. |
| ● | Certain recent initial public offerings of companies with public floats comparable to our anticipated public float have experienced extreme volatility that was seemingly unrelated to the underlying performance of the respective company. We may experience similar volatility, which may make it difficult for prospective investors to assess the value of our Class A common stock. |
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| ● | The dual class structure of our common stock will have the effect of concentrating voting control with our founder, Chief Executive Officer and Chairman, William A. Mobley, Jr., which will limit or preclude your ability to influence corporate matters, including the election of directors and the approval of any change of control transaction, and that may adversely affect the trading price of our Class A common stock. |
| ● | We are a “controlled company” within the meaning of the Nasdaq rules and, as a result, qualify for and rely on exemptions from certain corporate governance requirements. As a result, our shareholders do not have the same protections afforded to shareholders of companies that cannot rely on such exemptions and are subject to such requirements. |
| ● | If securities or industry analysts do not publish research or reports about our business, if they change their recommendations regarding our Class A common stock adversely, or if we fail to achieve analysts’ earnings estimates, the market price and trading volume of our Class A common stock could decline. |
| ● | If we are unable to meet the continued listing requirements of Nasdaq, Nasdaq will delist our Class A common stock. |
| ● | Our business currently depends on the availability of adequate funding and access to capital. As a result, we need to raise significant amounts of additional capital. We may be unable to obtain the additional capital when we need it, or on acceptable terms, if at all. |
| ● | It is not possible to predict the actual number of shares of our Class A common stock we will sell under our equity line of credit, or the actual gross proceeds resulting from those sales. |
| ● | The sale and issuance of our Class A common stock under our equity line of credit may cause substantial dilution to our existing shareholders, and the resale of such shares may cause the price of our Class A common stock to decrease. |
| ● | Our management will have broad discretion over the use of the net proceeds from our sale of our Class A common stock under our equity line of credit, and you may not agree with how we use the proceeds. |
| ● | For as long as we are an “emerging growth company,” we will not be required to comply with certain reporting requirements, including those relating to accounting standards and disclosure about our executive compensation, which apply to other public companies. |
| ● | If we fail to maintain an effective system of internal control over financial reporting, we may not be able to accurately report our financial results or prevent fraud. As a result, shareholders could lose confidence in our financial and other public reporting, which would harm our business and the trading price of our Class A common stock. |
| ● | In the past, we have had weaknesses in our internal control over financial reporting. |
| ● | Substantial future sales or perceived potential sales of our Class A common stock in the public market could cause the price of our Class A common stock to decline significantly. |
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Investing in our Class A common stock involves a high degree of risk. You should consider carefully the risks and uncertainties described below, together with all of the other information in this prospectus, including the financial statements, the notes thereto and the section entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included elsewhere in this prospectus before deciding whether to invest in shares of our Class A common stock. The risks and uncertainties described below are not the only ones we face. Additional risks and uncertainties that we are unaware of or that we deem immaterial may also become important factors that adversely affect our business. If any of the following risks actually occur, our business, financial condition, results of operations and future prospects could be materially and adversely affected. In that event, the market price of our Class A common stock could decline, and you could lose part or all of your investment.
Risks Relating to Our Business
We may not be able to continue as a going concern without additional financing, and if such financing is not available to us or is not available to us on acceptable terms, we may be forced to cease operations.
We have a limited operating history and have incurred recurring losses from operations. As of September 30, 2025, we have an accumulated deficit of $198,097,550, and a stockholders’ deficit of $851,384. For the three months ended September 30, 2025, and 2024, we incurred a net loss of $2,862,349 and $3,559,805, respectively. Our failure to generate sufficient revenues, effectively manage expenses or raise additional capital could adversely affect our ability to achieve our intended business objectives. These matters, among others, raise substantial doubt about our ability to continue as a going concern.
We funded our initial operations primarily through sales of Class A common stock to accredited investors, debt financing, and exchange of Class A common stock for services received by us. We cannot be certain that additional funding will be available on acceptable terms, or at all. To the extent that we raise additional funds by issuing equity securities, our shareholders may experience significant dilution. Any debt financing, if available, may involve restrictive covenants that impact our ability to conduct business. If we are not able to raise additional capital when required or on acceptable terms, we may have to: (i) significantly delay, scale back or discontinue the development or commercialization of new products; (ii) seek collaborators for further development and commercialization of our products; or (iii) relinquish or otherwise dispose of some or all of our rights to technologies or the products that we would otherwise seek to develop or commercialize.
Our SmartGuide relies on a technology that we license from Nextelligence, Inc. and any interruption of our rights as a licensee could have a significant adverse impact on some major aspects of our business, such as product development, customer retention and sales.
Our SmartGuide has been built on technology developed by Nextelligence, Inc., or Nextelligence, and used by us pursuant to a Technology License and Development Agreement (as amended, the “Technology Agreement”). Nextelligence is principally owned and controlled by William A. Mobley, Jr., our founder, Chief Executive Officer and Chairman. The Technology Agreement provides that Nextelligence is obligated to provide all further development, improvement, modification, maintenance, management and enhancement services related to the technology. The Technology Agreement may be terminated if, among other things, we breach the Technology Agreement, if we become insolvent or subject to the bankruptcy laws, or if there is a change of control (as defined in the Technology Agreement). If we were not able to use the technology for any reason, it could have a significant adverse impact on some major aspects of our business, such as product development, customer retention and sales.
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If our efforts to attract and retain subscribers are not successful, our business will be adversely affected.
Our ability going forward to attract and retain subscribers will depend on our ability to consistently provide a robust, valuable and quality experience for selecting and viewing TV shows, movies and channels and access to online radio stations. Furthermore, the relative service levels, content offerings, pricing and related features of competitors to our service may adversely impact our ability to attract and retain subscribers. If consumers do not perceive our service offering to be of value, or if we introduce new or adjust existing services that are not favorably received by them, we may not be able to attract subscribers. In addition, many of our subscribers are re-joining our service or originate from word-of-mouth advertising from existing subscribers. Our attracting and retaining subscribers may depend on our ability to:
| ● | offer a secure platform; |
| ● | provide tools and services that meet the evolving needs of consumers; |
| ● | provide a wide range of high-quality product and service offerings; |
| ● | enhance the attractiveness of our platform; |
| ● | maintain the quality of our customer service; and |
| ● | continue adapting to the changing demands of the market. |
If our efforts to satisfy our existing subscribers are not successful, we may not be able to attract new subscribers, and as a result, our ability to maintain or grow our business will be adversely affected. Subscribers cancel their subscription to our service for many reasons, including a perception that they do not use the service sufficiently, the need to cut household expenses, availability of content is limited, competitive services provide a better value or experience, and customer service issues are not satisfactorily resolved. We must continually add new subscribers both to replace subscribers who cancel and to grow our business beyond our current subscriber base. If too many of our subscribers cancel our service, or if we are unable to attract new subscribers in numbers sufficient to grow our business, our operating results will be adversely affected. If we are unable to successfully compete with current and new competitors in both retaining our existing subscribers and attracting new subscribers, our business will be adversely affected. Further, if excessive numbers of subscribers cancel our service, we may be required to incur significantly higher marketing expenditures than we currently anticipate in order to replace these subscribers with new subscribers.
If we are not able to continue to innovate or if we fail to adapt to changes in our industry, our business, financial condition and results of operations would be materially and adversely affected.
The market for online video, radio and games is characterized by rapidly changing technology, evolving industry standards, new service and product introductions and changing customer demands. Although we have developed new products and services in order to meet customer demands, new technologies and evolving business models for delivery of entertainment video continue to develop at a fast pace and we may not be able to keep up with all of the changes. Consumers are afforded various means for consuming online video, radio and games. The various economic models underlying these differing means of entertainment video delivery include subscription, pay-per-view, ad-supported and piracy-based models. Several competitors have longer operating histories, larger customer bases, greater brand recognition and significantly greater financial, marketing and other resources than we do. New entrants may enter the market with unique service offerings or approaches to distributing online video, radio and games and other companies also may enter into business combinations or alliances that strengthen their competitive positions. The changes and developments taking place in our industry may also require us to re-evaluate our business model and adopt significant changes to our long-term strategies and business plan. If we are unable to successfully or profitably compete with current and new competitors, programs and technologies, our business will be adversely affected, and we may not be able to increase or maintain market share, revenues or profitability.
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We may not be able to maintain or grow our revenue or our business.
Since the beginning of fiscal year 2019, we have been focused on investing in and developing new technologies, which we anticipate will drive future growth and give us a sustainable revenue stream. In addition, we have transitioned to a “multi license” model from a “single-license” model. We believe that with new technology, coupled with our new sales and marketing strategy focused on generating revenue through free registrations of FreeCast.com by partnering with retailers, manufacturers, operators and/or distributors of streaming devices, mobile phones, broadband carriers, broadcasters, property management, multi-dwelling developers, builders, and various mass consumer communities of streaming tv watchers in exchange for a negotiated revenue sharing percentage with each distributor on a case-by-case basis. However, there can be no assurance that we will be able to generate sufficient revenue from distributor fees or fees from premium content purchased by subscribers through our SmartGuide to fund our operations in the future. In addition, our growth may become stagnant for many other reasons, including decreasing consumer spending, increasing competition, slowing growth of the consumption of online video, radio and games, changes in government policies or general economic conditions.
If we are not able to manage our growth, our business could be adversely affected.
We are currently engaged in an effort to grow our service by promoting online access renewal, developing new products, expanding internationally and to residents of rural areas. As we undertake all these changes, if we are not able to manage the growing complexity of our business, including improving, refining or revising our systems and operational practices, our business may be adversely affected.
We are reliant on a limited number of customers, and the loss of one or more of these customers would adversely affect our business.
For the three months years ended September 30, 2025, and 2024, more than 26% and 65%, respectively, of our total revenue was derived from two related party customers. The loss of either customer, or a substantial reduction in their business with us, would adversely affect our financial performance and our business. Our reliance on a small customer base limits our ability to mitigate downturns in specific customer relationships or industry segments. Strategic decisions made by these customers could adversely impact our operations, including pricing, service levels, and product development priorities. Financial instability or delayed payments from these customers could negatively affect our liquidity and working capital. We cannot be certain that we will retain these customers, or replace the revenue if we lose them. Any disruption in our relationship with these two customers would likely have an adverse impact on our financial condition and business.
If our efforts to build strong brand identity and improve subscriber satisfaction and loyalty are not successful, we may not be able to attract or retain subscribers, and our operating results may be adversely affected.
We must continue to build and maintain strong brand identity for our products and services, which have expanded over time. We believe that strong brand identity will be important in attracting subscribers. If our efforts to promote and maintain our existing brands and brands we develop in the future are not successful, our operating results and our ability to attract subscribers may be adversely affected. From time to time, subscribers’ express dissatisfaction with our service, including, among other things, title availability, processing and service interruptions. To the extent dissatisfaction with our service is widespread or not adequately addressed, our brand may be adversely impacted and our ability to attract and retain subscribers may be adversely affected. With respect to our planned international expansion, we will also need to establish our brand and to the extent we are not successful, our business in new markets would be adversely impacted.
If we are unable to manage the mix of subscriber acquisition sources, our subscriber levels and marketing expenses may be adversely affected.
We utilize a broad mix of marketing programs to promote our service to potential new subscribers. We obtain new subscribers through our online marketing efforts, including paid search listings, banner ads, text links and permission-based e-mails. In addition, we have engaged in various offline marketing programs, including TV and radio advertising, direct mail and print campaigns, consumer package and mailing insertions. We maintain an active public relations program to increase awareness of our service and drive subscriber acquisition. We opportunistically adjust our mix of marketing programs to acquire new subscribers at a reasonable cost with the intention of achieving overall financial goals. If we are unable to maintain or replace our sources of subscribers with similarly effective sources, or if the cost of our existing sources increases, our subscriber levels and marketing expenses may be adversely affected.
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If we are unable to continue using our current marketing channels, our ability to attract new subscribers may be adversely affected.
We may not be able to continue to support the marketing of our service by current means if such activities are no longer available to us, become cost prohibitive or are adverse to our business. If companies that currently promote our service decide that we are negatively impacting their business, that they want to compete more directly with our business or enter a similar business or decide to exclusively support our competitors, we may no longer be given access to such marketing through them. In addition, if advertising rates increase, we may curtail marketing efforts or otherwise experience an increase in our marketing costs. Laws and regulations impose restrictions on the use of certain channels, including commercial e-mail and direct mail. We may limit or discontinue use or support of e-mail and other activities if we become concerned that subscribers or potential subscribers deem such activities intrusive, which could affect our goodwill or brand. If the available marketing channels are curtailed, our ability to attract new subscribers may be adversely affected.
Although we do not distribute content through our service, if we are sued for content accessed through our service, our results of operations would be adversely affected.
Although we do not distribute content through our service, we face potential liability for negligence, copyright, patent or trademark infringement or other claims based on content accessed through our service. We also may face potential liability for content uploaded from our users in connection with our community-related content or reviews. If we become liable for such activities, then our business may suffer. Litigation to defend these claims could be costly and the expenses and damages arising from any liability could harm our results of operations. We cannot assure you that we are insured or indemnified to cover claims of these types or liability that may be imposed on us.
We rely upon a number of partners to offer our service.
We currently offer subscribers the ability to easily navigate available sources of online video, radio and games and consume such media through their computers and other Internet-connected devices. If we are not successful in maintaining existing and creating new relationships with content providers, or if we encounter technological, content licensing or other impediments to our ability to organize content, our ability to grow our business could be adversely impacted. Furthermore, mobile devices and TVs are manufactured and sold by entities other than FreeCast and while these entities should be responsible for the devices’ performance, the connection between these devices and FreeCast may nonetheless result in consumer dissatisfaction toward FreeCast and such dissatisfaction could result in claims against us or otherwise adversely impact our business.
Any significant disruption in our computer systems or those of third-parties that we utilize in our operations could result in a loss or degradation of service and could adversely impact our business.
Subscribers and potential subscribers access our service through our Web site or their TVs, computers, game consoles, or streaming or mobile devices. Our reputation and ability to attract, retain and serve our subscribers are dependent upon the reliable performance of our computer systems and those of third-parties that we utilize in our operations. Interruptions in these systems, or with the Internet in general, including discriminatory network management practices, could make our service unavailable or degraded. Much of our software is proprietary, and we rely on the expertise of our engineering and software development teams for the continued performance of our software and computer systems. Service interruptions, errors in our software or the unavailability of computer systems used in our operations could diminish the overall attractiveness of our service to existing and potential customers.
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Our servers and those of third-parties we use in our operations are vulnerable to computer viruses, physical or electronic break-ins and similar disruptions, which could lead to interruptions and delays in our service and operations as well as loss, misuse or theft of data. Our Web site periodically experiences directed attacks intended to cause a disruption in service. Any attempts by hackers to disrupt our service or our internal systems, if successful, could harm our business, be expensive to remedy and damage our reputation. Our insurance does not cover expenses related to attacks on our Web site or internal systems. Efforts to prevent hackers from entering our computer systems are expensive to implement and may limit the functionality of our services. Any significant disruption to our service or internal computer systems could result in a loss of subscribers and adversely affect our business and results of operations.
We utilize our own communications and computer hardware systems located either in our facilities or in that of a third-party Web hosting provider. In addition, we utilize third-party Internet-based or “cloud” computing services in connection with our business operations. Problems faced by our third-party Web hosting or cloud computing providers, including technological or business-related disruptions, could adversely impact the experience of our subscribers. In addition, fires, floods, earthquakes, power losses, telecommunications failures, break-ins and similar events could damage these systems and hardware or cause them to fail completely. As we do not maintain entirely redundant systems, a disrupting event could result in prolonged downtime of our operations and could adversely affect our business.
We rely upon third parties to host certain aspects of our service and any disruption of, or interference with, our use of such third-party services would impact our operations and our business would be adversely impacted.
We make use of a number of services provided by third parties, including distributed computing infrastructure platform for business operations, or what is commonly referred to as a cloud computing service. We have architected our software and computer systems so as to utilize data processing, storage capabilities and other services provided by such third parties. Given this, along with the fact that we cannot easily switch our operations to other providers, any disruption of or interference with our use of current service providers would impact our operations and our business would be adversely impacted.
We rely heavily on our proprietary technology to locate and organize online video, radio and games and to manage other aspects of our operations, and the failure of this technology to operate effectively could adversely affect our business.
We continually enhance or modify the technology used for our operations. We cannot be sure that any enhancements or other modifications we make to our operations will achieve the intended results or otherwise be of value to our subscribers. Future enhancements and modifications to our technology could consume considerable resources. If we are unable to maintain and enhance our technology, our ability to retain existing subscribers and to add new subscribers may be impaired. In addition, if our technology or that of third-parties we utilize in our operations fails or otherwise operates improperly, our ability to retain existing subscribers and to add new subscribers may be impaired. Also, any harm to our subscribers’ personal computers or other devices caused by software used in our operations could have an adverse effect on our business, results of operations and financial condition.
Privacy concerns could limit our ability to leverage our subscriber data and our disclosure of or unauthorized access to subscriber data could adversely impact our business and reputation.
In the ordinary course of business and, in particular, in connection with merchandising our service to our subscribers, we collect and utilize data supplied by our subscribers. We currently face certain legal obligations regarding the manner in which we treat such information. Other businesses have been criticized by privacy groups and governmental bodies for attempts to link personal identities and other information to data collected on the Internet regarding users’ browsing and other habits. Increased regulation of data utilization practices, including self-regulation or findings under existing laws, which limit our ability to use collected data, could have an adverse effect on our business. In addition, if unauthorized access to our subscriber data were to occur or if we were to disclose data about our subscribers in a manner that was objectionable to them, our business reputation could be adversely affected, and we could face potential legal claims that could impact our operating results.
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Our reputation and relationships with subscribers would be harmed if our subscriber data, particularly billing data, were to be accessed by unauthorized persons.
We maintain personal data regarding our subscribers, including names and, in many cases, mailing addresses. With respect to billing data, such as credit card numbers, we rely on licensed encryption and authentication technology to secure such information. We take measures to protect against unauthorized intrusion into our subscribers’ data. If, despite these measures, we, or our payment processing services, experience any unauthorized intrusion into our subscribers’ data, current and potential subscribers may become unwilling to provide the information to us necessary for them to become subscribers, we could face legal claims, and our business could be adversely affected. Similarly, if a well-publicized breach of the consumer data security of any other major consumer Web site were to occur, there could be a general public loss of confidence in the use of the Internet for commerce transactions which could adversely affect our business.
In addition, we do not obtain signatures from subscribers in connection with the use of credit cards by them. Under current credit card practices, to the extent we do not obtain cardholders’ signatures, we are liable for fraudulent credit card transactions, even when the associated financial institution approves payment of the orders. From time to time, fraudulent credit cards are used on our Web site to obtain service. Typically, these credit cards have not been registered as stolen and are therefore not rejected by our automatic authorization safeguards. While we do have a number of other safeguards in place, we nonetheless experience some loss from these fraudulent transactions. We do not currently carry insurance against the risk of fraudulent credit card transactions. A failure to adequately control fraudulent credit card transactions would harm our business and results of operations.
We may not be able to protect our intellectual property rights.
We rely on a combination of trademark, fair trade practice, patent, copyright and trade secret protection laws, as well as confidentiality procedures and contractual provisions, to protect our intellectual property rights. We also enter into confidentiality agreements with our employees and any third parties who may access our proprietary information, and we rigorously control access to our proprietary technology and information.
Intellectual property protection may not be sufficient and confidentiality agreements may be breached by counterparties, and there may not be adequate remedies available to us for any such breach. Accordingly, we may not be able to effectively protect our intellectual property rights or to enforce our contractual rights, including our rights under the Technology Agreement with Nextelligence. In addition, policing any unauthorized use of our intellectual property is difficult, time-consuming and costly and the steps we have taken may be inadequate to prevent the misappropriation of our intellectual property. In the event that we resort to litigation to enforce our intellectual property rights, such litigation could result in substantial costs and a diversion of our managerial and financial resources. We can provide no assurance that we would prevail in such litigation. In addition, our trade secrets may be leaked or otherwise become available to, or be independently discovered by, our competitors. Any failure in protecting or enforcing our intellectual property rights could have a material adverse effect on our business, financial condition and results of operations.
Intellectual property claims against us could be costly and result in the loss of significant rights related to, among other things, our Web site, technology, title selection processes and marketing activities.
Trademark, copyright, patent and other intellectual property rights are important to us. Our intellectual property rights extend to our technology, business processes and the content on our Web site. We use the intellectual property of third-parties in merchandising our products and marketing our service through contractual and other rights. From time to time, third-parties allege that we have violated their intellectual property rights. If we are unable to obtain sufficient rights, successfully defend our use, or develop non-infringing technology or otherwise alter our business practices on a timely basis in response to claims against us for infringement, misappropriation, misuse or other violation of third-party intellectual property rights, our business and competitive position may be adversely affected. Many companies are devoting significant resources to developing patents that could potentially affect many aspects of our business. There are numerous patents that broadly claim means and methods of conducting business on the Internet. We have not searched patents relative to our technology. Defending ourselves against intellectual property claims, whether they are with or without merit or are determined in our favor, results in costly litigation and diversion of technical and management personnel. It also may result in our inability to use our current Web site and technology, or our inability to market our service or merchandise our products. As a result of a dispute, we may have to develop non-infringing technology, enter into royalty or licensing agreements, adjust our merchandising or marketing activities or take other actions to resolve the claims. These actions, if required, may be costly or unavailable on terms acceptable to us.
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If we are unable to protect our domain names, our reputation and brand could be adversely affected.
We currently hold various domain names relating to our brand, including freecast.com. Failure to protect our domain names could adversely affect our reputation and brand and make it more difficult for users to find our Web site and our service. The acquisition and maintenance of domain names generally are regulated by governmental agencies and their designees. The regulation of domain names in the U.S. may change in the near future. Governing bodies may establish additional top-level domains, appoint additional domain name registrars or modify the requirements for holding domain names. As a result, we may be unable to acquire or maintain relevant domain names. Furthermore, the relationship between regulations governing domain names and laws protecting trademarks and similar proprietary rights is unclear. We may be unable, without significant cost or at all, to prevent third-parties from acquiring domain names that are similar to, infringe upon or otherwise decrease the value of our trademarks and other proprietary rights.
We depend on key management as well as experienced and capable personnel generally, and any failure to attract, motivate and retain our staff could severely hinder our ability to maintain and grow our business.
We rely on the continued service of our senior management, including our founder and Chief Executive Officer and Chairman of our board of directors, William A. Mobley, Jr., other members of our executive team and other key employees to develop our products, services and solutions. In our industry, there is substantial and continuous competition for highly skilled business, product development, technical and other personnel. As a result, our human resources organization focuses significant efforts on attracting and retaining individuals in key technology positions. If we lose the services of any member of management or key personnel and are unable to attract or locate suitable or qualified replacements, or otherwise hire talented personnel, we may incur additional expenses to recruit and train new staff, making it more difficult to meet our business objectives, which could severely disrupt our business and growth.
Our Chief Executive Officer and Chief Financial Officer also serve as executive officers of other companies and such other positions may create conflicts of interest for such officers in the future.
William A. Mobley, Jr., our Chief Executive Officer and Chairman, works full-time for us, devoting approximately 50 hours a week to our business. Mr. Mobley also works part-time for Nextelligence and serves as its Chief Executive Officer and Chairman of the board of directors. Mr. Mobley’s duties to Nextelligence may compete for his full attention to our business; accordingly, he may have conflicts of interest in allocating time between those separate business activities.
Jonathan Morris, our Chief Financial Officer, works full-time for us, devoting approximately 45 hours a week to our business. Mr. Morris also advises two special purpose acquisition companies (SPACs), ESH Acquisition Corp. and Global Blockchain Acquisition Corp., on a limited basis as a consultant and their Chief Financial Officer. Mr. Morris’ duties to these other businesses may compete for his full attention to our business; accordingly, he may have conflicts of interest in allocating time between those separate business activities.
We cannot be assured we can obtain or retain third-party contractors for our specific services or development needs, which could disrupt our business operations or growth.
If we experience a substantial loss of, or an inability to attract, talented personnel, we may experience difficulty in meeting our business objectives.
Our brand name and our business may be harmed by aggressive marketing and communications strategies of our competitors.
Due to competition in our industry, we have been and may be the target of incomplete, inaccurate and false statements about our company and our services that could damage our and our management’s reputation and our brand and materially deter consumers from using our service. Our brand name and our business may be harmed if we are unable to promptly respond to our competitors’ misleading marketing efforts.
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Risks Related to our Industry
Changes in consumer viewing habits, including more widespread usage of demand methods of entertainment video consumption could adversely affect our business.
The manner in which consumers seek entertainment online is changing rapidly. Digital cable, wireless and Internet content providers are continuing to improve technologies, content offerings, user interfaces and business models that allow consumers to access entertainment video-on-demand with interactive capabilities. The devices through which online video, radio and games can be consumed are also changing rapidly. For example, content from cable service providers may be viewed on laptops and mobile devices and content from Internet content providers may be viewed on TVs. If competitors providing similar services address the changes in consumer habits in a manner that is better able to meet content distributor and consumer needs and expectations, our business could be adversely affected.
Our business depends on continued and unimpeded access to the Internet at non-discriminatory prices, and Internet access providers and Internet backbone providers may be able to block, limit, degrade or charge for access to certain of our products and services, which could lead to additional expenses and the loss of users.
Our products and services depend on the ability of our customers’ viewers to access the Internet, and certain of our customers’ products require significant bandwidth to work effectively. Currently, this access is provided by companies that have significant and increasing market power in the broadband and Internet access marketplace, including incumbent telephone companies, cable companies and mobile communications companies. Some of these providers have stated that they may take measures that could degrade, disrupt or increase the cost of user access by restricting or prohibiting the use of their infrastructure to support or facilitate offerings, or by charging increased fees to provide offerings, while others, including some of the largest providers of broadband Internet access services (ISPs), have committed to not engaging in such behavior.
The ability of the FCC to regulate broadband Internet access services was called into question by an April 2010 ruling of the U.S. Court of Appeals for the D.C. Circuit. The FCC then proposed rules regulating broadband Internet access, but on January 14, 2014, the D.C. Circuit Court of Appeals struck down the net neutrality rules adopted by the FCC, determining that the FCC did not have the authority to issue or enforce net neutrality rules, as it had failed to identify certain service providers as “common carriers.” On February 26, 2015, the FCC adopted a new rule that reclassifies broadband Internet access service as a telecommunication service and regulates broadband Internet access as a public utility (Title II Order). In 2016, a divided panel of the D.C. Circuit Court of Appeals upheld the Title II Order, concluding that the FCC’s classification of broadband Internet access service was permissible. However, under President Donald Trump’s administration, the FCC reversed course and in December 2017 adopted a new rule referred to as the Restoring Internet Freedom Order, which went into effect on June 11, 2018. The Restoring Internet Freedom Order (RIFO): (i) reinstated the information service classification of broadband Internet access service; (ii) reinstated the determination that mobile broadband Internet access service is not a commercial mobile service; and (iii) eliminated the Internet conduct standard and the non-exhaustive list of factors intended to guide application of that rule. On October 1, 2019, D.C. Circuit Court of Appeals upheld most provisions of the RIFO. One aspect of the RIFO that the court did not uphold relates to the FCC’s assertion that it could pre-empt state-level actions involving Net Neutrality and the Open Internet. More than 30 states have introduced bills to add their own net neutrality protections, several of which have gone into effect. The U.S. House of Representatives on April 10, 2019 passed a bill, called the Save the Internet Act, requiring internet service providers to treat all online content the same. The U.S. Senate, however, did not pass the bill. On July 9, 2021, President Joe Biden signed Executive Order 14036 (EO), “Promoting Competition in the American Economy,” a sweeping array of initiatives across the executive branch. Among them included instructions to the FCC to restore the net neutrality rules under the Title II Order that had been undone during the prior administration. In June 2024, the FCC adopted a new rule as instructed under the EO referred to as the Safeguarding and Securing the Open Internet rule (SSOI). SSOI restored Title II Order’s net neutrality regulations by reclassifying broadband Internet access service as a telecommunications service, making ISPs “common carriers” subject to stricter regulations for non-discriminatory access and oversight on pricing and service quality. On January 2, 2025, however, the U.S. Court of Appeals for the Sixth Circuit struck down the SSOI, ruling that the FCC incorrectly classified ISPs as telecommunications service providers, rather than non-common carrier providers of information services, and therefore exceeded its authority in imposing the net neutrality regulations.
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Unless either the Supreme Court overturns or Congress passes legislation that supersedes the RIFO, it is possible that broadband service providers could impose restrictions on bandwidth and service delivery that may adversely impact our download speeds or ability to deliver content over those facilities, or impose significant end user or other fees that could impact the cost of our services to end users, or our delivery costs. If no action is taken by the Supreme Court or Congress, current and future actions by broadband Internet access providers may also result in limitations on access to our services, a loss of existing users, or increased costs to us, our users or our customers, thereby impairing our ability to attract new users, or limiting our opportunities and models for revenue and growth.
Changes in how network operators handle and charge for access to data that travel across their networks could adversely impact our business.
We rely upon the ability of consumers to access our service through the Internet. To the extent that network operators implement usage-based pricing, including meaningful bandwidth caps, or otherwise try to monetize access to their networks by data providers, we could incur greater operating expenses, and our subscriber acquisition and retention could be negatively impacted.
Most network operators that provide consumers with access to the Internet also provide these consumers with multichannel video programming. As such, companies like Comcast, Time Warner Cable and Cablevision have an incentive to use their network infrastructure in a manner adverse to our continued growth and success. While we believe that consumer demand, regulatory oversight and competition will help limit these incentives, to the extent that network operators are able to provide preferential treatment to their data as opposed to ours, our industry and business could be negatively impacted.
Risks Related to Ownership of Our Class A Common Stock and this Offering
Our listing differs significantly from an initial public offering conducted on a firm-commitment basis.
This is not an initial public offering of Class A common stock conducted on a firm-commitment underwritten basis. This listing of our Class A common stock on Nasdaq differs from a firm-commitment underwritten initial public offering in several significant ways, which include, but are not limited to, the following:
| ● | There are no underwriters engaged on a firm-commitment basis. Consequently, prior to the opening of trading on Nasdaq, there will be no traditional book building process and no price at which underwriters initially sold shares to the public to help inform efficient and sufficient price discovery with respect to the opening trades on Nasdaq. Therefore, buy and sell orders submitted prior to and at the opening of trading of our Class A common stock on Nasdaq will not have the benefit of being informed by a published price range or a price at which the underwriters initially sold shares to the public, as would be the case in an initial public offering underwritten on a firm-commitment basis. Moreover, there will be no underwriters engaged on a firm-commitment underwritten basis assuming risk in connection with the initial resale of shares of our Class A common stock. In an initial public offering underwritten on a firm-commitment basis, the underwriters may engage in “covered” short sales in an amount of shares representing the underwriters’ option to purchase additional shares. To close a covered short position, the underwriters purchase shares in the open market or exercise the underwriters’ option to purchase additional shares. In determining the source of shares to close the covered short position, the underwriters typically consider, among other things, the price of shares available for purchase in the open market as compared to the price at which they may purchase shares through the underwriters’ option to purchase additional shares. Purchases in the open market to cover short positions, as well as other purchases underwriters may undertake for their own accounts, may have the effect of preventing a decline in the market price of shares. Given that there will be no underwriters’ option to purchase additional shares and no underwriters engaging in stabilizing transactions, there could be greater volatility in the public price of our Class A common stock during the period immediately following the listing. See also “— Our shares of Class A common stock have no prior public market. An active trading market may not develop or continue to be liquid and the market price of our shares of Class A common stock may be volatile.” |
| ● | There is not a fixed number of securities available for sale. Therefore, there can be no assurance that any Registered Shareholders or other existing shareholders will sell any or all of their Class A common stock and there may initially be a lack of supply of, or demand for, our Class A common stock on Nasdaq. Alternatively, we may have a large number of Registered Shareholders or other existing shareholders who choose to sell their Class A common stock in the near term resulting in an oversupply of our Class A common stock, which could adversely impact the public price of our Class A common stock once listed on Nasdaq. |
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| ● | We will not conduct a traditional “roadshow” with underwriters prior to the opening of trading on Nasdaq. Instead, we intend to host an investor day, as well as engage in certain other investor education meetings. In advance of the investor day, we will announce the date for such day over financial news outlets in a manner consistent with typical corporate outreach to investors. We will prepare an electronic presentation for this investor day, which will have content similar to a traditional roadshow presentation, and make one version of the presentation publicly available, without restriction, on a website. There can be no guarantees that the investor day and other investor education meetings will have the same impact on investor education as a traditional “roadshow” conducted in connection with a firm-commitment underwritten initial public offering. As a result, there may not be efficient price discovery with respect to our Class A common stock or sufficient demand among investors immediately after our listing, which could result in a more volatile public price of our Class A common stock. |
Such differences from a firm-commitment underwritten initial public offering could result in a volatile market price for our Class A common stock and uncertain trading volume and may adversely affect your ability to sell your Class A common stock.
Limitations on investors’ ability to trace their shares to this registration statement may preclude claims under Sections 11 and 12 of the Securities Act, potentially reducing our liability exposure and limiting investors remedies.
In connection with this direct listing, we are registering 19,782,084 shares of our common stock, all of which may be sold into the public market. Unlike in a traditional initial public offering, where all shares sold in the public market are issued pursuant to a registration statement, in a direct listing, both registered and unregistered shares may become freely tradeable simultaneously. As a result, purchasers in the public market following our direct listing may not be able to determine whether their shares were issued pursuant to this registration statement.
The ability to bring a claim under Section 11 of the Securities Act of 1933 requires that the security purchased be traceable to the allegedly defective registration statement. In Slack Technologies, LLC v. Pirani, 598 U.S. 759 (2023), the U.S. Supreme Court held that Section 11 applies only to shares that are actually issued pursuant to the registration statement. The U.S. Court of Appeals for the Ninth Circuit, in its 2025 opinion on remand, confirmed that the tracing requirement applies in the context of direct listings and that tracing shares to a registration statement is particularly difficult where registered and unregistered shares begin trading at the same time.
Accordingly, if you purchase our common stock in the open market following this direct listing, you may not be able to assert claims under Section 11 or Section 12(a)(2) of the Securities Act for any material misstatements or omissions in this registration statement or related prospectus. This limitation may reduce the potential remedies available to investors, limit recovery in the event of a violation of the federal securities laws, and adversely affect the market price of our common stock. Moreover, because our potential liability under the Securities Act may be reduced as compared to a traditional IPO, investors may face greater risk in the event of inaccurate or incomplete disclosures.
Our shares of Class A common stock currently have no public market. An active trading market may not develop or continue to be liquid and the market price of our shares of Class A common stock may be volatile.
We expect our shares of Class A common stock to be listed and traded on Nasdaq. Prior to the listing on Nasdaq, there has not been a public market for our shares of Class A common stock, and an active market for our shares of Class A common stock may not develop or be sustained after the listing, which could depress the market price of our shares of Class A common stock and could affect the ability of our shareholders to sell our shares of Class A common stock. In the absence of an active public trading market, investors may not be able to liquidate their investments in our shares of Class A common stock. An inactive market may also impair our ability to raise capital by selling shares of our Class A common stock, our ability to motivate our employees through equity incentive awards and our ability to acquire other companies, products or technologies by using our shares of Class A common stock as consideration.
In addition, we cannot predict the prices at which our shares of Class A common stock may trade on Nasdaq following the listing of our shares of Class A common stock, and the market price of our shares of Class A common stock may fluctuate significantly in response to various factors, some of which are beyond our control. In particular, as this listing is taking place through a novel process that is not a firm-commitment underwritten initial public offering, there will be no traditional book building process and no price at which traditional underwriters initially sold shares to the public to help inform efficient price discovery with respect to the opening trades on Nasdaq. On the day that our shares of Class A common stock are initially listed on Nasdaq, Nasdaq will begin accepting, but not executing, pre-opening buy and sell orders and will begin to continuously generate the indicative Current Reference Price on the basis of such accepted orders. The Current Reference Price is calculated each second and, during a 10-minute “Display Only” period, is disseminated, along with other indicative imbalance information, to market participants by Nasdaq on its NOII and BookViewer tools. Following the “Display Only” period, a “Pre-Launch” period begins, during which the Advisor, in its capacity as our financial advisor, must notify Nasdaq that our shares are “ready to trade.” Once the Advisor has notified Nasdaq that our shares of Class A common stock are ready to trade, Nasdaq will confirm the Current Reference Price for our shares of Class A common stock, in accordance with the Nasdaq rules. If the Advisor then approves proceeding at the Current Reference Price, the applicable orders that have been entered will be executed at such price and regular trading of our shares of Class A common stock on Nasdaq will commence, subject to Nasdaq conducting validation checks in accordance with Nasdaq rules. The Advisor will determine when our shares of Class A common stock are ready to trade and approve proceeding at the Current Reference Price primarily based on considerations of volume, timing and price. In particular, the Advisor will determine, based primarily on pre-opening buy and sell orders, when a reasonable amount of volume will cross on the opening trade such that sufficient price discovery has been made to open trading at the Current Reference Price. If the Advisor does not approve proceeding at the Current Reference Price (for example, due to the absence of adequate preopening buy and sell interest), the Advisor will request that Nasdaq delay the open until such a time that sufficient price discovery has been made to ensure a reasonable amount of volume crosses on the opening trade. For more information, see “Plan of Distribution.”
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Additionally, prior to the opening trade, there will not be a price at which underwriters initially sold shares of Class A common stock to the public as there would be in a firm-commitment underwritten initial public offering. The absence of a predetermined initial public offering price could impact the range of buy and sell orders collected by Nasdaq from various broker-dealers. Consequently, upon listing on Nasdaq, the public price of our Class A common stock may be more volatile than in a firm-commitment underwritten initial public offering and could decline significantly and rapidly.
Furthermore, because of our novel listing process on the Nasdaq Global Market, Nasdaq’s rules for ensuring compliance with its initial listing standards, such as those requiring a valuation or other compelling evidence of value, are untested. In the absence of a prior active public trading market for our Class A common stock, if the price of our Class A common stock or our market capitalization falls below those required by Nasdaq’s eligibility standards, we may not be able to satisfy the ongoing listing criteria and may be required to delist.
In addition, because of our novel listing process, individual investors, retail or otherwise, may have greater influence in setting the opening public price and subsequent public prices of our Class A common stock on Nasdaq and may participate more in our initial trading than is typical for a firm-commitment underwritten initial public offering. These factors could result in a public price of our Class A common stock that is higher than other investors (such as institutional investors) are willing to pay, which could cause volatility in the trading price of our Class A common stock and an unsustainable trading price if the price of our Class A common stock significantly rises upon listing and institutional investors believe our Class A common stock is worth less than retail investors, in which case the price of our Class A common stock may decline over time. Further, if the public price of our Class A common stock is above the level that investors determine is reasonable for our Class A common stock, some investors may attempt to short our Class A common stock after trading begins, which would create additional downward pressure on the public price of our Class A common stock. To the extent that there is a lack of consumer awareness among retail investors, such a lack of consumer awareness could reduce the value of our Class A common stock and cause volatility in the trading price of our Class A common stock.
We may not be able to meet each of the quantitative requirements of the Nasdaq Global Market’s Market Value Standard for Direct Listings.
We have applied to have shares of our Class A common stock listed on the Nasdaq Global Market. We expect that our Class A common stock will be listed on the Nasdaq Global Market on or promptly after the date of this prospectus. In order for the Nasdaq Global Market to approve our listing application, we will need to meet the quantitative requirements of the Nasdaq Global Market’s Market Value Standard for Direct Listings, as provided in Nasdaq Listing Rules 5405(a) and 5405(b)(3). We expect to meet all those requirements but in the event that we are unable to meet such requirements, we will not be approved to list our Class A common stock on the Nasdaq Global Market and our securities could be quoted on an over-the-counter market. If this were to occur, we could face significant material adverse consequences, including:
| ● | a limited availability of market quotations for our securities; |
| ● | reduced liquidity for our securities; |
| ● | a determination that our common stock is “penny stock” which will require brokers trading in our common stock to adhere to more stringent rules and possibly result in a reduced level of trading activity in the secondary trading market for our securities; |
| ● | a limited amount of news and analyst coverage; and |
| ● | a decreased ability to issue additional securities or obtain additional financing in the future. |
The National Securities Markets Improvement Act of 1996, which is a federal statute, prevents or preempts the states from regulating the sale of certain securities, which are referred to as “covered securities.” Because we expect that our Class A common stock will be listed on the Nasdaq Global Market, our Class A common stock will qualify as covered securities under the statute. Although the states are preempted from regulating the sale of our securities, the federal statute does allow the states to investigate companies if there is a suspicion of fraud, and, if there is a finding of fraudulent activity, then the states can regulate or bar the sale of covered securities in a particular case. If we cannot be listed on the Nasdaq Global Market or any other national securities exchange, our securities would not qualify as covered securities under the statute and we would be subject to regulation in each state in which we offer our securities.
The trading price of our Class A common stock, upon listing on the Nasdaq Global Market, may have little or no relationship to the historical sales prices of our Class A common stock in private transactions.
Prior to the registration and listing of our Class A common stock on the Nasdaq Global Market, there has been no public market for our Class A common stock. The historical sales prices of our Class A common stock are primarily from our sale of Class A common stock in private transactions. In the section titled “Sale Price History of our Common Stock,” we have provided the historical sales prices of our common stock in private transactions. However, given the limited history of sales, among other factors, this information may have little or no relation to any broader market demand for our Class A common stock and thus the price of our Class A common stock. As a result, you should not place undue reliance on these historical sales prices as they may differ materially from the trading price of our Class A common stock on the Nasdaq Global Market.
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Future sales of Class A common stock by our Registered Shareholders and other existing shareholders could cause our share price to decline.
We currently expect our Class A common stock to be listed and traded on Nasdaq. Prior to listing on Nasdaq, there has been no public market for our Class A common stock. Moreover, consistent with Regulation M and other federal securities laws applicable to our listing, we have not consulted with Registered Shareholders or other existing shareholders regarding their desire or plans to sell shares in the public market following the listing or discussed with potential investors their intentions to buy our Class A common stock in the open market. While our Class A common stock may be sold after our listing on Nasdaq by the Registered Shareholders pursuant to this prospectus, or, subject to leak-out agreements, in accordance with Rule 144 of the Securities Act, unlike a firm-commitment underwritten initial public offering, there can be no assurance that any Registered Shareholders will sell any of their shares of Class A common stock and there may initially be a lack of supply of, or demand for, Class A common stock on Nasdaq. In the case of a lack of supply of our Class A common stock, the trading price of our Class A common stock may rise to an unsustainable level. Further, institutional investors may be discouraged from purchasing our Class A common stock if they are unable to purchase a block of our Class A common stock in the open market due to a potential unwillingness of our existing shareholders to sell a sufficient amount of Class A common stock at the price offered by such institutional investors and the greater influence individual investors have in setting the trading price. If institutional investors are unable to purchase our Class A common stock, the market for our Class A common stock may be more volatile without the influence of long-term institutional investors holding significant amounts of our Class A common stock. In the case of a lack of market demand for our Class A common stock, the trading price of our Class A common stock could decline significantly and rapidly after our listing. Therefore, an active, liquid and orderly trading market for our Class A common stock may not initially develop or be sustained, which could significantly depress the public price of our Class A common stock and/or result in significant volatility, which could affect your ability to sell your shares of Class A common stock.
Certain recent initial public offerings of companies with public floats comparable to our anticipated public float have experienced extreme volatility that was seemingly unrelated to the underlying performance of the respective company. We may experience similar volatility, which may make it difficult for prospective investors to assess the value of our Class A common stock.
In addition to the risks addressed below in “—The market price of our Class A common stock may be volatile, which could cause the value of your investment to decline,” our Class A common stock may be subject to extreme volatility that is seemingly unrelated to the underlying performance of our business. Recently, companies with comparable public floats and initial public offering sizes have experienced instances of extreme stock price run-ups followed by rapid price declines, and such stock price volatility was seemingly unrelated to the respective company’s underlying performance. Although the specific cause of such volatility is unclear, our anticipated public float may amplify the impact the actions taken by a few shareholders have on the price of our Class A common stock, which may cause our share price to deviate, potentially significantly, from a price that better reflects the underlying performance of our business. Should our Class A common stock experience run-ups and declines that are seemingly unrelated to our actual or expected operating performance and financial condition or prospects, prospective investors may have difficulty assessing the rapidly changing value of our Class A common stock. In addition, investors of our Class A common stock may experience losses, which may be material, if the price of our Class A common stock declines after the listing of our Class A common stock on Nasdaq or if such investors purchase shares of our Class A common stock from the Registered Shareholders prior to any price decline.
Holders of our Class A common stock may also not be able to readily liquidate their investment or may be forced to sell at depressed prices due to low volume trading. Broad market fluctuations and general economic and political conditions may also adversely affect the market price of our Class A common stock. As a result of this volatility, investors may experience losses on their investment in our Class A common stock. Furthermore, the potential extreme volatility may confuse the public investors of the value of our shares, distort the market perception of our share price and our financial performance and public image and negatively affect the long-term liquidity of our Class A common stock, regardless of our actual or expected operating performance. If we encounter such volatility, including any rapid share price increases and declines seemingly unrelated to our actual or expected operating performance and financial condition or prospects, it will likely make it difficult and confusing for prospective investors to assess the rapidly changing value of our Class A common stock and understand the value thereof.
The dual class structure of our common stock will have the effect of concentrating voting control with our founder, Chief Executive Officer and Chairman, William A. Mobley, Jr., which will limit or preclude your ability to influence corporate matters, including the election of directors and the approval of any change of control transaction, and that may adversely affect the trading price of our Class A common stock.
Our Class B common stock has 15 votes per share, and our Class A common stock, which is the stock being offered by means of this prospectus, has one vote per share. Mr. Mobley holds, collectively with his permitted entities, and controls all of our outstanding shares of our Class B common stock. Accordingly, upon the closing of this offering, assuming all of the 6,946,980 Class B shares that are being converted into Class A shares and registered for sale by Mr. Mobley in this offering are sold and not converted back to Class B shares, he will hold approximately 75.55% of the voting power of our outstanding capital stock, even if his stock ownership represents less than 50% of the outstanding aggregate number of shares of our capital stock. As a result, Mr. Mobley will be able to significantly influence matters submitted to our shareholders for approval, including the election of directors, amendments of our organizational documents and any merger, consolidation, sale of all or substantially all of our assets or other major corporate transactions. Mr. Mobley may have interests that differ from yours and may vote in a way with which you disagree and which may be adverse to your interests. This concentrated control may have the effect of delaying, preventing or deterring a change in control of our company, could deprive our shareholders of an opportunity to receive a premium for their capital stock as part of a sale of our company and might ultimately affect the market price of our Class A common stock.
Future transfers by Mr. Mobley will generally result in those shares converting into shares of Class A common stock, subject to limited exceptions, such as certain transfers affected for estate planning or charitable purposes. In addition, each share of Class B common stock will convert automatically into one share of Class A common stock upon the death of Mr. Mobley. For information about our dual class structure, see the section titled “Description of Capital Stock.”
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We cannot predict the effect our dual-class structure may have on the market price of our Class A common stock.
We cannot predict whether our dual-class structure will result in a lower or more volatile market price of our Class A common stock, adverse publicity or other adverse consequences. For example, certain index providers have announced and implemented restrictions on including companies with multiple-class share structures in certain of their indices. In July 2017, FTSE Russell announced that it would require new constituents of its indices to have greater than 5% of the company’s voting rights (aggregated across all of its equity securities, including those that are not listed or trading) in the hands of public shareholders. Pursuant to the FTSE Russell, this 5% minimum voting rights requirement only applies to companies assigned a Developed market nationality within the FTSE Equity Country Classification scheme, and, based upon the FTSE Equity Country Classification Interim Announcement published on March 30, 2023, the United States is assigned a Developed market nationality within the FTSE. In addition, in July 2017, the S&P Dow Jones announced that it would no longer admit companies with multiple-class share structures to certain of its indices; however, in October 2022, the S&P Dow Jones announced that it was conducting a consultation with market participants on the multiple share class eligibility methodology requirement via a survey that closed on December 15, 2022. Subsequently, the S&P Dow Jones Indices announced that, effective as of April 17, 2023, companies with multiple share class structures will be considered eligible for the S&P Composite 1500 and its component indices, including the S&P 500, the S&P MidCap 400 and the S&P SmallCap 600, if they meet all other eligibility criteria. Also in 2017, MSCI, a leading stock index provider, opened public consultations on its treatment of no-vote and multi-class structures and temporarily barred new multi-class listings from certain of its indices; however, in October 2018, MSCI announced its decision to include equity securities “with unequal voting structures” in its indices. Additionally, MSCI announced that the securities of companies exhibiting unequal voting structures will be eligible for addition to the MSCI ACWI IMI and other relevant indexes effective March 1, 2019. Currently, MSCI offers the MSCI World Voting Rights-Adjusted Index. This index specifically includes voting rights in the weighting criteria and construction methodology and aims to better align constituent weights with economic rights and voting power, while continuing to represent the performance of a broad opportunity set. The dual-class structure of our common stock may make us ineligible for inclusion in certain indices and, as a result, mutual funds, exchange-traded funds and other investment vehicles that attempt to passively track those indices would not invest in our Class A common stock. In addition, it is unclear what effect, if any, such policies will have on the valuations of publicly-traded companies excluded from such indices, but it is possible that they may adversely affect valuations, as compared to similar companies that are included. Due to the dual-class structure of our common stock, we may be excluded from certain indices and we cannot assure you that other stock indices (including Nasdaq) will not take similar actions. Given the sustained flow of investment funds into passive strategies that seek to track certain indices, exclusion from certain stock indices may preclude investment by many of these funds and could make our Class A common stock less attractive to other investors. As a result, the market price of our Class A common stock may be adversely affected.
We are a “controlled company” within the meaning of the Nasdaq rules and, as a result, qualify for and rely on exemptions from certain corporate governance requirements. As a result, our shareholders do not have the same protections afforded to shareholders of companies that cannot rely on such exemptions and are subject to such requirements.
William A. Mobley, Jr., our Chief Executive Officer and Chairman individually owns and holds a majority of the combined voting power of our outstanding capital stock. As a result, we are a “controlled company” within the meaning of the Nasdaq listing rules. Under these rules, a company of which more than 50% of the voting power is held by an individual, a group or another company is a “controlled company” and may elect not to comply with certain corporate governance requirements of Nasdaq, including, but not limited to, the requirement that:
| ● | a majority of the board of directors consist of directors who qualify as “independent” as defined under the Nasdaq listing rules; |
| ● | its board of directors have a nominating and corporate governance committee composed entirely of independent directors with a written charter addressing the committee’s purpose and responsibilities; and |
| ● | its board of directors have a compensation committee composed entirely of independent directors with a written charter addressing the committee’s purpose and responsibilities. |
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We intend to rely on some or all of these exemptions so long as we remain a “controlled company.” As a result, we may not have: (i) a majority of independent directors; (ii) a nominating and governance committee composed entirely of independent directors; and (iii) a compensation committee composed entirely of independent directors. Accordingly, our shareholders may not have the same protections afforded to shareholders of companies subject to all of the corporate governance requirements of Nasdaq.
The market price of our Class A common stock may be volatile, which could cause the value of your investment to decline.
Securities markets worldwide experience significant price and volume fluctuations. This market volatility, as well as the factors listed below, some of which are beyond our control, could affect the market price of our Class A common stock:
| ● | our failure to achieve actual operating results that meet or exceed guidance that we may have provided due to factors beyond our control, such as currency volatility and trading volumes; |
| ● | future announcements concerning us or our competitors, including the announcement of acquisitions; |
| ● | changes in government regulations or in the status of our regulatory approvals or licensure; |
| ● | public perceptions of risks associated with our services or operations; |
| ● | developments in our industry; and |
| ● | general economic, market and political conditions and other factors that may be unrelated to our operating performance or the operating performance of our competitors. |
If securities or industry analysts do not publish research or reports about our business, if they change their recommendations regarding our Class A common stock adversely, or if we fail to achieve analysts’ earnings estimates, the market price and trading volume of our Class A common stock could decline.
The trading market for our Class A common stock may be influenced by the research and reports that industry or securities analysts publish about us or our business. If one or more of the analysts who cover us or our industry make unfavorable comments about our market opportunity or business, the market price of our Class A common stock would likely decline. If one or more of these analysts ceases coverage of us or fails to regularly publish reports on us, we could lose visibility in the financial markets, which could cause the market price of our Class A common stock or trading volume to decline. In addition, if we fail to achieve analysts’ earnings estimates, the market price of our Class A common stock would also likely decline.
If we are unable to meet the continued listing requirements of Nasdaq, Nasdaq will delist our Class A common stock.
Upon the consummation of this offering of shares of our Class A common stock by the Registered Shareholders, our Class A common stock will be listed on Nasdaq. In the future, if we are not able to meet Nasdaq’s continued listing standards, we could be subject to suspension and delisting proceedings. A delisting of our Class A common stock and our inability to list on another national securities exchange could negatively impact us by: (i) reducing the liquidity and market price of our Class A common stock; (ii) reducing the number of investors willing to hold or acquire our Class A common stock, which could negatively impact our ability to raise equity financing; (iii) limiting our ability to use a registration statement to offer and sell freely tradable securities, thereby preventing us from accessing the public capital markets; and (iv) impairing our ability to provide equity incentives to our employees.
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Because we do not intend to pay dividends for the foreseeable future, investors in the offering will benefit from their investment in shares only if our Class A common stock appreciates in value.
We currently intend to retain our future earnings, if any, to finance the operation and growth of our business and do not expect to pay any dividends in the foreseeable future. As a result, the success of an investment in our Class A common stock will depend upon any future appreciation in its value. Our Class A common stock may not appreciate in value or even maintain the price at which investors in this offering of shares of our Class A common stock by the Registered Shareholders have purchased their shares.
Our business currently depends on the availability of adequate funding and access to capital. As a result, we need to raise significant amounts of additional capital. We may be unable to obtain the additional capital when we need it, or on acceptable terms, if at all.
As of September 30, 2025, we have a cash balance of $345,723. We had a working capital deficit of $1,151,752 as of September 30, 2025. We plan to raise additional equity financing, without which we will not be able to meet our obligations as they become due for the next 12 months. We cannot provide any assurance that additional equity financing will be available on terms that are acceptable to us, or at all.
It is not possible to predict the actual number of shares of our Class A common stock we will sell under the Equity Purchase Agreement, or the actual gross proceeds resulting from those sales.
On December 8, 2025, we entered into an Equity Purchase Agreement (EPA) with a certain institutional investor named therein (the “Investor”), pursuant to which the Investor committed to purchase up to $50 million of shares of our Class A common stock, subject to certain limitations and conditions set forth in the EPA. As consideration for the Investor’s commitment to purchase shares of our Class A common stock in accordance with the EPA, we agreed to pay a commitment fee in an amount equal to $750,000, by the issuance to the Investor of a number of shares of Class A common stock (the “Commitment Shares”) as follows: (1) one-third of the Commitment Shares are to be issued to the Investor on the occurrence of the first closing under the EPA; (2) one-third of the Commitment Shares are to be issued to the Investor on the date the Investor has purchased an aggregate of $15 million of shares of our Class A common stock under the EPA; and (3) the remaining one-third of the Commitment Shares are to be issued to the Investor on the date the Investor has purchased an aggregate of $30 million of shares of our Class A common stock under the EPA. The number of Commitment Shares issued to the Investor on each required date will equal $250,000 divided by the lower of (i) $10.00; and (ii) the lowest daily VWAP (as defined in the EPA) of our Class A common stock during the five trading days immediately following to the date we give the Investor notice of our intent to sell them Class A common stock under the EPA. The Class A common stock that may be issued under the EPA may be sold by us to the Investor at our discretion, from time to time, over a 36-month period commencing on the date of the Direct Listing. We generally have the right to control the timing and amount of any sales of our Class A common stock to the Investor under the EPA. Sales of our Class A common stock under the EPA will depend upon market conditions as well as other factors to be determined by us. We may ultimately decide to sell to the Investor all or a portion of the shares of our Class A common stock that may be available under the EPA, or decide to terminate the EPA or not sell to the Investor any Class A common stock that may be available for us to sell to the Investor thereunder.
Because the purchase price per share to be paid by the Investor for the shares of our Class A common stock that we may elect to sell under the EPA will fluctuate based on the market prices of our Class A common stock during the applicable pricing period for each purchase, it is not possible for us to predict, as of the date of this prospectus, the number of shares of Class A common stock that we will sell to the Investor under the EPA, the purchase price per share that the Investor will pay for shares purchased from us under the EPA, or the aggregate gross proceeds that we will receive from those purchases by the Investor under the EPA.
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The sale and issuance of our Class A common stock to the Investor under the EPA may cause substantial dilution to our existing shareholders, and the resale of such shares acquired by the Investor, or the perception that such resales may occur, may cause the price of a share of our Class A common stock to decrease.
Issuances of Class A common stock by us to the Investor under the EPA will result in dilution to the interests of existing shareholders, which dilution may be substantial. Additionally, the sale of a substantial number of our Class A common stock to the Investor, or the anticipation of such sales, could make it more difficult for us to sell equity or equity-related securities in the future at a time and at a price that we might otherwise wish to affect sales.
The purchase price for each share of our Class A common stock to be paid by the Investor that we may elect to sell the Investor under the EPA, if any, will fluctuate based on the trading prices of our Class A common stock at the time we elect to sell our Class A common stock to the Investor under the EPA. Depending on market liquidity at the time, resales of such shares by the Investor may cause the trading price of our Class A common stock to decrease, and any such decrease may be substantial.
Our management will have broad discretion over the use of the net proceeds from our sale of shares of Class A common stock under the EPA, and you may not agree with how we use the proceeds and the proceeds may not be invested successfully.
Our management will have broad discretion in the application of the proceeds we receive from the sale of our Class A common stock to the Investor under the EPA, and you will not have the opportunity as part of your investment decision to assess whether our management is using the proceeds appropriately. Because of the number and variability of factors that will determine our use of the proceeds we receive from the Investor under the EPA, their ultimate use may vary substantially from their currently intended use. The failure by our management to apply these funds effectively could result in financial losses that could have a material adverse effect on our business and cause the price of our Class A common stock to decline.
For as long as we are an “emerging growth company,” we will not be required to comply with certain reporting requirements, including those relating to accounting standards and disclosure about our executive compensation, that apply to other public companies.
We are an “emerging growth company,” as defined in the Securities Act. As such, we are eligible to take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not “emerging growth companies,” including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404(b) of the Sarbanes–Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy and information statements and exemptions from the requirements of holding a non-binding advisory vote on executive compensation and of shareholder approval of any golden parachute payments not previously approved. Because we intend to take advantage of these exemptions, some investors may find our Class A common stock less attractive, which may result in a less active trading market for our Class A common stock and our stock price may be more volatile.
In addition, the JOBS Act provides that an “emerging growth company” can take advantage of the extended transition period for complying with new or revised accounting standards.
We could remain an “emerging growth company” until June 30, 2031 or, if earlier: (i) the last day of the first fiscal year in which our annual gross revenues exceed $1.07 billion; (ii) if the market value of our Class A common stock that is held by non-affiliates exceeds $700 million as of the last business day of the second fiscal quarter of any fiscal year, the last day of such fiscal year; or (iii) the date on which we have issued more than $1 billion in non-convertible debt securities during the preceding three-year period. If we are still a smaller reporting company (a company with a public float of less than $75 million) after we no longer qualify as an emerging growth company, we may be able to make use of some of the same exemptions (such as the exemption to the auditor attestation requirements of Section 404(b) of the Sarbanes–Oxley Act) as were available to us when we qualified as an emerging growth company.
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If we fail to maintain an effective system of internal control over financial reporting, we may not be able to accurately report our financial results or prevent fraud. As a result, shareholders could lose confidence in our financial and other public reporting, which would harm our business and the trading price of our Class A common stock.
We are not currently required to comply with Section 404(a) of the Sarbanes–Oxley Act and are therefore not required to make a formal assessment of the effectiveness of our internal control over financial reporting for that purpose. Upon becoming a public company, we will be required to comply with the SEC’s rules implementing Sections 302 and 404 of the Sarbanes–Oxley Act, which will require management to certify financial and other information in our quarterly and annual reports and provide an annual management report on the effectiveness of controls over financial reporting. Although we will be required to disclose changes made in our internal controls and procedures on a quarterly basis, we will not be required to make our first annual assessment of our internal control over financial reporting pursuant to Section 404 until the year following our first annual report required to be filed with the SEC. However, as an “emerging growth company,” our independent registered public accounting firm will not be required to formally attest to the effectiveness of our internal control over financial reporting pursuant to Section 404 until the later of the year following our first annual report required to be filed with the SEC or the date we are no longer an “emerging growth company.” At such time, our independent registered public accounting firm may issue a report that is adverse in the event it is not satisfied with the level at which our controls are documented, designed or operating.
In addition, to comply with the requirements of being a public company, we may need to undertake various actions, such as implementing new internal controls and procedures and hiring additional accounting or internal audit staff. Testing and maintaining internal control can divert our management’s attention from other matters that are important to the operation of our business. In addition, when evaluating our internal control over financial reporting, we may identify material weaknesses that we may not be able to remediate in time to meet the applicable deadline imposed upon us for compliance with the requirements of Section 404. If we identify material weaknesses in our internal control over financial reporting or are unable to comply with the requirements of Section 404 in a timely manner or assert that our internal control over financial reporting is effective, or if our independent registered public accounting firm is unable to express an opinion as to the effectiveness of our internal control over financial reporting, investors may lose confidence in the accuracy and completeness of our financial reports and the market price of our Class A common stock could be negatively affected, and we could become subject to investigations by the stock exchange on which our securities are listed, the SEC or other regulatory authorities, which could require additional financial and management resources.
Material weaknesses in our internal control over financial reporting.
Although we are not yet required to assess our internal controls over financial reporting, we have identified material weaknesses in our internal control over financial reporting, relating to our failure to receive documentation prior to paying certain invoices. As is the case with many companies of our size: (i) we did not have written documentation of our internal control policies and procedures; (ii) we did not have sufficient segregation of duties within accounting functions; (iii) we did not have adequate staff and supervision within our accounting function; and (iv) we lacked a sufficient process for periodic financial reporting, including timely preparation and review of financial reports and statements. Although we have taken steps to improve our internal control environment – including engaging the CFO Squad, LLC in December 2018 as a technical accounting expert in financial reporting and controlling function in accordance with the U.S. Generally Accepted Accounting Principles (GAAP) – these efforts have not fully remediated the material weaknesses.
Shareholders may be diluted by the future issuance of additional Class A common stock in connection with acquisitions or otherwise.
We are authorized to issue 320,000,000 shares of Class A common stock. After this offering and the listing of our Class A common stock on Nasdaq, we will have 286,121,200 shares of Class A common stock authorized but unissued (assuming all of the 6,946,980 Class B shares that are being converted into Class A shares and registered for sale by William A. Mobley, Jr. in this offering are sold and not converted back to Class B shares). Our amended and restated articles of incorporation authorize us to issue these shares of Class A common stock and options, rights, warrants and appreciation rights relating to Class A common stock for the consideration and on the terms and conditions established by our board of directors in its sole discretion, whether in connection with acquisitions, in future Class A common stock offerings or otherwise. Any Class A common stock that we issue after the listing of our Class A common stock on Nasdaq will dilute the percentage ownership held by the investors who purchase shares of our Class A common stock from the Registered Shareholders.
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Substantial future sales or perceived potential sales of our Class A common stock in the public market could cause the price of our Class A common stock to decline significantly.
Sales of our Class A common stock or other equity securities in the public market after the listing of our Class A common stock on Nasdaq, or the perception that these sales could occur, could cause the market price of our Class A common stock to decline significantly. Upon the listing of our Class A common stock on Nasdaq, we will have 33,878,800 shares of Class A common stock outstanding (assuming all of the 6,946,980 Class B shares that are being converted into Class A shares and registered for sale by William A. Mobley, Jr. in this offering are sold and not converted back to Class B shares), of which 13,988,455 shares of our Class A common stock, representing approximately 41.3% of our outstanding Class A common stock immediately after the listing of our Class A common stock on Nasdaq, will not be subject to leak-out agreements. All shares of Class A common stock sold by the Registered Shareholders in connection with the listing of our Class A common stock on Nasdaq will be freely transferable by persons other than our “affiliates” without restriction or further registration under the Securities Act. The Class A common stock outstanding after the listing of our Class A common stock on Nasdaq will be available for sale, upon the expiration of the leak-out periods described elsewhere in this prospectus beginning from the date of this prospectus (if applicable to such holder), subject to volume and other restrictions as applicable under Rules 144 and 701 under the Securities Act. Any or all of these shares may be released prior to the expiration of the applicable leak-out period at our discretion. To the extent shares are released before the expiration of the applicable leak-out period and sold into the market, the market price of our Class A common stock could decline significantly.
Certain holders of our Class A common stock will have the right to cause us to register under the Securities Act the sale of their shares, subject to the applicable leak-out periods in connection with the listing of our Class A common stock on Nasdaq. Registration of these shares under the Securities Act would result in such shares becoming freely tradable without restriction under the Securities Act immediately upon the effectiveness of the registration. Sales of these registered shares in the public market could cause the price of our Class A common stock to decline significantly.
Anti-takeover provisions contained in our articles of incorporation and bylaws could impair a takeover attempt.
Our articles of incorporation and bylaws contain provisions which could have the effect of rendering more difficult, delaying or preventing an acquisition deemed undesirable by our board of directors. Our corporate governance documents include provisions:
| ● | authorizing “blank check” preferred stock, which could be issued by our board of directors without shareholder approval and may contain voting, liquidation, dividend, and other rights superior to our Class A common stock; | |
| ● | limiting the liability of, and providing indemnification to, our directors and officers; | |
| ● | limiting the ability of our shareholders to call and bring business before special meetings; | |
| ● | requiring advance notice of shareholder proposals for business to be conducted at meetings of our shareholders and for nominations of candidates for election to our board of directors; and | |
| ● | controlling the procedures for the conduct and scheduling of board of directors and shareholder meetings. |
These provisions, alone or together, could delay or prevent hostile takeovers and changes in control or changes in our management.
Any provision of our articles of incorporation or bylaws that has the effect of delaying or deterring a change in control could limit the opportunity for our shareholders to receive a premium for their shares of our Class A common stock and could also affect the price that some investors are willing to pay for our Class A common stock.
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The COVID-19 pandemic has had, and may in the future continue to have, a material adverse impact on our business.
The onset of the 2019 novel coronavirus (“COVID-19”) pandemic and the travel restrictions, quarantines, and related public health measures and actions taken by governments and the private sector previously adversely affected global economies, financial markets and the overall environment for our business. However, the extent to which it may continue to impact our future results of operations and overall financial performance remains uncertain and is difficult to assess or predict. New variants and subvariants of COVID-19 continue to surface, including in our most recent fiscal year. The existence of new or enduring variant strains of COVID-19 may cause the implementation of new restrictions and mandates, which could be applied differently across jurisdictions. The global macroeconomic effects of the pandemic may persist for an indefinite period of time, even after the pandemic has subsided. In addition, we cannot predict the impact the COVID-19 pandemic has had and will have on our brand partners, third-party vendors and service providers, and we may continue to be materially adversely impacted as a result of the negative past, present and future impact upon our brand partners, third-party vendors and service providers.
The impact of the COVID-19 pandemic on our business going forward will depend on a range of factors which we are not able to accurately predict, including the duration and scope of the pandemic, a repeat of the spike in the number of COVID-19 cases, the geographies impacted, the impact of the pandemic on economic activity and the nature and severity of measures adopted by governments, including restrictions on travel, mandates to avoid large gatherings and orders to self-quarantine or shelter in place. In addition, to the extent COVID-19 adversely affects our operations and global economic conditions more generally, it may also have the effect of heightening many of the other risks described in these Risk Factors.
We will incur significantly increased costs as a result of and devote substantial management time to operating as a public company.
As a public company, we will incur significant legal, accounting and other expenses that we did not incur as a private company. For example, we will be subject to the reporting requirements of the Securities Exchange Act of 1934, as amended, and will be required to comply with the applicable requirements of the Sarbanes-Oxley Act and the Dodd-Frank Wall Street Reform and Consumer Protection Act, as well as rules and regulations subsequently implemented by the SEC, including the establishment and maintenance of effective disclosure and financial controls, changes in corporate governance practices and required filing of annual, quarterly and current reports with respect to our business and operating results. These requirements will increase our legal and financial compliance costs and will make some activities more time-consuming and costly. In addition, our management and other personnel will need to divert attention from operational and other business matters to devote substantial time to these public company requirements. We will also need to hire additional accounting and financial staff with appropriate public company experience and technical accounting knowledge and will need to establish an internal audit function. We also expect that operating as a public company will make it more expensive for us to obtain director and officer liability insurance, and we may be required to accept reduced coverage or incur substantially higher costs to obtain coverage. This could also make it more difficult for us to attract and retain qualified people to serve on our board of directors, our board committees or as executive officers. In addition, after we no longer qualify as an “emerging growth company,” as defined under the JOBS ACT we expect to incur additional management time and cost to comply with the more stringent reporting requirements applicable to companies that are deemed accelerated filers or large accelerated filers, including complying with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act. We are just beginning the process of compiling the system and processing documentation needed to comply with such requirements. We may not be able to complete our evaluation, testing and any required remediation in a timely fashion. In that regard, we currently do not have an internal audit function, and we will need to hire or contract for additional accounting and financial staff with appropriate public company experience and technical accounting knowledge.
We cannot predict or estimate the amount of additional costs we may incur as a result of becoming a public company or the timing of such costs.
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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
Statements in this prospectus or in the documents incorporated by reference herein that are not descriptions of historical facts are forward-looking statements that are based on management’s current expectations and are subject to risks and uncertainties that could negatively affect our business, operating results, financial condition and stock price. We have attempted to identify forward-looking statements by terminology including “anticipates,” “believes,” “can,” “continue,” “could,” “estimates,” “expects,” “intends,” “may,” “plans,” “potential,” “predicts,” “should,” or “will” or the negative of these terms or other comparable terminology. . We have based these forward-looking statements largely on our current expectations and projections about future events and trends that we believe may affect our financial condition, results of operations, business strategy, short-term and long-term business operations and objectives and financial needs. These forward-looking statements are subject to a number of risks, uncertainties and assumptions, including those described in the section titled “Risk Factors.” Moreover, we operate in a very competitive and rapidly changing environment. New risks emerge from time to time. It is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. In light of these risks, uncertainties and assumptions, the future events and trends discussed in this prospectus may not occur and actual results could differ materially and adversely from those anticipated or implied in the forward-looking statements. Forward-looking statements contained in this prospectus include, but are not limited to, statements about:
| ● | the online video and entertainment industry; |
| ● | our financial performance; |
| ● | our ability to attract and retain customers; |
| ● | our ability to expand our business; |
| ● | our ability to retain and hire necessary employees and appropriately staff our operations; and |
| ● | our estimates regarding capital requirements and needs for additional financing. |
We caution you that the foregoing list may not contain all of the forward-looking statements made in this prospectus.
You should not rely upon forward-looking statements as predictions of future events. The events and circumstances reflected in the forward-looking statements may not be achieved or occur. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Except as required by law, we do not intend to update any of these forward-looking statements after the date of this prospectus or to conform these statements to actual results or revised expectations.
You should read this prospectus and the documents that we reference in this prospectus and have filed with the SEC as exhibits to the registration statement of which this prospectus is a part with the understanding that our actual future results, levels of activity, performance and events and circumstances may be materially different from what we expect.
The Registered Shareholders may, or may not, elect to sell shares of our Class A common stock covered by this prospectus. To the extent any Registered Shareholder chooses to sell shares of our Class A common stock covered by this prospectus, we will not receive any proceeds from any such sales of our Class A common stock. See “Registered Shareholders.”
We have never declared or paid any cash dividends on our capital stock, and we do not currently intend to pay any cash dividends after the offering or for the foreseeable future. We expect to retain future earnings, if any, to fund the development and growth of our business. Any future determination to pay dividends on our Class A common stock will be made at the discretion of our board of directors and will depend upon, among other factors, our financial condition, operating results, current and anticipated cash needs, plans for expansion and other factors that our board of directors may deem relevant. In addition, the terms of our credit facilities contain restrictions on our ability to declare and pay cash dividends on our capital stock.
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The following table sets forth our capitalization as of September 30, 2025.
You should read this table in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the financial statements and related notes included elsewhere in this prospectus.
| Actual | ||||
| Cash | $ | 345,723 | ||
| Debt | - | |||
| Stockholders’ equity: | ||||
| Preferred stock, $0.0001 par value, 5,000,000 shares authorized | ||||
| Series A Preferred Stock, par value $0.0001, 4,000,000 shares issued and outstanding as of September 30, 2025, and June 30, 2025, respectively | 400 | |||
| Class A common stock, $.0001 par value, 320,000,000 shares authorized; 26,931,820 and 25,947,813 shares issued and outstanding as of September 30, 2025, and June 30, 2025, respectively | 2,695 | |||
| Class B common stock, $.0001 par value, 30,000,000 shares authorized; 13,925,640 and 13,937,640 shares issued and outstanding as of September 30, 2025, and June 30, 2025, respectively | 1,393 | |||
| Additional paid-in capital | 197,241,678 | |||
| Accumulated deficit | (198,097,550 | ) | ||
| Total stockholders’ deficit | $ | (851,384 | ) | |
| Total Capitalization | $ | (851,384 | ) | |
The number of shares of common stock outstanding as shown above does not take into account:
| ● | 8,056,087 shares of Class A common stock issuable upon the exercise of outstanding warrants as of September 30, 2025, at a weighted average exercise price of $4.76 per share. |
| ● | 931,779 shares of common stock issuable upon exercise of outstanding options, of which 871,789 have vested and are exercisable as of September 30, 2025, at a weighted average exercise price of $4.13 per share. |
| ● | 2,068,221 shares of Class A common stock available for future issuance under our 2021 Incentive Award Plan. |
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SELECTED HISTORICAL FINANCIAL AND OPERATING DATA
The following table presents our selected historical financial data for the periods presented and should be read in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the financial statement and notes thereto included elsewhere in this prospectus. The statements of operations data for the three months ended September 30, 2025 and 2024 and the statements of financial condition data as of September 30, 2025 and June 30, 2025 are derived from our audited financial statements included elsewhere in this prospectus. Our historical results are not necessarily indicative of the results to be expected in the future.
| For the three months ended | ||||||||
| September 30, | ||||||||
| 2025 | 2024 | |||||||
| Statements of Operations Data: | ||||||||
| Total Revenue | $ | 195,860 | $ | 118,407 | ||||
| Total Cost of Revenue | 58,239 | 102,243 | ||||||
| Total Operating Expenses | 2,945,208 | 3,527,025 | ||||||
| Loss From Operations | (2,807,587 | ) | (3,510,861 | ) | ||||
| Total Other (Expense) Income | (54,762 | ) | (48,944 | ) | ||||
| Net Loss | (2,862,349 | ) | (3,559,805 | ) | ||||
| Net Loss per share, basic and diluted | $ | (0.07 | ) | $ | (0.09 | ) | ||
| As of | ||||||||
| September 30, 2025 | June 30, 2025 | |||||||
| Balance Sheets Data: | ||||||||
| Cash and Cash Equivalents | $ | 345,723 | $ | 549,249 | ||||
| Accounts Receivable | 135,533 | 131,432 | ||||||
| Accounts Receivable – Related Party | 200,969 | 146,303 | ||||||
| Total Assets | 1,331,715 | 1,388,516 | ||||||
| Total Current Liabilities | 1,917,733 | 5,950,483 | ||||||
| Total Liabilities | 2,183,099 | 6,242,024 | ||||||
| Total Shareholders’ Deficit | $ | (851,384 | ) | $ | (4,853,508 | ) | ||
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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion of our financial condition and results of operations should be read in conjunction with our audited financial statements and the related notes thereto and other financial information appearing elsewhere in this prospectus. The following discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results could differ materially from those discussed in the forward-looking statements. Factors that could cause or contribute to these differences include those discussed below and elsewhere in this prospectus, particularly in the section titled “Risk Factors.”
Overview
We currently operate exclusively in the U.S., but see opportunities for expansion into international markets, by signing licensing agreements and collaborating with international CDPs. However, we can only take advantage of these opportunities if we have sufficient capital to do so, are able to recruit the necessary staff, and are able to expand our current infrastructure. We may also face additional challenges from new competitors that may be able to launch new businesses at relatively low cost, with consumers easily being able to shift spending from one provider to another. In order to combat this, we must continue to deliver a product that is more advanced than that of competitors.
Primarily as a result of our shift to a free registration subscription service, we have been able to increase our number of subscribers during our most 12 month period. Our subscriber numbers have increased from 879,489 on September 30, 2024, to 988,158 on September 30, 2025. Our revenue excluding FAST Revenue (FAST Revenue was $54,666 & $79,139 for the three months ended September 30, 2025 and 2024, respectively) and Ad Revenue (Ad Revenue was $119,014 & $128 for the three months ended September 30, 2025 and 2024, respectively) per subscriber has decreased from $0.04 for the three months ending September 30, 2024 compared to $0.02 for the three months ending September 30, 2025.
As of September 30, 2025, we have a cash balance of $345,723 and a working capital deficit of $1,151,752. We plan to raise additional equity financing as well, without which we will not be able to meet our obligations as they become due for the next 12 months. However, we cannot provide any assurance that additional equity financing will be available on terms that are acceptable to us, or at all.
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Components of our Operating Results
Revenue
Subscription (Membership) Revenue
In light of shifting consumer behaviors and constraints on big-box retail sales (especially during the pandemic), we refined our business model in 2022 to focus on B2B2C distribution. This approach leverages partnerships with multi-dwelling unit operators, hospitality providers, broadband carriers, and device manufacturers—each channel granting us immediate, large-scale user access. We believe that aligning with enterprise-level partners reduces our direct retail marketing costs, stabilizes recurring revenues, and extends the reach of our aggregator platform to tens of thousands of new users at once.
As a result, the Company no longer generate subscription revenue through renewal sales of Rabbit TV and Rabbit TV Plus, or through Select TV and Streaming TV Kits, which operated as the successor products to Rabbit TV and Rabbit TV Plus. In October 2022, our SelectTV.com paid subscription service and packaged SelectTV Streaming TV Kits were discontinued. We rebranded to the corporate namesake FreeCast.com and relaunched our SmartGuide as a free registration subscription service. SmartGuide is our internet distributed streaming media guide that searches and aggregates media content on the web and facilitates access to our customers through Wi-Fi-enabled devices that support streaming video.
The Company does, however, sell monthly subscriptions for premium content purchased through our SmartGuide for varying fees for different content. Revenue from such premium subscription fees is recognized on a gross basis over the service period as we are deemed to be the principal in the relationship with the end user. We control the content before transferring it to the end user and have latitude in establishing pricing. We both retransmit and “ingest” and distribute content.
Subscription revenue is derived from online sales through search engine optimization, search engine marketing, various marketing advertising services, the utilization of resellers in the form of publishers that promote upcoming retail promotions and packages, as well as direct sales to subscribers of our Value Channels subscription service. Value Channels subscription contains 17 cable channels and sells on a monthly subscription or annual fee. Value Channels is integrated into the initial FreeCast.com free registration and then offered as an upgrade. Both FreeCast.com (free registration) and Value Channels is available in various streaming Smart TV models (Google TV’s, Amazon Fire TV’s, LG, Samsung, TCL, Sony, and others), plus Streaming Devices (Amazon Fire, Google ChromeCast, Apple TV), PC’s/Laptops and mobile apps for Android and iOS devices.
Subscription revenue is recognized ratably on a straight-line basis over the duration of the subscription period, generally ranging from one month to five years. If the subscriber renews early, then the expiration date is extended by the renewal period, and the additional subscription fee is deferred and amortized over the additional months purchased by the subscriber. We no longer offer SelectTV lifetime subscriptions, which was initially deferred and recognized over a five-year period. All subscription fees are collected at the time of purchase.
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FAST (Free Ad-Supported TV)
We provide FAST channel buildouts that include post-production editing, motion graphics, channel assembly and content acquisitions. We charge the customers based on time incurred for the services plus a reasonable margin in addition to any additional out of pocket cost incurred that is charged at cost to us. In addition, we split the advertising revenue. Revenue is recognized when services are performed. We charge a monthly platform fee for distributing the FAST channel on its platform. Revenue is recognized at the point in time when the content is available on the digital platform.
In June 2023, we entered into verbal arrangements with two related party entities, Test Drive Live Inc. and Celebrity Cigars, Inc. William A. Mobley, Jr. serves as the President of both companies and is the sole director for Celebrity Cigars. Mr. Mobley’s son, Sean Mobley, is part of the management team of Celebrity Cigars. We provided FAST channel buildout services relating to the development and buildout of their respective channels. We also provide the platform on an ongoing basis for each company to stream their content. We charge each company a monthly fee based on a 15% or 30% markup of our cost of production, depending on the level of supervision required to provide our services, which includes labor, rent, etc. We also charge for any out-of-pocket costs, which vary from month-to-month. We are currently negotiating with each company on a potential advertising revenue-sharing arrangement.
Ad Platform Revenue
FreeCast is an agent in transactions on its FreeCast Ad Exchange platforms. The Company acts as an intermediary between DSPs and non-owned and operated publishers by providing access to a platform that allows both parties to transact in the buying and selling of ad inventory. The transaction price is determined through a real-time auction and the Company has no pricing discretion or obligation related to the fulfillment of the advertising delivery
The Company generally invoices buyers at the end of each month for the full purchase price of ad impressions monetized in that month. Accounts receivable are recorded at the amount of gross billings for the amounts the Company is responsible to collect, and accounts payable are recorded at the net amount payable to suppliers. Accordingly, both accounts receivable and accounts payable appear large in relation to revenue reported on a net basis.
Ad Agency Revenue (Launch That and Similar Contracts)
The Company earns revenue from direct client service contracts for marketing and campaign execution, such as the Launch That agreement. These contracts typically involve two distinct phases:
| ● | Phase 1: Discovery and Development Services (data research, audience analysis, creative development). Revenue is recognized over time using an input method based on the proportion of costs incurred relative to total estimated costs for Phase 1. |
| ● | Phase 2: Test Media Distribution Services (media placement, outreach, KPI reporting). Revenue is recognized upon delivery of the performance evaluation report specified in the contract. |
Revenue from such contracts is presented separately from “Other Revenue” due to its materiality and distinct nature.
Deferred Revenue – Ad Agency Revenue (Launch That and Similar Contracts)
For the Ad Agencyrevenue stream, the Company provides demand partners with access to the FreeCast Ad Platform, enabling real-time bidding on advertising inventory. Revenue is recognized at a point in time when a transaction is completed—specifically, when a bid is won and the client’s purchase occurs through the platform. Amounts invoiced in advance of the completion of these transactions are recorded as deferred revenue and recognized as revenue when the Company’s performance obligation is satisfied.
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Other Revenue
Other revenue includes product, licensing, and referral fee revenue. We generate revenue through free registrations of FreeCast.com by signing licensing agreements and collaborating with CDPs. A FreeCast.com license is freely provided per registered consumer marketed by distributors in exchange for a negotiated revenue sharing percentage with each distributor on a case-by-case basis. Affiliate commissions are earned and then shared from third-party advertisement service providers, pay-per-view movie or series distributors, and live events tickets sales for such things as professional boxing or concerts. These license arrangements have not resulted in significant revenue to date.
Beginning in 2024, in conjunction with the release of our new product FreeCast Home, we started recognizing contracts with customers from product sales requiring performance up to delivery, as well as contracts with customers that contain a subscription portion that causes revenue to be allocated or adjusted over time. Shipping and handling activities are performed before the customer obtains control of the goods and therefore represent a fulfillment activity rather than a promised service to the customer. Revenue and costs of sales are recognized when control of the products transfers to our customer, which generally occurs upon shipment from our facilities. For our physical product sales, our performance obligations are satisfied at that time.
Referral fee revenue is generated through premium services which are also available on our platform, for an additional fee, to allow single or time-limited use of private, decrypted viewing of movies, sporting events, concerts or other types of events.
Deferred Revenue
Deferred revenue consists principally of both prepaid but unrecognized subscription revenue and advertising fees received or billed in advance of the delivery or completion of the delivery of services. We may pay sales incentives, in cash or by issuing equity instruments, to distributors of our subscriptions. Such sales incentives are not recognized as deferred revenue. Rather, sales incentives are recognized in current operations when issued, regardless of amounts in deferred revenue, which may have resulted from the distributor’s efforts. Deferred revenue consists primarily of subscriptions for multiple months purchased upfront and recognized ratably over the term of the subscription.
Cost of Revenue
Cost of revenue consists primarily of subscription costs and FAST streaming costs, such as third-party hosting costs, infrastructure costs and salaries and benefits related to employees for our customer support. We make payments to third-party ad servers in the period in which the advertising impressions are delivered, or click-through actions occur, and accordingly record this as a cost of revenue in the related period. Hosting costs consist of content streaming, maintaining our internet service and creating and serving advertisements through third-party ad servers. Cost of revenue also consists of FAST channel buildout costs such as the salaries and benefits related to employees, facility related expenses and information technology associated with supporting these buildouts.
Operating Expenses
Compensation and Benefits
Compensation and benefits consist primarily of employee-related costs, including salaries and benefits related to employees in finance, accounting, internal information technology and other administrative personnel and stock-based compensation.
Sales and Marketing
Sales and marketing consist primarily of employee-related costs, including salaries, commissions and benefits related to employees in sales, sales support and marketing departments. In addition, sales and marketing expenses include external sales and marketing expenses such as third-party marketing, TV Infomercials, branding, advertising, public relations expenses, commissions, facilities-related expenses, and infrastructure costs.
General and Administrative
General and administrative expenses include professional services costs for outside legal and accounting services, facilities-related expenses, travel costs, third party customer support, and credit card fees.
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Three Months Ended September 30, 2025 Compared to Three Months Ended September 30, 2024
Revenue
Our primary sources of revenue are subscription revenue and FAST revenue. Additionally, we have several other revenue streams: product sales revenue, channel streaming, advertising revenue, and other revenue, which encompasses earnings from licensing and referral fees.
Subscription revenue decreased by 42%, or $16,008, to $22,120, in the three months ended September 30, 2025, as compared to $38,128 for the three months ended September 30, 2024. The decrease in subscription revenue is primarily attributable to our shift to a free registration subscription service that is supported with advertising revenue.
FAST revenue decreased by 31%, or $24,473, to $54,666, in the three months ended September 30, 2025, as compared to $79,139 for the three months ended September 30, 2024. The decrease was primarily due to lower production activity and reduced related-party channel buildout services compared to the prior year. While we continued to provide platform distribution services, fewer new channel buildouts were completed in the three months ended September 30, 2025 compared to the three months ended September 30, 2024, resulting in lower FAST revenue.
Ad revenue increased by 92,980% or $118,886 to $119,014, in the three months ended September 30, 2025, as compared to $128 for the three months ended September 30, 2024. The increase was related to the initial demand partners utilizing the FreeCast Ad platform beginning in October 2024.
Other revenue decreased by 94% or $952, to $60 in the three months ended September 30, 2025, as compared to $1,012 for the three months ended September 30, 2024.
Cost of Revenue
Cost of revenue decreased by 43%, or $44,004, to $58,239 in the three months ended September 30, 2025, as compared to $102,243 for the three months ended September 30, 2024. The decrease in cost of revenue is primarily attributed to an inventory write-off during the prior period related to moving away from product sales.
Operating Expenses
Operating expenses decreased by 17%, or $581,817, to $2,945,208 in the three months ended September 30, 2025, as compared to $3,527,025 for the three months ended September 30, 2024. The change in operating expenses is attributed to a $435,925 decrease in general and administrative expenses and a decrease in compensation and benefits expense of $116,349. The decrease in compensation and benefits was primarily the result of a decrease to executive compensation. The decrease in general and administrative expenses was primarily the result of decreased website development and professional fees.
Other (Expense) Income
Other expense was $54,762, for the three months ended September 30, 2025, as compared to other expense of $48,944 for the three months ended September 30, 2024. The change was principally caused by an increase in interest expense of $6,092.
Liquidity and Capital Resources
Since inception, we have financed our operations from a combination of:
| ● | issuance and sales of our Class A common stock; |
| ● | issuance of notes payable with related and non-related parties; |
| ● | issuance of convertible notes payable with related and non-related parties; |
| ● | borrowing under our revolving convertible notes payable with related party; |
| ● | cash advances from related parties; and |
| ● | cash generated from operations. |
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We have experienced operating losses since our inception and had a total accumulated deficit of $198,097,550 as of September 30, 2025. We expect to incur additional cost and require additional capital as we continue to implement our expansion plan. During the three months ended September 30, 2025, and 2024, our cash used in operations was $2,894,970 and $3,065,284, respectively.
Our primary short-term cash requirements are to fund working capital, lease obligations and short-term debt, including current maturities of long-term debt. Working capital requirements can vary significantly from period to period, particularly as a result of additional development expense.
Our ability to fund our cash needs will depend, in part, on our ability to generate cash in the future, which depends on future financial results. Our future results are subject to general economic, financial, competitive, legislative and regulatory factors that may be outside of our control. Our future access to, and the availability of credit on acceptable terms and conditions, is impacted by many factors, including capital market liquidity and overall economic conditions.
Our financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. We have incurred recurring losses and as of September 30, 2025, had an accumulated deficit of $198,097,550. For the three months ended September 30, 2025 and 2024, we sustained a net loss of $2,862,349 and $3,559,805, respectively. These factors, among others, raise substantial doubt about our ability to continue as a going concern for the next twelve months from the date these financial statements were issued. These financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that may be necessary should we be unable to continue as a going concern. Our continuation as a going concern is contingent upon our ability to obtain additional financing and to generate revenue and cash flow to meet our obligations on a timely basis. We will continue to seek to raise additional funding through debt or equity financing during the next twelve months. Management believes that actions presently being taken to obtain additional funding provide the opportunity for us to continue as a going concern. There is no guarantee we will be successful in achieving these objectives.
We cannot be sure that future funding will be available to us on acceptable terms, or at all. Due to often volatile nature of the financial markets, equity and debt financing may be difficult to obtain.
We may seek to raise any necessary additional capital through a combination of private or public equity offerings, debt financings, collaborations, strategic alliances, licensing arrangements and other marketing and distribution arrangements. To the extent that we raise additional capital through marketing and distribution arrangements or other collaborations, strategic alliances or licensing arrangements with third parties, we may have to relinquish valuable rights or future revenue streams on terms that may not be favorable to us. If we raise additional capital through private or public equity offerings, the ownership interest of our existing shareholders will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect our shareholders’ rights. If we raise additional capital through debt financing, we may be subject to covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends.
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Equity Line of Credit
On December 8, 2025, we entered into an Equity Purchase Agreement (EPA) with a certain institutional investor named therein (the “Investor”), pursuant to which the Investor has committed to purchase shares of our Class A common stock. Upon the terms and subject to the satisfaction of the conditions set forth in the EPA, we have the right, but not the obligation, to sell to the Investor, and the Investor is obligated to purchase, up to $50 million (the “Commitment Amount”) in shares of our Class A common stock. Such sales of Class A common stock by us, if any, are subject to certain limitations set forth in the EPA, and may occur from time to time, at our sole discretion, over a period of up to 36 months, commencing on the trading day immediately following the date of the Direct Listing (such period, the “Commitment Period”).
During the Commitment Period, we may from time to time, by written notice delivered by us to the Investor (each, an “Advance Notice”), direct the Investor to purchase a number of shares of our Class A common stock up to the Maximum Advance Amount (as defined in the EPA) as set forth in the Advance Notice, subject to limitations and adjustments as set forth in the EPA. The prices at which such shares will be sold will be based on the applicable Market Price (as defined in the EPA). Unless earlier terminated as provided under the EPA, the term of the facility provided under the EPA terminates automatically on the earliest of (1) the first day of the month following the 36-month anniversary of the trading day immediately following the date of the Direct Listing; (2) the date on which the Investor shall have made payment of Advances pursuant to EPA for Class A common stock equal to the Commitment Amount; (3) the date on which we announce or publicly disclose a material restatement of our financial statements for two (2) or more fiscal quarters; (4) the date a Variable Rate Transaction (as defined in the EPA) has occurred; and (5) the date we have failed to comply with the covenants and obligations contained in Section 6.21 of the EPA regarding the Investor’s right during the Commitment Period to participate in up to 30% of any subsequent capital raising transactions by us during the Commitment Period, on the same terms, conditions and price provided for in such financing.
Under the EPA, we will control the timing and amount of sales of our Class A common stock to the Investor, if any. The Investor has no right to require us to sell any shares of our Class A common stock to the Investor, but the Investor is obligated to make purchases as we direct, subject to certain conditions set forth in the EPA. Actual sales of shares of our Class A common stock to the Investor, if any, will depend on a variety of factors to be determined by us from time to time, including, among others, market conditions, the trading prices for the Class A common stock, and determinations by us as to the appropriate sources of funding for us and our operations.
Consistent with the applicable Nasdaq listing rules, the aggregate number of shares of our Class A common stock that we may issue to the Investor under the EPA may not exceed 19.99% of the shares of Class A common stock issued and outstanding as of the execution date of the EPA (the “Exchange Cap”), unless we first obtain shareholder approval to issue shares of our Class A common stock in excess of the Exchange Cap in accordance with applicable Nasdaq listing rules.
Additionally, we may not direct the Investor to purchase any shares of our Class A common stock under the EPA if such purchase, when aggregated with all other shares of our Class A common stock then owned by the Investor and its affiliates beneficially, would result in the Investor and its affiliates beneficially owning (on an aggregated basis) more than 4.99% of the then outstanding voting power or number of shares of our Class A common stock; provided that, Investor may increase or decrease this ownership limitation, upon notice to us, which notice for any increase will not be effective until the 61st day following the date such notice is delivered, not to exceed 9.99% of the number of shares of our Class A common stock outstanding immediately after giving effect to the issuance of shares of our Class A common stock held by the Investor.
The EPA contains customary representations, warranties, conditions and indemnification obligations of the parties. We have the right to terminate the EPA at any time effective five trading days after providing written notice to the Investor, at no cost or penalty, provided that there are no outstanding Advance Notices, the shares of Class A common stock under which have yet to be issued, and we have paid all amounts owed to the Investor pursuant to the EPA.
As consideration for the Investor’s commitment to purchase shares of our Class A common stock in accordance with the EPA, we agreed to pay a commitment fee in an amount equal to $750,000, by the issuance to the Investor of a number of shares of Class A common stock (the “Commitment Shares”) as follows: (1) one-third of the Commitment Shares are to be issued to the Investor on the occurrence of the first closing under the EPA; (2) one-third of the Commitment Shares are to be issued to the Investor on the date the Investor has purchased an aggregate of $15.0 million of shares of our Class A common stock under the EPA; and (3) the remaining one-third of the Commitment Shares are to be issued to the Investor on the date the Investor has purchased an aggregate of $30.0 million of shares of our Class A common stock under the EPA. The number of Commitment Shares issued to the Investor on each required date will equal $250,000 divided by the lower of (i) $10.00; and (ii) the lowest daily VWAP (as defined in the EPA) of our Class A common stock during the five trading days immediately following to the date we give the Investor notice of our intent to sell them Class A common stock under the EPA.
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In accordance with the EPA, we are required to file a registration statement with respect to the resale of the shares of our Class A common stock issuable under the EPA, including the Commitment Shares. The EPA requires us to file a registration statement within 15 days following the trading day after the Direct Listing date, and to use commercially reasonable efforts to have such registration statement declared effective within 90 days following the trading day after the Direct Listing date. We are required to use commercially reasonable efforts to continuously maintain the effectiveness of the registration statement until all of the Commitment Shares and the shares of our Class A common stock to be issued from time to time under the EPA pursuant to an Advance Notice have been sold or may be sold without restriction pursuant to Rule 144. Such resale registration statement must be effective before we may begin giving Advance Notices.
Convertible Note Payable – Related Party
In June 2016, William A. Mobley, Jr., our founder, Chief Executive Officer and Chairman, loaned us $111,000, at an interest rate of 12% per annum, and due and payable at June 30, 2024. The note was convertible into shares of our Class B common stock at a conversion price of $0.50 per share. The note was converted on March 29, 2024. As of March 29, 2024 and June 30, 2023, accrued interest charges related to this loan were $25,020 and $19,003, respectively. On March 29, 2024, the outstanding principal and accrued interest balance of $92,068 was converted into 184,136 shares of our Class B common stock.
On May 3, 2024, we signed a convertible promissory note with Nextelligence in the principal amount of $1,000,000. Outstanding principal accrues interest at 12% per annum and is due and payable no later than May 3, 2025. In lieu of repayment, at Nextelligence’s option, all or part of the outstanding principal and accrued interest is convertible into shares of our Class A common stock at a conversion price of $8.00 per share. Between May 30, 2024 and June 26, 2024, we borrowed an additional $1,075,000 from Nextelligence. On July 1, 2024, the Company repaid $1,075,000 on the convertible promissory note with related party Nextelligence. Between October 31, 2024 and December 11, 2024, we borrowed an additional $1,395,000 from Nextelligence. On December 13, 2024, we renewed and modified the May 3, 2024 note to include the additional loans. Between December 31, 2024 and June 3, 2025, we borrowed an additional $1,557,000 and made payments of $150,000 to Nextelligence. On July 26, 2025, Nextelligence converted the outstanding principal and accrued interest balance of $4,076,051 into 509,507 shares of our Class A common stock. As of September 30, 2025 and June 30, 2025, the outstanding principal and accrued interest due to Nextelligence was $0 and $3,865,555, respectively.
Note Payable – Related Party
Between July 2018 and April 2018, a related party, a company owned by William A. Mobley, Jr., Public Wire, loaned us $66,380, at an interest rate of 12% per annum. The notes representing the loan originally matured on dates ranging from April 1, 2019 to January 1, 2020. Effective June 30, 2021, we amended the original promissory note with Public Wire and combined principal and interest from the previous notes under one new loan. In addition, we extended the maturity date to June 30, 2024. On March 29, 2024, we entered into a Debt Conversion Agreement with Public Wire to convert the outstanding principal and interest of the note payable at a conversion price of $4.00 per share. The total outstanding principal of $89,289 and accrued interest of $29,425, total of $118,714, was converted into 29,679 shares of our Class B common stock. The Class B common stock was fair market valued at $8 per share and we recognized a debt extinguishment loss of $118,714.
Revolving Convertible Note Payable – Related Party
On July 1, 2018, we signed a revolving convertible note agreement with Nextelligence, which is a related party that is majority owned and controlled by William A. Mobley, Jr., which was amended and restated as of July 2, 2018, for an amount up to $1,000,000; with any borrowings on this loan being at our complete discretion. Outstanding principal accrued interest at 12% per annum and was due and payable on July 1, 2020. In lieu of repayment, at Nextelligence’s option, all or part of the outstanding principal and accrued interest was convertible into shares of our Class A common stock at a conversion price of $0.50 per share. The loan matured on July 1, 2020, was in default and remained as an on-demand liability of ours until June 30, 2021. On June 30, 2021, we entered into a new revolving convertible promissory note with Nextelligence for an amount up to $2,500,000; with any borrowings on this loan being at our complete discretion. Outstanding principal accrued interest at 12% per annum. The borrowing limit was increased to $6,000,000 pursuant to a first amendment to the note dated June 13, 2022. Pursuant to a second amendment to the note dated July 17, 2023, the borrowing limit was increased to $10,000,000 and the maturity date extended to June 30, 2025. In lieu of repayment, at Nextelligence’s option, all or part of the outstanding principal and accrued interest was convertible into shares of our Class A common stock at a conversion price of $0.50 per share.
We adopted ASU 2020-06 in the first quarter of fiscal year 2023, and as such, have not recognized any beneficial conversion feature or amortization expense during the years ended 2024 and 2023.
On March 29, 2024, Nextelligence converted the principal of $13,139,473 and accrued interest of $1,607,952, a total of $14,747,425, into 29,494,851 shares of our Class A common stock.
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Notes Payable
On September 15, 2016, we entered into an agreement with U.S. Premium Finance to provide financing in an aggregate amount of $1,967,450 for the insurance premium associated with both D&O and Workers Compensation policies. Both policies commenced September 15, 2016, and provided coverage for the next 36 months, expiring September 15, 2019. The loan bears interest at a floating rate per annum equal to the greater of either (i) 4.99% or (ii) 4.99% plus the Wall Street Journal Prime Rate. During the year ended June 30, 2019 and 2018, the interest rate on the loan was 4.99%. We were required to pay monthly principal and interest of approximately $58,957, paid over 36 months, with the final payment on October 15, 2019.
The U.S. Premium Finance agreement dated September 15, 2016 was secured against all rights, title, and interest associated with the D&O and Workers Compensation policies. As part of the legal costs associated with obtaining premium financing, on September 19, 2016, we agreed to pay a loan origination fee in the amount of $98,250. The loan origination fee was recorded as a debt discount and amortized over the life on the policy, maturing September 2019.
On April 18, 2017, we entered into an additional agreement with U.S. Premium Finance. We received $568,935 in net proceeds from the premium financing agreement. The loan bears interest at a floating rate per annum equal to the greater of either (i) 4.99% or (ii) 4.99% plus the Wall Street Journal Prime Rate. During the year ended June 30, 2019 and 2018, the interest rate on the loan was 4.99%. We were required to pay monthly principal and interest of approximately $29,705, paid over 20 months, with the final payment on December 15, 2018.
The U.S. Premium Finance agreement dated April 18, 2017 was secured against all rights, title, and interest associated with the general liability insurance policy. As part of the legal costs associated with obtaining premium financing, on April 18, 2017, we incurred and capitalized a loan origination fee in the amount of $28,348. The loan origination fee was amortized over the life of the policy, maturing December 2018. As of June 30, 2022 and 2021, there were no prepaid loan origination fees; as the amount was fully amortized.
On November 13, 2019, we settled the outstanding liability with U.S. Premium Finance, in which we agreed to pay $1,000,000 in various installments, with the last payment due on December 5, 2022. During the year ended June 30, 2020, in accordance with the agreement, we reduced the principal on the balance sheet and recognized a $774,009 gain on forgiveness of debt. In adherence to the conditions of the agreement, we paid $275,000 towards the outstanding balance of the loan as of June 30, 2020. In addition, as of November 13, 2019, we had accrued approximately $162,350 in interest, which was reduced to zero based on the settlement amount and we recognized as a gain on forgiveness of debt, of $162,350. As of June 30, 2023 the balance due was $650,000, all of which was current. In January 2024, we paid the entire principal balance and accrued interest to settle the outstanding liability.
On October 22, 2019, we entered into a promissory note with an unrelated third party for the amount of $250,000, at an interest at 6% per annum. Effective June 30, 2021, we combined all previous principal ($250,000) and interest related ($25,356) to this loan and extend the maturity date to June 30, 2024 as per the second amendment to the agreement. On March 29, 2024, we came to an agreement with the lender to convert all of the outstanding principal and interest on the note into shares of our Class A common stock at a conversion price of $4.00 per share. The total principal of $275,356 and accrued interest of $45,400, for a total of $320,076, was converted into 80,189 shares of our Class A common stock. The Class A common stock was fair market valued at $8 per share and we recognized a debt extinguishment loss of $320,076.
Between March 2022 and June 2022, an unrelated third party loaned us $200,000, at an interest rate of 6% per annum. In August 2022, the unrelated third party loaned us an additional $100,000. The notes matured on March 1, 2023, and were in default until a renewal and consolidating note was entered into as of August 1, 2023 in the principal amount of $320,384. The interest rate under the renewal note is 6% per annum, and it matures on July 31, 2024. On March 29, 2024, we came to an agreement with the lender to convert all of the outstanding principal and interest on the note into shares of our Class A common stock at a conversion price of $4.00 per share. The total principal of $320,384 and accrued interest of $12,692, for a total of $333,076, was converted into 83,269 shares of our Class A common stock. The Class A common stock was fair market valued at $8 per share and we recognized a debt extinguishment loss of $333,076.
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On November 18, 2022, we entered into a loan agreement with two unrelated parties for the aggregate amount of $200,000, at an interest rate of 6% compounded annually. The loan matured on December 1, 2024. On March 29, 2024, we came to an agreement with the lenders to convert all of the outstanding principal and interest on the notes into shares of our Class A common stock at a conversion price of $4.00 per share. The total principal of $200,000 and accrued interest of $16,340, for a total of $216,340, was converted into 54,086 shares of our Class A common stock. The Class A common stock was fair market valued at $8 per share and we recognized a debt extinguishment loss of $216,340.
Warrant Modification
Effective as of June 15, 2023, we authorized and approved: (i) the reissuance of 38 expired warrants held by non-employees and 2 expired warrants held by an employee (“Expired Warrants”) to purchase an aggregate of 7,637,962 shares of our Class A common stock, at a purchase prices from $0.50 to $8.00 per share, all of which had expired without being exercised; and (ii) the modification of 31 outstanding warrants held by non-employees and 1 warrant held by an employee (“Reissued Warrants”) to purchase an aggregate of 4,105,625 shares of our Class A common stock, at a purchase prices from $3.50 to $6.00 per share, that by their terms will expire if not exercised on or prior to dates ranging from February 10, 2024 to September 30, 2025. We reissued the Expired Warrants and modified the Reissued Warrants (collectively “Warrant Modification”) by extending the expiration date to December 31, 2025 and maintaining all other terms in the original warrant agreements.
The value of the Warrant Modification to purchase an aggregate of 23,487,174 shares was calculated using the Black-Scholes-Merton option pricing model. The incremental fair value attributable to the Expired Warrants and Reissued Warrants, which was measured at the amount equal to the incremental value reflecting in the change in fair value of the warrants before and after the Warrant Modification, was calculated at $9,848,947. The portion of the incremental fair value related to non-employee warrants that were initially issued as part of equity financings was $2,669,175 and was treated as a deemed dividend and is reflected as “Deemed dividend on warrant modification” in the accompanying statement of operations. The portion of the incremental fair value related to employee warrants that were initially issued as awards was $7,179,772 and was treated as stock-based compensation and is reflected in “Compensation and benefits” in the accompanying statement of operations. Accordingly, the Warrant Modification was recorded as an increase in additional paid in capital with a corresponding decrease to retained earnings.
We utilized an option pricing model to determine the fair value of a share of our Class A common stock as of June 15, 2023. The significant inputs were as follows: volatility of 71.1%, term of 2 years and risk-free rate of 4.55%. The valuation determined the fair value of a share of our Class A common stock to be $1.8025 as of June 15, 2023.
The Black-Scholes-Merton option pricing model includes the following assumptions to determine the fair value attributable immediately before and after the warrant modification effective June 15, 2023:
| Immediately | ||||||||
| Before | After | |||||||
| Assumptions: | ||||||||
| Class A common stock fair value | $ | 1.80 | $ | 1.80 | ||||
| Risk-free interest rate | 4.12-5.21 | % | 4.43 | % | ||||
| Expected dividend yield | 0 | % | 0 | % | ||||
| Expected volatility | 64-83 | % | 81.55 | % | ||||
| Expected life (in years) | .66-2.3 | 2.55 | ||||||
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Cash Flows
The following tables provide detailed information about our net cash flows for the periods indicated:
| For the Three Months Ended September 30, | ||||||||
| 2025 | 2024 | |||||||
| Net cash used in operating activities | $ | (2,824,970 | ) | $ | (3,065,284 | ) | ||
| Net cash used in investing activities | (8,556 | ) | (19,879 | ) | ||||
| Net cash provided by financing activities | 2,700,000 | (1,075,407 | ) | |||||
| Net (decrease) increase in cash and cash equivalents | $ | (203,526 | ) | $ | (4,160,570 | ) | ||
Operating Activities
For the three months ended September 30, 2025, cash used in operating activities decreased by $170,314 or 5.6%. due primarily to our decrease in net loss of $697,456. These were offset by a decrease in stock-based compensation of $161,012 and a net decrease in working capital of $368,465. This decrease was made up mainly of an increase in accounts receivable – related party of $250,016, increase in prepaid assets of $110,000, decrease in deferred revenue of $104,745, and decrease in accounts payable and accrued expenses of $12,254, partially offset by an increase in accounts payable and accrued expenses of $117,724.
Investing Activities
For the three months ended September 30, 2025, cash used in investing activities decreased by $11,323 or 57%. The change was attributed to a decrease in the cash used to purchase property and equipment.
Financing Activities
For the three months ended September 30, 2025, cash provided by (used in) financing activities increased by $3,775,407 or 351%. The change was primarily due to an increase in proceeds from the issuance of Class A common stock and a decrease to payments on revolving note payable – related party of $1,075,000.
Critical Accounting Policies and Estimates
Our financial statements and accompanying notes have been prepared in accordance with GAAP applied on a consistent basis. The preparation of these financial statements requires us to make certain estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, the application of the stock split accounting as of the date these financial statements are ready to be issued and the reported amounts of revenue and expenses during the periods presented. We evaluate these estimates and assumptions on an ongoing basis. We base our estimates on the information currently available to us and on various other assumptions that we believe to be reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions. As of September 30, 2025, our previous estimates had not materially deviated from our results.
An accounting policy is deemed to be critical if it requires an accounting estimate to be made based on assumptions about matters that are highly uncertain at the time the estimate is made; if different estimates reasonably could have been used; or if changes in the estimate that are reasonably likely to occur periodically could materially impact the financial statements. While our significant accounting policies are described in more detail in the notes to our financial statements included in this prospectus, we believe the following accounting policies to be critical to the estimates and assumption used in the preparation of our financial statements.
Revenue Recognition
Revenue is recognized upon transfer of control of promised goods or services to customers in an amount that reflects the consideration the Company expects to receive in exchange for those goods or services, in accordance with ASC 606. The Company’s contracts include various products or services or a combination of both, which are generally capable of being distinct and are accounted for as separate performance obligations. The Company’s contracts may contain multiple distinct performance obligations.
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The transaction price of a contract is estimated based on the expected value for which a significant reversal of revenue is not expected to occur. Stand-alone selling prices are generally determined based on prices charged to customers. In arrangements with multiple performance obligations, the estimated transaction price is allocated to each distinct performance obligation based on relative stand-alone selling price (“SSP”).
Subscription Revenue
The Company no longer generates subscription revenue through renewal sales of Rabbit TV and Rabbit TV Plus, or through Select TV and Streaming TV Kits, which operated as the successor products to Rabbit TV and Rabbit TV Plus. In October 2022, the Company’s SelectTV.com paid subscription service and packaged SelectTV Streaming TV Kits were discontinued. The Company rebranded to the corporate namesake FreeCast.com and relaunched its SmartGuide as a free registration subscription service. SmartGuide is the Company’s internet distributed streaming media guide that searches and aggregates media content on the web and facilitates access to its customers through Wi-Fi-enabled devices that support streaming video.
The Company does, however, sell monthly subscriptions for premium content purchased through its SmartGuide for varying fees for different content. Revenue from such premium subscription fees is recognized on a gross basis over the service period as the Company is deemed to be the principal in the relationship with the end user. The Company controls the content before transferring it to the end user and has latitude in establishing pricing. The Company both retransmits and “ingests” and distributes content.
Subscription revenue is derived from online sales through search engine optimization, search engine marketing, various marketing advertising services, the utilization of resellers in the form of publishers that promote upcoming retail promotions and packages, as well as direct sales to subscribers of our Value Channels subscription service. Value Channels subscription contains 17 cable channels and sells on a monthly subscription or annual fee. Value Channels is integrated into the initial FreeCast.com free registration and then offered as an upgrade. Both FreeCast.com (free registration) and Value Channels is available in various streaming Smart TV models (Google TV’s, Amazon Fire TV’s, LG, Samsung, TCL, Sony, and others), plus Streaming Devices (Amazon Fire, Google ChromeCast, Apple TV), PC’s/Laptops and mobile apps for Android and iOS devices.
Subscription revenue is recognized ratably on a straight-line basis over the duration of the subscription period, generally ranging from one month to five years. If the subscriber renews early, then the expiration date is extended by the renewal period, and the additional subscription fee is deferred and amortized over the additional months purchased by the subscriber. The Company no longer offers SelectTV lifetime subscriptions, which was initially deferred and recognized over a five-year period. All subscription fees are collected at the time of purchase.
FAST (Free Ad-Supported TV)
We provide FAST channel buildouts that include post-production editing, motion graphics, channel assembly and content acquisitions. We charge the customers based on time incurred for the services plus a reasonable margin in addition to any additional out-of-pocket cost incurred that is charged at cost to us. Revenue is recognized when services are performed. The Company charges a monthly platform fee for distributing the FAST channel on its platform. Revenue is recognized at the point in time when the content is available on the digital platform.
Ad Platform Revenue
FreeCast is an agent in transactions on its FreeCast Ad Exchange platforms. The Company acts as an intermediary between DSPs and non-owned and operated publishers by providing access to a platform that allows both parties to transact in the buying and selling of ad inventory. The transaction price is determined through a real-time auction and the Company has no pricing discretion or obligation related to the fulfillment of the advertising delivery
The Company generally invoices buyers at the end of each month for the full purchase price of ad impressions monetized in that month. Accounts receivable are recorded at the amount of gross billings for the amounts the Company is responsible to collect, and accounts payable are recorded at the net amount payable to suppliers. Accordingly, both accounts receivable and accounts payable appear large in relation to revenue reported on a net basis.
Ad Agency Revenue (Launch That and Similar Contracts)
The Company earns revenue from direct client service contracts for marketing and campaign execution, such as the Launch That agreement. These contracts typically involve two distinct phases:
| ● | Phase 1: Discovery and Development Services (data research, audience analysis, creative development). Revenue is recognized over time using an input method based on the proportion of costs incurred relative to total estimated costs for Phase 1. |
| ● | Phase 2: Test Media Distribution Services (media placement, outreach, KPI reporting). Revenue is recognized upon delivery of the performance evaluation report specified in the contract. |
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Revenue from such contracts is presented separately from “Other Revenue” due to its materiality and distinct nature.
Deferred Revenue
For the Ad Platform revenue stream, the Company provides demand partners with access to the FreeCast Ad Platform, enabling real-time bidding on advertising inventory. Revenue is recognized at a point in time when a transaction is completed—specifically, when a bid is won and the client’s purchase occurs through the platform. Amounts invoiced in advance of the completion of these transactions are recorded as deferred revenue and recognized as revenue when the Company’s performance obligation is satisfied.
For the Ad Agency revenue stream (Launch That and similar contracts), the Company provides direct marketing and campaign services, usually with a specified contract. Revenue is recognized over time during Phase 1 (using an input method based on the proportion of costs incurred relative to total estimated costs) and 2 at a point in time during Phase 2 (upon delivery of the performance evaluation report specified in the contract). Amounts paid in advance of the delivery of the specified services are recorded as deferred revenue and recognized as revenue when the Company’s performance obligation is satisfied.
Other Revenue
Other revenue includes product, licensing, and referral fee revenue. The Company generates revenue through free registrations of FreeCast.com by partnering with retailers, manufacturers, operators and/or distributors of streaming devices, mobile phones, broadband carriers, broadcasters, property management, multi-dwelling developers, builders, and various mass consumer communities of streaming tv watchers. A FreeCast.com license is freely provided per registered consumer marketed by distributors in exchange for a negotiated revenue sharing percentage with each distributor on a case-by-case basis. Affiliate commissions are earned and then shared from third-party advertisement service providers, pay-per-view movie or series distributors, and live events tickets sales for such things as professional boxing or concerts. These license arrangements have not resulted in significant revenue to date.
Beginning in 2024, in conjunction with the release of our new product FreeCast Home, we started recognizing contracts with customers from product sales requiring performance up to delivery, as well as contracts with customers that contain a subscription portion that causes revenue to be allocated or adjusted over time. Shipping and handling activities are performed before the customer obtains control of the goods and therefore represent a fulfillment activity rather than a promised service to the customer. Revenue and costs of sales are recognized when control of the products transfers to our customer, which generally occurs upon shipment from our facilities. For our physical product sales, our performance obligations are satisfied at that time.
Referral fee revenue is generated through premium services which are also available on our platform, for an additional fee, to allow single or time-limited use of private, decrypted viewing of movies, sporting events, concerts or other types of events.
The following table presents our revenue on a disaggregated basis:
| For the three months ended | ||||||||
| September 30, | ||||||||
| 2025 | 2024 | |||||||
| Membership (1) | $ | 22,120 | $ | 38,128 | ||||
| FAST Revenue – related parties (2) | 54,666 | 79,139 | ||||||
| Ad Revenue (3) | 119,014 | 128 | ||||||
| Other Revenue | 60 | 1,012 | ||||||
| Total | $ | 195,860 | $ | 118,407 | ||||
| (1) | Membership sales refer to customers purchasing premium content through our SmartGuide for varying fees and recognized on a gross basis over the service period determined. |
| (2) | We provide end-to-end software solutions for development of FAST (Free Ad-Supported TV) channels to customers such as content creation, production, video studio rental, etc. to aid in the creation of content for their channels and a platform fee for distributing the channel. Revenue is recognized at the point in time the services are performed for the development of FAST channels. We charge a monthly platform fee for distributing the FAST channel on our platform. We recognized related party revenue of $54,666 ($48,666 for FAST channel buildouts and $6,000 for channel streaming) for the three months ended September 30, 2025. |
| (3) | During the period from July 1, 2025, through September 30, 2025, we recognized $119,014 of ad revenue from the buying and selling of advertising space on other content platform providers. Of this amount, $125,000 was recognized as Ad Agency Revenue under the LaunchThat Experimental Media Plan Agreement, representing revenue from the provision of discovery, development, and test media distribution services for a client campaign. The remaining $5,986 was related to discounts and costs for Arbitrage Ad Revenue from the buying and selling of advertising space via the FreeCast Ad Platform. |
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Concentration of Credit Risk
Financial instruments that potentially subject us to concentrations of credit risk consist principally of cash and cash equivalents and trade accounts receivable. Our cash and cash equivalents are exposed to credit risk, subject to federal deposit insurance, in the event of default by the financial institutions holding its cash and cash equivalents to the extent of amounts recorded on the balance sheet. The cash accounts are insured by the Federal Deposit Insurance Corporation (“FDIC”) up to $250,000 per banking institution. As of June 30, 2025, our cash balance exceeded the FDIC insured limit by $95,723.
As of September 30, 2025, the Company had two customers, SportX, LLC and related party customer Celebrity Cigars, Inc., representing 39.70% and 45.64%, respectively, of the Company’s receivables. As of September 30, 2024, the Company had two related party customers, Test Drive Live Inc. and Celebrity Cigars, Inc., representing 32.62% and 64.39%, respectively, of the Company’s receivables (see Note 9).
As of September 30, 2025, the Company had two customers, Launch That. and related party customer Celebrity Cigars, Inc., representing 63.82% and 20.87%, respectively, of the Company’s revenues. As of September 30, 2024, the Company had two related party customers, Test Drive Live Inc. and Celebrity Cigars, Inc., representing 21.9% and 43.2%, respectively, of the Company’s revenues.
Fair Value of Financial Instruments
We account for financial instruments under Financial Accounting Standards Board (“FASB”) ASC 820, Fair Value Measurements. This statement defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles, and expands disclosures about fair value measurements. To increase consistency and comparability in fair value measurements, ASC 820 establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three levels as follows:
Level 1 — quoted prices (unadjusted) in active markets for identical assets or liabilities;
Level 2 — observable inputs other than Level 1, quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, and model-derived prices whose inputs are observable or whose significant value drivers are observable; and
Level 3 — assets and liabilities whose significant value drivers are unobservable.
The Company applies fair value accounting for all assets and liabilities that are recognized or disclosed at fair value in the financial statements. The carrying amounts reported in the financial statements for cash, accounts receivable, accounts payables and accrued liabilities approximate their fair value due to their short-term nature.
Earnings (Loss) Per Share
Basic earnings (loss) per share is computed by dividing net income (loss) attributable to all classes of our common stock by the weighted average number of shares of all classes of our common stock outstanding during the applicable period. Diluted earnings (loss) per share is determined in the same manner as basic earnings (loss) per share, except that the number of shares is increased to include restricted stock still subject to risk of forfeiture and to assume exercise of potentially dilutive stock options using the treasury stock method, unless the effect of such increase would be anti-dilutive.
The following table provides the number of Class A common stock equivalents not included in diluted income per share, because the effects are anti-dilutive, for the three months ended September 30, 2025, and 2024, respectively.
| For the Three Months Ended September 30, | ||||||||
| 2025 | 2024 | |||||||
| Convertible debt and liabilities | - | 133,633 | ||||||
| Options | 931,779 | 958,668 | ||||||
| Warrants | 8,056,087 | 8,156,087 | ||||||
| Total | 8,987,866 | 9,248,388 | ||||||
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Stock Based Compensation
Stock-based compensation issued is measured at the date of grant based on the estimated fair value of the award, net of estimated forfeitures. The grant date fair value of a stock-based award is recognized as an expense over the requisite service period of the award on a straight-line basis. The Company will recognize compensation expense, measured as the fair value of the stock-based compensation on grant date, when a performance condition is considered probable of occurring. For purposes of determining the variables used in the calculation of stock-based compensation issued to employees, the Company performs an analysis of current market data and historical data to calculate an estimate of implied volatility, the expected term of the option and the expected forfeiture rate. With the exception of the expected forfeiture rate, which is not an input, the Company uses these estimates as variables in the Black-Scholes option pricing model. Depending upon the number of warrants granted, any fluctuations in these calculations could have a material effect on the results presented in the Company’s Statements of Operations. In addition, any differences between estimated forfeitures and actual forfeitures could also have a material impact on the Company’s financial statements.
In accounting for modifications of equity-classified warrants held by employees, it is the Company’s policy to determine the impact by analogy to the share-based compensation guidance of ASC 718, Compensation - Stock Compensation (“ASC 718”). The model for a modified share-based payment award that is classified as equity and remains classified in equity after the modification is addressed in ASC 718-20-35-3. Pursuant to that guidance, the incremental fair value from the modification is recognized as stock-based compensation expense in the statements of operations to the extent the modified instrument has a higher fair value. The Company modified certain equity-classified warrants held by employees in the year 2023.
Loss Contingencies
Certain conditions may exist as of the date the financial statements are issued, which may result in a loss to us but which will only be resolved when one or more future events occur or fail to occur. Our management and legal counsel assess such contingent liabilities, and such assessment inherently involves an exercise of judgment. In assessing loss contingencies related to legal proceedings that are pending against us or unasserted claims that may result in such proceedings, our legal counsel evaluates the perceived merits of any legal proceedings or unasserted claims as well as the perceived merits of the amount of relief sought or expected to be sought therein.
If the assessment of a contingency indicates that it is probable that a material loss has been incurred and the amount of the liability can be estimated, then the estimated liability would be accrued in our financial statements. If the assessment indicates that a potentially material loss contingency is not probable, but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent liability, together with an estimate of the range of possible loss if determinable and material, would be disclosed.
Loss contingencies considered remote are generally not disclosed unless they involve guarantees, in which case the nature of the guarantee would be disclosed.
Modifications to Equity-classified Instruments
A change in the terms or conditions of a warrant is accounted for as a modification. For a warrant modification accounted for under ASC 815, the effect of a modification shall be measured as the difference between the fair value of the modified warrant and the fair value of the original warrant immediately before its terms are modified, with each measured on the modification date. The accounting for incremental fair value of the modified warrants over the original warrants is based on the specific facts and circumstances related to the modification. When a modification is directly attributable to an equity offering, the incremental change in fair value of the warrants is accounted for as an equity issuance cost. When a modification is directly attributable to a debt offering, the incremental change in fair value of the warrants is accounted for as a debt discount or debt issuance cost. For all other modifications accounted for under ASC 815, the incremental change in fair value is recognized as a deemed dividend.
Redeemable Series A Preferred Stock
We apply the guidance enumerated in ASC 480, when determining the classification and measurement of preferred stock. Preferred stock subject to mandatory redemption, if any, is classified as a liability and is measured at fair value. We classify conditionally redeemable preferred stock, which includes preferred stock that features redemption rights that are either within the control of the holder or subject to redemption upon the occurrence of uncertain events not solely within the Company’s control, as mezzanine equity. At all other times, we classify its preferred stock in stockholders’ equity. We subsequently measure mezzanine equity to redemption value when the instrument is currently redeemable or when it is probable the instrument will become redeemable. Initially, the redemption rights were not solely within our control because our Chief Executive Officer (CEO), William Mobley, was able to force us to redeem the shares for cash. Therefore, we classified the Series A Preferred Stock as mezzanine equity pursuant to ASC 480-10-S99. We had adjusted the value of the Series A Preferred shares to its maximum redemption amount as the instrument was redeemable.
On December 26, 2024, we amended the terms and conditions of the Series A Preferred Stock to replace the deemed liquidation triggered by a change in control with an ordinary liquidation. In conjunction with this amendment, we reclassified the Series A Preferred Stock from mezzanine equity to permanent equity because the features giving rise to mezzanine equity classification, the redemption right and the deemed liquidation, have been removed as part of the amendment.
Recently Issued Accounting Pronouncements
From time to time, new accounting pronouncements are issued by the FASB or other standard setting bodies that we adopt as of the specified effective date. We do not believe that the impact of recently issued standards that are not yet effective will have a material impact on our financial position or results of operations upon adoption.
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Overview
We provide a unified, à la carte service for TV entertainment through a platform that consolidates available entertainment content in one place, reducing the complexity for consumers of navigating multiple streaming services by providing a centralized platform that integrates all of the user’s content sources. As an entertainment-based content discovery, aggregation, and management company, we leverage our proprietary SmartGuide® digital interactive technology to enable users to organize and access streaming content in a familiar, cable-like TV guide format.
According to eMarketer’s June 2024 forecast, in 2025 U.S. adults will spend approximately 2 hours and 49 minutes per day viewing traditional linear TV, compared with social video’s approximately 53 minutes and YouTube’s approximately 37 minutes. This underscores a significant opportunity for an aggregator solution that replicates the simplicity of channel surfing while seamlessly integrating multiple streaming services into one interface. By pushing each network’s app to our backend infrastructure, we enable a single, user-friendly interface for live and on-demand content.
Unlike traditional streaming platforms that rely on a direct-to-consumer (B2C) approach, we operate under a B2B2C sales and marketing strategy. Rather than acquiring individual subscribers, we partner with Commercial Dedicated Partners (CDPs) that already serve large user bases, allowing us to scale efficiently while reducing customer acquisition costs and churn rates. Our CDPs include:
| ● | Broadband providers – Enhancing internet service offerings by bundling premium streaming solutions. |
| ● | Mobile carriers – Adding value to data and wireless service plans. |
| ● | Device manufacturers – Embedding FreeCast’s SmartGuide® technology into Smart TVs and streaming devices. |
| ● | Multi-dwelling units (MDUs), apartments, and condominiums – Providing an all-in-one entertainment solution for tenants. |
| ● | Hospitality locations – Offering a seamless streaming experience in hotels, resorts, and other lodging environments. |
By integrating our SmartGuide® digital interactive technology, CDPs can provide their users with a centralized platform to access all streaming apps and content in one place. This not only enhances the CDP’s service offerings, but also creates revenue opportunities through advertising and commissions.
Our platform gives users access to all their online media subscriptions, as well as approximately 750 additional live and on-demand channels, including top-tier news and entertainment content. Our proprietary content aggregation technology continuously scans the internet to discover and index thousands of commercial-quality entertainment sources—whether free, paid, or subscription-based—offering an unmatched level of convenience.
Designed for broad accessibility, our platform functions as a software application that can be used across all Wi-Fi-enabled devices, including Smart TVs, streaming devices, mobile phones, tablets, and computers. Unlike other streaming solutions, we operate as a non-competitive, agnostic “omnichannel streaming platform,” meaning users do not need multiple apps to access their favorite content. Instead, our technology aggregates all content into one seamless interface.
Our service is available directly to consumers under the FreeCast.com brand, and is also distributed through third-party partners under licensed brand names. Additionally, we co-brand with CDPs to align our service with their existing customer base, creating a flexible distribution model that benefits all stakeholders.
Our strategy is to expand domestically and globally by securing licensing agreements with CDPs that already have a substantial user base. We continually work to enhance the customer experience by expanding the content catalogued by our technology, refining our user interface, and extending our service to more Internet-connected devices. We also provide local broadcasters and independent programmers with a turnkey path to assemble FAST channels, distribute them on our platform, and monetize ad inventory through a shared revenue model.
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Following the end of the product lifecycle of our legacy product, Rabbit TV, and the conclusion of our partnership with Telebrands Corp. in 2017, we spent over two years rebuilding our product. This development not only improved our proprietary technology, but also positioned us to capitalize on the fast-moving nature of the industry and capture new revenue streams. During this transition, sales primarily stemmed from legacy Rabbit TV sales, which declined over time, as expected.
Our revenue streams include:
| ● | Advertising Revenue – Generated through ad placements within the platform. |
| ● | Subscription Revenue – From additional monthly content bundles. |
| ● | Product Revenue – From selling digital high-definition TV antennas. |
| ● | Licensing Revenue – From partnerships with CDPs and third-party distributors. |
| ● | Referral Fees – Earned through partnerships with content providers. |
By leveraging these revenue streams and our strategic partnerships, we believe that we are positioned to disrupt the current streaming industry, while delivering convenience to consumers and value to our CDPs.
The following table shows the aggregate number of subscribers at the end of each reporting period presented in this prospectus.
| For the Period Ended | ||||||||
| Subscribers (1) | September 30, 2025 | June 30, 2025 | ||||||
| Ad-Supported (2) | 974,222 | 958,439 | ||||||
| Paid (3) | 13,936 | 17,062 | ||||||
| Total Subscribers: | 988,158 | 975,501 | ||||||
| (1) | “Subscriber” refers to any individual or entity that has registered for access to our platform, whether on a paid or free (ad-supported) tier basis, subject to the terms of our service. |
| (2) | As of July 1, 2022, all subscribers’ accounts were converted to a free account, allowing every subscriber to view content on our platform for free while being exposed to advertisements. |
| (3) | As of April 11, 2023, we started offering pay-per-view content and packages consisting of third-party premium channels to which subscribers could upgrade for a fee that varies by the content or packages purchased. |
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The basis of our service platform is our proprietary content aggregation technology that automatically crawls the Internet to locate commercial-quality entertainment content from thousands of sources, including free, paid and subscription-based content. Additionally, we subscribe to the top entertainment data services such as Gracenote (owned by Nielsen), Xperi, and Reelgood whom provide real-time updates. Our technology then sorts through and manages all available commercial-quality digital media, including both live and on-demand video from free, subscription and pay-per-view (PPV) services. All of this information is then incorporated into our interactive SmartGuide presented to consumers in a familiar easy-to-use cable-like TV guide via the Internet and as a software application, on all Wi-Fi enabled devices.
The SmartGuide uses images and related information on customized guide pages to provide subscribers with an easy way to explore all of the available media choices from one centralized account, regardless of the device or location. Upon selecting content to consume, the subscriber is directed to the original source of the content. If content is available for free, the subscriber is transferred to the website providing the content. If content is available through a subscription service (such as Netflix or Hulu), we allow the subscriber to log-in to the service through our SmartGuide and the subscriber is then directed to the subscription service’s website. If the content is PPV, the subscriber is directed to the page requiring payment for the PPV service. We do not manipulate or distribute the source content, and the provider of the content retains all rights to and management of content.
Because we link subscribers directly to third-party content sources and in no way manipulate, store, retransmit or distribute this content, we are not subject to licensing fees or restrictions by third-party content suppliers. We are not responsible for the availability or content of these external websites, nor do we endorse, warrant or guarantee the products, services or information described or offered. All logos and trademarks used in the guide are the sole property of their respective owners. We believe that this is a complementary relationship in which we directly supply free traffic to content suppliers, much like the print-based model employed by TV Guide in past decades.
Our SmartGuide technology is currently available on computers, “smart” phones, tablets, streaming devices and “smart” TV’s. It is available directly to consumers, branded as FreeCast.com, and will also be distributed by third parties, both as FreeCast.com and under other licensed brand names and partnerships.
Industry Overview
The way people consume entertainment has changed dramatically in recent years. The global digital media market includes cable and satellite TV as well as Internet-based subscription services like Sling TV, Netflix, Hulu, Disney+, Apple and Amazon Prime Video. According to Grand View Research, the U.S. video streaming market generated revenue of $18.8 billion in 2023 and is expected to reach $66.4 billion by 2030, growing at a compounded annual growth rate of 19.8% from 2024 to 2030. The global video streaming market generated revenue of $106.8 billion in 2023, with North America representing 31.9% of the total market. This change is due in part to the continued decline of traditional cable and satellite TV households; excluding virtual Multichannel Video Programming Distributors, which deliver live TV over the internet. Additionally, the COVID-19 pandemic positively impacted the market growth at an accelerated rate due to substantial adoption of online live streaming supported by favorable regulations.
Audiences increasingly cancel their pay TV subscriptions, and after almost a decade of gradual decline, the number of pay TV households in the U.S. dropped to 60.5 million in 2023 and is expected to drop as low as 50 million by 2027 according to the latest data reported by Statista. They also reported that in 2022, U.S. pay TV providers suffered a combined net subscriber loss of around 5.9 million viewers, which included industry leaders like Comcast Corporation and AT&T, but they have since made their way onto the streaming side of the industry.
Meanwhile, it is clear that connected TVs (TVs that can be connected to the internet and access content beyond what is available via the normal offering from a cable provider, or other devices that use a TV as a display and can connect to the internet to access content) and OTT (Over-the-Top, which refers to film and television content provided via a high-speed Internet connection rather than a cable or satellite provider) are growing faster than ever. As of February 2024, according to eMarketer, the number of traditional pay TV viewers has dropped to 41.5% of the U.S. population or 111.1 million adults, due to traditional cable bundles being swapped out for digital pay TV and streaming. They went on to forecast in April 2024, that 254.2 million people, or an astounding 75% of the US population, will watch OTT video in 2024.
Furthermore, while consumers used to be able to watch a particular television program on a particular channel at a particular time (also known as broadcast tv), the majority of consumers now watch television in a digital streaming fashion. Broadcast usage is only at 22.5%, compared to Streaming that sits at 38.5% of total U.S. TV usage as of March 2024, a new record high for the category, as reported by Statista.
Options are great for consumers when it comes to deciding what to watch, but they are also decidedly complicated for an industry that continues to fragment and search for unique ways to influence consumer behavior. According to surveys conducted in 2022 and 2024, 38% of people polled in these surveys wished all of their shows were on one platform and one in three stated that it is getting too expensive to pay for all of the content they want to watch, as reported by Statista.
Streaming costs are on the rise due to the Streaming Platforms having to adjust for the saturated market and amount of churn they are experiencing from consumers cancelling due to the same increased costs put on them.
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According to a DISQO survey conducted with over 3,000 adults in 2024, 21% of streaming subscribers plan to reduce the number of services they subscribe to and 30% of those same adults plan to cancel their cable TV subscription, as reported by eMarketer. Bundling subscriptions has become a trending tactic for some major companies by partnering those offers with Mobile and Broadband providers like Verizon and T-Mobile.
We expect the trends toward digital streaming video consumption to continue and believe that we are uniquely positioned to take advantage of this market with our products.
Sources of Revenue
Our revenue model generates multiple recurring revenue streams from each active user, including: (i) Main Revenue: Advertising and Data; and (ii) Ancillary Revenue: Bundle Value/Channel Subscriptions and Equipment Sales.
We derive revenue from the following sources:
| ● | For subscribers who sign up using our free registration subscription service, we offer a variety of content provider bundles for an additional monthly fee ranging from $2.99 to $19.99; |
| ● | We also earn fees when subscribers make one-time purchases of any pay-per-view (PPV) media through our SmartGuide; |
| ● | We receive a fee for advertising on our guide pages provided, and for in-video/pre-roll ads by Google, pursuant to the standard terms and conditions of Google’s AdSense program; |
| ● | We also receive arbitrage advertising revenue from the buying and selling of advertising space on other content provider platforms; | |
| ● | We receive fees through affiliate programs for content providers that have such programs for PPV programs that are purchased through our SmartGuide; |
| ● | We receive fees for third-party related products (such as antennas or streaming devices to connect to a subscriber’s television) that are purchased through our SmartGuide; | |
| ● | We receive fees for Real-Time Bidding & Fill Rates: Our performance television DSP aims for near 100% fill rates, ensuring minimal inventory waste; and | |
| ● | We receive fees for Hyper-Targeting: Our ad server leverages first-party data from the aggregator platform, letting advertisers pinpoint audience segments by viewing habits, time-of-day preferences, etc. |
In Development
We continue to advance our technology stack with client/customer services, all of which are anticipated to bring value-added features and revenues to us, including the following:
FreeCast Home, a gateway device which receives local over-the-air (OTA) broadcast channels through an attached coaxial antenna and distributes them through the home broadband network by connecting the device to the home wireless router. This allows these local channels to be included within the FreeCast Channel Guide on all Wi-Fi-enabled video devices in the home where our freely downloadable app is installed and utilized. The FreeCast Home device is available for purchase by individual consumers or to be offered through one of the many CDPs as part of the content offerings to their customers or residents and includes all of the other features FreeCast provides for free to users through the FreeCast apps. These partners include a range of companies across different verticals like Internet Service Providers, Mobile Service Provider, and Multi-Dwelling Unit (MDU) Management companies.
In Fiscal year 2025 we developed a new Commercial Gateway device that enables the reception and multicasting of local OTA broadcast channels (with IP restrictions), Free Ad-Supported TV (FAST) channels, and Ad-Supported Video on Demand (AVOD) content to entire buildings through the FreeCast apps. We are targeting a commercial launch in fiscal year ending June 30, 2026. This innovation opens up new revenue opportunities for FreeCast across industries such as Hospitality, Travel Plazas, Student Housing, Senior Living, and other multi-dwelling units (MDUs)
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In that same vein, this will include the launch of two new versions of the Out-of-Home (OOH) FreeCast app for CDPs in industries such as Hospitality and Commercial Business.
The Collaborative ATSC Service Tech (CAST), a universal local OTA broadcast channel tuner technology that we will license to device manufacturers of local OTA gateway devices to integrate our platform into their device chipsets seamlessly with minimal cost to us. This activates our ability to open opportunities of growth around the globe and bring local channels to consumers with additional device options.
Aggregated sports data includes game schedules, live game scores, networks where to watch the games, sports betting data, and fantasy data for the games. We are bringing sports data to our platform, which will allow consumers to get all of their sports data in one place. This will all be available to consumers on our applications on all platforms.
An Automated User-Personalized Dynamic Channel Guide powered by an AI recommendations engine that is developed and built from each consumer’s content watch history, favorited channels and on-demand content, and user experiential journey data. This will organize a unified channel guide in the order that best matches a user’s content interests, and will recommend similar content in the channel guide.
Multi-channel View allows a user to watch between 2 to 4 different channels selected by the user in the channel guide on the Web and TV applications. This will allow the user to have more than one channel playing at once, and will also allow ads to be shown on each of the channels in parallel.
FreeCast for Hospitality will support external Hotel applications when applicable and accommodation options that can range from requesting more towels to requesting a late checkout. This version will also support Hosted Hospitality that allows Hosts to write custom messaging to their guests from our FreeCast Configuration Portal, display the local hot spots and weather forecast, instructions for connecting to the Wi-Fi, and how to Cast your Wi-Fi enabled device to the TV at each location. Backend configurations for branding standards where required or necessary will be available within the FreeCast Configuration Portal as well, to support branding consistency within the FreeCast app.
The Commercial Business Location version will have Digital Out-of-Home (DOOH) Advertising with local ad support and localized content included, which each can be customized by location or business type. This provides a way for commercial businesses like Travel Plazas to display local content and DOOH Ads, bringing in more revenue for the business and FreeCast alike.
We have developed a hyper-targeted data advertising platform which utilizes the consumer’s combined “Experiential Data Journey” across all streaming services within our apps, allowing us to identify both a consumer’s interests and areas of disinterest, the most used streaming services by a user, content most likely to be watched by a user, and when a user is most likely to watch content, in order to serve the highest-value ads. This greatly increases the chances of a user seeing ads targeted to them and the opportunity for a subscriber or user to interact with those ads.
FAST Channel Builder – End-to-end software solution for development of digital FAST channels with robust support for leading advertising formats in addition to distribution technology that allows for integration to all major providers (OTT, OTA, etc.). Existing robust integrations with leading dynamic advertising insertion (DAI) solutions and internal cross platform hyper-targeted DAI solutions enable this platform to monetize at a rate higher than traditional TV.
A Global Services and Content Management System has been developed under a partnership with Amazon’s AWS to onboard media content programmers, digital broadcast channels, and subscription video on demand brands with an instant, turnkey operations, and advertising platform for servicing their subscriptions or channels to non-U.S. global countries. This opens up FreeCast as a service for those in other countries as a content and streaming solution.
Our Competitive Strengths
We believe that we have a number of distinct advantages over competitors and are well positioned to fill the gaps in key market segments:
| ● | While traditional TV providers rely on fixed terrestrial hardwired infrastructure and first-party or proprietary devices and software ecosystems, our service is delivered via the Internet. |
| ● | Most of the products of our competitors are often limited in terms of the library of content available. For example, Netflix does not provide the same content as Amazon Prime, and neither will direct a subscriber to content available on the competing service. Because our SmartGuide catalogues content but does not distribute any content, we are able to direct subscribers to any service that has the program they would like to watch available, whether free or fee based. |
| ● | Many of our competitors provide services that are often tied to a single home-based device. Our SmartGuide, however, is device agnostic and may be used on any device with Internet access, thanks to a robust web-based interface and apps available on major platforms including Android TV. |
| ● | Unlike competitors, our subscribers continue to generate post-sale revenue through advertising on our guide pages and payments made to us through affiliate programs if subscribers purchase media or other hardware products through our service. |
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Our Growth Strategies
Through FreeCast.com, brand partners, and/or co-branding, we plan to accelerate our licensing platform to CDPs with substantial user bases, giving them a no-cost monetizable means to offer a competitive TV service to their customers without a large investment in new infrastructure.
Our growth strategy is supported by a pipeline of 22 distribution partners representing a potential customer universe of 23.1 million users, and a backlog of 14 partners representing a potential customer universe of 14.7 million users.
Our growth strategy includes offering our FreeCast Home device, Value Channel bundle subscription service, other third-party subscriptions, pay-per-view, and advertising opportunities to CDPs in exchange for negotiated commissions.
A central piece of our strategy is our new advanced advertising platform, designed to deliver hyper-targeted campaigns across live, linear, and on-demand channels. By aggregating first-party data from our integrated user base, we offer advertisers real-time bidding, 100% fill rates, and cross-device consistency. We believe this integrated ad tech stack generates incremental revenue, capitalizing on the high engagement levels of streaming audiences.
We launched DAI and our FAST Channel Builder in early 2023, which we anticipate will increase advertising revenue and breadth of content across our platform with partner channel launches beginning January 2024.
We launched our fully integrated virtual wallet system, MediaPay, in October 2023. MediaPay will allow our subscribers to manage all subscriptions and billings with easy cancelation. This unified payment for subscriptions and entertainment services along with our initiative to license our platform to global bandwidth distributors and content providers in various countries should reduce subscriber churn and increase revenue.
We are developing extensive relationships with CDPs – mobile device manufacturers and distributors for preloading of FreeCast streaming TV services platform in mobile “smart” phones in exchange for negotiated commissions.
We continue to secure several industry endorsements, such as the National Lifeline Association, and partnerships in the mobile carrier segment that have begun offering our free TV solution mobile devices. With the introduction of our hardware integrations for (OTA TV gateways, we are growing our presence in the telecommunications, broadband carriers, property developers (REITs) and hospitality industries.
Digital Out of Home (DOOH). We plan to run context aware DOOH campaigns across high traffic venues to drive brand awareness and app registrations. Because DOOH placements are viewable and unskippable, we expect improved reach versus web display. Our creative strategy includes dynamic content (e.g., dayparting, weather/sports triggers) and QR/NFC calls to action to attribute conversions. We also intend to retarget DOOH exposed audiences on mobile and CTV, enabling a closed loop performance view.
Measurement and Attribution. We intend to use venue level impression estimates from DOOH networks supplemented by privacy compliant mobile movement data and our own registration/conversion telemetry to calibrate audience exposure and optimize creative sequencing.
Competition
While there are many players in the online video space, our offering is unique and thus does not currently have direct, analogous competitors. Generally, any provider of online media that may appear to compete with us often in fact enjoys a mutually beneficial relationship, where their offering is captured and catalogued by our SmartGuide, which benefits our service, and we in turn send traffic and eyeballs to them as a result.
There are, however, several entities that provide services that are similar to the individual features or components of our own SmartGuide. They include:
| ● | Amazon Prime Video, through which Amazon also sells packages of content from HBO, Showtime, and others, which appear within the same interface for Prime Video subscribers. | |
| ● | Viacom’s PlutoTV business, which assembles online content from various sources into linear channels which are made available online, similar to the Live Channels offering within SelectTV. | |
| ● | Websites like Yidio and CanIStream. which function as basic media search engines and point users to legal streaming sources of specified shows and movies. | |
| ● | Roku, TiVo, Amazon’s FireTV and Apple TV, which are devices that aim to serve as media managers, though these are all hardware-centric solutions and little more than app managers, in contrast to our device-agnostic approach and unified media interface for all content. |
Unlike traditional streaming services that struggle with high customer acquisition costs (CAC) of $50+ per user and 3-5% margins, our platform achieves 50%+ margins with minimal CAC through our partnership-focused distribution model. This approach also results in lower churn rates compared to traditional direct-to-consumer streaming services.
As competition in the online television space increases, we expect this to strengthen the value proposition of our product, making it more appealing to potential commercial partners and to consumers as well.
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Operations
We license extensive entertainment data from Gracenote (a Nielsen company) and Reelgood. This data is to create the most comprehensive and up-to-date catalog of content from thousands of sources directly available from the World Wide Web by using in combination with FreeCast’s own proprietary aggregation technology. The links are then compiled into our SmartGuide for use by our subscribers. We market our service through various channels, including online advertising, broad-based media, such as television and radio, as well as various strategic partnerships. We utilize the services of third-party cloud computing providers, more specifically, Amazon Web Services.
The initial two-year term of the Gracenote license agreement began on March 25, 2019. The license agreement automatically renews for successive one-year terms, unless either party notifies the other in writing at least 90 days before the end of the initial or renewal term of its desire to not renew, in which event the license agreement expires at the end of the then-current term. Gracenote may also terminate the license agreement in the event of a change of control that results in us controlling, or being controlled by, or being under common control with, any competitor or customer of Gracenote or its affiliates. Gracenote may also terminate the license agreement or cease providing data to us if we fail to pay any invoice within 60 days after we receive such invoice. We pay Gracenote a monthly license fee of $5,210, which increases to $7,500 when we reach 750,001 active monthly users. After the initial two-year term, the monthly license fee increases by five percent with each anniversary of the beginning date.
The initial one-year term of the Guidebox/Reelgood license agreement began on February 1, 2019. The license agreement automatically renews for successive one-year terms, unless either party notifies the other in writing at least 30 days before the end of the initial or renewal term of its desire to not renew, in which event the license agreement expires at the end of the then-current term. Either party may terminate the license agreement if the other party fails to cure a material breach of the license agreement within 30 days after the non-breaching party provides written notice of such breach. Guidebox/Reelgood may also terminate the license agreement upon a change of majority control of our current owners by sale of stock or assets, merger or otherwise. We pay Guidebox/Reelgood a monthly license fee that fluctuates depending on the data we request, with a minimum monthly fee of $5,000.
Seasonality
Our subscriber growth exhibits a seasonal pattern that reflects variations in when consumers buy Internet-connected devices and when they tend to increase video watching. As a consequence, subscriber growth is generally greatest in the fourth and first fiscal quarters (October through March), slowing in the second fiscal quarter (April through June) and then accelerating in the third fiscal quarter (July through September).
Employees
As of September 30, 2025, we had 48 full-time employees and 60 contract employees. Our employees are not covered by a collective bargaining agreement, and we consider our relations with our employees to be good.
Marketing
Our product is marketed and sold online through our website, FreeCast.com, and through various affiliates who may distribute the product or a branded version of the underlying SmartGuide.
The product is also marketed through traditional pay-per-click, social and online advertising networks such as Google Adwords, Bing, Facebook, Twitter, and others, along with organic search engine optimization, or SEO, methods. We are also establishing licensing partnerships through CDPs, such as bandwidth resellers, telecommunications providers, device manufacturers and media marketing partners. Commercially, we intend to market to other CDPs – MDU companies who manage or develop apartments, condominiums, student housing, planned communities, and the hospitality sector (hotels, short stay).
Membership and Affinity Channels. We may pursue distribution through membership based or affinity organizations (e.g., large clubs, trade associations, senior associations) by bundling access to our service (free tier and/or premium channel packages) as a member benefit. These arrangements, if executed, would be structured as co branded sign ups with revenue sharing on advertising and upsells. We believe this channel can address streaming fatigue by providing a simplified “single hub” experience while expanding our top of funnel at a comparatively low acquisition cost.
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Facilities
Our headquarters are located in approximately 10,080 square feet of a building located in Orlando, Florida for which we pay $10,038 per month, with 5% annual increases. We are also obligated to pay our proportionate share of the operating expenses (as defined in the lease). On October 31, 2023, we entered into a First Amendment to our lease agreement for our headquarters with Anson Logistics Assets LLC. The amendment extends the term of our lease until October 31, 2028.
Intellectual Property
Our intellectual property consists of:
| ● | Our Media Content Management System by which we organize and deliver content to our customers. | |
| ● | Our Web Bot Media Crawler which gathers online content, including free, PPV, and subscription-based media. | |
| ● | Our Media & Link Validator which ensures reliability of the content offered by our service. |
Our Media Content Management System is our proprietary technology (which we purchased from Nextelligence on January 2, 2015). Our Web Bot Media Crawler and Media & Link Validator are web-based applications that install in the end-user’s browser and any supported email functions or chat functions with search and certain other features (the “Technology”). The Technology is licensed to us by Nextelligence pursuant to a Technology License and Development Agreement we entered into with Nextelligence on June 30, 2011, which was amended and restated on October 19, 2012, amended on July 1, 2013, amended and restated a second time on July 31, 2014 and further revised to terminate all payments to Nextelligence pursuant to the agreement, effective on June 30, 2016 (the “Technology Agreement”).
In connection with the Technology Agreement, we issued 10,002,000 shares of our Class A common stock to Nextelligence. The Technology Agreement expires on June 30, 2054, unless it’s terminated earlier based on termination events as defined in the Technology Agreement.
Although we have an exclusive license to the Technology pursuant to the Technology Agreement, including any improvements, modifications, maintenance or enhancements thereto, the Technology is owned by Nextelligence and we are not permitted to alter or enhance the Technology. Therefore, any alteration or enhancement of the Technology developed by our CEO, who is also the controlling shareholder of Nextelligence, will be owned by Nextelligence. We could lose our right to use such Technology in the event of, among other things, a breach of the Technology Agreement, our bankruptcy or insolvency, or a change of control in us. The Technology Agreement provides that we and Nextelligence must keep the other’s proprietary information confidential.
We rely on a combination of trademark, fair trade practice, copyright and trade secret protection laws, as well as confidentiality procedures and contractual provisions, to protect our intellectual property rights. We also enter into confidentiality agreements with our employees and any third parties who may access our proprietary information, and we rigorously control access to our proprietary technology and information. We may seek to patent certain of our intellectual property in the future.
Legal Proceedings
On October 31, 2025, we filed a civil action in the Circuit Court of the Ninth Judicial Circuit, Orange County, Florida, Case 2025-CA-010793-O, against shareholder Michael Saracco for a pattern of economic extortion, defamation, and tortious interference. Mr. Saracco has falsely claimed a right to redemption of approximately $3.5 million of our common stock he purchased through entities he controls and, when we declined, engaged in escalating threats, knowingly false statements about us and our executives, and made attempts to pressure us to repurchase his shares. Mr. Saracco disseminated false accusations of fraud, demanded redemption under an asserted August 31, 2025 deadline not contained in any agreement, threatened harm to our business and shareholder relationships, conducted an unsanctioned shareholder meeting to spread misinformation, and sent repeated demands and threats of reputational and economic harm unless his shares were redeemed. We are seeking injunctive relief, damages exceeding $500,000, attorney’s fees, and other appropriate remedies.
On November 29, 2025, Mr. Saracco filed a counterclaim against us and several of our executives seeking compensatory damages for alleged fraud in the inducement, civil conspiracy, and defamation. The counterclaim falsely asserts that we, through our representatives, misrepresented key terms surrounding Mr. Saracco’s $2,000,000 private placement investment in us in July 2025. Specifically, he alleges that he was told on a conference call with our executives that his funds would be held in a segregated reserve account until our Class A common stock publicly traded within approximately two weeks; that he would receive 2,500,000 warrants for no additional consideration as part of his investment; and that a 30-day redemption right would be honored if our shares were not trading by August 30, 2025.
On December 5, 2025, we filed a motion for emergency injunctive relief to, among other things, restrain Mr. Saracco from contacting, communicating with, or harassing any of our shareholders, investors, business partners, employees, officers, directors, or agents, directly or indirectly, by any means; and order Mr. Saracco to immediately cease all forms of harassment, threats, intimidation, or coercive conduct directed at us and our affiliates, investors, or personnel.
The ultimate outcome of this litigation cannot presently be determined. However, in management’s opinion, Mr. Saracco’s claims are without merit and the likelihood of a material adverse outcome for us is extremely remote. Accordingly, adjustments, if any, that might result from the resolution of this matter have not been reflected in the financial statements.
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Other Information
We were incorporated on June 21, 2011 in the State of Florida. Our principal executive offices are located at 6901 TPC Drive, Suite 200, Orlando, Florida 32822. Our telephone number is (407) 374-1607.
We maintain two websites, www.FreeCast.com and www.SmartGuide.tv. The information contained on our websites is not, and should not be interpreted to be, a part of this prospectus.
Emerging Growth Company Status
We qualify as an “emerging growth company” as defined in the Jumpstart Our Business Startups Act of 2012, which we refer to as the JOBS Act. As a result, we are permitted to, and intend to, rely on exemptions from certain disclosure requirements that are applicable to other companies that are not emerging growth companies. Accordingly, we have included detailed compensation information for only our three most highly compensated executive officers and have not included a compensation discussion and analysis of our executive compensation programs in this prospectus. In addition, for so long as we are an “emerging growth company,” we will not be required to:
| ● | engage an auditor to report on our internal controls over financial reporting pursuant to Section 404(b) of the Sarbanes–Oxley Act; | |
| ● | comply with any requirement that may be adopted by the PCAOB regarding mandatory audit firm rotation or a supplement to the auditor’s report providing additional information about the audit and the financial statements (i.e., an auditor discussion and analysis); | |
| ● | submit certain executive compensation matters to shareholder advisory votes, such as “say-on-pay,” “say-on-frequency,” and “say-on-golden parachutes;” or | |
| ● | disclose certain executive compensation related items such as the correlation between executive compensation and performance and comparison of the chief executive officer’s compensation to median employee compensation. |
In addition, the JOBS Act provides that an “emerging growth company” can use the extended transition period for complying with new or revised accounting standards, which we have elected to take advantage of.
We will remain an “emerging growth company” until the earliest to occur of:
| ● | our reporting $1.235 billion or more in annual gross revenues; | |
| ● | our issuance, in a three-year period, of more than $1 billion in non-convertible debt; | |
| ● | the end of the fiscal year in which the market value of our Class A common stock held by non-affiliates exceeds $700 million on the last business day of our second fiscal quarter; and | |
| ● | June 30, 2031. |
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DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth certain information about our executive officers, key employees and directors as of the date of this Registration Statement.
| Name | Age | Position | ||
| William A. Mobley, Jr. | 62 | Chief Executive Officer and Chairman of the Board of Directors | ||
| Christopher Savine | 67 | Chief Operating Officer | ||
| Jonathan D. Morris | 49 | Chief Financial Officer, Principal Accounting and Financial Officer; Director | ||
| William P. Jennings, Jr | 70 | Director |
None of the events listed in Item 401(f) of Regulation S-K has occurred during the past ten years and that is material to the evaluation of the ability or integrity of any of our directors, director nominees or executive officers. The following is a brief biography of each of our named executive officers and directors. Everyone, except for our independent director, William P. Jennings Jr., currently works full-time for us, and we have no reason to believe that will change in the foreseeable future.
William A. Mobley, Jr. founded our Company in 2011 and has served as our Chief Executive Officer and Chairman since then. Before founding FreeCast, in 1999, Mr. Mobley formed Nextelligence, Inc., a technology solution and business management expertise provider, of which he is the Chief Executive Officer, a director and majority shareholder. Additionally, between 1993 and 2008, Mr. Mobley founded and was an officer and director of a number of online business solution companies, including Web2 Corp, Personal Portal Online, and World Commerce Online, and online media companies, including MegaMedia Networks and ImageCafe.com. Based on Mr. Mobley’s role as our founder, his position as the Chief Executive Officer, and his executive level experience in Internet-based media industry, our board of directors believes that Mr. Mobley has the appropriate set of skills to serve as a member of the board.
Christopher M. Savine has served as our Chief Operating Officer since May 2024. He was previously our Chief Financial Officer from April 2014 until May 2018. Mr. Savine was Chief Financial Officer at Pharmaceutic Litho and Label Co. from 2018 through 2020. Prior to initially joining FreeCast, Mr. Savine was the Executive Vice President and a segment Chief Financial Officer at Cenveo, Inc., a diverse $2 billion printing and packaging company, from 2009 to 2013. Prior to joining Cenveo, Mr. Savine served as Executive Vice President and Chief Financial Officer at Case Interactive Media, Inc. from 2007 to 2009. Prior thereto, he spent five years at RR Donnelley & Sons Company (formerly Moore Wallace, Inc.) as the Executive Vice President and Chief Financial Officer of an over $4 billion segment. From 2000 to 2002, Mr. Savine was Chief Financial Officer of Netscape Communications Corporation and played an important role in integrating Netscape into AOL. He later served as a Senior Vice President - Finance at AOL. Prior to joining Netscape, Mr. Savine was also Chief Financial Officer at PennNET and Imark Communications and Chief Financial Officer for 14 years with two subsidiaries of Capital Cities/ABC, Inc., a Walt Disney Company, and was an audit manager at Peat, Markwick, Mitchell & Co. (which later merged with Klynveld Main Goerdeler and became KPMG LLP). Mr. Savine earned an M.B.A. in Finance, a B.S. in Accounting and a B.A.in Economics from Saint Joseph’s University, and was previously a Certified Public Accountant licensed in the state of Pennsylvania.
Jonathan Morris has served as our Chief Financial Officer and a member of our board of directors since May 29, 2020. Mr. Morris has over 23 years of experience as a finance executive, principal, operator and advisor. In addition to being a full-time employee of FreeCast and serving as our Chief Financial Officer, Mr. Morris advises two SPACs, ESH Acquisition Corp. and Global Blockchain Acquisition Corp. on a limited basis (approximately four hours per quarter combined) as a consultant and their Chief Financial Officer. Prior to joining us, Mr. Morris served as Chief Financial Officer at Imageware Systems, Inc. from May 2020 to December 2020, and from August 2015 to February 2020 he led principal investments and structuring as President and Senior Managing Director at a large private family office. Prior to that, at Blackstone Group, Inc., he focused on telecom and technology investments and served on the board of SunGard AS. From 2005 to 2012 Mr. Morris was part of the TMT Investment Banking Group of Credit Suisse. Mr. Morris began his career in 1997 within the private equity division of Lombard, Odier et Cie, private bank in Switzerland and subsequently went to work as an associate at GAIN Capital, a currency hedge fund from 1999 to 2003. Mr. Morris earned his B.S. in Economics and Finance from the University of Virginia and his M.B.A. from Georgetown University. Based on Mr. Morris’ position as the Chief Financial Officer, and his executive level financial experience, our board of directors believes that Mr. Morris has the appropriate set of skills to serve as a member of the board.
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William P. Jennings, Jr. has served as a member of our board of directors since July 29, 2025. He was a consultant of ours for about six months, ending in January 2025, during which he advised us on setting up and maintaining disclosure controls and procedures over financial reporting in preparation of us becoming a public company. Prior to consulting for us, Mr. Jennings had entered retirement beginning in May 2023. Prior to retirement, Mr. Jennings was a consultant for RSM from January 2019 to April 2023 where he supported financial accounting outsourcing and controllership functions for clients across various sectors. From 2016 through 2018 Mr. Jennings was responsible for all financial reporting and accounting services at Senior Care Centers of America. Mr. Jennings previously held senior finance roles at IBM-acquired Fiberlink, Roch Capital, and Orthovita, where he led finance transformations, ERP implementations, and M&A support and as VP of Finance at Case Interactive Media / Asset International, led financial operations through multiple acquisitions during private equity-backed growth, helping transform the company into a global B2B data and media platform. Earlier in his career, served as Director of Financial Reporting at Capital Cities/ABC (Disney), overseeing consolidation and reporting for a $500M subsidiary with international operations. Mr. Jennings has over 30 years of experience guiding financial strategy, reporting and operational execution across public, private and PE-backed companies. Mr. Jennings has extensive experience in M&A support, system implementations and driving efficiency across sectors including SaaS, healthcare, media, and manufacturing. Mr. Jennings earned his B.A. in Criminal Justice from the LaSalle University and his M.B.A. in Finance from Widener University. Mr. Jennings was also a Certified Public Accountant (retired 2021) . Based on Mr. Jennings’ extensive experience in, and in-depth understanding of, accounting and finance, our board of directors believes that Mr. Jennings has the appropriate set of skills to serve as a member of our board of directors.
Family Relationships
There are no family relationships among our directors or executive officers.
Director Independence
Upon the completion of this offering, we expect that our Class A common stock will be listed on Nasdaq. We expect to be a “controlled company” under Nasdaq corporate governance standards because more than 50% of the voting power of our Class A common stock following the completion of this offering will be held by William A. Mobley, Jr. A “controlled company” may elect not to comply with certain Nasdaq corporate governance standards, including the requirement that: (i) a majority of our board of directors consists of “independent directors,” as defined under Nasdaq rules; (ii) we have a nominating and corporate governance committee that is composed entirely of independent directors with a written charter addressing the committee’s purpose and responsibilities; and (iii) we have a compensation committee that is composed entirely of independent directors with a written charter addressing the committee’s purpose and responsibilities. Following this offering, in reliance upon the foregoing exemptions, a majority of our board of directors may not consist of independent directors, we will not have a nominating and corporate governance committee, and our compensation committee will not be composed entirely of independent directors, and we may use any of these exemptions for so long as we are a controlled company. Accordingly, you will not have the same protections afforded to shareholders of companies that are subject to all of the corporate governance requirements of Nasdaq.
The “controlled company” exception does not modify the independence requirements for the audit committee, and we intend to comply with the requirements of Sarbanes-Oxley Act and Nasdaq. The rules of Nasdaq permit the composition of our audit committee to be phased-in as follows: (i) one independent committee member at the time our Class A shares are listed on Nasdaq; (ii) a majority of independent committee members within 90 days of the date of this prospectus; and (iii) all independent committee members within one year of the date of this prospectus. Thereafter, we will be required to have an audit committee comprised entirely of independent directors. We expect to appoint two independent directors to our board within 90 days of the date of this prospectus. If at any time we cease to be a “controlled company” under Nasdaq rules, our board of directors will take all action necessary to comply with the applicable Nasdaq rules, including appointing a majority of independent directors to our board of directors and establishing certain committees composed entirely of independent directors, subject to a permitted “phase-in” period.
Our board of directors has reviewed the independence of our directors based on the listing standards of Nasdaq. Based on this review, our board of directors determined that William P. Jennings, Jr. is independent within the meaning of Nasdaq rules. In making this determination, our board of directors considered the relationships that this non-employee director has with us and all other facts and circumstances our board of directors deemed relevant in determining his independence. As required under applicable Nasdaq rules, we anticipate that our independent directors will meet in regularly scheduled executive sessions at which only independent directors are present.
Board Committees
Our board of directors has established standing committees in connection with the discharge of its responsibilities. These committees include an Audit Committee and a Compensation Committee. Our board of directors has adopted a written charter for the Audit Committee, but in reliance on the exemption available for controlled companies, the Compensation Committee will not have a written charter addressing the committee’s purpose and responsibilities. Upon the listing of our Class A common stock on Nasdaq, a copy of the charter for the Audit Committee will be available on our website. Our board of directors may establish other committees as it deems necessary or appropriate from time to time.
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Audit Committee
The Audit Committee will be responsible for, among other matters:
| ● | appointing, compensating, retaining, evaluating, terminating, and overseeing our independent registered public accounting firm; | |
| ● | discussing with our independent registered public accounting firm the independence of its members from its management; | |
| ● | reviewing with our independent registered public accounting firm the scope and results of their audit; | |
| ● | approving all audit and permissible non-audit services to be performed by our independent registered public accounting firm; | |
| ● | overseeing the financial reporting process and discussing with management and our independent registered public accounting firm the interim and annual financial statements that we file with the SEC; | |
| ● | reviewing and monitoring our accounting principles, accounting policies, financial and accounting controls, and compliance with legal and regulatory requirements; | |
| ● | coordinating the oversight by our board of directors of our code of business conduct and our disclosure controls and procedures | |
| ● | establishing procedures for the confidential or anonymous submission of concerns regarding accounting, internal controls or auditing matters; and | |
| ● | reviewing and approving related-person transactions. |
Upon the listing of our Class A common stock on Nasdaq, our Audit Committee will consist of William P. Jennings, Jr.. Rule 10A-3 under the Exchange Act require us to have one independent Audit Committee member upon the listing of our Class A common stock, a majority of independent directors within 90 days of the date of this prospectus and all independent Audit Committee members within one year of the date of this prospectus. Our board of directors has affirmatively determined that William P. Jennings, Jr. meets the definition of “independent director” for purposes of serving on an Audit Committee under Rule 10A-3 and Nasdaq rules. Our board of directors has also affirmatively determined that William P. Jennings, Jr. qualifies as an “audit committee financial expert,” as such term is defined in Item 407(d)(5) of Regulation S-K.
Compensation Committee
The Compensation Committee will be responsible for, among other matters:
| ● | reviewing key employee compensation goals, policies, plans and programs; | |
| ● | reviewing and approving the compensation of our directors and executive officers; | |
| ● | reviewing and approving employment agreements and other similar arrangements between us and our executive officers; and | |
| ● | appointing and overseeing any compensation consultants or advisors. |
Upon the listing of our Class A common stock on Nasdaq, our Compensation Committee will consist of William A. Mobley, Jr. and William P. Jennings, Jr.. As a controlled company, we will rely upon the exemption from the requirement that our Compensation Committee be composed entirely of independent directors.
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Risk Oversight
Our board of directors will oversee a company-wide approach to risk management. Our board of directors will determine the appropriate risk level for us generally, assess the specific risks faced by us and review the steps taken by management to manage those risks. While our board of directors will have ultimate oversight responsibility for the risk management process, its committees will oversee risk in certain specified areas.
Specifically, our Compensation Committee will be responsible for overseeing the management of risks relating to our executive compensation plans and arrangements, and the incentives created by the compensation awards it administers. Our Audit Committee will oversee management of financial risks, as well as potential conflicts of interests. Our board of directors will be responsible for overseeing the management of enterprise risks and risks associated with the independence of our board of directors.
Term of Office
Our current second amended and restated bylaws provide that the term of each director expires at the next annual meeting of shareholders following his or her election or until his or her successor is elected and qualifies.
Compensation Committee Interlocks and Insider Participation
All compensation and related matters after the listing of our Class A common stock on Nasdaq will be reviewed by our Compensation Committee.
Code of Ethics and Conduct
Our board of directors has adopted a Code of Ethics and Conduct that applies to our directors, officers and employees. Upon the listing of our Class A common stock on Nasdaq, a copy of this code will be available on our website. We intend to disclose on our website any amendments to the Code of Ethics and Conduct and any waivers of the Code of Ethics and Conduct that apply to our principal executive officer, principal financial officer, principal accounting officer, controller or persons performing similar functions.
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Summary Compensation Table
The following table provides information regarding the compensation paid during the year ended June 30, 2025, and 2024 to our principal executive officer, principal financial officer and certain of our other executive officers, who are collectively referred to as “named executive officers” elsewhere in this prospectus.
| Name and Principal Position | Year | Salary | Option Awards |
All Other Compensation |
Total | |||||||||||||
| William A. Mobley, Jr. | 2025 | $ | 250,000 | $ | - | $ | 30,000 | (1) | $ | 280,000 | ||||||||
| Chief Executive Officer | 2024 | $ | 250,000 | $ | - | $ | 30,000 | (1) | $ | 280,000 | ||||||||
| Christopher Savine | 2025 | $ | 207,500 | $ | 83,200 | (3) | $ | - | $ | 290,700 | ||||||||
| Chief Operating Officer | 2024 | $ | 11,538 | (2) | $ | 105,245 | (3) | $ | - | $ | 116,783 | |||||||
| Jonathan Morris | 2025 | $ | 256,300 | $ | - | $ | $ | 256,300 | ||||||||||
| Chief Financial Officer | 2024 | $ | 250,000 | $ | - | $ | - | $ | 250,000 | |||||||||
| (1) | Consists of an automobile allowance. |
| (2) | Employment began May 13, 2024, represents pro-rata annual salary of $200,000. |
| (3) | Represents nonqualified stock options to purchase 12,504 shares of our Class A common stock, exercisable at $8.00 per share, and incentive stock options to purchase 24,996 shares of our Class A common stock, exercisable at $8.00 per share, issued in connection with entering into an employment agreement, effective May 13, 2024. The amount in the table above reflects the total stock-based compensation recorded during the fiscal year for the equity awards under ASC 718 stock-based compensation. See discussion of Stock Based Compensation, Warrants and Warrant Modifications in footnote 8 of the financial statements for further detail. |
Equity Compensation Plan Information
The following table sets forth information as of June 30, 2025, about shares of our Class A common stock outstanding and available for issuance under our 2021 Incentive Award Plan.
| Number
of securities to be issued upon exercise of outstanding options and rights |
Weighted- average exercise price of outstanding options, warrants, and rights |
Number
of securities remaining available for future issuance under the current equity compensation plan |
||||||||||
| 2021 Incentive Award Plan (1)(2) | 953,892 | $ | 4.48 | 2,046,108 | ||||||||
| (1) | Plan was approved by our board of directors on June 25, 2021, for officers, employees, directors and consultants, and was approved by our shareholders on June 10, 2022. |
| (2) | The plan authorizes the granting of stock options and other awards to purchase up to 3,000,000 shares of our Class A common stock. |
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2021 Incentive Award Plan
We have adopted a 2021 Incentive Award Plan (“Award Plan”), which became effective on June 25, 2021 and was approved by our shareholders on June 10, 2022. The principal purpose of the Award Plan is to attract, retain and motivate selected employees, consultants and directors through the granting of stock-based compensation awards and cash-based performance bonus awards. The material terms of the Award Plan are summarized below.
Share Reserve. Under the Award Plan, 3,000,000 shares of our Class A common stock will be initially reserved for issuance pursuant to a variety of stock-based compensation awards, including stock options, stock appreciation rights, restricted stock awards, restricted stock unit awards, performance bonus awards, performance stock unit awards, dividend equivalents or other stock or cash-based awards.
The following counting provisions will be in effect for the share reserve under the Award Plan:
| ● | to the extent that an award expires, lapses or is terminated, converted into an award in respect of shares of another entity in connection with a spin-off or other similar event, exchanged for cash, surrendered, repurchased or cancelled, in any case, in a manner that results in us acquiring the underlying shares at a price not greater than the price paid by the participant or not issuing the underlying shares, such unused shares subject to the award at such time will be available for future grants under the Award Plan; | |
| ● | to the extent shares are tendered or withheld to satisfy any tax withholding obligation with respect to any award under the Award Plan, such tendered or withheld shares will be available for future grants under the Award Plan; | |
| ● | to the extent shares subject to stock appreciation rights are not issued in connection with the stock settlement of stock appreciation rights on exercise thereof, such shares will be available for future grants under the Award Plan; | |
| ● | the payment of dividend equivalents in cash in conjunction with any outstanding awards will not be counted against the shares available for issuance under the Award Plan; and | |
| ● | shares issued in assumption of, or in substitution for, any outstanding awards of any entity acquired in any form of combination by us or any of our subsidiaries will not be counted against the shares available for issuance under the Award Plan. |
In addition, the sum of the grant date fair value of all equity-based awards and the maximum that may become payable pursuant to all cash-based awards to any individual for services as a non-employee director during any calendar year may not exceed $50,000.
Administration. The compensation committee of our board of directors is expected to administer the Award Plan unless our board of directors assumes authority for administration. The board of directors may delegate its powers to a committee, which, to the extent required to comply with Rule 16b-3, is intended to be comprised of “non-employee directors” for purposes of Rule 16b-3 under the Exchange Act. The Award Plan provides that the board of directors or leadership development, belonging and compensation committee may delegate its authority to grant awards other than to individuals subject to Section 16 of the Exchange Act or officers or directors to whom authority to grant awards has been delegated.
Subject to the terms and conditions of the Award Plan, the administrator has the authority to select the persons to whom awards are to be made, to determine the number of shares to be subject to awards and the terms and conditions of awards, and to make all other determinations and to take all other actions necessary or advisable for the administration of the Award Plan. The administrator is also authorized to adopt, amend or rescind rules relating to administration of the Award Plan. Our board of directors may at any time remove the leadership development, belonging and compensation committee as the administrator and revest in itself the authority to administer the Award Plan.
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Eligibility. Awards under the Award Plan may be granted to individuals who are then our officers, employees or consultants or are the officers, employees or consultants of certain of our subsidiaries. Such awards also may be granted to our directors. However, only employees of our company or certain of our subsidiaries may be granted incentive stock options, or ISOs.
Awards. The Award Plan provides that the administrator may grant or issue stock options, SARs, restricted stock, restricted stock unit awards, performance bonus awards, performance stock units, other stock- or cash-based awards and dividend equivalents, or any combination thereof. Each award will be set forth in a separate agreement with the person receiving the award and will indicate the type, terms and conditions of the award.
| ● | Nonstatutory Stock Options, or NSOs, will provide for the right to purchase shares of our Class A common stock at a specified price which may not be less than fair market value on the date of grant, and usually will become exercisable (at the discretion of the administrator) in one or more installments after the grant date, subject to the participant’s continued employment or service with us and/or subject to the satisfaction of corporate performance targets and individual performance targets established by the administrator. NSOs may be granted for any term specified by the administrator that does not exceed ten years. | |
| ● | Incentive Stock Options, or ISOs, will be designed in a manner intended to comply with the provisions of Section 422 of the Code and will be subject to specified restrictions contained in the Code. Among such restrictions, ISOs must have an exercise price of not less than the fair market value of a share of Class A common stock on the date of grant, may only be granted to employees, and must not be exercisable after a period of ten years measured from the date of grant. In the case of an ISO granted to an individual who owns (or is deemed to own) at least 10% of the total combined voting power of all classes of our capital stock, the Award Plan provides that the exercise price must be at least 110% of the fair market value of a share of Class A common stock on the date of grant and the ISO must not be exercisable after a period of five years measured from the date of grant. | |
| ● | Restricted Stock may be granted to any eligible individual and made subject to such restrictions as may be determined by the administrator. Restricted stock typically may be forfeited for no consideration or repurchased by us at the original purchase price if the conditions or restrictions on vesting are not met. In general, restricted stock may not be sold or otherwise transferred until restrictions are removed or expire. Purchasers of restricted stock, unlike recipients of options, will have voting rights and will have the right to receive dividends, if any, prior to the time when the restrictions lapse; however, extraordinary dividends will generally be placed in escrow, and will not be released until restrictions are removed or expire. | |
| ● | Restricted Stock Units may be awarded to any eligible individual, typically without payment of consideration, but subject to vesting conditions based on continued employment or service or on performance criteria established by the administrator. Like restricted stock, restricted stock units may not be sold, or otherwise transferred or hypothecated, until vesting conditions are removed or expire. Unlike restricted stock, stock underlying restricted stock units will not be issued until the restricted stock units have vested, and recipients of restricted stock units generally will have no voting or dividend rights prior to the time when vesting conditions are satisfied. | |
| ● | Stock Appreciation Rights, or SARs, may be granted in connection with stock options or other awards, or separately. SARs granted in connection with stock options or other awards typically will provide for payments to the holder based upon increases in the price of our Class A common stock over a set exercise price. The exercise price of any SAR granted under the Award Plan must be at least 100% of the fair market value of a share of our Class A common stock on the date of grant. SARs under the Award Plan will be settled in cash or shares of our Class A common stock, or in a combination of both, at the election of the administrator. |
| ● | Performance Bonus Awards and Performance Stock Units are denominated in cash or shares/unit equivalents, respectively, and may be linked to one or more performance or other criteria as determined by the administrator. |
| ● | Other Stock- or Cash-Based Awards are awards of cash, fully vested shares of our Class A common stock and other awards valued wholly or partially by referring to, or otherwise based on, shares of our Class A common stock. Other stock- or cash-based awards may be granted to participants and may also be available as a payment form in the settlement of other awards, as standalone payments and as payment in lieu of base salary, bonus, fees or other cash compensation otherwise payable to any individual who is eligible to receive awards. The administrator will determine the terms and conditions of other stock- or cash-based awards, which may include vesting conditions based on continued service, performance and/or other conditions. |
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| ● | Dividend Equivalents represent the right to receive the equivalent value of dividends paid on shares of our Class A common stock and may be granted alone or in tandem with awards other than stock options or SARs. Dividend equivalents are converted to cash or shares by such formula and such time as determined by the administrator. In addition, dividend equivalents with respect to an award subject to vesting will either (i) to the extent permitted by applicable law, not be paid or credited or (ii) be accumulated and subject to vesting to the same extent as the related award. |
Any award may be granted as a performance award, meaning that the award will be subject to vesting and/or payment based on the attainment of specified performance goals.
The Award Plan also provides that unless otherwise provided by administrator or otherwise directed by the holder of an option or SAR, each vested and exercisable option and SAR outstanding on the automatic exercise date with an exercise price per share that is less than the fair market value per share as of such date will automatically be exercised on such date.
Adjustments of Awards. The administrator has broad discretion to take action under the Award Plan, as well as make adjustments to the terms and conditions of existing and future awards, to prevent the dilution or enlargement of intended benefits and facilitate necessary or desirable changes in the event of certain transactions and events affecting our Class A common stock, such as stock dividends, stock splits, mergers, acquisitions, consolidations, and other corporate transactions. In addition, in the event of certain non-reciprocal transactions with our shareholders known as “equity restructurings,” the administrator will make equitable adjustments to the Award Plan and outstanding awards.
Change in Control. In the event of a change in control, unless the administrator elects to terminate an award in exchange for cash, rights or other property, or cause an award to accelerate in full prior to the change in control, such award will continue in effect or be assumed or substituted by the acquirer, provided that any performance-based portion of the award will be subject to the terms and conditions of the applicable award agreement. In the event the acquirer refuses to assume or replace awards granted, prior to the consummation of such transaction, awards issued under the Award Plan (other than any portion subject to performance-based vesting) will be subject to accelerated vesting such that 100% of such awards will become vested and exercisable or payable, as applicable. The administrator may also make appropriate adjustments to awards under the Award Plan and is authorized to provide for the acceleration, cash-out, termination, assumption, substitution or conversion of such awards in the event of a change in control or certain other unusual or nonrecurring events or transactions.
Amendment and Termination. The administrator may terminate, amend or modify the Award Plan at any time and from time to time. However, we must generally obtain shareholder approval to the extent required by applicable law, rule or regulation (including any applicable stock exchange rule), and generally no amendment may materially and adversely affect any outstanding award without the affected participant’s consent. Notwithstanding the foregoing, an option may be amended to reduce the per share exercise price below the per share exercise price of such option on the grant date and options may be granted in exchange for, or in connection with, the cancellation or surrender of options having a higher per share exercise price without receiving additional shareholder approval.
No incentive stock options may be granted pursuant to the Award Plan after the tenth anniversary of the effective date of the Award Plan. Any award that is outstanding on the termination date of the Award Plan will remain in force according to the terms of the Award Plan and the applicable award agreement.
Overview of Our Fiscal 2025 and 2024 Executive Compensation
Our executive compensation program consisted of the following components of compensation in 2025 and 2024:
Base Salary. Each named executive officer receives a base salary for the expertise, skills, knowledge and experience they offer to our management team. Base salaries are periodically adjusted to reflect:
| ● | The nature, responsibilities, and duties of the officer’s position; | |
| ● | The officer’s expertise, demonstrated leadership ability, and prior performance; |
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| ● | The officer’s salary history and total compensation, including annual cash incentive awards and annual equity incentive awards; and | |
| ● | The competitiveness of the officer’s base salary. |
Each named executive officer’s base salary for the fiscal year of 2025 and 2024 is listed in the 2025 and 2024 Summary Compensation Table.
Equity Incentive Awards.
Pursuant to the Award Plan, we granted William A. Mobley, Jr. options to purchase an aggregate of 125,004 shares of our Class B common stock at an exercise price of $4.00 per share on June 25, 2021. A total of 20,834 options vested on July 1, 2021, and then 1/18th of the remaining unvested options vested on the first day of each month, beginning August 1, 2021 and continued each successive month until the option was 100% vested.
We issued Mr. Mobley warrants to purchase an aggregate of 5,000,000 shares of our Class B common stock at an exercise price of $0.50 per share in 2012, all of which expired on or prior to December 30, 2022. On June 15, 2023, we issued Mr. Mobley new warrants to purchase an aggregate of 5,000,000 shares of our Class B common stock at an exercise price of $0.50 per share in exchange for the expired warrants. On May 16, 2024, we modified the outstanding warrants held by Mr. Mobley to be exercisable into Class B common stock and exercisable on a cashless basis. Mr. Mobley exercised all of the warrants on a cashless basis on May 17, 2024.
Pursuant to the Award Plan, we granted Mr. Morris options to purchase an aggregate of 125,004 shares of our Class A common stock at an exercise price of $4.00 per share on June 25, 2021. A total of 20,834 options vested on July 1, 2021, and then 1/18th of the remaining unvested options vested on the first day of each month, beginning August 1, 2021 and continued each successive month until the option was 100% vested.
We sold Mr. Morris, for $100, warrants to purchase 50,000 shares of our Class A common stock at an exercise price of $3.50 per share. The warrants vested ratably over 12 months from May 29, 2020 and expired on May 29, 2023. On June 15, 2023, we issued Mr. Morris new warrants to purchase 50,000 shares of our Class A common stock at an exercise price of $3.50 per share in exchange for the expired warrants. The warrants are immediately exercisable and expire on December 31, 2025.
Pursuant to the Award Plan, we granted Mr. Savine options to purchase an aggregate of 37,500 shares of our Class A common stock at an exercise price of $8.00 per share on May 13, 2024. The options vest ratably over 24 months and may be exercised in whole or in part at any time or from time to time from the vesting date up to and including May 13, 2034.
We issued Mr. Savine warrants to purchase 100,000 shares of our Class A common stock, exercisable at $2.00 per share, in connection with entering into an employment agreement, effective May 13, 2024. The warrant vested ratably over 12 months and was exercisable in whole or in part at any time or from time to time from the vesting date up to and including May 13, 2027. The warrant was subsequently terminated and cancelled in connection with an amendment to Mr. Savine’s employment agreement on November 15, 2024.
Other Benefits. We are obligated to provide to one or more of the named executive officers with an automobile allowance. In the three months ended September 30, 2025, we paid Mr. Mobley an automobile allowance of $30,000.
Employment Agreements
On July 1, 2013, we entered into an employment agreement with William A. Mobley, Jr., pursuant to which Mr. Mobley agreed to act as our Chief Executive Officer, which employment agreement was initially amended on July 1, 2014 and amended for a second time on July 1, 2019 (as amended, the “Mobley Employment Agreement”). Pursuant to the terms of the Mobley Employment Agreement, Mr. Mobley is entitled to receive an annual salary of $250,000 and an automobile allowance of $2,500 per month. An annual cash bonus may be paid at the discretion of our board of directors. Pursuant to the terms of the Mobley Employment Agreement, Mr. Mobley may only be terminated by us upon his death, disability or for cause, as defined in the Mobley Employment Agreement. The term of the Mobley Employment Agreement expired on June 30, 2024. We expect to enter into a new employment agreement with Mr. Mobley soon after listing our Class A common stock on Nasdaq. Until then, both parties have verbally agreed that Mr. Mobley will continue to be employed, on a month-to-month basis, under the applicable terms and conditions of the Mobley Employment Agreement.
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Effective May 13, 2024, we entered into an employment agreement with Mr. Christopher Savine to serve as our Chief Operating Officer (the “Savine Employment Agreement”). We subsequently entered into an amendment to the Savine Employment Agreement on November 15, 2024 (the “Amendment”). The initial term of the Savine Employment Agreement expired on May 12, 2025. The Savine Employment Agreement automatically renews on a month-to-month basis until either party terminates it. Under the Savine Employment Agreement, Mr. Savine received an annual salary of $200,000 during the initial one-year term. Beginning May 13, 2025, his annual salary was increased to $225,000 and he now receives a monthly stipend of $1,385 for health insurance premiums. In conjunction with Mr. Savine entering into the Savine Employment Agreement, we issued Mr. Savine a warrant to purchase 100,000 shares of our Class A common stock, exercisable at $2.00 per share, which vests ratably over 12 months from the date of issuance, and expires on May 13, 2027 (the “Warrant”). The Warrant was terminated and cancelled in connection with the Amendment. The Amendment also added a provision to the Savine Employment Agreement whereby Mr. Savine is eligible to receive a performance bonus payable in cash only in an amount equal to the fair market value of: (i) 112,500 shares; and (ii) 100,000 warrants for Class A common stock exercised on a cashless basis with an exercise price of $2.00 per share. To be eligible for the bonus, Mr. Savine must have been continuously employed during the initial term, and we must have successfully completed a liquidity event, which may occur after the initial term. A liquidity event is defined in the Savine Employment Agreement as either: (i) (a) a merger, consolidation, reorganization, or business combination; or (b) a sale or other disposition of all or substantially all of our assets in any single transaction or series of related transactions; or (ii) (a) a primary offering of our Class A common stock by us to the general public through an effective registration statement filed with the SEC; (b) simultaneous listing of our Class A common stock on any established stock exchange if such common stock was not already listed at the time of such offering; and (c) we receive net proceeds from the offering of not less than $20 million. If Mr. Savine becomes eligible for the bonus, it will be paid to him no later than five days after the later of: (a) the end of the initial term and (b) a liquidity event. We also granted Mr. Savine nonqualified stock options to purchase 12,504 shares of our Class A common stock, exercisable at $8.00 per share, and incentive stock options to purchase 24,996 shares of our Class A common stock, exercisable at $8.00 per share, in connection with entering into the Savine Employment Agreement. An annual bonus may be paid at the discretion of our board of directors. If Mr. Savine is terminated by us as a result of death, permanent disability or for cause, he shall receive payment in respect of compensation earned but not yet paid. If Mr. Savine is terminated by us other than due to his death, disability or for cause, he will receive as severance: (i) continued payment of three months of salary at the rate of $200,000 per annum; and (ii) all warrants and shares as defined in the Savine Employment Agreement shall immediately vest as of the date of termination. Under the Savine Employment Agreement, while Mr. Savine is employed by us and for a period of one year from and after the date that his employment by us ceases or terminates for any reason, he is prohibited from directly or indirectly competing against us.
Effective May 29, 2020, we entered into an employment agreement with Mr. Jonathan Morris to serve as our Chief Financial Officer (the “Morris Employment Agreement”). The initial term of the Morris Employment Agreement expired on May 29, 2021. The Morris Employment Agreement automatically renews on a month-to-month basis until either party terminates it. Under the Morris Employment Agreement, Mr. Morris received an annual salary of $250,000 during the initial one-year term, and he receives $250,000 per annum thereafter until a new extension is executed between the parties. During fiscal year 2025, the parties amended the agreement to include a monthly stipend of $699 for health insurance premiums. In conjunction with Mr. Morris entering into the employment agreement, we sold Mr. Morris, for $100.00, a warrant to purchase 50,000 shares of our Class A common stock, exercisable at $3.50 per share. The warrants vested ratably over 12 months from the effective date of the Morris Employment Agreement, and expired on May 29, 2023. We issued Mr. Morris new warrants to purchase 50,000 shares of our Class A Class A common stock in exchange for the expired warrants. The new warrants have the same exercise price as the expired warrants, are immediately exercisable and expire on December 31, 2025. Mr. Morris also has the option to receive additional warrants in lieu of a pro-rated portion of his annual salary on a one warrant per $2 basis. Each such additional warrant will also have an exercise price of $3.50, vest immediately and expire 36 months from the date of issuance. An annual bonus may be paid at the discretion of our board of directors. If Mr. Morris is terminated by us as a result of death, permanent disability or for cause, or if Mr. Morris terminates his employment for other than good reason, he shall receive payment in respect of compensation earned but not yet paid. If Mr. Morris is terminated by us other than due to his death, disability or for cause, or if Mr. Morris terminates his employment for good reason, he will receive as severance: (i) continued payment of 12 months of his base salary then in effect; (ii) a lump sum payment of the prorated portion of any bonus earned for that year; (iii) accelerated vesting of 50% of unvested warrants; and (iv) continued health insurance coverage then in effect for 12 months following the date of termination. Under the Morris Employment Agreement, while Mr. Morris is employed by us and for a period of one year from and after the date that his employment by us ceases or terminates for any reason, he is prohibited from directly or indirectly competing against us.
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Outstanding Equity Awards at Fiscal Year End
The following table sets forth certain information regarding all outstanding equity awards held by our named executive officers as of September 30, 2025.
| Name | Number of
Securities Underlying Unexercised Options (#) Exercisable |
Number of
Securities Underlying Unexercised Options (#) Unexercisable |
Option Exercise Price ($) |
Option Expiration Date |
|||||||||||
| William A. Mobley, Jr. | 125,004 | - | $ | 4.00 | June 24, 2031 | ||||||||||
| Christopher Savine | 26,571 | 10,929 | (1) | (1) | (1) | ||||||||||
| Jonathan Morris | 125,004 | - | $ | 4.00 | June 24, 2031 | ||||||||||
| (1) | On May 13, 2024, options to purchase 37,500 shares of Class A common stock at an exercise price of $8.00 per share were granted. Options vest ratably over 24 months and may be exercised at any time from the vesting date up to and including May 12, 2034. Beginning May 13, 2024, and continuing on the first day of each successive month until all of the options are vested, 1,563 options vest and become exercisable. |
Option Exercises and Stock Vested
No officers or directors exercised options, and no stock vested during the three months ended September 30, 2025 except for stock options to purchase 4,689 shares of Class A common stock as described in footnote (1) to the above table.
Non-Executive Director Compensation
The non-executive members of our board of directors have not received any compensation prior to the listing of our Class A common stock on Nasdaq and no arrangements have been entered into in relating to compensation after the listing of our Class A common stock on Nasdaq. Following the listing of our Class A common stock on Nasdaq, our board of directors will establish a compensation package for the non-executive members of our board of directors.
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CERTAIN RELATIONSHIPS AND RELATED-PARTY TRANSACTIONS
From July 30, 2017 through October 31, 2019, we deferred some of William A. Mobley, Jr.’s compensation, including all of his compensation in 2018. As of June 30, 2023, his accrued compensation total was $377,893. On January 3, 2017, our board of directors approved the payment of the deferred compensation and repayment of the amount due in accounts payable in shares of our Class B common stock in lieu of cash at the price of $0.50 per share, at Mr. Mobley’s sole discretion. On March 31, 2024, Mr. Mobley converted the total amount of accrued compensation into 755,786 shares of our Class B common stock.
As of December 31, 2023, we owed Nextelligence $213,696 for cash collected on behalf of Nextelligence from sales that occurred prior to June 30, 2017. On January 3, 2017, our board of directors approved the repayment of the amount due in accounts payable in shares of our Class A common stock in lieu of cash at the price of $0.50 per share, at Nextelligence’s sole discretion. On March 31, 2024, Nextelligence converted the total amount of accounts payable into 427,392 shares of our Class A common stock.
On June 30, 2011, we entered into a Technology License and Development Agreement, which was amended and restated on October 19, 2012, amended on July 1, 2013 and amended and restated a second time on July 31, 2014 and further revised to terminate all payments by us pursuant to the agreement, effective June 30, 2016, with Nextelligence, which is majority owned and controlled by William A. Mobley, Jr. The Technology Agreement provides us with an exclusive license to certain technology from Nextelligence and for Nextelligence to provide all further development, improvement, modification, maintenance, management and enhancement services related to such technology. Nextelligence is our largest shareholder with more than 40% of our outstanding Class A common stock prior to the listing of our Class A common stock on Nasdaq. In connection with the Technology Agreement, we issued 10,002,000 shares of our Class A common stock to Nextelligence. The Technology Agreement expires on June 30, 2054, unless it’s terminated earlier based on termination events as defined in the Technology Agreement.
On July 1, 2018, we signed a revolving convertible note agreement with Nextelligence, which was amended and restated as of July 2, 2018, for an amount up to $500,000; with any borrowings on this loan being at our complete discretion. Outstanding principal accrued interest at 12% per annum, and was due and payable on July 1, 2020. In lieu of repayment, at Nextelligence’s option, all or part of the outstanding principal and accrued interest was convertible into shares of our Class A common stock at a conversion price of $0.50 per share. The loan matured on July 1, 2020, was in default and remained as an on-demand liability of ours until June 30, 2021. On June 30, 2021, we entered into a new revolving convertible promissory note with Nextelligence for an amount up to $2,500,000; with any borrowings on this loan being at our complete discretion. Outstanding principal accrues interest at 12% per annum. The borrowing limit was increased to $6,000,000 pursuant to a first amendment to the note dated June 13, 2022. Pursuant to a second amendment to the note dated July 17, 2023, the borrowing limit was increased to $10,000,000 and the maturity date extended to June 30, 2025. In lieu of repayment, at Nextelligence’s option, all or part of the outstanding principal and accrued interest is convertible into shares of our Class A common stock at a conversion price of $0.50 per share. On March 29, 2024, Nextelligence converted the principal of $13,139,473 and accrued interest of $1,607,952, total of $14,747,425, into 29,494,851 shares of our Class A common stock.
In June 2016, William A. Mobley, Jr. loaned us $111,000, at an interest rate of 12% per annum. The loan matured on December 31, 2017, was in default and remained as an on-demand liability of ours until June 30, 2021. In December 2016, we repaid $11,000 in outstanding principal. We also repaid approximately $50,000 during the fiscal year-end June 30, 2018. The loan was convertible into shares of Class B common stock at a conversion price of $0.50 per share. On June 30, 2021, we entered into a new convertible promissory note with Mr. Mobley for a loan in the principal amount of $82,509. Outstanding principal accrues interest at 12% per annum, and is due and payable on June 30, 2024. In lieu of repayment, at Mr. Mobley’s option, all or part of the outstanding principal and accrued interest is convertible into shares of our Class B common stock at a conversion price of $0.50 per share. As of March 29, 2024 and June 30, 2023, accrued interest charges related to this loan were $25,020 and $19,003, respectively. On March 29, 2024, Mr. Mobley converted the outstanding principal and accrued interest balance of $92,068 into 184,136 shares of our Class B common stock.
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Between July 2017 and December 2018, Public Wire, LLC, an entity owned by William A. Mobley, Jr., loaned us in various installments a total of $66,380. The notes representing the loan matured on dates ranging from April 1, 2019 to January 1, 2020. The loan was in default and remained as an on-demand liability of ours until June 30, 2021. On June 30, 2021, we entered into a new promissory note with Public Wire for a loan in the principal amount of $89,139. Outstanding principal accrues interest at 12% per annum, and is due and payable on June 30, 2024. On March 29, 2024, we entered into a Debt Conversion Agreement with Public Wire to convert the outstanding principal and accrued interest of the note payable at a conversion price of $4.00 per share. The total outstanding principal of $89,289 and accrued interest of $29,425, total of $118,714, was converted into 29,679 shares of our Class B common stock.
On May 3, 2024, we entered into a new convertible promissory note with Nextelligence for $1,000,000 that matured on May 3, 2025 with an interest rate of 12% per annum, and a default interest rate of 18% per annum. In lieu of repayment, at Nextelligence’s option, all or part of the outstanding principal and accrued interest is convertible into shares of our Class A common stock at a conversion price of $8.00 per share. Between May 30, 2024 and June 26, 2024, we borrowed an additional $1,075,000 from Nextelligence. On July 1, 2024, we repaid outstanding principal and accrued interest of $1,075,067. Between October 31, 2024 and December 11, 2024, we borrowed an additional $1,395,000 from Nextelligence. On December 13, 2024, we renewed and modified the May 3, 2024 note to include the additional loans. Between January 1, 2025 and June 3, 2025, we borrowed an additional $1,557,000 and made payments of $86,445 to Nextelligence. On July 26, 2025, Nextelligence converted the outstanding principal and accrued interest balance of $4,076,051 into 509,507 shares of our Class A common stock. As of September 30, 2025, June 30, 2025, the outstanding principal and accrued interest due to Nextelligence was $0 and $3,865,555, respectively.
On May 16, 2024, we entered into a Share Exchange Agreement with Nextelligence in connection with Nextelligence’s agreement to forfeit and cancel 20,000,000 shares of our Class A common stock in exchange for our issuance of 4,000,000 shares of our Series A preferred stock to Nextelligence. The Series A preferred stock has no voting or conversion to Class A common stock rights; a liquidation preference of $120 million; and a right to receive annual non-cumulative dividends out of our profits of 10% of annual revenue over $50 million, up to an aggregate amount of $160,000 million.
In June 2023, we entered into verbal arrangements with two related party entities, Test Drive Live Inc. and Celebrity Cigars, Inc., which are not under common ownership control. William A. Mobley, Jr. serves as the President of both companies and is the sole director for Celebrity Cigars. Mr. Mobley’s son, Sean Mobley, is part of the management team of Celebrity Cigars. We provided FAST channel buildout services relating to the development and buildout of their respective channels. We also provide the platform on an ongoing basis for each company to stream their content. We charge each company a monthly fee based on a 15% markup of our cost of production, which includes labor, rent, out-of-pocket costs, etc. We are currently negotiating with each company on a potential advertising revenue sharing arrangement. For the three months ended September 30, 2025, revenue generated from these agreements with Test Drive Live and Celebrity Cigars totaled $11,681 and $40,886, respectively.
In September 2025, we entered into a Data Services Agreement with Nextelligence, which is effective as of July 1, 2025. Under the agreement, we have access to and use of a proprietary marketing database and related analytical services Nextelligence either owns or licenses from Audience Acuity LLC, including customer profiling, audience targeting, and CRM support. The agreement imposes certain restrictions on our use of the data, including prohibitions on resale, reverse engineering and use in certain industries and applications. We paid a one-time fee of $120,000, and are required to pay a monthly fee of $10,000 for continued access to the data and services. The agreement has an initial three-year term, automatically renewing for successive one-year periods unless terminated in writing by either party not less than 30 days before the end of the initial term or subsequent term extension.
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of December 5, 2025, certain information concerning the beneficial ownership of our common stock by: (i) each shareholder known by us to own beneficially five percent or more of our outstanding common stock; (ii) each director; (iii) each named executive officer; and (iv) all of our executive officers and directors as a group, and their percentage ownership and voting power.
The information presented below regarding beneficial ownership of our voting securities has been presented in accordance with the rules of the Securities and Exchange Commission and is not necessarily indicative of ownership for any other purpose. Under these rules, a person is deemed to be a “beneficial owner” of a security if that person has or shares the power to vote or direct the voting of the security or the power to dispose or direct the disposition of the security. A person is deemed to own beneficially any security as to which such person has the right to acquire sole or shared voting or investment power within 60 days through the conversion or exercise of any convertible security, warrant, option, or other right. More than one person may be deemed to be a beneficial owner of the same securities. The percentage of beneficial ownership by any person as of a particular date is calculated by dividing the number of shares beneficially owned by such person, which includes the number of shares as to which such person has the right to acquire voting or investment power within 60 days, by the sum of the number of shares outstanding as of such date. Consequently, the denominator used for calculating such percentage may be different for each beneficial owner. Except as otherwise indicated below and under applicable community property laws, we believe that the beneficial owners of our Class A common stock and Class B common stock listed below have sole voting and investment power with respect to the shares shown. As of December 5, 2025, we had 40,857,460 shares of common stock outstanding (consisting of 26,931,820 shares of Class A common stock and 13,925,640 shares of Class B common stock outstanding).
| Amount and Nature of Beneficial Ownership | ||||||||||||||||||||
| Class A | Class B | % of Total | ||||||||||||||||||
| Name of Beneficial Owner (1) | Shares | % of Class | Shares | % of Class | Voting Power (2) | |||||||||||||||
| William A. Mobley, Jr. (3) | 10,796,964 | 39.83 | % | 14,050,644 | 100 | % | 93.09 | % | ||||||||||||
| Christopher Savine (4) | 1,382,340 | 4.98 | % | - | - | * | ||||||||||||||
| Jonathan Morris (5) | 175,004 | * | - | - | * | |||||||||||||||
| William P. Jennings, Jr. | - | - | - | - | - | |||||||||||||||
| All officers and directors as a group (four persons) | 12,354,308 | 43.92 | % | 14,050,644 | 100 | % | 93.40 | % | ||||||||||||
| Nextelligence, Inc. (6) | 10,796,964 | 39.83 | % | - | - | 4.50 | % | |||||||||||||
| * | Indicates beneficial ownership of less than 1% of the outstanding shares of our Class A common stock. |
| (1) | Unless otherwise indicated, the address of each beneficial owner is c/o FreeCast, Inc., 6901 TPC Drive, Suite 200, Orlando, Florida 32822. |
| (2) | Percentage of total voting power represents voting power with respect to all shares of our Class A and Class B common stock, as a single class. The holders of our Class B common stock are entitled to 15 votes per share, and holders of our Class A common stock are entitled to one vote per share. See the section titled “Description of Capital Stock – Common Stock” for additional information about the voting rights of our Class A and Class B common stock. |
| (3) | Consists of: (i) 6,110,991 shares of Class B common stock held of record by Mr. Mobley; (ii) 125,004 shares of Class B common stock underlying immediately exercisable options held of record by Mr. Mobley; (iii) 7,782,970 shares of Class B common stock held of record jointly by Mr. Mobley and his spouse, Michele Mobley (iv) 10,619,250 shares of Class A common stock held of record by Nextelligence, for which Mr. Mobley is an officer, director and majority shareholder; (v) 177,714 shares of Class A common stock underlying an immediately convertible promissory note held by Nextelligence; (vi) 29,679 shares of Class B common stock held of record by Public Wire, LLC, of which Mr. Mobley is the manager and sole member; and (vii) 2,000 shares of Class B common stock held of record by Telebrands for which Mr. Mobley acts as trustee pursuant to a Voting Trust Agreement. Mr. Mobley may be deemed to be the beneficial owner of the securities held of record by Telebrands Corp. and subject to the Voting Trust Agreement by virtue of his position as trustee thereof. Mr. Mobley disclaims beneficial ownership of the securities held of record by Telebrands for which he acts as trustee pursuant to the Voting Trust Agreement. |
| (4) | Consists of: (i) 537,500 shares of Class A common stock held of record by Mr. Savine; (ii) 812,017 shares of Class A common stock underlying immediately exercisable warrants held of record by Mr. Savine; and (iii) 32,823 shares of Class A common stock underlying immediately exercisable options held of record by Mr. Savine. |
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| (5) | Consists of: (i) 50,000 shares of Class A common stock underlying immediately exercisable warrants held of record by Mr. Morris; and (ii) 125,004 shares of Class A common stock underlying immediately exercisable options held of record by Mr. Morris. |
| (6) | Consists of: (i) 10,619,250 shares of Class A common stock held of record by Nextelligence, and (ii) 177,714 shares of Class A common stock underlying an immediately convertible promissory note held by Nextelligence. William A. Mobley, Jr. is the CEO, sole director and majority shareholder of Nextelligence. |
Voting Trust Agreement
On October 15, 2012, we entered into a Voting Trust Agreement with Telebrands and William A. Mobley, Jr. The Voting Trust Agreement appoints Mr. Mobley as the trustee of all the shares of our Class B common stock owned by Telebrands at any time (the “Entrusted Shares”). Telebrands currently owns 2,000 shares of our Class B common stock. Telebrands had warrants to purchase up to 10,000,000 shares of our Class A common stock, but the last of such warrants expired on October 14, 2022. Pursuant to the Voting Trust Agreement, Mr. Mobley is entitled to exercise all rights relating to the voting and disposition of the Entrusted Shares, provided, however, Mr. Mobley is not allowed to effect a disposition or permit registration of the Entrusted Shares with the SEC or any state securities administrators unless Nextelligence, which is majority owned and controlled by Mr. Mobley, simultaneously effects a disposition or permits registration of an identical proportion of our voting securities held by Nextelligence on the same terms and conditions. In addition, Mr. Mobley may not permit a disposition or registration of any of our voting securities that Nextelligence holds unless he simultaneously effects a disposition or registration of an identical proportion of the Entrusted Shares on the same terms and conditions.
The term of such trust ends upon the earlier to occur, of: (i) Mr. Mobley ceases to be an affiliate of FreeCast, as defined in the Voting Trust Agreement; or (ii) the disposition of all of the Entrusted Shares.
We are obligated to indemnify Mr. Mobley against any liabilities, damages, claims, taxes, deficiencies, assessments, losses, penalties, interest, costs and expenses paid or incurred by him in connection with the Voting Trust Agreement, unless those paid or incurred are a result of the gross negligence, willful misconduct or bad faith of Mr. Mobley.
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General
The total number of shares of all classes of capital stock which we are authorized to issue is 355,000,000 shares, consisting of: (i) 320,000,000 shares of Class A common stock, par value $0.0001 per share; (ii) 30,000,000 shares of Class B common stock, par value $0.0001 per share; and (iii) 5,000,000 shares of preferred stock,” par value $0.0001 per share.
Common Stock
As of December 5, 2025, we had 26,931,820 shares of Class A common stock outstanding that were held by approximately 900 record holders, and 13,925,640 shares of Class B common stock outstanding that were held directly and indirectly by William A. Mobley, Jr. A summary of the powers, preferences, rights, privileges, restrictions, and other matters relating to our common stock are as follows
Equal Status. In general, except with regards to voting, conversion and transfer rights described below, shares of Class A common stock and Class B common stock have the same rights and privileges and rank equally, share ratably and are identical in all respects as to all matters. Without limiting the generality of the foregoing: (i) in the event of a merger, consolidation or other business combination requiring the approval of the holders of our capital stock entitled to vote thereon (whether or not we are the surviving entity), the holders of Class A common stock shall have the right to receive, or the right to elect to receive, the same form of consideration, if any, as the holders of Class B common stock and the holders of Class A common stock shall have the right to receive, or the right to elect to receive, at least the same amount of consideration, if any, on a per share basis as the holders of Class B common stock; and (ii) in the event of (a) any tender or exchange offer to acquire any shares of common stock by any third party pursuant to an agreement to which we are a party, or (b) any tender or exchange offer by us to acquire any shares of common stock, pursuant to the terms of the applicable tender or exchange offer, the holders of Class A common stock shall have the right to receive, or the right to elect to receive, the same form of consideration as the holders of Class B common stock and the holders of Class A common stock shall have the right to receive, or the right to elect to receive, at least the same amount of consideration on a per share basis as the holders of Class B common stock.
Voting Rights. The holders of shares of Class A common stock and Class B common stock vote together as one class on all matters (including the election of directors) submitted to a vote or for the consent of our shareholders, except as otherwise provided by the Florida Business Corporation Act (the “FBCA”). However, each holder of shares of Class A common stock shall be entitled to one (1) vote for each share of Class A common stock held as of the applicable date on any matter that is submitted to a vote or for the consent of our shareholders, and the holder of shares of Class B common stock shall be entitled to fifteen (15) votes for each share of Class B common stock held as of the applicable date on any matter that is submitted to a vote or for the consent of our shareholders.
Under Section 607.1004 of the FBCA, the holders of outstanding shares of Class A common stock are entitled to vote as a separate voting group on any proposed amendment to our articles of incorporation, if the amendment would: (i) effect an exchange or reclassification, or create a right of exchange, of all or part of the Class A shares into Class B shares, or Class B shares into Class A shares; (ii) change the designation, rights, preferences, or limitations of all or part of the Class A shares; (iii) change all or part of the Class A shares into a different number of Class A shares; (iv) create a new class of shares having rights or preferences with respect to distributions or to dissolution that are prior or superior to the Class A shares; (v) increase the rights, preferences, or number of authorized shares of any class that, after giving effect to the amendment, have rights or preferences with respect to distributions or to dissolution that are prior or superior to the Class A shares; or (vi) cancel or otherwise affect rights to distributions or dividends that have accumulated but not yet been declared on all or part of the Class A shares. The holders of outstanding Class B shares have the right to vote as a separate voting group under the same circumstances as the holders of the Class A shares described above.
Dividends. Subject to the preferences applicable to any series of preferred stock, the holders of Class A common stock and the holders of Class B common stock are entitled to share equally, on a per share basis, in such dividends and other distributions of cash, property or shares of stock of the Company as may be declared by our board of directors from time to time with respect to the common stock out of assets or funds of the Company legally available therefor; provided, however, that in the event that such dividend is paid in the form of shares of common stock or rights to acquire common stock, the holders of Class A common stock shall receive Class A common stock or rights to acquire Class A common stock, as the case may be, and the holders of Class B common stock shall receive Class B common stock or rights to acquire Class B common stock, as the case may be.
Liquidation. Subject to the preferences applicable to any series of preferred stock, in the event of the voluntary or involuntary liquidation, dissolution, distribution of assets or winding up of the Company, the holders of Class A common stock and the holders of Class B common stock are entitled to share equally, on a per share basis, all assets of the Company of whatever kind available for distribution to the holders of common stock.
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Subdivision or Combinations. If we in any manner subdivide or combine the outstanding shares of Class A common stock or shares of Class B common stock, the outstanding shares of the other such class shall be subdivided or combined in the same proportion and manner, unless different treatment of the shares of each such class is approved by the affirmative vote of the holders of a majority of the outstanding shares of Class A common stock and shares of Class B common stock, each voting separately as a class.
Permitted Class B Holders. Shares of Class B common stock may only be issued to and held by William A. Mobley, Jr,. personally or jointly with his spouse, and certain permitted entities owned or controlled by Mr. Mobley, or for which he has sole disposition and voting power over shares held by such entities, other than Nextelligence (each, a “Class B Holder”). Any issuance by us of Class B shares to anyone other than a Class B Holder is immediately null and void, and of no legal validity, force, or effect. Unless a Class B Holder requests to receive Class A shares, any issuance of common stock by us to a Class B Holder will be shares of Class B common stock. If a Class B Holder purchases or otherwise acquires or receives any shares of Class A common stock from a person or entity other than us, upon receipt thereof such shares of Class A common stock shall automatically be reclassified as and become an equal number of shares of Class B common stock.
Class B Conversion. Each share of Class B common stock is convertible into one fully paid and nonassessable share of Class A common stock at the option of the Class B Holder at any time upon written notice to our transfer agent. Furthermore, each share of Class B common stock is automatically, without any further action by the Class B Holder thereof, converted into and reclassified as one fully paid and nonassessable share of Class A common stock upon the: (i) the death of William A. Mobley, Jr.; and (ii) transfer of a share of Class B common stock, other than a transfer to another Class B Holder, including a transfer of a share of Class B common stock to a broker or other nominee (regardless of whether or not there is a corresponding change in beneficial ownership). Any Class B shares transferred to a broker or other nominee, thereby reclassified as Class A shares, that are not sold and are subsequently returned to the Class B Holder, upon receiving the Class A shares, such shares are automatically reclassified as Class B shares. Except in connection with a Class B Holder acquiring or receiving shares of Class A common stock, shares of Class A common stock are not convertible into shares of Class B common stock for any reason.
Class B Protective Provisions. Without the prior written approval of holders of Class B common stock, we may: (i) not directly or indirectly, whether by amendment, or through merger, recapitalization, consolidation or otherwise, amend or repeal, or adopt any provision that modifies the voting, conversion or other rights, powers, preferences, privileges or restrictions of our Class B common stock; (ii) not reclassify any outstanding shares of Class A common stock into shares having rights as to dividends or liquidation that are senior to Class B common stock or the right to have more than one vote for each share thereof; (iii) only issue shares of Class B common stock to William A. Mobley, Jr. and certain permitted entities owned and controlled by Mr. Mobley; or (iv) not authorize, or issue any shares of, any class or series of our capital stock, including any preferred stock, having the right to more than one vote for each share thereof.
Preferred Stock
The Preferred Stock is divided into series, with the first series designated “Series A Preferred Stock” and consisting of 4,000,000 shares (the “Series A Shares”). Our board of directors may designate the remaining 1,000,000 authorized but unissued shares of Preferred Stock with such rights and privileges as the board of directors may determine without notice to our shareholders and without shareholder approval.
As of December 5, 2025, we had 4,000,000 Series A Shares outstanding that were held by one record holder. A summary of the powers, preferences, rights, privileges, restrictions, and other matters relating to our Series A Shares are as follows:
Dividends. In any fiscal year Series A Shares are outstanding where we have revenue of more than $50,000,000, the holder of the Series A Shares (the “Series A Shareholder”) is entitled to receive an annual cash dividend equal to ten percent of any revenue above $50,000,000 (the “Annual Dividend Payment”). Subject to meeting the above criteria for such fiscal year, Annual Dividend Payments shall continue until such time as the aggregate amount of all Annual Dividend Payments is equal to the lesser of: (i) $160,000,000; or (ii) the product of the then number of outstanding shares of Series A Preferred Stock and $40 (as may be adjusted for any subdivisions or combinations) (the “Maximum Dividend Payment”). Notwithstanding the above, such dividends are payable only to the extent permitted by law out of assets legally available therefore. No dividends may be paid on any common stock during any fiscal year of the Company until the Annual Dividend Payment on the Series A Shares shall have been paid or declared and set apart during that fiscal year.
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Liquidation Preference. In the event of any liquidation, dissolution or winding up of the Company, either voluntary or involuntary, the Series A Shareholder is entitled to receive, prior and in preference to any distribution of any of the assets of the Company to the holders of common stock, or other junior equity security by reason of their ownership thereof, an amount per Series A Share equal to $30 (as may be adjusted for any subdivisions or combinations) (the “Liquidation Amount”). If upon the occurrence of such event, the assets and funds to be distributed to the Series A Shareholder are insufficient to permit the payment to the Series A Holder of the full preferential Liquidation Amount, then the entire assets and funds of the Company legally available for distribution shall be distributed to the Series A Shareholder. After the distribution described above has been paid, the remaining assets of the Company available for distribution to shareholders shall be distributed among the holders of common stock pro rata based on the number of shares of common stock held by them. Whenever the distribution provided for in this section is payable in securities or other property other than cash, the value of such distribution will be the fair market value of such securities or other property as determined in good faith by our board of directors.
Voting Rights. Except as otherwise required by law, the Series A Shares have no voting rights or powers on any matter presented to our shareholders for their action or consideration at any meeting of our shareholders (or by written consent of shareholders in lieu of a meeting).
Conversion Rights. Except as otherwise required by law, the Series A Shares have no conversion rights or powers to convert into any other capital stock or security of the Company.
Transfers. Except as otherwise required by law, the Series A Shareholder has no rights or powers to enter into and/or consummate any sale, assignment, transfer, conveyance, hypothecation or other transfer or disposition of one or more of the Series A Shares or any legal or beneficial interest in the Series A Shares, whether or not for value and whether voluntary or involuntary, without our prior written consent, in our sole discretion.
Transfer Agent
The transfer agent for our common stock is Equiniti Trust Company, LLC, Mendota Heights, Minnesota.
Listing
We have applied to have our Class A common stock listed on the Nasdaq Global Market under the symbol “CAST.”
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SALE PRICE HISTORY OF OUR COMMON STOCK
We intend to apply to have shares of our Class A common stock listed on the Nasdaq Global Market. Prior to the initial listing, no public market has existed for our Class A common stock. However, we have issued shares of our Class A common stock in private transactions. The table below shows the high and low sales prices for our common stock sold in private transactions to our shareholders. While the Advisor is expected to consider this information in connection with setting the opening public price of our Class A common stock, this information may, however, have little or no relation to broader market demand for our Class A common stock. As a result, you should not place undue reliance on these historical private sales prices as they may differ materially from the trading price of our Class A common stock on the Nasdaq Global Market. See “Risk Factors-The trading price of our Class A common stock, upon listing on the Nasdaq Global Market, may have little or no relationship to the historical sales prices of our Class A common stock in private transactions.”
| Per Share Sale Price | Number of Shares Issued in | |||||||||||
| High | Low | the Period | ||||||||||
| Annual(1) | ||||||||||||
| 2022 | $ | 2.00 | $ | 2.00 | 1,940,625 | |||||||
| 2023 | $ | 2.00 | $ | 2.00 | 2,715,000 | |||||||
| 2024(2) | $ | 8.00 | $ | 0.50 | (3) | 11,202,287 | ||||||
| 2025(4) | $ | 8.00 | $ | 8.00 | 1,302,757 | |||||||
| (1) | Calendar year. |
| (2) | Reflects a 1 for 2 reverse stock split in May. |
| (3) | Conversion price of debt converted by William A. Mobley, Jr. and Nextelligence, Inc. in accordance with the terms of convertible promissory notes dated June 30, 2021. |
| (4) | Thru December 5. |
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SHARES ELIGIBLE FOR FUTURE SALE
Prior to this offering, there has been no public market for our Class A common stock. Furthermore, a liquid trading market for our Class A common stock may not develop or be sustained after the listing of our Class A common stock on Nasdaq. Future sales of substantial amounts of our Class A common stock in the public market following the listing of our Class A common stock on Nasdaq, or the perception that such sales could occur, could adversely affect market prices prevailing from time to time and may make it more difficult for you to sell your shares at a time and price that you deem appropriate. We will have no input if and when any Registered Shareholders may, or may not, elect to sell their shares or the prices at which any such sales may occur.
Upon the listing of our Class A common stock on Nasdaq, a total of 33,878,800 shares of Class A common stock will be outstanding (assuming all of the 6,946,980 Class B shares that are being converted into Class A shares and registered for sale by William A. Mobley, Jr. in this offering are sold and not converted back to Class B shares), and 19,782,084 shares covered by this prospectus will be registered under the registration statement of which this prospectus is a part. Any shares of common stock not registered will be “restricted securities,” as that term is defined in Rule 144 under the Securities Act. Restricted securities are eligible for public sale only if they are registered under the Securities Act, or if they qualify for an exemption from registration, including under Section 4(a)(1) and Rules 144 or 701 under the Securities Act, which are summarized below. With the exception of shares owned by our directors, officers and certain stockholders, and subject to the restrictions under the leak-out agreements described below, substantially all of our outstanding Class A common stock may be sold after our initial listing on Nasdaq, either by the Registered Shareholders pursuant to this prospectus or by the Registered Shareholders and our other existing shareholders in accordance with Section 4(a)(1) and Rule 144 under the Securities Act.
Furthermore, the number of shares of our Class A common stock outstanding upon the listing of our Class A common stock on Nasdaq does not take into account:
| ● | 8,056,087 shares of Class A common stock issuable upon the exercise of outstanding warrants as of September 30, 2025 at a weighted average exercise price of $4.76 per share. | |
| ● | 931,779 shares of common stock issuable upon exercise of outstanding options, of which 871,789 have vested and are exercisable as of September 30, 2025, at a weighted average exercise price of $4.13 per share. | |
| ● | 2,068,221 shares of Class A common stock available for future issuance under our 2021 Incentive Award Plan as of September 30, 2025. | |
| ● | 6,946,980 shares of Class A common stock issuable upon the conversion of 6,946,980 shares of Class B common stock outstanding after this offering. |
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Rule 144
In general, under Rule 144 as currently in effect, once we have been subject to the reporting requirements under the Exchange Act for at least 90 days, a person (or persons whose shares are aggregated) who is not deemed to have been an affiliate of ours at any time during the six months preceding a sale, and who has beneficially owned restricted securities within the meaning of Rule 144 for at least six months, would be entitled to sell those shares, subject only to the availability of current public information about us. A non-affiliated person who has beneficially owned restricted securities within the meaning of Rule 144 for at least one year would be entitled to sell those shares without regard to the provisions of Rule 144.
An affiliate of ours who has beneficially owned restricted shares of our Class A common stock for at least one year (or six months, provided that such sale occurs after we have been subject to the reporting requirements under the Exchange Act for at least 90 days) would be entitled to sell, within any three-month period, a number of shares that does not exceed the greater of:
| ● | 1% of shares of our Class A common stock then outstanding; or | |
| ● | the average weekly trading volume of shares of our Class A common stock on the Nasdaq during the four calendar weeks preceding the date on which notice of the sale is filed with the SEC. |
Sales under Rule 144 by our affiliates or persons selling shares on behalf of our affiliates are also subject to manner of sale provisions, notice requirements and the availability of current public information about us.
Rule 701
Rule 701 under the Securities Act, as in effect on the date of this prospectus, permits resales of shares in reliance upon Rule 144 but without compliance with certain restrictions of Rule 144, including the holding period requirement. Most of our employees, executive officers or directors who purchased shares under a written compensatory plan or contract may be entitled to rely on the resale provisions of Rule 701, but all holders of Rule 701 shares are required to wait until 90 days after the date we become subject to the reporting requirements under the Exchange Act before selling their shares.
Leak-out Agreements
Of the 425 Registered Shareholders, 149 have entered into leak-out agreements with respect to the disposition of their 17,526,833 shares that are being registered and are covered by this prospectus (“Registered Shares”), and their 17,478,955 shares that are not being registered and are not covered by this prospectus (“Non-Registered Shares,” and together with Registered Shares, “Covered Shares”). Such persons and entities have agreed to restrict the sale of their Covered Shares for a period of one year after the date our shares of Class A common stock begin trading on Nasdaq (“Initial Trading Day”). Under the terms of the leak-out agreement, Registered Shareholders may only sell: (i) up to 45% of their Registered Shares beginning on the Initial Trading Day, except that five Registered Shareholders may sell up to 100% of their Registered Shares on the Initial Trading Day and seven Registered Shareholders may to sell up to 80% of their Registered Shares on the Initial Trading Day; (ii) beginning on the 21st trading day after the Initial Trading Day, and each trading day thereafter, additional Registered Shares in an amount of not more than the Registered Shareholder’s pro-rata share of 10% of the average daily trading volume (“ADTV”) of shares of Class A common stock during the 20 trading days immediately preceding such sale date; and (iii) beginning on the first trading day that is seven months after the Initial Trading Day, and each trading day thereafter, Non-Registered Shares in an amount of not more than the Registered Shareholder’s pro-rata share of 10% of the ADTV of shares of Class A common stock during the 20 trading days immediately preceding such sale date. We plan to calculate the ADTV on a weekly basis. During the leak-out period, any and all sales of Covered Shares may only be executed and undertaken through one or more broker-dealers designated by us prior to the Initial Trading Day.
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Equity Incentive Plan
We intend to file one or more registration statements on Form S-8 under the Securities Act to register our shares issued or reserved for issuance under our 2021 Incentive Award Plan. The first such registration statement is expected to be filed soon after the date of this prospectus and will automatically become effective upon filing with the SEC. Accordingly, shares registered under such registration statement will be available for sale in the open market, unless such shares are subject to vesting restrictions with us or the leak-out restrictions described above.
Registration Rights
In connection with and as additional consideration for Nextelligence, Inc. forfeiting and cancelling 20,000,000 shares of our Class A common stock, we entered into a registration rights agreement with Nextelligence which provides Nextelligence, or its assigns, with certain registration rights with regards to 10,783,808 shares of our Class A common stock currently held by Nextelligence, and 9,623,542 shares of our Class A common stock previously held by Nextelligence and assigned last year to its stockholders as a special dividend, or a total of 19,782,084 shares of our Class A common stock currently outstanding. These shares are referred to as registrable securities. The holders of these registrable securities possess registration rights described in additional detail below.
The registration of shares of our Class A common stock pursuant to the exercise of the registration rights described below would enable the holders to resell these shares without restriction under the Securities Act when the applicable registration statement is declared effective. We will pay the registration expenses, other than underwriting discounts, selling commissions and fees for holder’s counsel, in a demand registration, of the shares registered pursuant to the demand and Form S-3 registrations described below.
Generally, in an underwritten offering, the managing underwriter, if any, has the right, subject to specified conditions, to limit the number of shares the holders may include. The demand and Form S-3 registration rights described below expire after the registrable securities have been registered or are otherwise transferred without assignment of the registration rights.
Demand Registration Rights. The holders of the registrable securities are entitled to certain demand registration rights. At any time beginning one year after the date on which we become subject to Section 13(a) or Section 15(d) of the Exchange Act, the holders of a majority of the registrable securities then outstanding may make a written request that we register all or a portion of their shares, subject to certain specified exceptions. In addition, we must notify all of the other holders of registrable securities of such registration and allow them to include all or a portion of their shares on the applicable registration statement, subject to customary cutbacks.
Form S-3 Registration Rights. The holders of the registrable securities are entitled to certain Form S-3 registration rights. Any holder of registrable securities can make a request that we register for offer and sale their shares on Form S-3 if we are qualified to file a registration statement on Form S-3, subject to certain specified exceptions. In addition, we must notify all of the other holders of registrable securities of such registration and allow them to include all or a portion of their shares on the applicable registration statement.
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The following table sets forth the number of shares of our Class A common stock held by and registered for resale by means of this prospectus for the Registered Shareholders.
The Registered Shareholders include certain shareholders with “restricted” securities under the applicable securities laws and regulations who, because of their status as our affiliates pursuant to Rule 144 or because they acquired their capital stock from an affiliate or from us within the prior 12 months from the date of any proposed sale, would otherwise be unable to sell their securities pursuant to Rule 144 until we have been subject to the reporting requirements of Section 13 or Section 15(d) of the Exchange Act for a period of at least 90 days. See “Shares Eligible for Future Sale” for further information regarding sales of such “restricted” securities if not sold pursuant to this prospectus.
Information concerning the Registered Shareholders may change from time to time and any changed information will be set forth in supplements to this prospectus, if and when necessary. Because the Registered Shareholders may sell all, some, or none of the shares of our Class A common stock covered by this prospectus, we cannot determine the number of such shares of our Class A common stock that will be sold by the Registered Shareholders, or the amount or percentage of shares of our Class A common stock that will be held by the Registered Shareholders upon consummation of any particular sale. In addition, the Registered Shareholders listed in the table below may have sold, transferred or otherwise disposed of, or may sell, transfer or otherwise dispose of, at any time and from time to time, our shares of Class A common stock in transactions exempt from the registration requirements of the Securities Act, after the date on which they provided the information set forth in the table below.
We currently intend to use our reasonable efforts to keep the registration statement of which this prospectus forms a part effective for a period of 90 days after the effectiveness of the registration statement. We are not party to any arrangement with any Registered Shareholder or any broker-dealer with respect to sales of shares of our Class A common stock by the Registered Shareholders.
The Registered Shareholders have not, nor have they within the past three years had, any position, office, or other material relationship with us, other than as disclosed in this prospectus. See “Directors and Executive Officers” and “Certain Relationships and Related Party Transactions” for further information regarding the Registered Shareholders.
In accordance with the rules of the SEC, beneficial ownership includes sole or shared voting or investment power with respect to our securities, and includes the Class A common stock issuable pursuant to options, warrants and other convertible securities that are exercisable or settled within 60 days of December 5, 2025. Shares of Class A common stock issuable pursuant to options, warrants or other convertible securities are deemed outstanding for computing the percentage of the class beneficially owned by the person holding such securities but are not deemed outstanding for computing the percentage of the class beneficially owned by any other person. Unless otherwise indicated below, to our knowledge, the persons and entities named in the table have sole voting and sole investment power with respect to all shares that they beneficially owned, subject to community property laws where applicable.
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We have calculated percentage ownership of our common stock based on 40,857,460 shares of our common stock (including 26,931,820 shares of Class A common stock and 13,925,640 shares of Class B common stock) issued and outstanding as of December 5, 2025. These amounts are based upon information available to us as of December 5, 2025.
| Name and Address of Registered Shareholders (1) | Class A Shares Beneficially Owned | Percentage Ownership of Common Stock | Class A Shares Being Registered | |||||||||
| William A. Mobley, Jr. (2) | 24,847,608 | 60.37 | % | 6,946,980 | ||||||||
| Paul J. Becker (3) | 1,644,543 | 3.95 | % | 464,771 | ||||||||
| Michael V. Boyko (4) | 1,650,793 | 3.96 | % | 467,896 | ||||||||
| Harold B. Coughlin (5) | 437,500 | 1.07 | % | 123,750 | ||||||||
| Stanley Drinkwater III (6) | 500,000 | 1.22 | % | 125,000 | ||||||||
| Equity Trust (7) | 1,281,250 | 3.09 | % | 314,062 | ||||||||
| The Gregory J Hill 2022 Irrevocable Trust (8) | 2,275,000 | 5.48 | % | 1,137,500 | ||||||||
| Nextelligence, Inc. (9) | 10,796,964 | 26.31 | % | 5,658,128 | ||||||||
| Carl & Joyce Peterson (10) | 872,877 | 2.12 | % | 311,438 | ||||||||
| Christopher M. Savine (11) | 1,382,340 | 3.31 | % | 268,750 | ||||||||
| William H. Valdes (12) | 605,189 | 1.47 | % | 165,094 | ||||||||
| MSRS CAST Holdings, LLC (13) | 250,000 | 0.61 | * | 250,000 | ||||||||
| LYM5, LLC (14) | 312,500 | 0.76 | * | 312,500 | ||||||||
| All Other Registered Shareholders (15) | 13,528,191 | 30.01 | % | 3,236,215 | ||||||||
| Total Number of Shares Being Registered | 19,782,084 | |||||||||||
| * | Indicates beneficial ownership of less than 1% of the outstanding shares of our Class A common stock. |
| (1) | Unless otherwise indicated, the address of such individual or entity is c/o FreeCast, Inc., 6901 TPC Drive, Suite 200, Orlando, Florida 32822. |
| (2) | The number of Class A shares beneficially owned consists of: (i) 6,110,991 shares of Class B common stock held of record by Mr. Mobley; (ii) 125,004 shares of Class B common stock underlying immediately exercisable options held of record by Mr. Mobley; (iii) 7,782,970 shares of Class B common stock held of record jointly by Mr. Mobley and his spouse, Michele Mobley (iv) 10,619,250 shares of Class A common stock held of record by Nextelligence, for which Mr. Mobley is an officer, director and majority shareholder; (v) 177,714 shares of Class A common stock underlying an immediately convertible promissory note held by Nextelligence; (vi) 29,679 shares of Class B common stock held of record by Public Wire, LLC, of which Mr. Mobley is the manager and sole member; and (vii) 2,000 shares of Class B common stock held of record by Telebrands for which Mr. Mobley acts as trustee pursuant to a Voting Trust Agreement. Mr. Mobley may be deemed to be the beneficial owner of the securities held of record by Telebrands Corp. and subject to the Voting Trust Agreement by virtue of his position as trustee thereof. Mr. Mobley disclaims beneficial ownership of the securities held of record by Telebrands for which he acts as trustee pursuant to the Voting Trust Agreement. |
| (3) | The number of Class A shares beneficially owned consists of 867,043 shares of Class A common stock and 777,500 shares of Class A common stock issuable pursuant to warrants that are exercisable within 60 days of December 5, 2025. The address for Mr. Becker is 875 Bainbridge Dr., West Chester, PA 19382. |
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| (4) | The number of Class A shares beneficially owned consists of 873,293 shares of Class A common stock and 777,500 shares of Class A common stock issuable pursuant to warrants that are exercisable within 60 days of December 5, 2025. address for Mr. Boyko is 108 Zachary court, Forest Hill, MD 21050. |
| (5) | The number of Class A shares beneficially owned consists of 247,500 shares of Class A common stock and 190,000 shares of Class A common stock issuable pursuant to warrants that are exercisable within 60 days of December 5, 2025. The address for Mr. Coughlin is 493 Ridge Rd PO Box 449, Benton, PA 17814. |
| (6) | The number of Class A shares beneficially owned consists of 250,000 shares of Class A common stock and 250,000 shares of Class A common stock issuable pursuant to warrants that are exercisable within 60 days of December 5, 2025. The address for Drinkwater III is 241 Atco Ave, Atco, NJ 08004. |
| (7) | The number of Class A shares beneficially owned consists of 628,125 shares of Class A common stock and 653,125 shares of Class A common stock issuable pursuant to warrants that are exercisable within 60 days of December 5, 2025. The address for Equity Trust is 10746 Havenwood Meadows Dr, Evansville IN 47725. |
| (8) | The number of Class A shares beneficially owned consists of 1,650,000 shares of Class A common stock and 625,000 shares of Class A common stock issuable pursuant to warrants that are exercisable within 60 days of December 5, 2025. The address for Hill Trust is 5202 Iron Works Way, Wayne PA 1908. |
| (9) | The number of Class A shares beneficially owned consists of: (i) 10,619,250 shares of Class A common stock; and (ii) 177,714 shares of Class A common stock underlying an immediately convertible promissory note held by Nextelligence. |
| (10) | The number of Class A shares beneficially owned consists of 622,877 shares of Class A common stock and 250,000 shares of Class A common stock issuable pursuant to warrants that are exercisable within 60 days of December 5, 2025. The address for Mr. & Mrs. Peterson is 9240 Sloane St, Orlando FL 32827. |
| (11) | The number of Class A shares beneficially owned consists of 537,500 shares of Class A common stock, 32,823 shares of Class A common stock issuable pursuant to options that are exercisable within 60 days of December 5, 2025, and 812,017 shares of Class A common stock issuable pursuant to warrants that are exercisable within 60 days of December 5, 2025. The address for Mr. Savine is 7726 Schooner Court, Parkland, FL 33067. |
| (12) | The number of Class A shares beneficially owned consists of 330,189 shares of Class A common stock and 275,000 shares of Class A common stock issuable pursuant to warrants that are exercisable within 60 days of December 5, 2025. The address for Mr. Valdes is 1333 Windowsong Rd, Orlando FL 32809. |
| (13) | The number of Class A shares beneficially owned consists of 250,000 shares of Class A common stock. The address for MSRS CAST Holdings, LLC is 526 Brevard Ave., Cocoa, FL 32922. |
| (14) | The number of Class A shares beneficially owned consists of 312,500 shares of Class A common stock. The address for LYM5, LLC is 1706 Rittenhouse Square, Philadelphia, PA 19103. |
| (15) | Consists of remaining 414 record shareholders who each owns less than 1% of the outstanding shares of our Class A common stock. |
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On the day that our shares of Class A common stock are initially listed on Nasdaq, Nasdaq will begin accepting, but not executing, pre-opening buy and sell orders and will begin to continuously generate the indicative Current Reference Price on the basis of such accepted orders. The Current Reference Price is calculated each second and, during a 10-minute “Display Only” period, is disseminated, along with other indicative imbalance information, to market participants by Nasdaq on its NOII and BookViewer tools. Following the “Display Only” period, a “Pre-Launch” period begins, during which the Advisor, in its capacity as our financial advisor, must notify Nasdaq that our shares are “ready to trade.” Once the Advisor has notified Nasdaq that our shares of Class A common stock are ready to trade, Nasdaq will confirm the Current Reference Price for our shares of Class A common stock, in accordance with the Nasdaq rules. If the Advisor then approves proceeding at the Current Reference Price, the applicable orders that have been entered will then be executed at such price and regular trading of our shares of Class A common stock on Nasdaq will commence, subject to Nasdaq conducting validation checks in accordance with Nasdaq rules.
Under Nasdaq rules, the Current Reference Price means: (i) the single price at which the maximum number of orders to buy or sell can be matched; (ii) if there is more than one price at which the maximum number of orders to buy or sell can be matched, then it is the price that minimizes the imbalance between orders to buy or sell (i.e. minimizes the number of shares that would remain unmatched at such price); (iii) if more than one price exists under (ii), then it is the entered price (i.e. the specified price entered in an order by a customer to buy or sell) at which our shares of Class A common stock will remain unmatched (i.e. will not be bought or sold); and (iv) if more than one price exists under (iii), a price determined by Nasdaq in consultation with the Advisor in its capacity as our financial advisor. In the event that more than one price exists under (iii), the Advisor will exercise any consultation rights only to the extent that it can do so consistent with the anti-manipulation provisions of the federal securities laws, including Regulation M, or applicable relief granted thereunder.
In determining the Current Reference Price, Nasdaq’s cross algorithms will match orders that have been entered into and accepted by Nasdaq’s system. This occurs with respect to a potential Current Reference Price when orders to buy shares of Class A common stock at an entered bid price that is greater than or equal to such potential Current Reference Price are matched with orders to sell a like number of shares of Class A common stock at an entered asking price that is less than or equal to such potential Current Reference Price. To illustrate, as a hypothetical example of the calculation of the Current Reference Price, if Nasdaq’s cross algorithms matched all accepted orders as described above, and two limit orders remained — a limit order to buy 500 shares of Class A common stock at an entered bid price of $10.01 per share and a limit order to sell 200 shares of Class A common stock at an entered asking price of $10.00 per share — the Current Reference Price would be selected as follows:
| ● | Under clause (i), if the Current Reference Price is $10.00, then the maximum number of additional shares that can be matched is 200. If the Current Reference Price is $10.01, then the maximum number of additional shares that can be matched is also 200, which means that the same maximum number of additional shares would be matched at the price of either $10.00 or $10.01. | |
| ● | Because more than one price under clause (i) exists, under clause (ii), the Current Reference Price would be the price that minimizes the imbalance between orders to buy or sell (i.e. minimizes the number of shares that would remain unmatched at such price). Selecting either $10.00 or $10.01 as the Current Reference Price would create the same imbalance in the limit orders that cannot be matched, because at either price 300 shares would not be matched. | |
| ● | Because more than one price under clause (ii) exists, under clause (iii), the Current Reference Price would be the entered price at which orders for shares of Class A common stock at such entered price will remain unmatched. In such case, choosing $10.01 would cause 300 shares of the 500-share limit order with the entered price of $10.01 to remain unmatched, compared to choosing $10.00, where all 200 shares of the limit order with the entered price of $10.00 would be matched, and no shares at such entered price remain unmatched. Thus, Nasdaq would select $10.01 as the Current Reference Price, because orders for shares at such entered price will remain unmatched. The above example (including the prices) is provided solely by way of illustration. |
The above example (including the prices) is provided solely by way of illustration.
The Advisor, as the designated financial advisor under Nasdaq Rule 4120(c)(8), will determine when our shares of Class A common stock are ready to trade and approve proceeding at the Current Reference Price primarily based on considerations of volume, timing and price. In particular, the Advisor will determine, based primarily on pre-opening buy and sell orders, when a reasonable amount of volume will cross on the opening trade such that sufficient price discovery has been made to open trading at the Current Reference Price. If the Advisor does not approve proceeding at the Current Reference Price (for example, due to the absence of adequate pre-opening buy and sell interest), the Advisor will request that Nasdaq delay the opening until such a time that sufficient price discovery has been made to ensure that a reasonable amount of volume crosses on the opening trade. Further, in the highly unlikely event that Nasdaq consults with the Advisor as described in clause (iv) of the definition of Current Reference Price, the Advisor would request that Nasdaq delay the opening to ensure a single opening price within clauses (i), (ii) or (iii) of the definition of the Current Reference Price. The Registered Shareholders will not be involved in Nasdaq’s price-setting mechanism, and will not coordinate or be in communication with the Advisor including with respect to any decision by the Advisor to delay or proceed with trading.
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Similar to a Nasdaq-listed firm-commitment underwritten initial public offering, in connection with the listing of our shares of Class A common stock, buyers and sellers who have subscribed will have access to Nasdaq’s Order Imbalance Indicator (the “Net Order Imbalance Indicator”), a widely available, subscription-based data feed, prior to submitting buy or sell orders. Nasdaq’s electronic trading platform simulates auctions every second to calculate a Current Reference Price, the number of shares of Class A common stock that can be paired off the Current Reference Price, the number of shares of Class A common stock that would remain unexecuted at the Current Reference Price and whether a buy-side or sell-side imbalance exists, or whether there is no imbalance, to disseminate that information continuously to buyers and sellers via the Net Order Imbalance Indicator data feed.
However, because this is not an initial public offering being conducted on a firm-commitment underwritten basis, there will be no traditional book building process. Moreover, prior to the opening trade, there will not be a price at which underwriters initially sold shares of Class A common stock to the public, as there would be in a firm-commitment underwritten initial public offering. The lack of an initial public offering price could impact the range of buy and sell orders collected by Nasdaq from various broker-dealers. Consequently, the public price of our shares of Class A common stock may be more volatile than in an initial public offering underwritten on a firm-commitment basis and could, upon being listed on Nasdaq, decline significantly and rapidly. See “Risk Factors—Risks Related to Ownership of Our Class A common stock — Our listing differs significantly from an initial public offering conducted on a firm-commitment basis. An active trading market may not develop or continue to be liquid and the market price of our shares of Class A common stock may be volatile.”
In addition, to list on Nasdaq, we are also required to have at least four registered and active market makers. We understand that the Advisor intends (but is not obligated) to act as a registered and active market maker, and gather at least three additional firms to act as registered and active market makers. However, any such market-making, if commenced, may be discontinued at any time. Letters of intention to make a market from the Advisor and at least three additional market makers will be provided to Nasdaq prior to any listing.
In addition to sales made pursuant to this prospectus, the shares of Class A common stock covered by this prospectus may be sold by the Registered Shareholders in private transactions exempt from the registration requirements of the Securities Act. However, shares of our Class A common stock do not have a history of trading in private transactions.
Under the securities laws of some states, shares of Class A common stock may be sold in such states only through registered or licensed brokers or dealers. If any of the Registered Shareholders utilize a broker-dealer in the sale of the shares of Class A common stock being offered by this prospectus, such broker-dealer may receive commissions in the form of discounts, concessions or commissions from such Registered Shareholder or commissions from purchasers of the shares of Class A common stock for whom they may act as agent or to whom they may sell as principal.
We have engaged Maxim as our financial advisor to advise and assist us with respect to certain matters relating to our direct listing. The services expected to be performed by the Advisor will include providing advice and assistance with respect to defining objectives, analyzing, structuring and planning the listing and developing and assisting with our investor communication strategy in relation to this listing. However, the Advisor will not be engaged to otherwise facilitate or coordinate price discovery activities or sales of shares of our Class A common stock in consultation with us, and will not be permitted to, and will not be instructed by us to, plan or actively participate in any investor education activities, except as described herein. We paid the Advisor a fee of $50,000 upon their engagement. We also paid the Advisor 125,000 shares of our Class A common stock, and have included such shares in this offering, subject to a leak-out agreement. The Advisor is also entitled to be reimbursed for all reasonable, documented expenses incurred by the Advisor in connection with its engagement, provided that such expenses, other than legal fees, may not exceed $5,000 without our prior authorization.
In addition, pursuant to our agreement with the Advisor, for a period of 18 months from the date of the consummation of the Direct Listing, if we propose to: (i) effect a public offering of our securities on a major U.S. exchange; (ii) effect a private placement of our securities; (iii) enter into certain financing transactions with third parties introduced to us by the Advisor; or (iv) propose to enter into certain other transactions with third parties introduced to us by the Advisor, including, without limitation, a merger, acquisition or sale of stock or assets, or other similar transaction, we are obligated to offer to retain the Advisor as our exclusive underwriter and book running manager, our exclusive placement or sales agent, or our exclusive advisor, as applicable, in connection with such financing or transaction, upon such terms as the Advisor and we may mutually agree, with such terms to be set forth in a separate engagement letter or other agreement between the Advisor and us.
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DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION FOR SECURITIES ACT LIABILITIES
Our Articles of Incorporation and Bylaws, subject to the provisions of Florida Law, contain provisions which allow the corporation to indemnify any person against liabilities and other expenses incurred as the result of defending or administering any pending or anticipated legal issue in connection with service to us if it is determined that person acted in good faith and in a manner which he reasonably believed was in the best interest of the corporation. Insofar as indemnification for liabilities arising under the Securities Act may be permitted to our directors, officers and controlling persons, we have been advised that in the opinion of the Securities and Exchange Commission, such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable.
The validity of the shares of Class A common stock offered hereby will be passed upon for us by Bahnsen Legal Group, PLLC, Boca Raton, Florida.
Sadler, Gibb & Associates, LLC, independent registered public accounting firm, has audited our financial statements as of June 30, 2025 and for each of the two years in the period ended June 30, 2025 as set forth in their report. We have included our financial statements in the prospectus and elsewhere in the registration statement in reliance on Sadler, Gibb & Associates, LLC’s report which includes an explanatory paragraph about the existence of substantial doubt concerning FreeCast’s ability to continue as a going concern, given on their authority as experts in accounting and auditing.
WHERE YOU CAN FIND MORE INFORMATION
We have filed with the SEC a registration statement on Form S-1, which includes amendments and exhibits, under the Securities Act and the rules and regulations under the Securities Act for the registration of Class A common stock being offered by this prospectus. This prospectus, which constitutes a part of the registration statement, does not contain all the information that is in the registration statement and its exhibits and schedules. Certain portions of the registration statement have been omitted as allowed by the rules and regulations of the SEC. Statements in this prospectus that summarize documents are not necessarily complete, and in each case, you should refer to the copy of the document filed as an exhibit to the registration statement. You may read and copy the registration statement, including exhibits and schedules filed with it, and reports or other information we may file with the SEC from the SEC’s Internet site at www.sec.gov.
Upon the listing of our Class A common stock on Nasdaq, we will become subject to information and periodic reporting requirements of the Exchange Act and we will file annual, quarterly and current reports, proxy statements, and other information with the SEC.
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Index to Financial Statements
CONTENTS
F-1
CONDENSED BALANCE SHEETS
| September 30, | June 30, | |||||||
| 2025 | 2025 | |||||||
| (Unaudited) | ||||||||
| Current Assets: | ||||||||
| Cash | $ | 345,723 | $ | 549,249 | ||||
| Accounts receivable, net | 135,533 | 131,432 | ||||||
| Accounts receivable - related party | 200,969 | 146,303 | ||||||
| Prepaid assets – related party | 40,000 | - | ||||||
| Other current assets | 43,756 | 46,314 | ||||||
| Total current assets | 765,981 | 873,298 | ||||||
| Non-current assets: | ||||||||
| Property and equipment, net | 29,021 | 26,105 | ||||||
| Prepaid assets, net of current portion – related party | 70,000 | - | ||||||
| Security deposits | 126,145 | 126,145 | ||||||
| Operating lease, right-of-use asset | 340,568 | 362,968 | ||||||
| Total non-current assets | 565,734 | 515,218 | ||||||
| Total assets | $ | 1,331,715 | $ | 1,388,516 | ||||
| Current liabilities: | ||||||||
| Accounts payable and accrued expenses | $ | 1,627,639 | $ | 1,528,327 | ||||
| Accounts payable and accrued expenses - related party | 187,269 | 330,108 | ||||||
| Current portion of operating lease obligation | 95,597 | 91,220 | ||||||
| Current portion of deferred revenue | 7,228 | 135,273 | ||||||
| Convertible Note Payable - Related Party | - | 3,865,555 | ||||||
| Total current liabilities | 1,917,733 | 5,950,483 | ||||||
| Long term liabilities: | ||||||||
| Deferred revenue, net of current portion | 1,648 | 2,705 | ||||||
| Operating lease liabilities, net of current portion | 263,718 | 288,836 | ||||||
| Total long-term liabilities | 265,366 | 291,541 | ||||||
| Total liabilities | 2,183,099 | 6,242,024 | ||||||
| Preferred stock, $0.0001 par value, 5,000,000 shares authorized | ||||||||
| Series A Preferred Stock, par value $0.0001, 4,000,000 and 4,000,000 shares issued and outstanding as of September 30, 2025, and June 30, 2025, respectively | 400 | 400 | ||||||
| Class A common stock, $0.0001 par value, 320,000,000 authorized; 26,931,820 and 25,635,313 shares issued and outstanding as of September 30, 2025, and June 30, 2025, respectively | 2,695 | 2,596 | ||||||
| Class B common stock, $0.0001 par value, 30,000,000 shares authorized; 13,925,640 and 13,937,640 shares issued and outstanding as of September 30, 2025, and June 30, 2025, respectively | 1,393 | 1,394 | ||||||
| Additional paid-in capital | 197,241,678 | 190,377,303 | ||||||
| Accumulated deficit | (198,097,550 | ) | (195,235,201 | ) | ||||
| Total stockholders’ deficit | (851,384 | ) | (4,853,508 | ) | ||||
| Total liabilities and stockholders’ deficit | $ | 1,331,715 | $ | 1,388,516 | ||||
The accompanying notes are an integral part of these condensed financial statements
F-2
UNAUDITED CONDENSED STATEMENTS OF OPERATIONS
| For the Three Months ended September 30, | ||||||||
| 2025 | 2024 | |||||||
| Net sales | ||||||||
| Sales | $ | 141,194 | $ | 39,268 | ||||
| Sales - related parties | 54,666 | 79,139 | ||||||
| Total revenue | 195,860 | 118,407 | ||||||
| Cost of revenue: | ||||||||
| Cost of revenue | 58,239 | 102,243 | ||||||
| Total cost of revenue | 58,239 | 102,243 | ||||||
| Gross profit | 137,621 | 16,164 | ||||||
| Operating costs and expenses: | ||||||||
| Compensation and benefits | 1,187,647 | 1,303,996 | ||||||
| Sales and marketing expense | 96,088 | 125,631 | ||||||
| General and administrative | 1,661,473 | 2,097,398 | ||||||
| Total operating expenses | 2,945,208 | 3,527,025 | ||||||
| Loss from operations | (2,807,587 | ) | (3,510,861 | ) | ||||
| Other income (expense): | ||||||||
| Interest income (expense), net | (52,621 | ) | (46,529 | ) | ||||
| Other (expense) income, net | (2,141 | ) | (2,415 | ) | ||||
| Total other (expense) income | (54,762 | ) | (48,944 | ) | ||||
| Net loss before income tax | $ | (2,862,349 | ) | $ | (3,559,805 | ) | ||
| Income tax expense (benefit) | - | - | ||||||
| Net loss | (2,862,349 | ) | (3,559,805 | ) | ||||
| Net loss per common share - basic and diluted | $ | (0.07 | ) | $ | (0.09 | ) | ||
| Weighted average common shares outstanding - basic and diluted | 40,491,073 | 39,147,953 | ||||||
The accompanying notes are an integral part of these condensed financial statements
F-3
UNAUDITED CONDENSED STATEMENTS OF STOCKHOLDERS’ DEFICIT
FOR THREE MONTHS ENDED September 30, 2025, AND 2024
| Redeemable
Series A Preferred Stock | Series
A Preferred Stock | Class
A Common Stock | Class
B Common Stock | Common Stock | Additional Paid-In | Accumulated | Total Stockholders’ | |||||||||||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | Subscriptions | Capital | Deficit | Deficit | |||||||||||||||||||||||||||||||||||||
| Balance as of June 30, 2025 | - | $ | - | 4,000,000 | 400 | 25,947,813 | 2,596 | 13,937,640 | 1,394 | - | 190,377,303 | (195,235,201 | ) | (4,853,508 | ) | |||||||||||||||||||||||||||||||||
| Stock based compensation | - | - | - | - | - | - | - | - | - | 88,422 | - | 88,422 | ||||||||||||||||||||||||||||||||||||
| Common stock issued to settle related party notes payable | - | - | - | - | 509,507 | 51 | - | - | - | 4,076,000 | - | 4,076,051 | ||||||||||||||||||||||||||||||||||||
| Common stock issued for cash | - | - | - | - | 337,500 | 34 | - | - | - | 2,699,966 | - | 2,700,000 | ||||||||||||||||||||||||||||||||||||
| Common stock issued for services | - | - | - | - | 125,000 | 13 | - | - | - | (13 | ) | - | - | |||||||||||||||||||||||||||||||||||
| Shares converted | - | - | - | - | 12,000 | 1 | (12,000 | ) | (1 | ) | - | - | - | - | ||||||||||||||||||||||||||||||||||
| Net loss | - | - | - | - | - | - | - | - | - | - | (2,862,349 | ) | (2,862,349 | ) | ||||||||||||||||||||||||||||||||||
| Balance as of September 30, 2025 | 4,000,000 | 400 | 26,931,820 | 2,695 | 13,925,640 | 1,393 | - | 197,241,678 | (198,097,550 | (851,384 | ) | |||||||||||||||||||||||||||||||||||||
| Balance as of June 30, 2024 | 4,000,000 | 120,000,000 | - | - | 32,993,283 | 3,299 | 6,154,670 | 616 | - | 63,495,755 | (181,169,253 | ) | (117,669,583 | ) | ||||||||||||||||||||||||||||||||||
| Stock based compensation | - | - | - | - | - | - | - | - | - | 105,172 | - | 105,172 | ||||||||||||||||||||||||||||||||||||
| Reclass from Class A common stock to Class B common stock | - | - | - | - | (7,782,970 | ) | (778 | ) | 7,782,970 | 778 | - | - | - | - | ||||||||||||||||||||||||||||||||||
| Warrants issued for services | - | - | - | - | - | - | - | - | - | 144,262 | - | 144,262 | ||||||||||||||||||||||||||||||||||||
| Net loss | - | - | - | - | - | - | - | - | - | - | (3,559,805 | ) | (3,559,805 | ) | ||||||||||||||||||||||||||||||||||
| Balance as of September 30, 2024 | 4,000,000 | 120,000,000 | - | - | 25,210,313 | 2,521 | 13,937,640 | 1,394 | - | 63,745,189 | (184,729,058 | ) | (120,979,954 | ) | ||||||||||||||||||||||||||||||||||
The accompanying notes are an integral part of these condensed financial statements
F-4
UNAUDITED CONDENSED STATEMENTS OF CASH FLOWS
| For the Three Months Ended September 30, | ||||||||
| 2025 | 2024 | |||||||
| Cash flows from operating activities: | ||||||||
| Net loss | $ | (2,862,349 | ) | $ | (3,559,805 | ) | ||
| Reconciliation of net loss to net cash used in operating activities | ||||||||
| Depreciation and amortization expense | 5,640 | 6,063 | ||||||
| Operating lease expense | 22,400 | 20,095 | ||||||
| Stock-based compensation | 88,422 | 249,434 | ||||||
| Bad debt expense | 453 | - | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | (4,554 | ) | 1,219 | |||||
| Accounts receivable - related party | (54,666 | ) | 195,350 | |||||
| Prepaid assets | (110,000 | ) | - | |||||
| Other current assets | 2,558 | 2,148 | ||||||
| Operating lease liability | (20,741 | ) | (16,930 | ) | ||||
| Accounts payable and accrued expenses | 99,312 | 111,566 | ||||||
| Accounts payable and accrued expenses - related party | 67,657 | (50,067 | ) | |||||
| Deferred revenue | (129,102 | ) | (24,357 | ) | ||||
| Net cash used in operating activities | (2,894,970 | ) | (3,065,284 | ) | ||||
| Cash flows from investing activities: | ||||||||
| Purchase of property and equipment | (8,556 | ) | (19,879 | ) | ||||
| Net cash used in investing activities | (8,556 | ) | (19,879 | ) | ||||
| Cash flows from financing activities: | ||||||||
| Proceeds from issuance of Class A common stock | 2,700,000 | - | ||||||
| Payments on finance lease | - | (407 | ) | |||||
| Repayments on revolving note payable - related party | - | (1,075,000 | ) | |||||
| Net cash provided by financing activities | 2,700,000 | (1,075,407 | ) | |||||
| Net change in cash | (203,526 | ) | (4,160,570 | ) | ||||
| Cash, beginning of period | 549,249 | 5,218,413 | ||||||
| Cash, end of period | $ | 345,723 | $ | 1,057,843 | ||||
| Non-cash investing and financing activities: | ||||||||
| Common stock issued to settle related party notes payable | $ | 4,076,051 | $ | - | ||||
The accompanying notes are an integral part of these condensed financial statements
F-5
NOTES TO CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2025, and 2024
(Unaudited)
Note 1 – Organization and Description of Business
FreeCast, Inc. (the “Company”) developed and markets an interactive digital media guide that facilitates access to a virtual library of entertainment media. The Company is based in Orlando, Florida and was founded in 2011 as a Florida Corporation. The Company’s primary products are SmartGuide and Select TV. Both SmartGuide and Select TV utilize the Company-designed proprietary technology that searches, and aggregates internet distributed streaming media into an electronic media guide. SmartGuide is licensable to brands/manufacturers of devices with large online user bases, while Select TV is a retail package that is sold by monthly and/or annual subscriptions.
In addition to subscription and product revenues, the Company generates revenue from its ad platform and agency services. FreeCast is a technology-driven streaming entertainment aggregator offering a unified, à la carte service for TV entertainment through a comprehensive Platform-as-a-Service (PaaS) model. The Company also earns revenue from direct client service contracts for marketing and campaign execution, such as the Launch That agreement, which involves discovery, development, and test media distribution services. These ad-related and agency revenues are recognized as distinct revenue streams in accordance with Accounting Standards Codification (ASC) Topic 606, Revenue from Contracts with Customers.(“ASC 606”)
Additionally, we provide Free Ad-Supported Streaming TV (“FAST”) channel buildouts which include post-production editing, motion graphic channel assembly and content acquisitions. We have aggregated over 500 FAST channels, which now provide material operations to the Company. We charge the customers based on time incurred for the services plus a reasonable margin in addition to any additional out of pocket cost incurred that is charged at cost to us. In addition, we split the advertising revenue. Revenue is recognized when services are performed. We charge a monthly platform fee for distributing the FAST channel on its platform. Revenue is recognized at the point in time when the content is available on the digital platform.
Going Concern
The Company has incurred recurring losses from operations since inception, accumulating a deficit of approximately $198.1 million as of September 30, 2025. For the three months ended September 30, 2025, and 2024, the Company incurred a net loss of approximately $2.9 million and $3.6 million, respectively. The Company may incur additional losses and negative operating cash flows in the future. Failure to generate sufficient revenues, reduce spending or raise additional capital could adversely affect the Company’s ability to achieve its intended business objectives. These matters, among others, raise substantial doubt about the Company’s ability to continue as a going concern for a period of one year from the issuance of these financial statements.
Since the inception of the Company in 2011, the operations of the Company have been funded primarily through sales of Class A common stock to private investors, debt financing and exchange of Class A common stock for services received by the Company. Management cannot be certain that additional funding will be available on acceptable terms, or at all. Management plans include raising additional capital through the sale of equity and debt securities, along with exploring additional avenues to increase revenues. To the extent that the Company raises additional funds by issuing equity securities, the Company’s shareholders may experience significant dilution. Any debt financing, if available, may involve restrictive covenants that impact the Company’s ability to conduct business.
F-6
The accompanying financial statements for the three months ended September 30, 2025, and 2024 have been prepared assuming the Company will continue as a going concern, which contemplates, among other things, the realization of assets and satisfaction of liabilities in the normal course of business. During the remaining 2025 calendar year, management intends to raise additional debt and/or equity financing to fund future operations and to provide additional working capital. Management’s plans to alleviate substantial doubt include pursuing equity and debt financing, expanding strategic partnerships, and enhancing monetization of its ad platform and FAST channel network. However, these plans are not yet finalized, and there is no assurance that such financing will be consummated or obtained in sufficient amounts. The financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.
Note 2 – Summary of Significant Accounting Policies
Basis of Presentation
The accompanying unaudited condensed financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring adjustments except those otherwise described herein) considered necessary for a fair presentation have been included, unless otherwise disclosed. Operating results for the current quarter ended September 30, 2025, are not necessarily indicative of the results that may be expected for the fiscal year ending June 30, 2026.
The Condensed Balance Sheet at June 30, 2025, has been derived from the audited Financial Statements at that date but does not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. The financial statements should be read in conjunction with the annual audited Financial Statements and Notes thereto.
Use of Estimates
The preparation of these financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the reported amounts in the financial statements and disclosure in the accompanying notes. Actual results may differ from those estimates, and such differences may be material to the financial statements. The Company evaluates expected credit losses in accordance with ASC 326, considering historical loss experience, current conditions, and reasonable and supportable forecasts. The more significant estimates and assumptions by management include among others: accounts receivable realization, the valuation allowance on deferred tax assets, the valuation of the Company’s Class A common stock, redeemable series A preferred stock, options, warrants and revenue recognition.
Cash and Cash Equivalents
The Company considers all highly liquid investments with original maturities at the date of purchase of three months or less to be cash equivalents. Cash and cash equivalents include bank demand deposits, marketable securities with maturities of three months or less at purchase, and money market funds that invest primarily in certificates of deposits, commercial paper and U.S. government and U.S. government agency obligations. Cash equivalents are reported at fair value.
F-7
Accounts receivable
Accounts receivables are unsecured and are derived from revenue earned from customers. For accounts receivable, the Company performs ongoing credit evaluations of customers to assess the probability of accounts receivable collection based on a number of factors, including past transaction experience with the customer, evaluation of their credit history, and review of the invoicing terms of the contract. Accounts receivables are reported net of an allowance for doubtful accounts when applicable. The allowance for doubtful accounts reflects management’s best estimate of probable losses inherent in the accounts receivable balance at each reporting date. Management determines the allowance based on known troubled accounts, historical experience, and other currently available evidence. The Company recognized bad debt expense for the three months ended September 30, 2025, and 2024 of $453 and $0, respectively. The balance of allowance for doubtful accounts as of September 30, 2025, and 2024 was $31,785 and $0, respectively.
Property and Equipment
Property and Equipment are stated at cost, less accumulated depreciation. Depreciation is determined on a straight-line basis over the estimated useful lives of the assets, which generally range from three to five years. Maintenance and repairs are charged against expense as incurred.
Leases
Effective July 1, 2019, we adopted ASC 842, Leases. Under ASC 842, we determine if a contractual arrangement is, or contains, a lease at the inception date. Right-of-use (“ROU”) assets and liabilities related to operating leases and finance leases are separately reported in the balance sheets.
ROU assets and lease liabilities are recognized at the lease commencement date based on the present value of the future lease payments over the lease term. When the rate implicit to the lease cannot be readily determined, we utilize our incremental borrowing rate in determining the present value of the future lease payments. The incremental borrowing rate is derived from information available at the lease commencement date and represents the rate of interest that a lessee would have to pay to borrow an amount equal to the lease payments on a collateralized basis over a similar term in a similar economic environment. Operating lease ROU assets also include any cumulative prepaid or accrued rent when the lease payments are uneven throughout the lease term.
The ROU assets and lease liabilities may include options to extend or terminate the lease when it is reasonably certain that we will exercise that option.
Lease liabilities are increased by interest and reduced by payments each period, and the ROU asset is amortized over the lease term. For operating leases, interest on the lease liability and the amortization of the ROU asset result in straight-line rent expense over the lease term. Variable lease expenses are recorded when incurred.
Income Taxes
The Company accounts for income taxes using the asset and liability method. Deferred tax assets and liabilities are recognized for temporary differences between the financial reporting and tax bases of assets and liabilities and are measured using enacted tax rates expected to apply when those differences reverse. A valuation allowance is recorded when it is more likely than not that some portion or all of the deferred tax assets will not be realized. The Company also evaluates uncertain tax positions and recognizes liabilities for tax positions that do not meet the more-likely-than-not threshold for sustainability upon examination.
F-8
Modifications to Warrants
A change in the terms or conditions of a warrant is accounted for as a modification. For a warrant modification accounted for under ASC 815, the effect of a modification shall be measured as the difference between the fair value of the modified warrant and the fair value of the original warrant immediately before its terms are modified, with each measured on the modification date. The accounting for incremental fair value of the modified warrants over the original warrants is based on the specific facts and circumstances related to the modification. When a modification is directly attributable to an equity offering, the incremental change in fair value of the warrants is accounted for as an equity issuance cost. When a modification is directly attributable to a debt offering, the incremental change in fair value of the warrants is accounted for as a debt discount or debt issuance cost. For all other modifications accounted for under ASC 815, the incremental change in fair value is recognized as a deemed dividend.
Revenue Recognition
Revenue is recognized upon transfer of control of promised goods or services to customers in an amount that reflects the consideration the Company expects to receive in exchange for those goods or services, in accordance with ASC 606. The Company’s contracts include various products or services or a combination of both, which are generally capable of being distinct and are accounted for as separate performance obligations. The Company’s contracts may contain multiple distinct performance obligations.
The transaction price of a contract is estimated based on the expected value for which a significant reversal of revenue is not expected to occur. Stand-alone selling prices are generally determined based on prices charged to customers. In arrangements with multiple performance obligations, the estimated transaction price is allocated to each distinct performance obligation based on relative stand-alone selling price (“SSP”).
Subscription Revenue
The Company no longer generates subscription revenue through renewal sales of Rabbit TV and Rabbit TV Plus, or through Select TV and Streaming TV Kits, which operated as the successor products to Rabbit TV and Rabbit TV Plus. In October 2022, the Company’s SelectTV.com paid subscription service and packaged SelectTV Streaming TV Kits were discontinued. The Company rebranded to the corporate namesake FreeCast.com and relaunched its SmartGuide as a free registration subscription service. SmartGuide is the Company’s internet distributed streaming media guide that searches and aggregates media content on the web and facilitates access to its customers through Wi-Fi-enabled devices that support streaming video.
The Company does, however, sell monthly subscriptions for premium content purchased through its SmartGuide for varying fees for different content. Revenue from such premium subscription fees is recognized on a gross basis over the service period as the Company is deemed to be the principal in the relationship with the end user. The Company controls the content before transferring it to the end user and has latitude in establishing pricing. The Company both retransmits and “ingests” and distributes content.
Subscription revenue is derived from online sales through search engine optimization, search engine marketing, various marketing advertising services, the utilization of resellers in the form of publishers that promote upcoming retail promotions and packages, as well as direct sales to subscribers of our Value Channels subscription service. Value Channels subscription contains 17 cable channels and sells on a monthly subscription or annual fee. Value Channels is integrated into the initial FreeCast.com free registration and then offered as an upgrade. Both FreeCast.com (free registration) and Value Channels is available in various streaming Smart TV models (Google TV’s, Amazon Fire TV’s, LG, Samsung, TCL, Sony, and others), plus Streaming Devices (Amazon Fire, Google ChromeCast, Apple TV), PC’s/Laptops and mobile apps for Android and iOS devices.
Subscription revenue is recognized ratably on a straight-line basis over the duration of the subscription period, generally ranging from one month to five years. If the subscriber renews early, then the expiration date is extended by the renewal period, and the additional subscription fee is deferred and amortized over the additional months purchased by the subscriber. The Company no longer offers SelectTV lifetime subscriptions, which was initially deferred and recognized over a five-year period. All subscription fees are collected at the time of purchase.
F-9
FAST (Free Ad-Supported TV)
We provide FAST channel buildouts that include post-production editing, motion graphics, channel assembly and content acquisitions. We charge the customers based on time incurred for the services plus a reasonable margin in addition to any additional out-of-pocket cost incurred that is charged at cost to us. Revenue is recognized when services are performed. The Company charges a monthly platform fee for distributing the FAST channel on its platform. Revenue is recognized at the point in time when the content is available on the digital platform.
Ad Platform Revenue
FreeCast is an agent in transactions on its FreeCast Ad Exchange platforms. The Company acts as an intermediary between DSPs and non-owned and operated publishers by providing access to a platform that allows both parties to transact in the buying and selling of ad inventory. The transaction price is determined through a real-time auction and the Company has no pricing discretion or obligation related to the fulfillment of the advertising delivery
The Company generally invoices buyers at the end of each month for the full purchase price of ad impressions monetized in that month. Accounts receivable are recorded at the amount of gross billings for the amounts the Company is responsible to collect, and accounts payable are recorded at the net amount payable to suppliers. Accordingly, both accounts receivable and accounts payable appear large in relation to revenue reported on a net basis.
Ad Agency Revenue (Launch That and Similar Contracts)
The Company earns revenue from direct client service contracts for marketing and campaign execution, such as the Launch That agreement. These contracts typically involve two distinct phases:
| ● | Phase 1: Discovery and Development Services (data research, audience analysis, creative development). Revenue is recognized over time using an input method based on the proportion of costs incurred relative to total estimated costs for Phase 1. |
| ● | Phase 2: Test Media Distribution Services (media placement, outreach, KPI reporting). Revenue is recognized upon delivery of the performance evaluation report specified in the contract. |
Revenue from such contracts is presented separately from “Other Revenue” due to its materiality and distinct nature.
Deferred Revenue
For the Ad Platform revenue stream, the Company provides demand partners with access to the FreeCast Ad Platform, enabling real-time bidding on advertising inventory. Revenue is recognized at a point in time when a transaction is completed—specifically, when a bid is won and the client’s purchase occurs through the platform. Amounts invoiced in advance of the completion of these transactions are recorded as deferred revenue and recognized as revenue when the Company’s performance obligation is satisfied.
For the Ad Agency revenue stream (Launch That and similar contracts), the Company provides direct marketing and campaign services, usually with a specified contract. Revenue is recognized over time during Phase 1 (using an input method based on the proportion of costs incurred relative to total estimated costs) and 2 at a point in time during Phase 2 (upon delivery of the performance evaluation report specified in the contract). Amounts paid in advance of the delivery of the specified services are recorded as deferred revenue and recognized as revenue when the Company’s performance obligation is satisfied.
F-10
Other Revenue
Other revenue includes product, licensing, and referral fee revenue. The Company generates revenue through free registrations of FreeCast.com by partnering with retailers, manufacturers, operators and/or distributors of streaming devices, mobile phones, broadband carriers, broadcasters, property management, multi-dwelling developers, builders, and various mass consumer communities of streaming tv watchers. A FreeCast.com license is freely provided per registered consumer marketed by distributors in exchange for a negotiated revenue sharing percentage with each distributor on a case-by-case basis. Affiliate commissions are earned and then shared from third-party advertisement service providers, pay-per-view movie or series distributors, and live events tickets sales for such things as professional boxing or concerts. These license arrangements have not resulted in significant revenue to date.
Beginning in 2024, in conjunction with the release of our new product FreeCast Home, we started recognizing contracts with customers from product sales requiring performance up to delivery, as well as contracts with customers that contain a subscription portion that causes revenue to be allocated or adjusted over time. Shipping and handling activities are performed before the customer obtains control of the goods and therefore represent a fulfillment activity rather than a promised service to the customer. Revenue and costs of sales are recognized when control of the products transfers to our customer, which generally occurs upon shipment from our facilities. For our physical product sales, our performance obligations are satisfied at that time.
Referral fee revenue is generated through premium services which are also available on our platform, for an additional fee, to allow single or time-limited use of private, decrypted viewing of movies, sporting events, concerts or other types of events.
Concentration of Credit Risk
Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash and cash equivalents and trade accounts receivable. Cash and cash equivalents of the Company are exposed to credit risk, subject to federal deposit insurance, in the event of default by the financial institutions holding their cash and cash equivalents to the extent of amounts recorded on the balance sheet. The cash accounts are insured by the Federal Deposit Insurance Corporation (“FDIC”) up to $250,000. As of September 30, 2025, the Company’s cash balance exceeded the FDIC insured limit by $95,723.
As of September 30, 2025, the Company had two customers, SportX, LLC and related party customer Celebrity Cigars, Inc., representing 39.70% and 45.64%, respectively, of the Company’s receivables. As of September 30, 2024, the Company had two related party customers, Test Drive Live Inc. and Celebrity Cigars, Inc., representing 32.62% and 64.39%, respectively, of the Company’s receivables (see Note 9).
As of September 30, 2025, the Company had two customers, Launch That. and related party customer Celebrity Cigars, Inc., representing 63.82% and 20.87%, respectively, of the Company’s revenues. As of September 30, 2024, the Company had two related party customers, Test Drive Live Inc. and Celebrity Cigars, Inc., representing 21.9% and 43.2%, respectively, of the Company’s revenues.
Cost of Revenue
Cost of revenue consists primarily of subscription costs and FAST streaming costs such as third-party hosting costs, infrastructure costs and salaries and benefits related to employees for our customer support. The Company makes payments to third-party ad servers in the period in which the advertising impressions are delivered, or click-through actions occur, and accordingly records this as a cost of revenue in the related period. Hosting costs consist of content streaming, maintaining our internet service and creating and serving advertisements through third-party ad servers. Cost of revenue also consists of FAST channel buildout costs such as the salaries and benefits related to employees, facility related expenses and information technology associated with supporting these buildouts.
F-11
Sales and Marketing
Sales and marketing consist primarily of contracts with third-party operators as well as employee-related costs, including commissions related to employees in sales, and sales support and marketing departments. In addition, sales and marketing expenses include external sales and marketing expenses such as third-party marketing, branding, advertising, public relations expenses, commissions, facilities-related expenses, and infrastructure costs.
Fair Value of Financial Instruments
The Company accounts for financial instruments under Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 820, Fair Value Measurements. This statement defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles, and expands disclosures about fair value measurements. To increase consistency and comparability in fair value measurements, ASC 820 establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three levels as follows:
| Level 1 — | quoted prices (unadjusted) in active markets for identical assets or liabilities; |
| Level 2 — | observable inputs other than Level 1, quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, and model-derived prices whose inputs are observable or whose significant value drivers are observable; and |
| Level 3 — | assets and liabilities whose significant value drivers are unobservable. |
The Company applies fair value accounting for all assets and liabilities that are recognized or disclosed at fair value in the financial statements. The carrying amounts reported in the financial statements for cash, accounts receivable, accounts payable and accrued liabilities approximate their fair value due to their short-term nature.
Stock-Based Compensation
Stock-based compensation issued is measured at the date of grant based on the estimated fair value of the award, net of estimated forfeitures. The grant date fair value of a stock-based award is recognized as an expense over the requisite service period of the award on a straight-line basis. The Company will recognize compensation expense, measured as the fair value of the stock-based compensation on grant date, when a performance condition is considered probable of occurring. For purposes of determining the variables used in the calculation of stock-based compensation issued to employees, the Company performs an analysis of current market data and historical data to calculate an estimate of implied volatility, the expected term of the option and the expected forfeiture rate. With the exception of the expected forfeiture rate, which is not an input, the Company uses these estimates as variables in the Black-Scholes option pricing model. Depending upon the number of warrants granted, any fluctuations in these calculations could have a material effect on the results presented in the Company’s Statements of Operations. In addition, any differences between estimated forfeitures and actual forfeitures could also have a material impact on the Company’s financial statements.
In accounting for modifications of equity-classified warrants held by employees, it is the Company’s policy to determine the impact by analogy to the share-based compensation guidance of ASC 718, Compensation - Stock Compensation (“ASC 718”). The model for a modified share-based payment award that is classified as equity and remains classified in equity after the modification is addressed in ASC 718-20-35-3. Pursuant to that guidance, the incremental fair value from the modification is recognized as stock-based compensation expense in the statements of operations to the extent the modified instrument has a higher fair value.
F-12
Loss Contingencies
Certain conditions may exist as of the date financial statements are issued, which may result in a loss to the Company, but which will only be resolved when one or more future events occur or fail to occur. The Company’s management and its legal counsel assess such contingent liabilities, and such assessment inherently involves an exercise of judgment. In assessing loss contingencies related to legal proceedings that are pending against the Company or unasserted claims that may result in such proceedings, the Company’s legal counsel evaluates the perceived merits of any legal proceedings or unasserted claims as well as the perceived merits of the amount of relief sought or expected to be sought therein.
If the assessment of a contingency indicates that it is probable that a material loss has been incurred and the amount of the liability can be estimated, then the estimated liability would be accrued in the Company’s financial statements. If the assessment indicates that a potentially material loss contingency is not probable, but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent liability, together with an estimate of the range of possible loss if determinable and material, would be disclosed.
Loss contingencies considered remote are generally not disclosed unless they involve guarantees, in which case the nature of the guarantee would be disclosed. In accordance with ASC 450-20, Loss Contingencies, any probable and reasonable estimates of assessment costs have been included in the accompanying Consolidated Balance Sheet.
Earnings (Loss) Per Share
Basic earnings (loss) per share is computed by dividing net income (loss) attributable to all classes of common shareholders of the Company by the weighted average number of shares of all classes of Class A common stock outstanding during the applicable period. Diluted earnings (loss) per share is determined in the same manner as basic earnings (loss) per share, except that the number of shares is increased to include restricted stock still subject to risk of forfeiture and to assume exercise of potentially dilutive stock options using the treasury stock method, unless the effect of such increase would be anti-dilutive.
The following table provides the number of Class A common stock equivalents not included in diluted income per share, because the effects are anti-dilutive, for the three months ended September 30, 2025, and 2024, respectively.
| For the Three Months Ended September 30, | ||||||||
| 2025 | 2024 | |||||||
| Convertible debt and liabilities | - | 133,633 | ||||||
| Options | 931,779 | 958,668 | ||||||
| Warrants | 8,056,087 | 8,156,087 | ||||||
| Total | 8,987,866 | 9,248,388 | ||||||
Recently Issued Accounting Pronouncements
The Company has reviewed the recent accounting pronouncements issued by the Financial Accounting Standards Board (“FASB”), including its Emerging Issues Task Force, the American Institute of Certified Public Accountants, and the SEC, and determined that these pronouncements do not have a material impact on the Company’s current or anticipated consolidated financial statement presentation or disclosures.
In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740) – Improvements to Income Tax Disclosures (ASU 2023-09). ASU 2023-09 requires that an entity, on an annual basis, disclose additional income tax information, primarily related to the reconciliation rate and income taxes paid. The amendment in the ASU is intended to enhance the transparency and decision usefulness of income tax disclosures. The ASU’s amendments are effective for annual periods beginning after December 15, 2024. The Company is currently evaluating the impact that adoption of ASU 2023-09 will have on its financial statements.
F-13
In September 2016, the FASB issued ASU 2016-13, Measurement of Credit Losses on Financial Instrument (“ASU 2016-13”). ASU 2016-13 requires entities to use a forward-looking approach based on current expected credit losses (“CECL”) to estimate credit losses on certain types of financial instruments, including trade receivables. This may result in the earlier recognition of allowances for losses. ASU 2016-13 was effective for the Company beginning July 1, 2023. The adoption of ASU 2016-13 did not have a material impact on the Company’s financial position, results of operations and cash flows.
In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. This ASU enhances reportable segment disclosure requirements, primarily by requiring additional information about significant segment expenses. The standard is effective for annual reporting periods beginning after December 15, 2023, and interim periods beginning after December 15, 2024. The Company has adopted this guidance in the current quarter and has updated its segment disclosures accordingly.
ASU 2024-03: Income Statement (Topic 220): Disaggregation of Income Statement Expenses: The amendments in this ASU require public companies to disclose, in interim and year-end reporting periods, additional information about certain expenses in the financial statements. These disclosures are effective beginning with 2027 annual reports, and interim reports beginning with the first quarter of 2028. Early adoption is permitted on either a prospective or retrospective basis. The Company is currently assessing the potential impact of adoption of these provisions on the consolidated financial statements.
Note 3 – Segment Reporting
The Company operates as a single operating and reportable segment. Management evaluates performance and allocates resources on a consolidated basis. Accordingly, separate segment information is not presented.
Note 4 – Property and Equipment
Property and equipment, net consisted of the following:
| September 30, | June 30, | |||||||
| 2025 | 2025 | |||||||
| Property and equipment | $ | 183,821 | $ | 175,264 | ||||
| Less: accumulated depreciation | (154,800 | ) | (149,160 | ) | ||||
| Property and equipment, net | $ | 29,021 | $ | 26,104 | ||||
Depreciation expense was $5,640 and $6,063 for the three months ended September 30, 2025, and 2024, respectively, and is classified in general and administrative expenses in the Statements of Operations.
Note 5 – Debt
Convertible Note’s Payable – Related Party
In June 2016, the Chief Executive Officer of the Company (“CEO”), William Mobley, loaned the Company $111,000, at an interest rate of 12% per annum. The loan matured on December 31, 2017, and the note is convertible into shares of Class B common stock at a conversion price of $0.50 per share.
The note was converted on March 29, 2024. The outstanding principal and accrued interest balance on March 29, 2024, of $92,068 was converted into 184,136 shares of Class B common stock. As of June 30, 2025, the outstanding principal and interest due to William Mobley was $0.
F-14
On May 3, 2024, the Company signed a convertible promissory note with Nextelligence, a related party that is majority owned and controlled by William Mobley, the Company’s CEO, in the principal amount of $1,000,000. The note accrues interest at 12% per annum and is due and payable no later than May 3, 2025. At Nextelligence’s option, all or part of the outstanding principal and accrued interest may be converted into shares of our Class A common stock at a conversion price of $8.00 per share. On July 1, 2024, the Company repaid $1,075,000 on the convertible promissory note with related party Nextelligence. On December 13, 2024, the Company renewed and modified the original May 3, 2024, note to incorporate additional borrowings. On July 26, 2025, the Company approved the conversion of all outstanding principal and interest into common shares at a conversion price of $8 per share. The conversion was accounted for under ASC 470-20 as a debt extinguishment with no gain or loss recognized. The principal of $3,865,555 and accrued interest of $210,496, total of $4,076,000 was converted into 509,507 shares of Class A common stock. As of September 30, 2025 and June 30, 2025, the outstanding principal and accrued interest due to Nextelligence was $0 and $3,865,555, respectively (see Note 6).
Note 6 – Stockholders’ Deficit and Mezzanine Equity
Preferred Stock
The Preferred Stock is divided into series, with the first series designated “Series A Preferred Stock” and consisting of 4,000,000 shares (the “Series A Shares”). Our board of directors may designate the remaining 1,000,000 authorized but unissued shares of Preferred Stock with such rights and privileges as the board of directors may determine without notice to our shareholders and without shareholder approval.
As of September 30, 2025, and June 30, 2025, there were 4,000,000 shares of Series A Preferred Stock issued and outstanding, respectively.
A summary of the powers, preferences, rights, privileges, restrictions, and other matters relating to the Series A Shares are as follows:
Dividends. In any fiscal year Series A Shares are outstanding where the Company has revenue of more than $50,000,000, the holder of the Series A Shares (the “Series A Shareholder”) shall be entitled to receive an annual cash dividend equal to ten percent of any revenue above $50,000,000 (the “Annual Dividend Payment”). Subject to meeting the above criteria for such fiscal year, Annual Dividend Payments shall continue until such time as the aggregate amount of all Annual Dividend Payments is equal to the lesser of: (i) $160,000,000; or (ii) the product of the then number of outstanding shares of Series A Preferred Stock and $40 (as may be adjusted for any subdivisions or combinations) (the “Maximum Dividend Payment”). Notwithstanding the above, such dividends shall be payable only to the extent permitted by law out of assets legally available therefore. No dividends shall be paid on any Common Stock during any fiscal year of the Company until the Annual Dividend Payment on the Series A Shares shall have been paid or declared and set apart during that fiscal year.
Liquidation Preference. In the event of any liquidation, dissolution or winding up of the Company, either voluntary or involuntary, the Series A Shareholder is entitled to receive, prior and in preference to any distribution of any of the assets of the Company to the holders of Common Stock, or other junior equity security by reason of their ownership thereof, an amount per Series A Share equal to $30 (as may be adjusted for any subdivisions or combinations) (the “Liquidation Amount”). If upon the occurrence of such event, the assets and funds to be distributed to the Series A Shareholder are insufficient to permit the payment to the Series A Holder of the full preferential Liquidation Amount, then the entire assets and funds of the Company legally available for distribution shall be distributed to the Series A Shareholder. After the distribution described above has been paid, the remaining assets of the Company available for distribution to shareholders shall be distributed among the holders of Common Stock pro rata based on the number of shares of Common Stock held by them. Any change in ownership or fundamental change shall be treated as a liquidation, dissolution or winding up of the Company, and shall entitle the Series A Shareholder and the holders of Common Stock to receive at the closing cash, securities or other property as specified above. Whenever the distribution provided for in this section shall be payable in securities or other property other than cash, the value of such distribution shall be the fair market value of such securities or other property as determined in good faith by the board of directors.
F-15
Redemption by the Company. The Company has the right at any time (the “Call Right”), but not the obligation, to cause the Series A Shareholder to sell some or all of the Series A Shares to the Company at the purchase price per share of $30 (as may be adjusted for any subdivisions or combinations) (the “Call Purchase Price”). If the Company desires to purchase the Series A Shares, the Company shall deliver to the Series A Shareholder a written notice (the “Call Exercise Notice”) exercising the Call Right. The closing of any sale of Series A Shares shall take place on a date (the “Call Right Closing Date”) no later than ten days following receipt by the Series A Shareholder of the Call Exercise Notice.
As mentioned above, the redemption feature was removed on September 26, 2024, as part of the amendment to the Company’s articles of incorporation.
Voting Rights. Except as otherwise required by law, the Series A Shares have no voting rights or powers on any matter presented to the shareholders of the Company for their action or consideration at any meeting of shareholders of the Company (or by written consent of shareholders in lieu of a meeting).
Conversion Rights. Except as otherwise required by law, the Series A Shares have no conversion rights or powers to convert into any other capital stock or security of the Company.
Transfers. Except as otherwise required by law, the Series A Shareholder has no rights or powers to enter into and/or consummate any sale, assignment, transfer, conveyance, hypothecation or other transfer or disposition of one or more of the Series A Shares or any legal or beneficial interest in the Series A Shares, whether or not for value and whether voluntary or involuntary, without the prior written consent of the Company, in its sole discretion.
The Board of Directors may designate the authorized but unissued shares of the Preferred Stock with such rights and privileges as the board of directors may determine. As such, our board of directors may issue 5,000,000 preferred shares and designate the conversion, voting and other rights and preferences without notice to our shareholders and without shareholder approval.
Common Stock
As of September 30, 2025, and June 30, 2025, the Company is authorized to issue 320,000,000 shares of Class A common stock and 30,000,000 shares of Class B common stock at a par value of $0.0001 per share.
As of September 30, 2025, and June 30, 2025, the Company had shares of Class A common stock outstanding of 26,931,820 and 25,947,813, respectively. As of September 30, 2025, and June 30, 2025, the Company had shares of Class B common stock outstanding of 13,925,640 and 13,937,640, respectively.
In general, except with regards to voting rights described below, shares of Class A Common Stock and Class B Common Stock have the same rights and privileges and rank equally, share ratably and are identical in all respects as to all matters. Without limiting the generality of the foregoing: (a) in the event of a merger, consolidation or other business combination requiring the approval of the holders of the Company’s capital stock entitled to vote thereon (whether or not the Company is the surviving entity), the holders of Class A Common Stock shall have the right to receive, or the right to elect to receive, the same form of consideration, if any, as the holders of Class B Common Stock and the holders of Class A Common Stock shall have the right to receive, or the right to elect to receive, at least the same amount of consideration, if any, on a per share basis as the holders of Class B Common Stock; and (b) in the event of (i) any tender or exchange offer to acquire any shares of Common Stock by any third party pursuant to an agreement to which the Company is a party or (ii) any tender or exchange offer by the Company to acquire any shares of Common Stock, pursuant to the terms of the applicable tender or exchange offer, the holders of Class A Common Stock shall have the right to receive, or the right to elect to receive, the same form of consideration as the holders of Class B Common Stock and the holders of Class A Common Stock shall have the right to receive, or the right to elect to receive, at least the same amount of consideration on a per share basis as the holders of Class B Common Stock.
F-16
With regards to voting rights, the holders of shares of Class A Common Stock and Class B Common Stock vote together as one class on all matters (including the election of directors) submitted to a vote or for the consent of the shareholders of the Company. However, each holder of shares of Class A Common Stock shall be entitled to one (1) vote for each share of Class A Common Stock held as of the applicable date on any matter that is submitted to a vote or for the consent of the shareholders of the Company, and the holder of shares of Class B Common Stock shall be entitled to fifteen (15) votes for each share of Class B Common Stock held as of the applicable date on any matter that is submitted to a vote or for the consent of the shareholders of the Company.
Shares of Class B common stock may only be issued to and held by William A. Mobley, Jr., personally or jointly with his spouse, and certain permitted entities owned or controlled by Mr. Mobley, or for which he has sole disposition and voting power over shares held by such entities, other than Nextelligence (each, a “Class B Holder”). Any issuance by us of Class B shares to anyone other than a Class B Holder is immediately null and void, and of no legal validity, force, or effect. Unless a Class B Holder requests to receive Class A shares, any issuance of common stock by us to a Class B Holder will be shares of Class B common stock. If a Class B Holder purchases or otherwise acquires or receives any shares of Class A common stock from a person or entity other than us, upon receipt thereof such shares of Class A common stock shall automatically be reclassified as and become an equal number of shares of Class B common stock. As of September 30, 2025, and June 30, 2025, William A Mobley, Jr. the Company CEO and Majority owner has 13,925,640 and 13,937,640 Class B shares outstanding, respectively, which is 100% of the Class B shares outstanding as of both reporting periods.
In August 2025, the Company CEO and majority owner converted 12,000 shares of Class B common stock to 12,000 shares of Class A common stock and subsequently transferred the 12,000 shares of Class A common stock to third parties.
Class A common stock Issuance
During the three months ended September 30, 2025, the Company received deposits from three third party investors in the amount of $2,700,000 for 337,500 Class A common shares to be issued pursuant to the securities purchase agreement. These common shares were issued in July 2025.
On September 25, 2025, the Company issued 125,000 shares of its Class A common stock at $8 per share for a total value of $1,000,000 to Maxim Partners LLC (“Maxim”) in connection with its affiliate’s engagement as a financial advisor to assist with certain aspects of the Company’s direct listing process. The $1,000,000 issuance for services performed was deferred and resulted in a net effect of $0 on the Stockholder’s deficit as of September 30, 2025. The Company recorded an increase in common stock for the par value of the shares of $13 and reduced Additional Paid in Capital for the same amount. The advisory services contracted to be provided by Maxim’s affiliate include strategic guidance on listing objectives, structural planning, and investor communication strategy, with the penultimate service being the official direct listing. As the direct listing has not yet happened, Maxim has not yet performed the contracted services. As a result, the Company deferred the $1,000,000 compensation until the direct listing process is completed, after which the $1,000,000 will be expensed as a professional service fee.
Warrants
The Company from time-to-time issues warrants in conjunction with equity financing and to employees and non-employees for services.
During the year ended June 30, 2024, the Company issued warrants to purchase an aggregate of 100,000 shares of Class A common stock of the Company to Chris Savine, the Company’s Chief Operating Office for services in conjunction with his employment agreement. The warrants vest over a twelve-month term and have an exercise price of $2.00 per share. As a result, the Company recognized stock-based compensation of $144,262 for the years ended June 30, 2025. Under the Black-Scholes-Merton option pricing model the fair value of the warrants at time of issuance was approximately $572,343, the Company will amortize the fair value over 12 months as compensation and benefits expense in the accompanying statement of operations. The significant inputs were as follows: Class A common stock fair value of $7.32, volatility of 61.67%, term of 3 years and risk-free rate of 4.66%.
F-17
During the year ended June 30, 2025, the Company amended Mr. Savine’s employment agreement on November 15, 2024, to terminate the warrants in consideration for a cash bonus that is contingent upon a Liquidity Event as defined in Note 7. Per ASC 718-20-35-7, the termination of the warrants was treated as a cancellation and all previously unrecognized compensation cost of $352,814 was recognized on November 15, 2024, the date of cancellation.
On May 1, 2023, the Company issued warrants to Gary Engel, the Company’s Chief Marketing Officer, to purchase 12,500 shares of our Class A common stock, exercisable at $6.00 per share, issued in connection with entering into an employment agreement, effective May 1, 2023. The warrant vests ratably over 12 months and may be exercised in whole or in part at any time or from time to time from the vesting date up to and including May 1, 2026. Under the Black-Scholes-Merton option pricing model the fair value of the warrants at time of issuance was approximately $7,666.. The Company will amortize the fair value over 12 months as compensation and benefits expense in the accompanying statement of operations. The significant inputs were as follows: Class A common stock fair value of $1.80, volatility of 92.1%, term of 3 years and risk-free rate of 3.85%.
The following is a summary of outstanding stock warrants as of the three months ended September 30, 2025, and June 30, 2025:
| Number of Shares | Weighted Average Shares | Weighted Average Remaining Life (years) | Intrinsic Value | |||||||||||||
| Warrants outstanding as of June 30, 2024 | $ | 8,156,087 | $ | 4.72 | $ | 1.7 | $ | 26,716,879 | ||||||||
| Warrants exercisable as of June 30, 2024 | 8,069,238 | $ | 4.75 | $ | 1.7 | $ | 26,195,785 | |||||||||
| Issued | (100,000 | ) | - | - | - | |||||||||||
| Expired and forfeited | - | - | - | - | ||||||||||||
| Exercised | - | - | - | - | ||||||||||||
| Warrants outstanding as of June 30, 2025 | $ | 8,056,087 | $ | 4.76 | $ | 0.7 | $ | 26,116,879 | ||||||||
| Warrants exercisable as of June 30, 2025 | $ | 8,056,087 | $ | 4.76 | $ | 0.7 | $ | 26,116,879 | ||||||||
| Issued | - | - | - | |||||||||||||
| Expired and forfeited | - | - | - | |||||||||||||
| Exercised | - | - | - | |||||||||||||
| Warrants outstanding as of September 30, 2025 | $ | 8,056,087 | $ | 4.76 | $ | 0.4 | $ | 26,116,879 | ||||||||
| Warrants exercisable as of September 30, 2025 | $ | 8,056,087 | $ | 4.76 | $ | 0.4 | $ | 26,116,879 | ||||||||
| Exercise Price ($) | Warrants outstanding as of September 30, 2025 | Warrants outstanding as of June 30, 2025 | ||||||||
| $ | 0.25 | 137,017 | 137,017 | |||||||
| $ | 0.60 | 675,000 | 675,000 | |||||||
| $ | 1.75 | 2,458,446 | 2,458,446 | |||||||
| $ | 3.00 | 4,718,125 | 4,718,125 | |||||||
| $ | 4.00 | 67,500 | 67,500 | |||||||
| 8,056,087 | 8,056,087 | |||||||||
F-18
Stock Based Compensation - Stock Options
Effective June 25, 2021, the Board of Directors of FreeCast Inc. adopted the 2021 Equity Incentive Plan, (the “Incentive Plan”). The plan provides for both incentive stock options and non-qualified stock options to officers, directors, employees, and consultants of the Company. The plan authorized 3,000,000 awards to be granted under the Incentive Plan of which 2,068,221 remain available to be granted as of September 30, 2025. The Incentive Plan expires on June 25, 2031.
The Company recognizes stock-based compensation expense from stock-based payments using the grant date fair-value, including for stock options. The fair value of options awarded to employees is measured on the grant date using the Black-Scholes option-pricing model and is recognized as an expense over the requisite service period on a straight-line basis.
All stock options are exercisable into class A common stock except for the 125,004 options granted to the Company CEO, William Mobley, which are exercisable into class B common stock.
The following is a summary of outstanding stock options as of September 30, 2025, and June 30, 2025:
| Number of Shares | Weighted Average Exercise Price | Weighted Average Remaining Life (years) | Intrinsic Value | |||||||||||||
| Options outstanding as of June 30, 2025 | $ | 953,892 | $ | 4.48 | $ | 6.53 | $ | 3,353,616 | ||||||||
| Options exercisable as of June 30, 2025 | $ | 860,083 | $ | 4.11 | $ | 6.15 | $ | - | ||||||||
| Issued | - | - | - | - | ||||||||||||
| Canceled | (22,113 | ) | (0.07 | ) | (0.32 | ) | - | |||||||||
| Expired | - | - | - | - | ||||||||||||
| Options outstanding as of September 30, 2025 | $ | 931,779 | $ | 4.41 | $ | 6.21 | $ | 3,345,312 | ||||||||
| Options exercisable as of September 30, 2025 | $ | 871,789 | $ | 4.13 | $ | 5.93 | $ | - | ||||||||
The following are the vesting terms associated with those shares:
| Tranche | Shares Granted | Vesting Method | Vesting Terms | |||||
| Tranche 1 | 784,236 | Graded Vesting | 1/6th vested on July 1, 2021, remainder vests over the next 18th months using the graded vesting method, until the option is 100% vested. | |||||
| Tranche 2 | 144,783 | Straight-line | 1/24th will vest on a straight-line monthly basis until the option is 100% vested. | |||||
| Tranche 3 | 2,760 | Graded Vesting | 1/6th vests on grant date, remainder vests over the next 30 months using the graded vesting method, until the option is 100% vested. | |||||
| Total | 931,779 | |||||||
F-19
The Black-Scholes option-pricing model includes the following weighted average assumptions to determine the grant share-based awards:
| September 30, 2025 | ||
| Assumptions: | ||
| Risk-free interest rate | 0.42-4.45% | |
| Expected dividend yield | 0% | |
| Expected volatility | 62.51- 77.84% | |
| Expected life (in years) | 5.52 |
During the three months ended September 30, 2025, and 2024, the Company recognized stock-based compensation from options of $88,422 and $105,172, respectively. Additionally, no options were exercised during the three months ended September 30, 2025. Accordingly, there were no cashflow effects related to stock option exercises.
As of September 30, 2025, there was $244,409 in unrecognized stock-based compensation related to unvested restricted stock agreements, net of estimated forfeitures.
Note 7 – Commitments and Contingencies
In October 2018, the Company entered into a two-year sublease agreement for approximately 3,360 square feet of office space in Orlando, Florida. In August 2020, the Company provided $117,336 in security deposit and entered into a 39-month lease agreement which allowed the Company to expand its office space to 10,080 square feet. On October 31, 2023, we entered into a First Amendment that extended our lease until October 31, 2028 (see Note 8).
On November 15, 2024, Chris Savine, the Company Chief Operating Officer employment agreement was amended whereby Mr. Savine is eligible to receive a performance bonus payable in cash only in an amount equal to the fair market value of: (i) 112,500 shares; and (ii) 100,000 warrants for Class A common stock exercised on a cashless basis with an exercise price of $2.00 per share. To be eligible for the bonus, Mr. Savine must be continuously employed during the term of the agreement and the Company must have successfully completed a liquidity event, which may occur after the employment term. A Liquidity Event is defined in the Savine Employment Agreement as either: (i) (a) a merger, consolidation, reorganization, or business combination; or (b) a sale or other disposition of all or substantially all of our assets in any single transaction or series of related transactions; or (ii) (a) a primary offering of our Class A common stock by us to the general public through an effective registration statement filed with the SEC; (b) simultaneous listing of our Class A common stock on any established stock exchange if such common stock was not already listed at the time of such offering; and (c) we receive net proceeds from the offering of not less than $20 million. If Mr. Savine becomes eligible for the bonus, it will be paid to him no later than five days after the later of: (a) the end of the initial term and (b) a liquidity event.
As of September 30, 2025, no liability was recorded within the balance sheets for contingent consideration as the contingency is not probable such that an amount has not been estimated.
F-20
Note 8 – Leases
The Company currently has one active lease, an office lease, under a non-cancellable operating lease with initial terms typically ranging from 1 to 3 years but previously extended the lease for an additional 5 years. At contract inception, the Company reviews the facts and circumstances of the arrangement to determine if the contract is or contains a lease. The Company follows the guidance in Topic 842 to evaluate whether the contract has an identified asset; if the Company has the right to obtain substantially all economic benefits from the asset; and if the Company has the right to direct use of the underlying asset. When determining if a contract has an identified asset, the Company considers both explicit and implicit assets, and whether the supplier has the right to substitute the asset. When determining if the Company has the right to direct the use of an underlying asset, the Company considers if they have the right to direct how and for what purpose the asset is used throughout the period of use and if they control the decision-making right over the asset.
The Company’s lease terms may include options to extend or terminate the lease. The Company exercises judgment to determine the term of those leases when extension or termination options are present and include such options in the calculation of the lease term when it is reasonably certain that it will exercise those options.
The Company has elected to include both lease and non-lease components in the determination of lease payments. Payments made to a lessor for items such as taxes, insurance, common area maintenance, or other costs commonly referred to as executory costs, are also included in lease payments if they are fixed. The fixed portion of these payments are included in the calculation of the lease liability, while any variable portion would be recognized as variable lease expenses, when incurred. Variable payments made to third parties for these, or similar costs, such as utilities, are not included in the calculation of lease payments.
At commencement, lease-related assets and liabilities are measured at the present value of future lease payments over the lease term. As most of the Company’s leases do not provide an implicit rate, the Company exercises judgment in determining the incremental borrowing rate based on the information available at when the lease commences to measure the present value of future payments.
Operating lease expense is recognized on a straight-line basis over the lease term. Finance lease cost includes amortization, which is recognized on a straight-line basis over the expected life of the leased asset, and interest expense, which is recognized following an effective interest rate method.
Operating leases are included in other assets, current operating lease obligations, and operating lease obligations (less current portion) on the Company’s balance sheet. Finance leases are included in financing lease, right-of-use assets and current and long-term portion of finance lease obligations on the Company’s balance sheet. Short-term leases with an initial term of 12 months or less are not presented on the balance sheet with expense recognized as incurred.
F-21
The following table presents lease assets and liabilities and their balance sheet classification:
| Classification | September 30, 2025 | June 30, 2025 | ||||||
| Operating Leases: | ||||||||
| Right-of-use Asset | $ | 340,568 | $ | 362,968 | ||||
| Current portion of operating lease obligation | $ | 95,597 | $ | 91,220 | ||||
| Operating lease obligation, less current portion | $ | 263,718 | $ | 288,836 | ||||
| Finance Leases: | ||||||||
| Right-of-use Asset | $ | - | $ | - | ||||
| Current portion of financing lease obligation | $ | - | $ | - | ||||
| Financing lease obligation, less current portion | $ | - | $ | - | ||||
The components of lease expense for the three months ended September 30, 2025, and 2024, are as follows:
| For the Three Months Ended September 30, | ||||||||
| Classification | 2025 | 2024 | ||||||
| Operating lease cost | $ | 32,280 | $ | 33,280 | ||||
| Finance Lease: | ||||||||
| Amortization of lease assets | - | 408 | ||||||
| Interest on lease liabilities | - | 12 | ||||||
| Total finance lease cost | $ | - | $ | 420 | ||||
Supplemental disclosures of cash flow information related to leases were as follows:
| For the Three Months Ended September 30, | ||||||||
| 2025 | 2024 | |||||||
| Cash paid for operating lease liabilities | $ | 31,620 | $ | 30,114 | ||||
The weighted average lease term and discount rates are as follows:
| September 30, 2025 | ||||
| Operating Leases: | ||||
| Weighted average remaining lease term (years) | 3.08 | |||
| Weighted average discount rate | 12 | % | ||
Future payments due under leases reconciled to lease liabilities as follows:
| Operating | ||||
| Lease | ||||
| For the Three Months Ending June 30: | ||||
| 2025 | 32,674 | |||
| 2026 | 133,910 | |||
| 2027 | 140,602 | |||
| 2028 | 122,010 | |||
| Total undiscounted lease payments | 429,196 | |||
| Present value discount, less interest | (69,881 | ) | ||
| Lease Liabilities | $ | 359,315 | ||
F-22
Note 9 – Related Parties
All related party transactions are reviewed and approved by the Company’s Board of Directors or Audit Committee to ensure they are conducted in the best interest of shareholders.
On June 30, 2011, we entered into a Technology License and Development Agreement, which was amended and restated on October 19, 2012, amended on July 1, 2013 and amended and restated a second time on July 31, 2014 and further revised to terminate all payments by us pursuant to the agreement, effective June 30, 2016, with Nextelligence, which is majority owned and controlled by William A. Mobley, Jr. The Technology Agreement provides us with an exclusive license for certain technology from Nextelligence and for Nextelligence to provide all further development, improvement, modification, maintenance, management and enhancement services related to such technology. Nextelligence is our largest shareholder with more than 40% of our outstanding Class A common stock prior to the listing of our Class A common stock on Nasdaq. In connection with the Technology Agreement, we issued 10,002,000 shares of our Class A common stock to Nextelligence. The Technology Agreement expires on June 30, 2054, unless it’s terminated earlier based on termination events as defined in the Technology Agreement.
On May 3, 2024, the Company signed a convertible promissory note with Nextelligence in the principal amount of $1,000,000. The note accrues interest at 12% per annum and is due and payable no later than May 3, 2025. At Nextelligence’s option, all or part of the outstanding principal and accrued interest may be converted into shares of our Class A common stock at a conversion price of $8.00 per share. On July 1, 2024, the Company repaid $1,075,000 on the convertible promissory note with related party Nextelligence. On December 13, 2024, the Company renewed and modified the original May 3, 2024, note to incorporate additional borrowings. On July 26, 2025, the Company approved the conversion of all outstanding principal and interest into common shares at a conversion price of $8 per share. The principal of $3,865,555 and accrued interest of $210,496, total of $4,076,051 was converted into 509,507 shares of Class A common stock. As of September 30, 2025, and June 30, 2025, the outstanding principal and accrued interest due to Nextelligence was $0 and $3,865,555, respectively (see Note 5).
On May 16, 2024, in conjunction with the Reverse Split and Amendment, Nextelligence, Inc. agreed to forfeit and cancel 20,000,000 shares of Class A common stock in exchange for the issuance of 4,000,000 shares of Series A preferred stock (see Note 6).
On July 29, 2024, the Company’s largest shareholder and related party Nextelligence distributed 9,623,543 shares of Class A common stock to shareholders of Nextelligence. The Company CEO and majority owner beneficially received 7,782,970 of the shares distributed, which upon receipt, in accordance with the Company’s articles of incorporation, were automatically reclassified as Class B common stock.
The Company entered into a Data Services Agreement with Nextelligence, which is effective as of July 1, 2025. Under the agreement, the Company has access to and use of a proprietary marketing database and related analytical services Nextelligence either owns or licenses from Audience Acuity LLC, including customer profiling, audience targeting, and CRM support. The agreement imposes certain restrictions on our use of the data, including prohibitions on resale, reverse engineering and use in certain industries and applications. The Company paid a one-time fee of $120,000, and are required to pay a monthly fee of $10,000 for continued access to the data and services. The fees related to this contract are being recorded as General and administrative expenses. The agreement has an initial three-year term, automatically renewing for successive one-year periods unless terminated in writing by either party not less than 30 days before the end of the initial term or subsequent term extension. On the September 30, 2025 condensed balance sheet, $40,000 of the unamortized license fee is classified as prepaid assets- related party within current assets, while the remaining non-current portion of $110,000 is presented as prepaid assets, net of the current portion – related party.
Related Party Revenue
In June 2023, the Company entered into verbal arrangements with two related party entities, Test Drive Live Inc. and Celebrity Cigars, Inc., which are not under common ownership control. William A. Mobley, Jr. serves as the President of both companies and is the sole director for Celebrity Cigars. Mr. Mobley’s son, Sean Mobley, is part of the management team of Celebrity Cigars. The Company provided FAST channel buildout services relating to the development and buildout of their respective channels. The Company also provides the platform on an ongoing basis for each company to stream their content. The Company charges each company a monthly fee based on a 15% or 30% markup of the Company’s cost of production, depending on the level of supervision required to provide the Company’s services, which includes labor, rent, etc. The Company also charges for any out-of-pocket costs, which vary from month to month. The Company is currently negotiating with each company on a potential advertising revenue sharing arrangement.
The Company recognized related party revenue of $54,666 ($48,666 for FAST channel buildouts and $6,000 for channel streaming) for the year three months September 30, 2025. The Company has accounts receivable – related party of $191,023 for the FAST revenue services provided and $9,946 from Nextelligence, Inc. for the reimbursement of supplies and rent provided during the three months ended September 30, 2025.
F-23
Note 10 – Disaggregation of Revenues
Net sales disaggregated by significant products and services for the three months ended September 30, 2025, and 2024 were as follows:
| For the three months ended | ||||||||
| September 30, | ||||||||
| 2025 | 2024 | |||||||
| Membership (1) | $ | 22,120 | $ | 38,128 | ||||
| FAST Revenue – related parties (2) | 54,666 | 79,139 | ||||||
| Ad Revenue (3) | 119,014 | 128 | ||||||
| Other Revenue | 60 | 1,012 | ||||||
| Total | $ | 195,860 | $ | 118,407 | ||||
| (1) | Membership sales refer to customers purchasing premium content through our SmartGuide for varying fees and recognized on a gross basis over the service period determined. |
| (2) | We provide end-to-end software solutions for development of FAST (Free Ad-Supported TV) channels to customers such as content creation, production, video studio rental, etc. to aid in the creation of content for their channels and a platform fee for distributing the channel. Revenue is recognized at the point in time the services are performed for the development of FAST channels. We charge a monthly platform fee for distributing the FAST channel on our platform. We recognized related party revenue of $54,666 ($48,666 for FAST channel buildouts and $6,000 for channel streaming) for the three months ended September 30, 2025. |
| (3) | During the period from July 1, 2025, through September 30, 2025, we recognized $119,014 of ad revenue from the buying and selling of advertising space on other content platform providers. Of this amount, $125,000 was recognized as Ad Agency Revenue under the LaunchThat Experimental Media Plan Agreement, representing revenue from the provision of discovery, development, and test media distribution services for a client campaign. The remaining $5,986 was related to discounts and costs for Arbitrage Ad Revenue from the buying and selling of advertising space via the FreeCast Ad Platform. |
Note 11 – Subsequent Events
The Company evaluated subsequent events through the date the financial statements were issued and determined that except for the following subsequent events, there have been no additional subsequent events that would require recognition in the financial statements or disclosure in the notes to the financial statements:
Between October 9, 2025, and November 21, 2025, Nextelligence, a related party, majority owned by the Company’s CEO, provided aggregate funding to the Company totaling $1,500,000. Of this amount, $191,023 was remitted by Nextelligence on behalf of Celebrity Cigars, Inc. and Test Drive Live Inc. to fully satisfy their outstanding accounts receivable balances with the Company. As these entities are under common control, Nextelligence agreed to assume the obligations of both Celebrity Cigars, Inc. and Test Drive Live Inc. The remaining $1,308,977 was recorded as a revolving convertible note payable to Nextelligence, for a total of $1,308,977. The Company and Nextelligence entered into an agreement on November 21, 2025 to place terms on this revolving convertible note payable. The new outstanding revolving convertible note payable has an interest rate of 12%, a maturity date of June 30, 2026, and is convertible at Nextelligence’s discretion for $8 per share of Class A common stock. Additionally, the agreement capitalized all unpaid accrued interest as of November 21, 2025, for $6,575, which resulted in an “original principal balance” of $1,315,552. Between the date of the executed agreement and December 5, 2025, the Company has received an additional $100,000 advance on December 1, 2025. As of December 5, 2025, the total outstanding principal is $1,415,552 and the accrued interest balance is $6,157 for a total outstanding balance of $1,421,709.
On December 5, 2025, the Company entered into an Equity Purchase Agreement (EPA) with a certain institutional investor (the ‘Investor’), pursuant to which the Company may, from time to time after the direct listing, at its sole discretion, issue and sell up to $50,000,000 in aggregate gross purchase price of newly issued shares of the Company’s Class A common stock, par value $0.0001 per share. Advances under the agreement are conditioned on the Company’s compliance with certain customary conditions, such as timely filing of required reports and maintaining its listing on a national securities exchange. Shares issued pursuant to an advance under the agreement are priced at 95% of the VWAP (volume-weighted average price) for the five-trading day period immediately following the advance request. The shares will be issued in reliance upon Section 4(a)(2) of the Securities Act of 1933, as amended (which provides an exemption from registration for private offerings), or other applicable exemptions from registration. The Company is required to maintain a registration statement pursuant to which the Investor may resell the shares purchased. The Agreement limits the Investor’s ownership to 4.99% of the then outstanding voting power or issued Class A common stock. The Investor may, upon written notice to the Company, increase or decrease the ownership percentage up to 9.99%. As consideration for the Investor’s commitment to purchase shares of the Company's Class A common stock in accordance with the EPA, the Company agreed to pay a commitment fee in shares of the Company’s Class A common stock in an amount equal to $750,000 divided by the lower of (i) $10.00; and (ii) the lowest daily VWAP (as defined in the EPA) of the Company's Class A common stock during the five trading days immediately following to the date the Company gives the Investor notice of the Company's intent to sell them Class A common stock under the EPA.
F-24
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Shareholders of FreeCast, Inc.:
Opinion on the Financial Statements
We have audited the accompanying balance sheets of FreeCast, Inc. (“the Company”) as of June 30, 2025, and 2024, the related statements of operations, stockholders’ deficit, and cash flows for each of the years in the two-year period ended June 30, 2025, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Company as of June 30, 2025, and 2024, and the results of its operations and its cash flows for each of the years in the two-year period ended June 30, 2025, in conformity with accounting principles generally accepted in the United States of America.
Explanatory Paragraph Regarding Going Concern
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 of the financial statements, the Company has recurring net losses and negative cash flows from operations which raise substantial doubt about its ability to continue as a going concern. Management’s plans regarding these matters are also described in Note 1. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
/s/ Sadler, Gibb & Associates, LLC
We have served as the Company’s auditor since 2019.
Draper, UT
September 29, 2025
F-25
BALANCE SHEETS
| June 30, | ||||||||
| 2025 | 2024 | |||||||
| Current Assets: | ||||||||
| Cash | $ | 549,249 | $ | 5,218,413 | ||||
| Accounts receivable, net | 131,432 | 1,490 | ||||||
| Accounts receivable - related party | 146,303 | 274,501 | ||||||
| Other current assets | 46,314 | 45,730 | ||||||
| Total current assets | 873,298 | 5,540,134 | ||||||
| Non-current assets: | ||||||||
| Property and equipment, net | 26,105 | 23,579 | ||||||
| Security deposits | 126,145 | 126,145 | ||||||
| Operating lease, right-of-use asset | 362,968 | 446,675 | ||||||
| Financing lease, right-of-use asset | - | 546 | ||||||
| Total non-current assets | 515,218 | 596,945 | ||||||
| Total assets | $ | 1,388,516 | $ | 6,137,079 | ||||
| Current liabilities: | ||||||||
| Accounts payable and accrued expenses | $ | 1,528,327 | $ | 916,336 | ||||
| Accounts payable and accrued expenses - related party | 330,108 | 274,439 | ||||||
| Current portion of finance lease obligation | - | 546 | ||||||
| Current portion of operating lease obligation | 91,220 | 75,061 | ||||||
| Current portion of deferred revenue | 135,273 | 72,246 | ||||||
| Convertible Note Payable - Related Party | 3,865,555 | - | ||||||
| Total current liabilities | 5,950,483 | 1,338,628 | ||||||
| Long term liabilities: | ||||||||
| Deferred revenue, net of current portion | 2,705 | 12,978 | ||||||
| Convertible note payable - related party, net of current portion and debt discount | - | 2,075,000 | ||||||
| Operating lease liabilities, net of current portion | 288,836 | 380,056 | ||||||
| Total long-term liabilities | 291,541 | 2,468,034 | ||||||
| Total liabilities | 6,242,024 | 3,806,662 | ||||||
| Redeemable Series A Preferred Stock, par value $0.0001, 0 and 4,000,000 shares issued and outstanding as of June 30, 2025 and June 30, 2024, respectively | - | 120,000,000 | ||||||
| Preferred stock, $0.0001 par value, 5,000,000 shares authorized | ||||||||
| Series A Preferred Stock, par value $0.0001, 4,000,000 and 0 shares issued and outstanding as of June 30, 2025 and June 30, 2024, respectively | 400 | - | ||||||
| Class A common stock, $0.0001 par value, 320,000,000 authorized; 25,947,813 and 32,993,283 shares issued and outstanding as of June 30, 2025 and June 30, 2024, respectively | 2,596 | 3,299 | ||||||
| Class B common stock, $0.0001 par value, 30,000,000 shares authorized; 13,937,640 and 6,154,670 shares issued and outstanding as of June 30, 2025, and June 30, 2024, respectively | 1,394 | 616 | ||||||
| Additional paid-in capital | 190,377,303 | 63,495,755 | ||||||
| Accumulated deficit | (195,235,201 | ) | (181,169,253 | ) | ||||
| Total stockholders’ deficit | (4,853,508 | ) | (117,669,583 | ) | ||||
| Total liabilities, mezzanine equity and stockholders’ deficit | $ | 1,388,516 | $ | 6,137,079 | ||||
The accompanying notes are an integral part of these financial statements
F-26
STATEMENTS OF OPERATIONS
| For the Year ended June 30, | ||||||||
| 2025 | 2024 | |||||||
| Net sales | ||||||||
| Sales | $ | 406,255 | $ | 241,778 | ||||
| Sales - related parties | 221,894 | 266,142 | ||||||
| Total revenue | 628,149 | 507,920 | ||||||
| Cost of revenue: | ||||||||
| Cost of revenue | 346,581 | 336,996 | ||||||
| Total cost of revenue | 346,581 | 336,996 | ||||||
| Gross profit | 281,568 | 170,924 | ||||||
| Operating costs and expenses: | ||||||||
| Compensation and benefits | 5,482,968 | 3,856,857 | ||||||
| Sales and marketing expense | 524,930 | 616,992 | ||||||
| General and administrative | 8,029,108 | 6,425,862 | ||||||
| Total operating expenses | 14,037,006 | 10,899,711 | ||||||
| Loss from operations | (13,755,438 | ) | (10,728,787 | ) | ||||
| Other income (expense): | ||||||||
| Interest income (expense), net | (301,327 | ) | (796,126 | ) | ||||
| Other (expense) income, net | (9,183 | ) | (49,812 | ) | ||||
| Gain on the settlement of accounts payable | - | 117,393 | ||||||
| Loss on the extinguishment of debt | - | (988,884 | ) | |||||
| Total other (expense) income | (310,510 | ) | (1,717,429 | ) | ||||
| Net loss before income tax | $ | (14,065,948 | ) | $ | (12,446,216 | ) | ||
| Income tax expense (benefit) | - | - | ||||||
| Net loss | (14,065,948 | ) | (12,446,216 | ) | ||||
| Deemed dividends attributable to accretion of Series A Preferred Stock to redemption value | - | (5,000,000 | ) | |||||
| Net loss attributable to common shareholders | (14,065,948 | ) | (17,446,216 | ) | ||||
| Net loss per common share - basic and diluted | $ | (0.36 | ) | $ | (0.62 | ) | ||
| Weighted average common shares outstanding - basic and diluted | 39,376,087 | 28,193,649 | ||||||
The accompanying notes are an integral part of these financial statements
F-27
STATEMENTS OF STOCKHOLDERS’ DEFICIT
FOR YEARS ENDED JUNE 30, 2025 AND 2024
| Redeemable
Series A Preferred Stock | Series
A Preferred Stock | Class
A Common Stock | Class
B Common Stock | Common Stock | Additional Paid-In | Accumulated | Total Stockholders’ | |||||||||||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | Subscriptions | Capital | Deficit | Deficit | |||||||||||||||||||||||||||||||||||||
| Balance as of June 30, 2023 | - | $ | - | - | $ | - | 21,584,744 | $ | 2,158 | $ | 497,569 | $ | 50 | $ | 1,250,000 | $ | 39,558,930 | $ | (48,725,037 | ) | $ | (7,913,899 | ) | |||||||||||||||||||||||||
| Stock based compensation | - | - | - | - | - | - | - | - | - | 56,411 | - | 56,411 | ||||||||||||||||||||||||||||||||||||
| Shares issued to settle common stock subscriptions | - | - | - | - | 30,764,789 | 3,077 | 969,601 | 97 | (18,658,854 | ) | 18,655,680 | - | - | |||||||||||||||||||||||||||||||||||
| Conversion of Revolving convertible notes payable - related parties into common stock subscriptions | - | - | - | - | - | - | - | - | 14,747,426 | - | - | 14,747,426 | ||||||||||||||||||||||||||||||||||||
| Conversion of Notes payable - related party into common stock subscriptions | - | - | - | - | - | - | - | - | 329,495 | - | - | 329,495 | ||||||||||||||||||||||||||||||||||||
| Conversion of Notes payable into common stock subscriptions | - | - | - | - | - | - | - | - | 1,740,344 | - | - | 1,740,344 | ||||||||||||||||||||||||||||||||||||
| Issuance of common stock subscriptions in lieu of accounts payable and accrued expenses - related party | - | - | - | - | - | - | - | - | 591,589 | - | - | 591,589 | ||||||||||||||||||||||||||||||||||||
| Common stock issued for cash | - | - | - | - | 643,750 | 64 | - | - | - | 5,149,936 | - | 5,150,000 | ||||||||||||||||||||||||||||||||||||
| Warrants issued for services | - | - | - | - | - | - | - | - | - | 75,267 | - | 75,267 | ||||||||||||||||||||||||||||||||||||
| Cashless exercise of Class B warrants | - | - | - | - | - | - | 4,687,500 | 469 | - | (469 | ) | - | - | |||||||||||||||||||||||||||||||||||
| Shares cancelled and exchanged for redeemable Series A preferred stock | 4,000,000 | 115,000,000 | - | - | (20,000,000 | ) | (2,000 | ) | - | - | - | - | (114,998,000 | ) | (115,000,000 | ) | ||||||||||||||||||||||||||||||||
| Remeasurement of Series A Preferred Stock to redemption value | - | 5,000,000 | - | - | - | - | - | - | - | - | (5,000,000 | ) | (5,000,000 | ) | ||||||||||||||||||||||||||||||||||
| Net loss | - | - | - | - | - | - | - | - | - | - | (12,446,216 | ) | (12,446,216 | ) | ||||||||||||||||||||||||||||||||||
| Balance as of June 30, 2024 | 4,000,000 | 120,000,000 | - | - | 32,993,283 | 3,299 | 6,154,670 | 616 | - | 63,495,755 | (181,169,253 | ) | (117,669,583 | ) | ||||||||||||||||||||||||||||||||||
| Stock based compensation | - | - | - | - | - | - | - | - | - | 484,947 | - | 484,947 | ||||||||||||||||||||||||||||||||||||
| Shares issued to settle common stock subscriptions | - | - | - | - | 187,500 | 19 | - | - | (1,500,000 | ) | 1,499,981 | - | - | |||||||||||||||||||||||||||||||||||
| Class A common stock subscription | - | - | - | - | - | - | - | - | 1,500,000 | - | - | 1,500,000 | ||||||||||||||||||||||||||||||||||||
| Class A common stock issued for cash | - | - | - | - | 362,500 | 37 | - | - | - | 2,899,963 | - | 2,900,000 | ||||||||||||||||||||||||||||||||||||
| Class A common stock issued for cash to related party | - | - | - | - | 187,500 | 19 | - | - | - | 1,499,981 | - | 1,500,000 | ||||||||||||||||||||||||||||||||||||
| Reclass from Class A common stock to Class B common stock | - | - | - | - | (7,782,970 | ) | (778 | ) | 7,782,970 | 778 | - | - | - | - | ||||||||||||||||||||||||||||||||||
| Reclass of Series A preferred stock from mezzanine to permanent equity | (4,000,000 | ) | (120,000,000 | ) | 4,000,000 | 400 | - | - | - | - | - | 119,999,600 | - | 120,000,000 | ||||||||||||||||||||||||||||||||||
| Warrants issued for services | - | - | - | - | - | - | - | - | - | 497,076 | - | 497,076 | ||||||||||||||||||||||||||||||||||||
| Net loss | - | - | - | - | - | - | - | - | - | - | (14,065,948 | ) | (14,065,948 | ) | ||||||||||||||||||||||||||||||||||
| Balance as of June 30, 2025 | - | - | 4,000,000 | 400 | 25,947,813 | 2,596 | 13,937,640 | 1,394 | - | 190,377,303 | (195,235,201 | ) | (4,853,508 | ) | ||||||||||||||||||||||||||||||||||
The accompanying notes are an integral part of these financial statements
F-28
STATEMENTS OF CASH FLOWS
| For the Years Ended June 30, | ||||||||
| 2025 | 2024 | |||||||
| Cash flows from operating activities: | ||||||||
| Net loss | $ | (14,065,948 | ) | $ | (12,446,216 | ) | ||
| Reconciliation of net loss to net cash used in operating activities | ||||||||
| Depreciation and amortization expense | 24,902 | 23,690 | ||||||
| Operating lease expense | 83,707 | 85,179 | ||||||
| Gain on settlement of accounts payable | - | (117,393 | ) | |||||
| Loss on the extinguishment of debt | - | 988,884 | ||||||
| Warrants issued for services | 497,076 | 75,267 | ||||||
| Stock-based compensation | 484,947 | 56,411 | ||||||
| Bad debt expense | 31,295 | - | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | (161,237 | ) | 2,123 | |||||
| Accounts receivable - related party | 128,198 | (274,501 | ) | |||||
| Other current assets | (584 | ) | 12,668 | |||||
| Operating lease liability | (75,061 | ) | (80,170 | ) | ||||
| Accounts payable and accrued expenses | 611,991 | (540,730 | ) | |||||
| Accounts payable and accrued expenses - related party | 55,669 | 1,004,415 | ||||||
| Deferred revenue | 52,754 | (97,547 | ) | |||||
| Net cash used in operating activities | (12,332,291 | ) | (11,307,920 | ) | ||||
| Cash flows from investing activities: | ||||||||
| Purchase of property and equipment | (26,882 | ) | (1,647 | ) | ||||
| Net cash used in investing activities | (26,882 | ) | (1,647 | ) | ||||
| Cash flows from financing activities: | ||||||||
| Proceeds from issuance of Class A common stock | 4,400,000 | 5,150,000 | ||||||
| Proceeds from issuance of Class A common stock - related party | 1,500,000 | - | ||||||
| Payments on finance lease | (546 | ) | (1,514 | ) | ||||
| Proceeds from convertible note payable - related party | 2,952,000 | 2,075,000 | ||||||
| Proceeds from revolving convertible note payable - related party | - | 8,320,000 | ||||||
| Repayments on convertible note payable - related party | (1,161,445 | ) | (650,000 | ) | ||||
| Net cash provided by financing activities | 7,690,009 | 14,893,486 | ||||||
| Net change in cash | (4,669,164 | ) | 3,583,919 | |||||
| Cash, beginning of period | 5,218,413 | 1,634,494 | ||||||
| Cash, end of period | $ | 549,249 | $ | 5,218,413 | ||||
| Non-cash investing and financing activities: | ||||||||
| Shares issued to settle common stock subscriptions | $ | 778 | $ | 18,658,854 | ||||
| Settlement of debt through common share subscriptions - related party | $ | - | $ | 870,174 | ||||
| Settlement of debt and accounts payable through common share subscriptions | $ | - | $ | 15,549,796 | ||||
| Right of use asset acquired during the period | $ | - | $ | 497,868 | ||||
| Series A Preferred Stock issued for Cancellation of Class A common stock | $ | - | $ | 115,000,000 | ||||
| Remeasurement of Series A Preferred Shares to redemption value | $ | - | $ | 5,000,000 | ||||
| Reclassification of Series A temporary equity to stockholder’s equity | $ | 120,000,000 | $ | - | ||||
The accompanying notes are an integral part of these financial statements
F-29
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2025 and 2024
Note 1 – Organization and Description of Business
FreeCast, Inc. (the “Company”) developed and markets an interactive digital media guide that facilitates access to a virtual library of entertainment media. The Company is based in Orlando, Florida and was founded in 2011 as a Florida Corporation. The Company’s primary products are SmartGuide and Select TV. Both SmartGuide and Select TV utilize the Company-designed proprietary technology that searches, and aggregates internet distributed streaming media into an electronic media guide. SmartGuide is licensable to brands/manufacturers of devices with large online user bases, while Select TV is a retail package that is sold by monthly and/or annual subscriptions.
In addition to subscription and product revenues, the Company generates revenue from its ad platform and agency services. The FreeCast Ad Platform is a demand-side platform (DSP) for Connected TV (CTV) and over-the-top (OTT) ads, enabling advertisers and agencies to bid in real time on advertising spaces across multiple content provider platforms. The Company also earns revenue from direct client service contracts for marketing and campaign execution, such as the Launch That agreement, which involves discovery, development, and test media distribution services. These ad-related and agency revenues are recognized as distinct revenue streams in accordance with ASC 606.
Going Concern
The Company has incurred recurring losses from operations since inception, accumulating a deficit of approximately $195.2 million as of June 30, 2025. For the years ended June 30, 2025, and 2024, the Company incurred a net loss of approximately $14.1 million and $12.4 million, respectively. The Company may incur additional losses and negative operating cash flows in the future. Failure to generate sufficient revenues, reduce spending or raise additional capital could adversely affect the Company’s ability to achieve its intended business objectives. These matters, among others, raise substantial doubt about the Company’s ability to continue as a going concern for a period of one year from the issuance of these financial statements.
Since the inception of the Company in 2011, the operations of the Company have been funded primarily through sales of Class A common stock to private investors, debt financing and exchange of Class A common stock for services received by the Company. Management cannot be certain that additional funding will be available on acceptable terms, or at all. Management plans include raising additional capital through the sale of equity and debt securities, along with exploring additional avenues to increase revenues. To the extent that the Company raises additional funds by issuing equity securities, the Company’s shareholders may experience significant dilution. Any debt financing, if available, may involve restrictive covenants that impact the Company’s ability to conduct business.
The accompanying financial statements for the years ended June 30, 2025 and 2024 have been prepared assuming the Company will continue as a going concern, which contemplates, among other things, the realization of assets and satisfaction of liabilities in the normal course of business. During the remaining 2025 calendar year, management intends to raise additional debt and/or equity financing to fund future operations and to provide additional working capital. However, there is no assurance that such financing will be consummated or obtained in sufficient amounts necessary to meet the Company’s needs. The financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.
F-30
Note 2 – Summary of Significant Accounting Policies
Basis of Presentation
The accompanying financial statements have been prepared in accordance with GAAP and include all adjustments necessary for the fair presentation of the Company’s financial position for the periods presented.
Use of Estimates
The preparation of these financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the reported amounts in the financial statements and disclosure in the accompanying notes. Actual results may differ from those estimates and such differences may be material to the financial statements. The more significant estimates and assumptions by management include among others: accounts receivable realization, the valuation allowance on deferred tax assets, the valuation of the Company’s Class A common stock, redeemable series A preferred stock, options, warrants and revenue recognition.
Cash and Cash Equivalents
The Company considers all highly liquid investments with original maturities at the date of purchase of three months or less to be cash equivalents. Cash and cash equivalents include bank demand deposits, marketable securities with maturities of three months or less at purchase, and money market funds that invest primarily in certificates of deposits, commercial paper and U.S. government and U.S. government agency obligations. Cash equivalents are reported at fair value.
Accounts receivable
Accounts receivables are unsecured and are derived from revenue earned from customers. For accounts receivable, the Company performs ongoing credit evaluations of customers to assess the probability of accounts receivable collection based on a number of factors, including past transaction experience with the customer, evaluation of their credit history, and review of the invoicing terms of the contract. Accounts receivables are reported net of an allowance for doubtful accounts when applicable. The allowance for doubtful accounts reflects management’s best estimate of probable losses inherent in the accounts receivable balance at each reporting date. Management determines the allowance based on known troubled accounts, historical experience, and other currently available evidence. The Company recognized bad debt expense for the year ended June 30, 2025 and 2024 of $31,295 and $0, respectively. The balance of allowance for doubtful accounts as of June 30, 2025 and 2024 was $31,332 and $0, respectively.
Property and Equipment
Property and Equipment are stated at cost, less accumulated depreciation. Depreciation is determined on a straight-line basis over the estimated useful lives of the assets, which generally range from three to five years. Maintenance and repairs are charged against expense as incurred.
F-31
Leases
Effective July 1, 2019, we adopted ASC 842, Leases. Under ASC 842, we determine if a contractual arrangement is, or contains, a lease at the inception date. Right-of-use (“ROU”) assets and liabilities related to operating leases and finance leases are separately reported in the balance sheets.
ROU assets and lease liabilities are recognized at the lease commencement date based on the present value of the future lease payments over the lease term. When the rate implicit to the lease cannot be readily determined, we utilize our incremental borrowing rate in determining the present value of the future lease payments. The incremental borrowing rate is derived from information available at the lease commencement date and represents the rate of interest that a lessee would have to pay to borrow an amount equal to the lease payments on a collateralized basis over a similar term in a similar economic environment. Operating lease ROU assets also include any cumulative prepaid or accrued rent when the lease payments are uneven throughout the lease term.
The ROU assets and lease liabilities may include options to extend or terminate the lease when it is reasonably certain that we will exercise that option.
Lease liabilities are increased by interest and reduced by payments each period, and the ROU asset is amortized over the lease term. For operating leases, interest on the lease liability and the amortization of the ROU asset result in straight-line rent expense over the lease term. Variable lease expenses are recorded when incurred.
Income Taxes
The Company accounts for income taxes under ASC 740 “Income Taxes,” which codified SFAS 109, “Accounting for Income Taxes” and FIN 48 “Accounting for Uncertainty in Income Taxes – an Interpretation of FASB Statement No. 109.” Under the asset and liability method of ASC 740, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statements carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Under ASC 740, the effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period the enactment occurs. A valuation allowance is provided for certain deferred tax assets if it is more likely than not that the Company will not realize tax assets through future operations.
FASB issued ASC 740-10 “Accounting for Uncertainty in Income Taxes”. ASC 740-10 clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements. This standard requires a company to determine whether it is more likely than not that a tax position will be sustained upon examination based upon the technical merits of the position. If the more-likely-than-not threshold is met, a company must measure the tax position to determine the amount to recognize in the financial statements.
Modifications to Equity-classified Instruments
A change in the terms or conditions of a warrant is accounted for as a modification. For a warrant modification accounted for under ASC 815, the effect of a modification shall be measured as the difference between the fair value of the modified warrant and the fair value of the original warrant immediately before its terms are modified, with each measured on the modification date. The accounting for incremental fair value of the modified warrants over the original warrants is based on the specific facts and circumstances related to the modification. When a modification is directly attributable to an equity offering, the incremental change in fair value of the warrants is accounted for as an equity issuance cost. When a modification is directly attributable to a debt offering, the incremental change in fair value of the warrants is accounted for as a debt discount or debt issuance cost. For all other modifications accounted for under ASC 815, the incremental change in fair value is recognized as a deemed dividend.
Redeemable Series A Preferred Stock
The Company applies the guidance enumerated in ASC 480, when determining the classification and measurement of preferred stock. Preferred stock subject to mandatory redemption, if any, is classified as a liability and is measured at fair value. The Company classifies conditionally redeemable preferred stock, which includes preferred stock that features redemption rights that are either within the control of the holder or subject to redemption upon the occurrence of uncertain events not solely within the Company’s control, as mezzanine equity. At all other times, the Company classifies its preferred stock in stockholders’ equity. The Company subsequently measures mezzanine equity to redemption value when the instrument is currently redeemable or when it is probable the instrument will become redeemable. Given the redemption rights are not solely within the Company’s control because the Company’s CEO, William Mobley is able to force the Company to redeem the shares for cash, the Company classifies the Series A Preferred Stock as mezzanine equity pursuant to ASC 480-10-S99. The Company has adjusted the value of the Series A Preferred shares to its maximum redemption amount as the instrument is currently redeemable.
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Revenue Recognition
Revenue is recognized upon transfer of control of promised goods or services to customers in an amount that reflects the consideration the Company expects to receive in exchange for those goods or services, in accordance with ASC 606. The Company’s contracts include various product or services or a combination of both, which are generally capable of being distinct and are accounted for as separate performance obligations. The Company’s contracts may contain multiple distinct performance obligations.
The transaction price of a contract is estimated based on the expected value for which a significant reversal of revenue is not expected to occur. Stand-alone selling prices are generally determined based on prices charged to customers. In arrangements with multiple performance obligations, the estimated transaction price is allocated to each distinct performance obligation based on relative stand-alone selling price (“SSP”).
| For the years ended | ||||||||
| June 30, | ||||||||
| 2025 | 2024 | |||||||
| Membership (1) | $ | 132,950 | $ | 233,453 | ||||
| Product Sales (2) | 952 | 6,176 | ||||||
| FAST Revenue – related parties (3) | 221,894 | 266,142 | ||||||
| Ad Revenue (4) | 271,638 | 1,151 | ||||||
| Other Revenue | 715 | 998 | ||||||
| Total | $ | 628,149 | $ | 507,920 | ||||
| (1) | Membership sales refer to customers purchasing premium content through our SmartGuide for varying fees and recognized on a gross basis over the service period determined. |
| (2) | Product sales refer to the physical transfer of goods shipped to customers to aid in access to our other offered service lines, recognized as a point of sale, upon shipment of goods. |
| (3) | We provide end-to-end software solutions for development of FAST (Free Ad-Supported TV) channels to customers such as content creation, production, video studio rental, etc. to aid in the creation of content for their channels and a platform fee for distributing the channel. Revenue is recognized at the point in time the services are performed for the development of FAST channels. We charge a monthly platform fee for distributing the FAST channel on our platform. We recognized related party revenue of $221,894 ($175,394 for FAST channel buildouts and $46,500 for channel streaming) for the year ended June 30, 2025. |
| (4) | During the period from October 1, 2024 through June 30, 2025, we recognized $271,638 of ad revenue from the buying and selling of advertising space on other content platform providers. Of this amount, $125,000 was recognized as Ad Agency Revenue under the LaunchThat Experimental Media Plan Agreement, representing revenue from the provision of discovery, development, and test media distribution services for a client campaign. The remaining $146,638 was recognized as Arbitrage Ad Revenue from the buying and selling of advertising space via the FreeCast Ad Platform. |
Subscription Revenue
The Company no longer generates subscription revenue through renewal sales of Rabbit TV and Rabbit TV Plus, or through Select TV and Streaming TV Kits, which operated as the successor products to Rabbit TV and Rabbit TV Plus. In October 2022, the Company’s SelectTV.com paid subscription service and packaged SelectTV Streaming TV Kits were discontinued. The Company rebranded to the corporate namesake FreeCast.com and relaunched its SmartGuide as a free registration subscription service. SmartGuide is the Company’s internet distributed streaming media guide that searches and aggregates media content on the web and facilitates access to its customers through Wi-Fi-enabled devices that support streaming video.
The Company does, however, sell monthly subscriptions for premium content purchased through its SmartGuide for varying fees for different content. Revenue from such premium subscription fees is recognized on a gross basis over the service period as the Company is deemed to be the principal in the relationship with the end user. The Company controls the content before transferring it to the end user and has latitude in establishing pricing. The Company both retransmits and “ingests” and distributes content.
Subscription revenue is derived from online sales through search engine optimization, search engine marketing, various marketing advertising services, the utilization of resellers in the form of publishers that promote upcoming retail promotions and packages, as well as direct sales to subscribers of our Value Channels subscription service. Value Channels subscription contains 17 cable channels and sells on a monthly subscription or annual fee. Value Channels is integrated into the initial FreeCast.com free registration and then offered as an upgrade. Both FreeCast.com (free registration) and Value Channels is available in various streaming Smart TV models (Google TV’s, Amazon Fire TV’s, LG, Samsung, TCL, Sony, and others), plus Streaming Devices (Amazon Fire, Google ChromeCast, Apple TV), PC’s/Laptops and mobile apps for Android and iOS devices.
Subscription revenue is recognized ratably on a straight-line basis over the duration of the subscription period, generally ranging from one month to five years. If the subscriber renews early, then the expiration date is extended by the renewal period, and the additional subscription fee is deferred and amortized over the additional months purchased by the subscriber. The Company no longer offers SelectTV lifetime subscriptions, which was initially deferred and recognized over a five-year period. All subscription fees are collected at the time of purchase.
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FAST (Free Ad-Supported TV)
We provide FAST channel buildouts that includes post-production editing, motion graphics, channel assembly and content acquisitions. We charge the customers based on time incurred for the services plus a reasonable margin in addition to any additional out-of-pocket cost incurred that is charged at cost to us. Revenue is recognized when services are performed. The Company charges a monthly platform fee for distributing the FAST channel on its platform. Revenue is recognized at the point in time when the content is available on the digital platform.
Ad Platform Revenue
FreeCast is an agent in transactions on its FreeCast Ad Exchange platforms. The Company acts as an intermediary between DSPs and non-owned and operated publishers by providing access to a platform that allows both parties to transact in the buying and selling of ad inventory. The transaction price is determined through a real-time auction and the Company has no pricing discretion or obligation related to the fulfillment of the advertising delivery
The Company generally invoices buyers at the end of each month for the full purchase price of ad impressions monetized in that month. Accounts receivable are recorded at the amount of gross billings for the amounts the Company is responsible to collect, and accounts payable are recorded at the net amount payable to suppliers. Accordingly, both accounts receivable and accounts payable appear large in relation to revenue reported on a net basis.
Ad Agency Revenue (Launch That and Similar Contracts)
The Company earns revenue from direct client service contracts for marketing and campaign execution, such as the Launch That agreement. These contracts typically involve two distinct phases:
| ● | Phase 1: Discovery and Development Services (data research, audience analysis, creative development). Revenue is recognized over time using an input method based on the proportion of costs incurred relative to total estimated costs for Phase 1. |
| ● | Phase 2: Test Media Distribution Services (media placement, outreach, KPI reporting). Revenue is recognized upon delivery of the performance evaluation report specified in the contract. |
Revenue from such contracts is presented separately from “Other Revenue” due to its materiality and distinct nature
Deferred Revenue (Launch That and Similar Contracts)
For the Ad Arbitrage revenue stream, the Company provides demand partners with access to the FreeCast Ad Platform, enabling real-time bidding on advertising inventory. Revenue is recognized at a point in time when a transaction is completed—specifically, when a bid is won and the client’s purchase occurs through the platform. Amounts invoiced in advance of the completion of these transactions are recorded as deferred revenue and recognized as revenue when the Company’s performance obligation is satisfied.
Product Sales
Beginning in 2023, in conjunction with the release of our new product FreeCast Home, we started recognizing contracts with customers from product sales requiring performance up to delivery, as well as contracts with customers that contain a subscription portion that causes revenue to be allocated or adjusted over time. Shipping and handling activities are performed before the customer obtains control of the goods and therefore represent a fulfillment activity rather than a promised service to the customer. Revenue and costs of sales are recognized when control of the products transfers to our customer, which generally occurs upon shipment from our facilities. For our physical product sales, our performance obligations are satisfied at that time.
Other Revenue
Other revenue includes licensing, advertising and referral fee revenue. The Company generates revenue through free registrations of FreeCast.com by partnering with retailers, manufacturers, operators and/or distributors of streaming devices, mobile phones, broadband carriers, broadcasters, property management, multi-dwelling developers, builders, and various mass consumer communities of streaming tv watchers. A FreeCast.com license is freely provided per registered consumer marketed by distributors in exchange for a negotiated revenue sharing percentage with each distributor on a case-by-case basis. Affiliate commissions are earned and then shared from third-party advertisement service providers, pay-per-view movie or series distributors, and live events tickets sales for such things as professional boxing or concerts. These license arrangements have not resulted in significant revenue to date.
The Company generates advertising revenue pursuant to arrangements with advertising agencies and brokers. Under these arrangements, it provides the agencies and brokers the ability to sell advertising on its service directly to advertisers. The Company reports this revenue net of amounts due to agencies and brokers because the Company is neither the primary obligor under these arrangements, nor does it set the pricing or establish or maintain the relationship with the advertisers.
Referral fee revenue is generated through premium services which are also available on our platform, for an additional fee, to allow single or time-limited use of private, decrypted viewing of movies, sporting events, concerts or other types of events.
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Concentration of Credit Risk
Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash and cash equivalents and trade accounts receivable. Cash and cash equivalents of the Company are exposed to credit risk, subject to federal deposit insurance, in the event of default by the financial institutions holding its cash and cash equivalents to the extent of amounts recorded on the balance sheet. The cash accounts are insured by the Federal Deposit Insurance Corporation (“FDIC”) up to $250,000. As of June 30, 2025, the Company’s cash balance exceeded the FDIC insured limit by $299,249.
As of June 30, 2025, the Company had two customers, SportX, LLC and related party customer Celebrity Cigars, Inc., representing 51.1% and 44.5%, respectively, of the Company’s receivables. As of June 30, 2024, the Company had two related party customers, Test Drive Live Inc. and Celebrity Cigars, Inc., representing 61.4% and 34.9%, respectively, of the Company’s receivables.
As of June 30, 2025, the Company had two related party customers, Test Drive Live Inc. and Celebrity Cigars, Inc., representing 13.7% and 20.3%, respectively, of the Company’s revenues. As of June 30, 2024, the Company had two related party customers, Test Drive Live Inc. and Celebrity Cigars, Inc., representing 33.4% and 19.0%, respectively, of the Company’s revenues.
Cost of Revenue
Cost of revenue consists primarily of subscription costs and FAST streaming costs such as third-party hosting costs, infrastructure costs and salaries and benefits related to employees for our customer support. The Company makes payments to third-party ad servers in the period in which the advertising impressions are delivered, or click-through actions occur, and accordingly records this as a cost of revenue in the related period. Hosting costs consist of content streaming, maintaining our internet service and creating and serving advertisements through third-party ad servers. Cost of revenue also consists of FAST channel buildout costs such as the salaries and benefits related to employees, facility related expenses and information technology associated with supporting these buildouts.
Sales and Marketing
Sales and marketing consist primarily of contracts with third-party operators as well as employee-related costs, including, and commissions related to employees in sales, sales support and marketing departments. In addition, sales and marketing expenses include external sales and marketing expenses such as third-party marketing, branding, advertising, public relations expenses, commissions, facilities-related expenses, and infrastructure costs.
Fair Value of Financial Instruments
The Company accounts for financial instruments under Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 820, Fair Value Measurements. This statement defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles, and expands disclosures about fair value measurements. To increase consistency and comparability in fair value measurements, ASC 820 establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three levels as follows:
| Level 1 — | quoted prices (unadjusted) in active markets for identical assets or liabilities; |
| Level 2 — | observable inputs other than Level 1, quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, and model-derived prices whose inputs are observable or whose significant value drivers are observable; and |
| Level 3 — | assets and liabilities whose significant value drivers are unobservable. |
The Company applies fair value accounting for all assets and liabilities that are recognized or disclosed at fair value in the financial statements. The carrying amounts reported in the financial statements for cash, accounts receivable, accounts payables and accrued liabilities approximate their fair value due to their short-term nature.
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Stock-Based Compensation
Stock-based compensation issued is measured at the date of grant based on the estimated fair value of the award, net of estimated forfeitures. The grant date fair value of a stock-based award is recognized as an expense over the requisite service period of the award on a straight-line basis. The Company will recognize compensation expense, measured as the fair value of the stock-based compensation on grant date, when a performance condition is considered probable of occurring. For purposes of determining the variables used in the calculation of stock-based compensation issued to employees, the Company performs an analysis of current market data and historical data to calculate an estimate of implied volatility, the expected term of the option and the expected forfeiture rate. With the exception of the expected forfeiture rate, which is not an input, the Company uses these estimates as variables in the Black-Scholes option pricing model. Depending upon the number of warrants granted, any fluctuations in these calculations could have a material effect on the results presented in the Company’s Statements of Operations. In addition, any differences between estimated forfeitures and actual forfeitures could also have a material impact on the Company’s financial statements.
In accounting for modifications of equity-classified warrants held by employees, it is the Company’s policy to determine the impact by analogy to the share-based compensation guidance of ASC 718, Compensation - Stock Compensation (“ASC 718”). The model for a modified share-based payment award that is classified as equity and remains classified in equity after the modification is addressed in ASC 718-20-35-3. Pursuant to that guidance, the incremental fair value from the modification is recognized as stock-based compensation expense in the statements of operations to the extent the modified instrument has a higher fair value.
Loss Contingencies
Certain conditions may exist as of the date the financial statements are issued, which may result in a loss to the Company, but which will only be resolved when one or more future events occur or fail to occur. The Company’s management and its legal counsel assess such contingent liabilities, and such assessment inherently involves an exercise of judgment. In assessing loss contingencies related to legal proceedings that are pending against the Company or unasserted claims that may result in such proceedings, the Company’s legal counsel evaluates the perceived merits of any legal proceedings or unasserted claims as well as the perceived merits of the amount of relief sought or expected to be sought therein.
If the assessment of a contingency indicates that it is probable that a material loss has been incurred and the amount of the liability can be estimated, then the estimated liability would be accrued in the Company’s financial statements. If the assessment indicates that a potentially material loss contingency is not probable, but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent liability, together with an estimate of the range of possible loss if determinable and material, would be disclosed.
Loss contingencies considered remote are generally not disclosed unless they involve guarantees, in which case the nature of the guarantee would be disclosed.
Gain on Settlement of Accounts Payable
In March 2024, the Company entered into a settlement agreement with a vendor, in which the Company agreed to pay the vendor a total of $239,000, a reduction in the amount owed of $117,393. During the year ended June 30, 2024, the Company recognized a gain on the settlement of accounts payable of $117,393 on the Statements of Operations upon payment of the $239,000 and being released from the remaining liability.
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Earnings (Loss) Per Share
Basic earnings (loss) per share is computed by dividing net income (loss) attributable to all classes of common shareholders of the Company by the weighted average number of shares of all classes of Class A common stock outstanding during the applicable period. Diluted earnings (loss) per share is determined in the same manner as basic earnings (loss) per share, except that the number of shares is increased to include restricted stock still subject to risk of forfeiture and to assume exercise of potentially dilutive stock options using the treasury stock method, unless the effect of such increase would be anti-dilutive.
The following table provides the number of Class A common stock equivalents not included in diluted income per share, because the effects are anti-dilutive, for the fiscal years ended June 30, 2025 and 2024, respectively.
| For the Fiscal Year Ended June 30, | ||||||||
| 2025 | 2024 | |||||||
| Convertible debt and liabilities | 503,549 | 263,016 | ||||||
| Options | 953,892 | 932,592 | ||||||
| Warrants | 8,056,087 | 8,156,087 | ||||||
| Total | 9,513,528 | 9,351,695 | ||||||
Recently Issued Accounting Pronouncements
The Company has reviewed the recent accounting pronouncements issued by the Financial Accounting Standards Board (“FASB”), including its Emerging Issues Task Force, the American Institute of Certified Public Accountants, and the SEC, and determined that these pronouncements do not have a material impact on the Company’s current or anticipated consolidated financial statement presentation or disclosures.
In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740) – Improvements to Income Tax Disclosures (ASU 2023-09). ASU 2023-09 requires that an entity, on an annual basis, disclose additional income tax information, primarily related to the rate reconciliation and income taxes paid. The amendment in the ASU is intended to enhance the transparency and decision usefulness of income tax disclosures. The ASU’s amendments are effective for annual periods beginning after December 15, 2024. The Company is currently evaluating the impact that adoption of ASU 2023-09 will have on its financial statements.
In September 2016, the FASB issued ASU 2016-13, Measurement of Credit Losses on Financial Instrument (“ASU 2016-13”). ASU 2016-13 requires entities to use a forward-looking approach based on current expected credit losses (“CECL”) to estimate credit losses on certain types of financial instruments, including trade receivables. This may result in the earlier recognition of allowances for losses. ASU 2016-13 was effective for the Company beginning July 1, 2023. The adoption of ASU 2016-13 did not have a material impact on the Company’s financial position, results of operations and cash flows.
In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. The ASU is intended to improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses. The standard is effective for annual reporting periods beginning after December 15, 2023, and interim periods beginning after December 15, 2024. The Company is currently evaluating the impact of this guidance on its disclosures in the consolidated financial statements.
Note 3 – Retrospective Adjustments to Company Stock
On May 10, 2024, the Company effected a 1-for-2 reverse stock split (“Reverse Split”) and concurrently designated two classes of common stock: Class A common stock and Class B common stock. All of the Company’s then outstanding shares of common stock were automatically reclassified as Class A common stock, except for shares of common stock held by William A. Mobley, Jr., the Company’s founder, Chief Executive Officer and Chairman of the Company’s board of directors, whose common shares were reclassified as Class B common stock. The rights of the holders of Class A common stock and Class B common stock are identical, except with respect to voting, conversion and transfer rights. Each share of Class A common stock is entitled to one vote. Each share of Class B common stock is entitled to 15 votes and may be converted at any time into one share of Class A common stock. Each share of Class B common stock will automatically convert into one share of Class A common stock upon any sale or transfer thereof, subject to certain exceptions. Shares of Class B common stock may only be issued to and held by Mr. Mobley.
In conjunction with the Reverse Split, the Company amended and restated its articles of incorporation to authorize the issuance of 320,000,000 shares of Class A common stock, 30,000,000 shares of Class B common stock and 5,000,000 shares of preferred stock (“Amendment”).
The Reverse Split also applied to Class A common stock and Class B common stock issuable upon the exercise of the Company’s outstanding warrants, the warrant exercise price, outstanding stock options, stock option exercise price, and stock options plan. All warrants and stock options outstanding are convertible into shares of Class A common stock, except for outstanding warrants and stock options held by Mr. Mobley, which are convertible into shares of Class B common stock. Fractional shares which would otherwise result from the Reverse Split were rounded up to the nearest whole share. All information included in these financial statements has been adjusted, on a retrospective basis, for all periods presented to reflect the Reverse Split and Amendment, unless otherwise stated.
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Note 4 – Property and Equipment
Property and equipment, net consisted of the following:
| June 30, | June 30, | |||||||
| 2025 | 2024 | |||||||
| Property and equipment | $ | 175,265 | $ | 148,382 | ||||
| Less: accumulated depreciation | (149,160 | ) | (124,803 | ) | ||||
| Property and equipment, net | $ | 26,105 | $ | 23,579 | ||||
Depreciation expense was $24,356 and $22,176 for the years ended June 30, 2025 and 2024, respectively, and is classified in general and administrative expenses in the Statements of Operations.
Note 5 – Intangible Assets
Intangible assets, net as of June 30, 2025 and 2024 consisted of the following:
| June 30, | ||||||||
| 2025 | 2024 | |||||||
| Internal Use Software | $ | 105,000 | $ | 105,000 | ||||
| Less accumulated amortization | (105,000 | ) | (105,000 | ) | ||||
| Net carrying value | $ | — | $ | — | ||||
During the years ended June 30, 2025 and 2024, the Company recorded total amortization expense of $0.
As of June 30, 2025, the Company has fully amortized the internal use software.
Note 6 – Debt
Convertible Note’s Payable – Related Party
In June 2016, the Chief Executive Officer of the Company (“CEO”), William Mobley, loaned the Company $111,000, at an interest rate of 12% per annum. The loan matured on December 31, 2017 and the note is convertible into shares of Class B common stock at a conversion price of $0.50 per share.
The note was converted on March 29, 2024. As of March 29, 2024 and June 30, 2023, accrued interest charges related to this loan were $25,020 and $19,003, respectively. The outstanding principal and accrued interest balance on March 29, 2024, of $92,068 was converted into 184,136 shares of Class B common stock. As of June 30, 2025 the outstanding principal and interest due to William Mobley was $0.
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On May 3, 2024, the Company signed a convertible promissory note with Nextelligence in the principal amount of $1,000,000. The note accrues interest at 12% per annum and is due and payable no later than May 3, 2025. At Nextelligence’s option, all or part of the outstanding principal and accrued interest may be converted into shares of our Class A common stock at a conversion price of $8.00 per share. On July 1, 2024, the Company repaid $1,075,000 on the convertible promissory note with related party Nextelligence. On December 13, 2024, the Company renewed and modified the original May 3, 2024 note to incorporate additional borrowings. During the year ended June 30, 2024, and June 30, 2025, the Company borrowed $2,150,000 and $2,952,000, respectively. As of June 30, 2025, the outstanding principal and accrued interest due to Nextelligence was $3,865,555 and $162,839, respectively.
Notes Payable – Related Parties
Between July 2018 and April 2018, a related party, a Company owned by CEO, William Mobley, Public Wire, loaned the Company $66,380, at an interest rate of 12% per annum. The notes representing the loan originally matured on dates ranging from April 1, 2019 to January 1, 2020. Effective June 30, 2021, the Company amended the original promissory note with Public Wire and combined principal and interest from the previous notes under one new loan. In addition, the Company extended the maturity date to June 30, 2024.
On March 29, 2024, the Company entered into a “Debt Conversion Agreement” with Public Wire to convert the outstanding principal and interest of the note payable at a conversion price of $4.00 per share. The total outstanding principal of $89,289 and accrued interest of $29,425, total of $118,714, was converted into 29,679 shares of Class B common stock. The common stock was fair market valued at $8 per share and the Company recognized a debt extinguishment loss of $118,714.
Revolving Convertible Notes Payable – Related Parties
On June 30, 2021, the Company entered into a new revolving convertible promissory note with Nextelligence, which is a related party that is majority owned and controlled by our CEO, for an amount up to $2,500,000; with any borrowings on this loan being at the Company’s complete discretion. Outstanding principal accrues interest at 12% per annum. The borrowing limit was increased to $6,000,000 pursuant to a first amendment to the note dated June 13, 2022. Pursuant to a second amendment to the note dated July 17, 2023, the borrowing limit was increased to $10,000,000 and the maturity date extended to June 30, 2025. In lieu of repayment, at Nextelligence’s option, all or part of the outstanding principal and accrued interest is convertible into shares of our Class A common stock at a conversion price of $0.50 per share.
The Company adopted ASU 2020-06 in the first quarter of fiscal year 2023, and as such, has not recognized any beneficial conversion feature or amortization expense during the year ended June 30, 2024.
During the year ending June 30, 2024, the Company received additional proceeds of $8,320,000 under the revolving convertible promissory note with Nextelligence. On March 29, 2024, the Company approved to convert all outstanding principal and accrued interest into common shares at the conversion price of $0.50 per share. The principal of $13,139,473 and accrued interest of $1,607,952, total of $14,747,425, was converted into 29,494,851 shares of Class A common stock.
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Note 7 – Stockholders’ Deficit and Mezzanine Equity
Preferred Stock
The Preferred Stock is divided into series, with the first series designated “Series A Preferred Stock” and consisting of 4,000,000 shares (the “Series A Shares”). Our board of directors may designate the remaining 1,000,000 authorized but unissued shares of Preferred Stock with such rights and privileges as the board of directors may determine without notice to our shareholders and without shareholder approval.
As of June 30, 2025 and 2024, there were 4,000,000 shares of Series A Preferred Stock issued and outstanding, respectively.
On May 16, 2024, in conjunction with the Reverse Split and Amendment, the Company’s largest shareholder Nextelligence, Inc., which is a related party and controller by the Company’s CEO, agreed to forfeit and cancel 20,000,000 shares of Class A common stock in exchange for the issuance of 4,000,000 shares of Series A preferred stock.
The Company determined the Series A Preferred Stock is classified as temporary mezzanine equity because the redemption rights are not solely within the Company’s control because the Company’s CEO, William Mobley is able to force the Company to redeem the shares for cash. Accordingly, the Company classifies the Series A Preferred Stock as mezzanine equity pursuant to ASC 480-10-S99. The Company accounted for the issuance of the Series A Preferred Stock at its fair value of $115,000,000. Subsequently, the Company has adjusted the carrying value of the Series A Preferred shares to its maximum redemption amount, which is $30 per share or $120,000,000 in the aggregate, given the instrument is currently redeemable.
The initial fair value of the Series A Preferred Stock was valued using a discounted cash flow and back solve method to determine $28.75 per share or $115,000,000 in the aggregate. The significant inputs were as follows: perpetual growth rate of 3%, market change factor of 5.8%, liquidity event of 1 year, volatility of 71.69% and risk-free rate of 5.13%. The accretion of $5,000,000 to redemption value was recorded as a deemed dividend and is disclosed on the statement of operations.
On September 26, 2024, the Company amended the Series A Preferred Stock to remove the redemption right by the Company pursuant to an amendment to the Company’s articles of incorporation filed with the Florida Secretary of State, and effective, on September 26, 2024.
On December 26, 2024, the Company further amended the Series A Preferred Stock to replace the deemed liquidation triggered by a change in control with an ordinary liquidation. In conjunction with this amendment, the Company reclassified the Series A Preferred Stock from mezzanine equity to permanent equity because the features giving rise to mezzanine equity classification, the redemption right and the deemed liquidation, have been removed as part of the amendment.
The following table illustrates the redemption value of the shares of Series A preferred Stock in the offering:
| Redeemable Series A Preferred Stock | ||||
| Initial fair value of the Series A Preferred Stock | 115,000,000 | |||
| Accretion of Series B issuances | 5,000,000 | |||
| Balance as of June 30, 2024 | 120,000,000 | |||
| Reclass from Mezzanine Equity to Permanent Equity | 120,000,000 | |||
| Balance as of June 30, 2025 | - | |||
F-40
A summary of the powers, preferences, rights, privileges, restrictions, and other matters relating to the Series A Shares are as follows:
Dividends. In any fiscal year Series A Shares are outstanding where the Company has revenue of more than $50,000,000, the holder of the Series A Shares (the “Series A Shareholder”) shall be entitled to receive an annual cash dividend equal to ten percent of any revenue above $50,000,000 (the “Annual Dividend Payment”). Subject to meeting the above criteria for such fiscal year, Annual Dividend Payments shall continue until such time as the aggregate amount of all Annual Dividend Payments is equal to the lesser of: (i) $160,000,000; or (ii) the product of the then number of outstanding shares of Series A Preferred Stock and $40 (as may be adjusted for any subdivisions or combinations) (the “Maximum Dividend Payment”). Notwithstanding the above, such dividends shall be payable only to the extent permitted by law out of assets legally available therefore. No dividends shall be paid on any Common Stock during any fiscal year of the Company until the Annual Dividend Payment on the Series A Shares shall have been paid or declared and set apart during that fiscal year.
Liquidation Preference. In the event of any liquidation, dissolution or winding up of the Company, either voluntary or involuntary, the Series A Shareholder is entitled to receive, prior and in preference to any distribution of any of the assets of the Company to the holders of Common Stock, or other junior equity security by reason of their ownership thereof, an amount per Series A Share equal to $30 (as may be adjusted for any subdivisions or combinations) (the “Liquidation Amount”). If upon the occurrence of such event, the assets and funds to be distributed to the Series A Shareholder are insufficient to permit the payment to the Series A Holder of the full preferential Liquidation Amount, then the entire assets and funds of the Company legally available for distribution shall be distributed to the Series A Shareholder. After the distribution described above has been paid, the remaining assets of the Company available for distribution to shareholders shall be distributed among the holders of Common Stock pro rata based on the number of shares of Common Stock held by them. Any change in ownership or fundamental change shall be treated as a liquidation, dissolution or winding up of the Company, and shall entitle the Series A Shareholder and the holders of Common Stock to receive at the closing cash, securities or other property as specified above. Whenever the distribution provided for in this section shall be payable in securities or other property other than cash, the value of such distribution shall be the fair market value of such securities or other property as determined in good faith by the board of directors.
Redemption by the Company. The Company has the right at any time (the “Call Right”), but not the obligation, to cause the Series A Shareholder to sell some or all of the Series A Shares to the Company at the purchase price per share of $30 (as may be adjusted for any subdivisions or combinations) (the “Call Purchase Price”). If the Company desires to purchase the Series A Shares, the Company shall deliver to the Series A Shareholder a written notice (the “Call Exercise Notice”) exercising the Call Right. The closing of any sale of Series A Shares shall take place on a date (the “Call Right Closing Date”) no later than ten days following receipt by the Series A Shareholder of the Call Exercise Notice.
As mentioned above, the redemption feature was removed on September 26, 2024, as part of the amendment to the Company’s articles of incorporation.
Voting Rights. Except as otherwise required by law, the Series A Shares have no voting rights or powers on any matter presented to the shareholders of the Company for their action or consideration at any meeting of shareholders of the Company (or by written consent of shareholders in lieu of a meeting).
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Conversion Rights. Except as otherwise required by law, the Series A Shares have no conversion rights or powers to convert into any other capital stock or security of the Company.
Transfers. Except as otherwise required by law, the Series A Shareholder has no rights or powers to enter into and/or consummate any sale, assignment, transfer, conveyance, hypothecation or other transfer or disposition of one or more of the Series A Shares or any legal or beneficial interest in the Series A Shares, whether or not for value and whether voluntary or involuntary, without the prior written consent of the Company, in its sole discretion.
The Board of Directors may designate the authorized but unissued shares of the Preferred Stock with such rights and privileges as the board of directors may determine. As such, our board of directors may issue 5,000,000 preferred shares and designate the conversion, voting and other rights and preferences without notice to our shareholders and without shareholder approval.
Common Stock
On May 9, 2024, the Board of Directors approved a reverse stock split of 1-for-2 for both Class A and Class B common shares. The financial statements have been retrospectively updated to reflect this change. Par value of the shares was maintained at $0.001 per share.
As of June 30, 2025 and June 30, 2024, the Company is authorized to issue 320,000,000 shares of Class A common stock and 30,000,000 shares of Class B common stock at a par value of $0.0001 per share.
As of June 30, 2025 and June 30, 2024, the Company had shares of Class A common stock outstanding of 25,947,813 and 32,993,283, respectively. As of June 30, 2025 and 2024, the Company had shares of Class B common stock outstanding of 13,937,640 and 6,154,670, respectively.
In general, except with regards to voting rights described below, shares of Class A Common Stock and Class B Common Stock have the same rights and privileges and rank equally, share ratably and are identical in all respects as to all matters. Without limiting the generality of the foregoing: (a) in the event of a merger, consolidation or other business combination requiring the approval of the holders of the Company’s capital stock entitled to vote thereon (whether or not the Company is the surviving entity), the holders of Class A Common Stock shall have the right to receive, or the right to elect to receive, the same form of consideration, if any, as the holders of Class B Common Stock and the holders of Class A Common Stock shall have the right to receive, or the right to elect to receive, at least the same amount of consideration, if any, on a per share basis as the holders of Class B Common Stock; and (b) in the event of (i) any tender or exchange offer to acquire any shares of Common Stock by any third party pursuant to an agreement to which the Company is a party or (ii) any tender or exchange offer by the Company to acquire any shares of Common Stock, pursuant to the terms of the applicable tender or exchange offer, the holders of Class A Common Stock shall have the right to receive, or the right to elect to receive, the same form of consideration as the holders of Class B Common Stock and the holders of Class A Common Stock shall have the right to receive, or the right to elect to receive, at least the same amount of consideration on a per share basis as the holders of Class B Common Stock.
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With regards to voting rights, the holders of shares of Class A Common Stock and Class B Common Stock vote together as one class on all matters (including the election of directors) submitted to a vote or for the consent of the shareholders of the Company. However, each holder of shares of Class A Common Stock shall be entitled to one (1) vote for each share of Class A Common Stock held as of the applicable date on any matter that is submitted to a vote or for the consent of the shareholders of the Company, and the holder of shares of Class B Common Stock shall be entitled to fifteen (15) votes for each share of Class B Common Stock held as of the applicable date on any matter that is submitted to a vote or for the consent of the shareholders of the Company.
Shares of Class B common stock may only be issued to and held by William A. Mobley, Jr,. personally or jointly with his spouse, and certain permitted entities owned or controlled by Mr. Mobley, or for which he has sole disposition and voting power over shares held by such entities, other than Nextelligence (each, a “Class B Holder”). Any issuance by us of Class B shares to anyone other than a Class B Holder is immediately null and void, and of no legal validity, force, or effect. Unless a Class B Holder requests to receive Class A shares, any issuance of common stock by us to a Class B Holder will be shares of Class B common stock. If a Class B Holder purchases or otherwise acquires or receives any shares of Class A common stock from a person or entity other than us, upon receipt thereof such shares of Class A common stock shall automatically be reclassified as and become an equal number of shares of Class B common stock. As of June 30, 2025 and 2024, William A Mobley, Jr. the Company CEO and Majority owner has 13,937,640 and 6,154,670 Class B shares outstanding, respectively, which is 100% of the Class B shares outstanding as of both reporting periods.
During the year ending June 30, 2025, the Company reclassed 7,782,970 of Class A common stock to Class B common stock.
Class A common stock Subscriptions
In the year ended June 30, 2025, the Company received deposits in the amount of $1,500,000 for 187,500 Class A common shares to be issued pursuant to the securities purchase agreement. These common shares were issued in January and February 2025.
During year ending June 30, 2025, pursuant to the common stock subscription agreements, the Company issued 362,500 shares of Class A common stock at $8.00 per share for a total of $2,900,000.
During year ending June 30, 2025, pursuant to the common stock subscription agreements, the Company issued 187,500 shares of Class A common stock at $8.00 per share for a total of $1,5000,000 to related parties.
Warrants
The Company from time-to-time issues warrants in conjunction with equity financing and to employees and non-employees for services.
During the year ended June 30, 2024, the Company issued warrants to purchase an aggregate of 100,000 shares of Class A common stock of the Company to Chris Savine, the Company’s Chief Operating Office for services in conjunction with his employment agreement. The warrants vest over a twelve-month term and have an exercise price of $2.00 per share. As a result, the Company recognized stock-based compensation of $144,262 for the years ended June 30, 2025. Under the Black-Scholes-Merton option pricing model the fair value of the warrants at time of issuance was approximately $572,343, the Company will amortize the fair value over 12 months as compensation and benefits expense in the accompanying statement of operations. The significant inputs were as follows: Class A common stock fair value of $7.32, volatility of 61.67%, term of 3 years and risk-free rate of 4.66%.
During the year ended June 30, 2025, the Company amended Mr. Savine’s employment agreement on November 15, 2024, to terminate the warrants in consideration for a cash bonus that is contingent upon a Liquidity Event as defined in Note 8. The termination of the warrants was treated as a cancellation and all previously unrecognized compensation cost of $352,814 was recognized on November 15, 2024, the date of cancellation.
On May 1, 2023, the Company issued warrants to Gary Engel, the Company’s Chief Marketing Officer, to purchase 12,500 shares of our Class A common stock, exercisable at $6.00 per share, issued in connection with entering into an employment agreement, effective May 1, 2023. The warrant vests ratably over 12 months and may be exercised in whole or in part at any time or from time to time from the vesting date up to and including May 1, 2026. Under the Black-Scholes-Merton option pricing model the fair value of the warrants at time of issuance was approximately $7,666, the Company will amortize the fair value over 12 months as compensation and benefits expense in the accompanying statement of operations. The significant inputs were as follows: Class A common stock fair value of $1.80, volatility of 92.1%, term of 3 years and risk-free rate of 3.85%.
F-43
The following is a summary of outstanding stock warrants as of the years ended June 30, 2025 and 2024:
| Number of Shares | Weighted Average Shares | Weighted Average Remaining Life (years) | Intrinsic Value | |||||||||||||
| Warrants as of June 30, 2023 | $ | 13,056,087 | $ | 3.13 | $ | 2.6 | $ | 8,245,525 | ||||||||
| Issued | 100,000 | - | - | 600,000 | ||||||||||||
| Expired and forfeited | - | - | - | - | ||||||||||||
| Exercised | (5,000,000 | ) | - | - | - | |||||||||||
| Warrants outstanding as of June 30, 2024 | $ | 8,156,087 | $ | 4.72 | $ | 1.7 | $ | 26,716,879 | ||||||||
| Warrants exercisable as of June 30, 2024 | $ | 8,069,238 | $ | 4.75 | $ | 1.7 | $ | 26,195,785 | ||||||||
| Issued | - | - | - | |||||||||||||
| Expired and forfeited | (100,000 | ) | - | - | ||||||||||||
| Exercised | - | - | - | |||||||||||||
| Warrants outstanding as of June 30, 2025 | $ | 8,056,087 | $ | 4.76 | $ | 0.7 | $ | 26,116,879 | ||||||||
| Warrants exercisable as of June 30, 2025 | $ | 8,056,087 | $ | 4.76 | $ | 0.7 | $ | 26,116,879 | ||||||||
| Exercise Price ($) | Warrants outstanding as of June 30, 2025 | Warrants outstanding as of June 30, 2024 | ||||||||
| $ | 0.25 | 137,017 | 137,017 | |||||||
| $ | 0.60 | 675,000 | 675,000 | |||||||
| $ | 2.00 | - | 100,000 | |||||||
| $ | 1.75 | 2,458,446 | 2,458,446 | |||||||
| $ | 3.00 | 4,718,125 | 4,718,125 | |||||||
| $ | 4.00 | 67,500 | 67,500 | |||||||
| 8,056,087 | 8,156,087 | |||||||||
Stock Based Compensation - Stock Options
Effective June 25, 2021, the Board of Directors of FreeCast Inc. adopted the 2021 Equity Incentive Plan, (the “Incentive Plan”). The plan provides for both incentive stock options and non-qualified stock options to officers, directors, employees, and consultants of the Company. The plan authorized 3,000,000 awards to be granted under the Incentive Plan of which 2,046,108 remain available to be granted as of June 30, 2025. The Incentive Plan expires on June 25, 2031.
The Company recognizes stock-based compensation expense from stock-based payments using the grant date fair-value, including for stock options. The fair value of options awarded to employees is measured on the grant date using the Black-Scholes option-pricing model and is recognized as an expense over the requisite service period on a straight-line basis.
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All stock options are exercisable into class A common stock except for the 125,004 options granted to the Company CEO, William Mobley which are exercisable into class B common stock.
The following is a summary of outstanding stock options as of June 30, 2025 and 2024:
| Number of Shares | Weighted Average Exercise Price | Weighted Average Remaining Life (years) | Intrinsic Value | |||||||||||||
| Options outstanding as of June 30, 2024 | $ | 932,592 | $ | 4.05 | $ | 7.43 | $ | 3,683,808 | ||||||||
| Options exercisable as of June 30, 2024 | $ | 806,614 | $ | 3.99 | $ | 7.03 | $ | - | ||||||||
| Issued | 127,410 | 7.86 | 9.28 | - | ||||||||||||
| Canceled | (106,110 | ) | - | - | - | |||||||||||
| Expired | - | - | - | - | ||||||||||||
| Options outstanding as of June 30, 2025 | $ | 953,892 | $ | 4.48 | $ | 6.53 | $ | 3,353,616 | ||||||||
| Options exercisable as of June 30, 2025 | $ | 860,083 | $ | 4.11 | $ | 6.15 | $ | - | ||||||||
The following is the vesting terms associated with those shares:
| Tranche | Shares Granted | Vesting Method | Vesting Terms | |||||
| Tranche 1 | 784,236 | Graded Vesting | 1/6th vested on July 1, 2021, remainder vests over the next 18th months using the graded vesting method, until the option is 100% vested. | |||||
| Tranche 2 | 166,896 | Straight-line | 1/24th will vest on a straight-line monthly basis until the option is 100% vested. | |||||
| Tranche 3 | 2,760 | Graded Vesting | 1/6th vests on grant date, remainder vests over the next 30 months using the graded vesting method, until the option is 100% vested. | |||||
| Total | 953,892 | |||||||
The Black-Scholes option-pricing model includes the following weighted average assumptions to determine the grant share-based awards:
| Years Ended June 30, | ||||||||
| 2025 | 2024 | |||||||
| Assumptions: | ||||||||
| Risk-free interest rate | 0.42-4.45 | % | 3.90-4.77 | % | ||||
| Expected dividend yield | 0 | % | 0 | % | ||||
| Expected volatility | 62.51- 77.84 | % | 60.41-62.84 | % | ||||
| Expected life (in years) | 5.52 | 5.52 | ||||||
During the years ended June 30, 2025 and 2024, the Company recognized stock-based compensation from options of $484,947 and $56,411, respectively.
As of June 30, 2025 there was $579,990 in unrecognized stock-based compensation related to unvested restricted stock agreements, net of estimated forfeitures.
Note 8 – Commitments and Contingencies
In October 2018, the Company entered into a two-year sublease agreement for approximately 3,360 square feet of office space in Orlando, Florida. In August 2020, the Company provided $117,336 in security deposit and entered into a 39-month lease agreement which allowed the Company to expand its office space to 10,080 square feet. On October 31, 2023, we entered into a First Amendment that extended our lease until October 31, 2028 (see Note 9).
F-45
In August 2022, CEBV, LLC, as assignee of Ameris Bank sued the Company and its chief executive officer (“CEO”), William Mobley, along with various other companies alleging the Company and its CEO had received proceeds from a purported loan fraud scheme perpetrated by various third parties. No loans were made to the Company or its CEO by Ameris Bank. On August 2, 2023, the court dismissed the case against the Company and its CEO without prejudice.
In December 2022, U.S. Premium Finance sued the Company and its CEO for nonpayment of a settlement agreement arising from a collection lawsuit involving two U.S. Premium Finance agreements. These agreements, which the Company learned after entered into, were the product of the same loan scheme at the center of the CEBV, LLC lawsuit (see above). The Company filed motions to set aside the judgment, for rehearing and for evidentiary hearing on January 17, 2023, all of which were denied by the court in an order entered on December 7, 2023. The Company continues to believe that the claims made by USPF are without merit. The Company intends to continue the pursuit to prove USPF is involved in a national banking fraud scheme, and that the settlement that was reached was done so before learning that the loans issued by USPF were part of this scheme. If the Company fails in this pursuit, the Company may be required to pay the Damages, plus accrued interest thereon at the rate of 4.75% per annum. USPF filed a Write of Garnishment on January 10, 2024, which was granted by the court on January 12, 2024 and subsequently served on the Company’s bank as garnishee. On January 16, 2024, this litigation was concluded when the Company paid USPF the full amount of the damages of $662,893.75 plus an additional $44,595 for post judgment interest and attorney fees.
On November 15, 2024, Chris Savine, the Company Chief Operating Officer employment agreement was amended whereby Mr. Savine is eligible to receive a performance bonus payable in cash only in an amount equal to the fair market value of: (i) 112,500 shares; and (ii) 100,000 warrants for Class A common stock exercised on a cashless basis with an exercise price of $2.00 per share. To be eligible for the bonus, Mr. Savine must be continuously employed during the term of the agreement and the Company must have successfully completed a liquidity event, which may occur after the employment term. A Liquidity Event is defined in the Savine Employment Agreement as either: (i) (a) a merger, consolidation, reorganization, or business combination; or (b) a sale or other disposition of all or substantially all of our assets in any single transaction or series of related transactions; or (ii) (a) a primary offering of our Class A common stock by us to the general public through an effective registration statement filed with the SEC; (b) simultaneous listing of our Class A common stock on any established stock exchange if such common stock was not already listed at the time of such offering; and (c) we receive net proceeds from the offering of not less than $20 million. If Mr. Savine becomes eligible for the bonus, it will be paid to him no later than five days after the later of: (a) the end of the initial term and (b) a liquidity event.
As of June 30, 2025, no liability was recorded within the balance sheets for contingent consideration as the contingency is not probable such that an amount has not been estimated.
Note 9 – Leases
On August 20, 2019, the Company entered into a 63-month lease agreement for an office copier that is expected to mature on October 20, 2024.
The Company currently has two active leases, an office lease, as well as an office copier under non-cancellable operating leases with initial terms typically ranging from 1 to 3 years. At contract inception, the Company reviews the facts and circumstances of the arrangement to determine if the contract is or contains a lease. The Company follows the guidance in Topic 842 to evaluate whether the contract has an identified asset; if the Company has the right to obtain substantially all economic benefits from the asset; and if the Company has the right to direct use of the underlying asset. When determining if a contract has an identified asset, the Company considers both explicit and implicit assets, and whether the supplier has the right to substitute the asset. When determining if the Company has the right to direct the use of an underlying asset, the Company considers if they have the right to direct how and for what purpose the asset is used throughout the period of use and if they control the decision-making right over the asset.
The Company’s lease terms may include options to extend or terminate the lease. The Company exercises judgment to determine the term of those leases when extension or termination options are present and include such options in the calculation of the lease term when it is reasonably certain that it will exercise those options.
The Company has elected to include both lease and non-lease components in the determination of lease payments. Payments made to a lessor for items such as taxes, insurance, common area maintenance, or other costs commonly referred to as executory costs, are also included in lease payments if they are fixed. The fixed portion of these payments are included in the calculation of the lease liability, while any variable portion would be recognized as variable lease expenses, when incurred. Variable payments made to third parties for these, or similar costs, such as utilities, are not included in the calculation of lease payments.
At commencement, lease-related assets and liabilities are measured at the present value of future lease payments over the lease term. As most of the Company’s leases do not provide an implicit rate, the Company exercises judgment in determining the incremental borrowing rate based on the information available at when the lease commences to measure the present value of future payments.
Operating lease expense is recognized on a straight-line basis over the lease term. Finance lease cost includes amortization, which is recognized on a straight-line basis over the expected life of the leased asset, and interest expense, which is recognized following an effective interest rate method.
Operating leases are included in other assets, current operating lease obligations, and operating lease obligations (less current portion) on the Company’s balance sheet. Finance leases are included in financing lease, right-of-use assets and current and long-term portion of finance lease obligations on the Company’s balance sheet. Short term leases with an initial term of 12 months or less are not presented on the balance sheet with expense recognized as incurred.
F-46
The following table presents lease assets and liabilities and their balance sheet classification:
| June 30, | ||||||||
| Classification | 2025 | 2024 | ||||||
| Operating Leases: | ||||||||
| Right-of-use Asset | $ | 362,968 | $ | 446,675 | ||||
| Current portion of operating lease obligation | $ | 91,220 | $ | 75,061 | ||||
| Operating lease obligation, less current portion | $ | 288,836 | $ | 380,056 | ||||
| Finance Leases: | ||||||||
| Right-of-use Asset | $ | - | $ | 546 | ||||
| Current portion of financing lease obligation | $ | - | $ | 1,514 | ||||
| Financing lease obligation, less current portion | $ | - | $ | - | ||||
The components of lease expense for the years ended June 30, 2025 and 2024, are as follows:
| For the Years Ended June 30, | ||||||||
| Classification | 2025 | 2024 | ||||||
| Operating lease cost | $ | 133,118 | $ | 116,846 | ||||
| Finance Lease: | ||||||||
| Amortization of lease assets | - | 1,514 | ||||||
| Interest on lease liabilities | - | 166 | ||||||
| Total finance lease cost | $ | - | $ | 1,680 | ||||
Supplemental disclosures of cash flow information related to leases were as follows:
| For the Years Ended June 30, | ||||||||
| 2025 | 2024 | |||||||
| Cash paid for operating lease liabilities | $ | 124,472 | $ | 111,058 | ||||
The weighted average lease term and discount rates are as follows:
| June 30, 2025 | ||||
| Operating Leases: | ||||
| Weighted average remaining lease term (years) | 3.34 | |||
| Weighted average discount rate | 12 | % | ||
Future payments due under leases reconciled to lease liabilities as follows:
| Operating | ||||
| Lease | ||||
| For the Year Ending June 30: | ||||
| 2025 | 64,294 | |||
| 2026 | 133,910 | |||
| 2027 | 140,602 | |||
| 2028 | 122,010 | |||
| Total undiscounted lease payments | 460,816 | |||
| Present value discount, less interest | (80,760 | ) | ||
| Lease Liabilities | $ | 380,056 | ||
Note 10 – Income Taxes
At June 30, 2025, the Company has approximately $62,964,597 of operating loss carryforwards for federal and $62,964,597 for Florida state tax purposes that may be applied against future taxable income. Of the $63.0 million of net operating losses, $8.5 million will begin to expire in the year 2032 if not utilized prior to that date. The remaining amount of $54.5 million will not have an expiration date but will be limited to 80% of taxable income. There is no provision for income taxes because the Company has historically incurred operating losses and maintains a full valuation allowance against its net deferred tax assets. The valuation allowance increased by approximately $3,813,572 and $3,152,233 during the years 2025 and 2024, respectively. The deferred tax assets are approximately $19,123,000 and $15,309,000 at June 30, 2025 and 2024, respectively.
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A reconciliation of the statutory U.S. Federal rate to the Company’s effective tax rate is as follows:
| June 30, | ||||||||
| 2025 | 2024 | |||||||
| Federal income tax benefit at statutory rate | 21.00 | % | 21.00 | % | ||||
| State income tax, net of federal benefits | 4.65 | % | 4.34 | % | ||||
| Permanent items | (0.06 | )% | (0.09 | )% | ||||
| Prior period adjustments | 1.52 | % | 0.09 | % | ||||
| Change in valuation allowance | (27.11 | )% | (25.34 | )% | ||||
| Provision from income taxes | — | — | ||||||
The tax effect of temporary differences that gave rise to significant portion of the deferred tax assets / (liabilities) were as follows:
| June 30, | ||||||||
| 20245 | 2024 | |||||||
| Net Operating loss carryforwards - Federal | $ | 13,222,565 | $ | 10,423,054 | ||||
| Net Operating loss carryforwards - State | 2,735,812 | 2,156,580 | ||||||
| Stock based compensation | 3,120,915 | 2,868,053 | ||||||
| Deferred Revenue | (34,971 | ) | (306,396 | ) | ||||
| Accrued Liabilities | (30,443 | ) | 63,142 | |||||
| Depreciation and Amortization | 810 | (1,332 | ) | |||||
| Allowance for doubtful accounts | 108,222 | 108,222 | ||||||
| Valuation allowance | (19,122,910 | ) | (15,311,323 | ) | ||||
| Net deferred tax assets | $ | — | $ | — | ||||
In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax asset will not be realized. The Company’s ability to realize its deferred tax assets depends upon the generation of sufficient future taxable income to allow for the utilization of the deductible temporary difference carryforwards. At this time, based on current facts and circumstances, management believes that is not likely that the Company will realize the benefits for its deferred tax assets, and a valuation allowance has been recorded on the same.
The Company does not have any recorded unrecognized tax benefit for uncertain tax positions as of June 30, 2025 and 20234.
Note 11 – Related Parties
From July 30, 2017 through October 31, 2019, we deferred some of William A. Mobley, Jr.’s compensation, including all of his compensation in 2018. As of June 30, 2023, his accrued compensation total was $377,893. On January 3, 2017, our board of directors approved the payment of the deferred compensation and repayment of the amount due in accounts payable in shares of our Class B common stock in lieu of cash at the price of $0.50 per share, at Mr. Mobley’s sole discretion. On March 31, 2024, Mr. Mobley converted the total amount of accrued compensation into 755,786 shares of our Class B common stock.
As of December 31, 2023, we owed Nextelligence $213,696 for cash collected on behalf of Nextelligence from sales that occurred prior to June 30, 2017. On January 3, 2017, our board of directors approved the repayment of the amount due in accounts payable in shares of our Class A common stock in lieu of cash at the price of $0.50 per share, at Nextelligence’s sole discretion. On March 31, 2024, Nextelligence converted the total amount of accounts payable into 427,392 shares of our Class A common stock.
F-48
On June 30, 2011, we entered into a Technology License and Development Agreement, which was amended and restated on October 19, 2012, amended on July 1, 2013 and amended and restated a second time on July 31, 2014 and further revised to terminate all payments by us pursuant to the agreement, effective June 30, 2016, with Nextelligence, which is majority owned and controlled by William A. Mobley, Jr. The Technology Agreement provides us with an exclusive license for certain technology from Nextelligence and for Nextelligence to provide all further development, improvement, modification, maintenance, management and enhancement services related to such technology. Nextelligence is our largest shareholder with more than 40% of our outstanding Class A common stock prior to the listing of our Class A common stock on Nasdaq. In connection with the Technology Agreement, we issued 10,002,000 shares of our Class A common stock to Nextelligence. The Technology Agreement expires on June 30, 2054, unless it’s terminated earlier based on termination events as defined in the Technology Agreement.
In June 2016, the Chief Executive Officer of the Company (“CEO”), William Mobley loaned the Company $111,000, at an interest rate of 12% per annum. The loan originally matured on December 31, 2017, however effective June 30, 2021, the Company amended the original promissory note with William Mobley and combined all previous principal and interest under one new note, which matures June 30, 2024. During the years ended June 30, 2025, and 2024, the Company did not pay any interest towards this loan. The note is convertible into shares of Class B common stock at a conversion price of $0.50 per share. The note was converted on March 29, 2024. As of March 29, 2024, and June 30, 2023, accrued interest charges related to this loan were $25,020 and $19,003, respectively. The outstanding principal and accrued interest balance on March 29, 2024, of $92,068 was subsequently converted into 184,136 Class B common share subscriptions. There was no gain or loss recognized for the conversion as the balance was converted at the conversion rate in the promissory note (see Note 6).
Between July 2018 and April 2018, a related party, Public Wire, LLC, an entity owned by CEO, William Mobley, loaned the Company $89,139, at an interest rate of 12% per annum. The notes representing the loan originally matured on dates ranging from April 1, 2019, to January 1, 2020. Effective June 30, 2021, the Company amended the original promissory note with Public Wire and combined principal and interest from the previous notes under one new loan. In addition, the Company extended the maturity date to June 30, 2024. On March 29, 2024, the Company entered into a “Debt Conversion Agreement” with Public Wire to convert the outstanding principal and interest of the note payable at a conversion price of $4.00 per share. The total outstanding principal of $89,289 and accrued interest of $29,425, total of $118,714, was converted into 29,679 Class B common stock. The common stock was fair market valued at $8 per share and the Company recognized a debt extinguishment loss of $118,714 (see Note 6).
On July 1, 2018, the Company signed a revolving convertible note agreement with Nextelligence; the majority shareholder, for an amount up to $1,000,000; with any borrowings on this loan being at the complete discretion of the Company. Pursuant to a second amendment to the note dated July 17, 2023, the borrowing limit was increased to $10,000,000 and the maturity date extended to June 30, 2025. In lieu of repayment, at Nextelligence’s option, all or part of the outstanding principal and accrued interest is convertible into shares of our Class A common stock at a conversion price of $0.50 per share. On March 29, 2024, Nextelligence converted all outstanding principal and accrued interest into common shares at the conversion price of $0.50 per share. The principal of $13,139,473 and accrued interest of $1,607,952, total of $14,747,425, was converted into 29,494,851 Class A common stock.
On May 3, 2024, the Company signed a convertible promissory note with Nextelligence in the principal amount of $1,000,000. Outstanding principal accrues interest at 12% per annum and is due and payable no later than May 3, 2025. In lieu of repayment, at Nextelligence’s option, all or part of the outstanding principal and accrued interest is convertible into shares of our Class A common stock at a conversion price of $8.00 per share. Between May 30, 2024, and June 26, 2024, the Company borrowed an additional $1,075,000 from Nextelligence. Between October 31, 2024, and December 11, 2024, we borrowed an additional $1,395,000 from Nextelligence. On December 13, 2024, we renewed and modified the May 3, 2024, note to include the addition loans. Between December 31, 2024, and June 3, 2025, we borrowed an additional $1,557,000 and made payments of $150,000 to Nextelligence. As of June 30, 2025, the outstanding principal and accrued interest due to Nextelligence was $3,865,555 and $162,839, respectively (see Note 6).
On May 16, 2024, in conjunction with the Reverse Split and Amendment, Nextelligence, Inc. agreed to forfeit and cancel 20,000,000 shares of Class A common stock in exchange for the issuance of 4,000,000 shares of Series A preferred stock (see Note 7).
On July 29, 2024, the Company’s largest shareholder and related party Nextelligence distributed 9,623,543 shares of Class A common stock to shareholders of Nextelligence. The Company CEO and majority owner beneficially received 7,782,970 of the shares distributed, which upon receipt, in accordance with the Company’s articles of incorporation, were automatically reclassified as Class B common stock.
F-49
Related Party Revenue
In June 2023, the Company entered into verbal arrangements with two related party entities, Test Drive Live Inc. and Celebrity Cigars, Inc., which are not under common ownership control. William A. Mobley, Jr. serves as the President of both companies and is the sole director for Celebrity Cigars. Mr. Mobley’s son, Sean Mobley, is part of the management team of Celebrity Cigars. The Company provided FAST channel buildout services relating to the development and buildout of their respective channels. The Company also provides the platform on an ongoing basis for each company to stream their content. The Company charges each company a monthly fee based on a 15% or 30% markup of the Company’s cost of production, depending on the level of supervision required to provide the Company’s services, which includes labor, rent, etc. The Company also charges for any out-of-pocket costs, which vary from month to month. The Company is currently negotiating with each company on a potential advertising revenue sharing arrangement.
The Company recognized related party revenue of $221,894 ($175,394 for FAST channel buildouts and $46,500 for channel streaming) for the year ended June 30, 2025. The Company has accounts receivable – related party of $146,303 for the FAST revenue services provided and $7,846 from Nextelligence, Inc. for the reimbursement of supplies and rent provided during the year ended June 30, 2025.
Note 12 – Disaggregation of Revenues
Net sales disaggregated by significant products and services for the years ended June 30, 2025 and 2024 were as follows:
| For the years ended | ||||||||
| June 30, | ||||||||
| 2025 | 2024 | |||||||
| Membership (1) | $ | 132,950 | $ | 233,472 | ||||
| Product Sales (2) | 952 | 6,176 | ||||||
| FAST Revenue – related parties (3) | 221,894 | 266,123 | ||||||
| Ad Revenue (4) | 271,638 | 1,151 | ||||||
| Other Revenue | 715 | 998 | ||||||
| Total | $ | 628,149 | $ | 507,920 | ||||
| (1) | Membership sales refer to customers purchasing premium content through our SmartGuide for varying fees and recognized on a gross basis over the service period determined. |
| (2) | Product sales refer to the physical transfer of goods shipped to customers to aid in access to our other service lines offered, recognized as a point of sale, upon shipment of goods. |
| (3) | The Company provides end-to-end software solutions for development of FAST (Free Ad-Supported TV) channels to customers such as content creation, production, video studio rental, etc. to aid in the creation of content for their channels and a platform fee for distributing the channel. Revenue is recognized at the point in time the services are performed for the development of FAST channels. The Company charges a monthly platform fee for distributing the FAST channel on its platform. The Company recognized related party revenue of $221,894 ($175,394 for FAST channel buildouts and $46,500 for channel streaming) for the year ended June 30, 2025. |
| (4) | During the period from October 1, 2024, through June 30, 2025 the Company recognized $271,638 of ad revenue from the buying and selling of advertising space on other content platform providers. Of this amount, $125,000 was recognized as Ad Agency Revenue under the LaunchThat Experimental Media Plan Agreement, representing revenue from the provision of discovery, development, and test media distribution services for a client campaign. The remaining $146,638 was recognized as Arbitrage Ad Revenue from the buying and selling of advertising space via the FreeCast Ad Platform. |
Note 13 – Subsequent Events
The Company evaluated subsequent events through the date the financial statements were issued and determined that except for the following subsequent events, there have been no additional subsequent events that would require recognition in the financial statements or disclosure in the notes to the financial statements:
On July 26, 2025, Nextelligence, a related party majority owned by the Company CEO converted its Convertible Note Payable - Related Party principal and accrued interest balance outstanding, an aggregate value of $4,076,051 into 509,507 shares of Class A common stock pursuant to the conversion terms at $8 per share.
In July 2025, the Company issued 337,500 shares of Class A common stock to three third party investors at $8 per share for total proceeds of $2,700,000.
In August 2025, the Company CEO and majority owner converted 12,000 shares of Class B common stock to 12,000 shares of Class A common stock, and subsequently transferred the 12,000 shares of Class A common stock to third parties.
On September 25, 2025, the Company issued 125,000 shares of its Class A common stock to Maxim Partners LLC (“Maxim”) in connection with its affiliate’s engagement as a financial advisor to assist with certain aspects of the Company’s direct listing process. The advisory services provided by Maxim’s affiliate include strategic guidance on listing objectives, structural planning, and investor communication strategy.
F-50
FreeCast, Inc.
19,782,084 shares of Class A common stock
PROSPECTUS
, 2025
Through and including , 2025 (the 25th day after the date of this prospectus), all dealers effecting transactions in these securities, whether or not participating in this offering of shares of our Class A common stock by the Registered Shareholders, may be required to deliver a prospectus.
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 13. Other Expenses of Issuance and Distribution
The following table sets forth the various expenses, all of which will be borne by the registrant, in connection with the sale and distribution of the securities being registered. All amounts shown are estimates except for the SEC registration fee and the Nasdaq Global Market listing fee.
| SEC registration fee | $ | 0.10 | ||
| Nasdaq Global Market listing fee | $ | 295,000 | ||
| Accounting fees and expenses | $ | 205,000 | ||
| Legal fees and expenses | $ | 275,000 | ||
| Printing expenses | $ | 25,000 | ||
| Transfer agent and registrar fees | $ | 10,000 | ||
| Miscellaneous | $ | 40,000 | ||
| Total | $ | 850,000 |
Item 14. Indemnification of Directors and Officers.
Pursuant to Section 607.0850 of the Florida Revised Statutes, we have the power to indemnify any person made a party to any lawsuit by reason of being a director or officer of the Registrant, or serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by him in connection with such action, suit or proceeding if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful. Our Articles of Incorporation and Bylaws provide that the Registrant shall indemnify its directors and officers to the fullest extent permitted by Florida law.
With regard to the foregoing provisions, or otherwise, we have been advised that in the opinion of the Securities and Exchange Commission, such indemnification is against public policy as expressed in the Securities Act of 1933, as amended, and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by us of expenses incurred or paid by a director, officer or controlling person of the Corporation in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the common shares being registered, we will, unless in the opinion of our counsel the matter has been settled by a controlling precedent, submit to a court of appropriate jurisdiction the question of whether such indemnification by us is against public policy as expressed in the Securities Act, and will be governed by the final adjudication of such case.
Item 15. Recent Sales of Unregistered Securities.
The information below lists all of the securities sold by us during the three years prior to September 15, 2025, which were not registered under the Securities Act:
On December 8, 2025, we entered into an Equity Purchase Agreement (EPA) with a certain institutional investor (the “Investor”), pursuant to which the Investor has committed to purchase up to $50 million of our Class A common stock. Upon the terms and subject to the satisfaction of the conditions set forth in the EPA, we have the right, but not the obligation, to sell to the Investor, and the Investor is obligated to purchase, up to $50 million in shares of our Class A common stock. Such sales of our Class A common stock by us, if any, are subject to certain limitations set forth in the EPA, and may occur from time to time, at our sole discretion, over a period of up to 36 months, commencing on the trading day immediately following the date of the Direct Listing. The Investor represented to us that it is an “accredited investor”, as defined in Rule 501 promulgated under the Securities Act, and our offer and sale of our Class A common stock under the EPA and the Commitment Shares were made in reliance upon the exemptions from the registration requirements of the Securities Act pursuant to Section 4(a)(2) thereof and Rule 506 promulgated thereunder.
On November 21, 2025, we entered into a revolving convertible promissory note with Nextelligence for up to $5 million that matures on June 30, 2026, with an interest rate of 12% per annum, and a default interest rate of 18% per annum. The initial principal amount of the note on November 21, 2025 was $1,315,552. As of December 5, 2025, the outstanding principal and accrued interest due to Nextelligence was $1,421,709. In lieu of repayment, at Nextelligence’s option, all or part of the outstanding principal and accrued interest is convertible into shares of our Class A common stock at a conversion price of $8.00 per share. The offer, sale and issuance of the revolving convertible promissory note was deemed to be exempt from registration under the Securities Act in reliance on Section 4(a)(2) of the Securities Act as transactions by an issuer not involving a public offering. Nextelligence took the convertible note for investment purposes only and not with a view to or for sale in connection with any distribution thereof.
On September 25, 2025, we issued 125,000 shares of our Class A common stock to Maxim Partners, LLC, an affiliate of the Advisor, as part of the Advisor’s compensation in exchange for the advice and assistance it has provided, and will continue to provide, us with in connection with our direct listing on Nasdaq. The offer, sale and issuance of the shares was deemed to be exempt from registration under the Securities Act in reliance on Section 4(a)(2) of the Securities Act and Rule 506 promulgated thereunder as a transaction by an issuer not involving a public offering. The recipient of the shares represented to us that it could bear the risks of the investment and could hold the securities for an indefinite period of time, and appropriate legends were affixed to the book entry representing the shares issued. The recipient of the shares also represented to us that it was an accredited investor within the meaning of Rule 501 of Regulation D under the Securities Act.
II-1
On July 26, 2025, we issued 509,507 shares of our Class A common stock to Nextelligence in connection with its conversion of a convertible promissory note we entered into with Nextelligence on May 3, 2024, which is described further below. The outstanding principal and accrued interest balance of $4,076,051 was convertible at Nextelligence’s option at a conversion price of $8.00 per share. The offer, sale and issuance of the convertible promissory note and the shares of Class A common stock were deemed to be exempt from registration under the Securities Act in reliance on Section 3(a)(9) and Section 4(a)(2) of the Securities Act as transactions by an issuer not involving a public offering. Nextelligence took the convertible note and the shares for investment purposes only and not with a view to or for sale in connection with any distribution thereof.
During the period from November 2024 through July 2025, we sold an aggregate of 1,450,000 shares of our Class A common stock to 12 accredited investors at a purchase price of $8.00 per share, for aggregate cash proceeds of $11,600,000. The offer, sale and issuance of the shares was deemed to be exempt from registration under the Securities Act in reliance on Section 4(a)(2) of the Securities Act and Rule 506 promulgated thereunder as transactions by an issuer not involving a public offering. The recipients of securities in each of these transactions acquired the securities for investment only and not with a view to or for sale in connection with any distribution thereof and represented to us that they could bear the risks of the investment and could hold the securities for an indefinite period of time, and appropriate restrictive designations were attached to the book-entries representing the shares issued in these transactions. Each of the recipients of securities in these transactions represented to us in connection with their purchase that they were an accredited investor within the meaning of Rule 501 of Regulation D under the Securities Act.
During the period from May 21, 2023, through March 31, 2025, we granted options to purchase 275,742 shares of our Class A common stock to 46 employees pursuant to our 2021 Incentive Award Plan. The options were granted and issued in reliance upon the exemption from the registration provisions of the Securities Act set forth in Rule 701 in that the securities were granted and issued pursuant to a written compensatory benefit plan, and the number of securities granted and issued in reliance upon this rule during the previous consecutive 12-month period does not exceed 15% of our outstanding shares of Class A common stock.
On June 28, 2024, we sold 625,000 shares of our Class A common stock to The Gregory J. Hill Revocable Trust at a purchase price of $8.00 per share, for cash proceeds of $5,000,000. The offer, sale and issuance of the shares was deemed to be exempt from registration under the Securities Act in reliance on Section 4(a)(2) of the Securities Act and Rule 506 promulgated thereunder as a transaction by an issuer not involving a public offering. The recipient of shares in this transaction acquired the securities for investment only and not with a view to or for sale in connection with any distribution thereof and represented to us that he could bear the risks of the investment and could hold the securities for an indefinite period of time, and appropriate legends were affixed to the certificate representing the shares issued in this transaction. The recipient of securities in this transaction represented to us in connection with his purchase that he was an accredited investor within the meaning of Rule 501 of Regulation D under the Securities Act.
On May 16, 2024, we issued William A. Mobley, Jr. four warrants to purchase an aggregate of 5,000,000 shares of our Class B common stock in exchange for four outstanding warrants to purchase the same number of shares already held by Mr. Mobley, and for other consideration in connection with Nextelligence forfeiting 20,000,000 shares of our Class A common stock. The four new warrants had a cashless exercise provision unlike the four outstanding warrants. On May 17, 2024, we issued 4,687,500 shares of our Class B common stock to Mr. Mobley in connection with his cashless exercise of the new warrants to purchase 5,000,000 shares of our Class B common stock at an exercise price of $0.50 per share. The offer, sale and issuance of the new warrants and the shares of Class B common stock were deemed to be exempt from registration under the Securities Act in reliance on Section 3(a)(9) and Section 4(a)(2) of the Securities Act as transactions by an issuer not involving a public offering. Mr. Mobley took the new warrants and the shares for investment purposes only and not with a view to or for sale in connection with any distribution thereof.
On May 16, 2024, we issued 4,000,000 shares of our Series A preferred stock to Nextelligence, Inc. in exchange for the forfeiture and cancellation of 20,000,000 shares of our Class A common stock. The Series A preferred stock has no voting or conversion to Class A common stock rights; a liquidation preference of $120 million; redemption value of $120 million at our sole discretion; and a right to receive annual non-cumulative dividends out of our profits of 10% of annual revenue over $50 million, up to an aggregate amount of $160,000 million. The offer, sale and issuance of the Series A preferred stock was deemed to be exempt from registration under the Securities Act in reliance on Section 3(a)(9) of the Securities Act as transactions by an issuer not involving a public offering. Nextelligence took the shares of Series A preferred stock for investment purposes only and not with a view to or for sale in connection with any distribution thereof.
On May 3, 2024, we entered into a convertible promissory note with Nextelligence for $1,000,000 that matured on May 3, 2025, with an interest rate of 12% per annum, and a default interest rate of 18% per annum. In lieu of repayment, at Nextelligence’s option, all or part of the outstanding principal and accrued interest is convertible into shares of our Class A common stock at a conversion price of $8.00 per share. Between May 30, 2024, and June 26, 2024, we borrowed an additional $1,075,000 from Nextelligence. On July 1, 2024, we repaid outstanding principal and accrued interest of $1,075,067. Between October 31, 2024, and December 11, 2024, we borrowed an additional $1,395,000 from Nextelligence. On December 13, 2024, we renewed and modified the May 3, 2024, note to include the additional loans. Between January 1, 2025, and June 3, 2025, we borrowed an additional $1,557,000 and made payments of $86,455 to Nextelligence. As of July 26, 2025, the outstanding principal and accrued interest due to Nextelligence was $4,076,051. The offer, sale and issuance of the convertible promissory note, and the renewal thereof, was deemed to be exempt from registration under the Securities Act in reliance on Section 4(a)(2) of the Securities Act as transactions by an issuer not involving a public offering. Nextelligence took the convertible note for investment purposes only and not with a view to or for sale in connection with any distribution thereof.
II-2
In April 2024, we sold an aggregate of 18,750 shares of our Class A common stock to three accredited investors at a purchase price of $8.00 per share, for aggregate cash proceeds of $150,000. The offer, sale and issuance of the shares was deemed to be exempt from registration under the Securities Act in reliance on Section 4(a)(2) of the Securities Act as transactions by an issuer not involving a public offering. The recipients of securities in each of these transactions acquired the securities for investment only and not with a view to or for sale in connection with any distribution thereof and represented to us that they could bear the risks of the investment and could hold the securities for an indefinite period of time, and appropriate legends were affixed to the certificates representing the shares issued in these transactions. Each of the recipients of securities in these transactions represented to us in connection with their purchase that they were an accredited investor within the meaning of Rule 501 of Regulation D under the Securities Act.
On March 31, 2024, we issued 755,786 shares of our Class B common stock to William A. Mobley, Jr. in connection with his conversion of outstanding debt we owed Mr. Mobley relating to deferred compensation and accounts payables. The outstanding debt in the aggregate amount of $377,893 was convertible at his option at a conversion price of $0.50 per share. The offer, sale and issuance of the shares of Class B common stock were deemed to be exempt from registration under the Securities Act in reliance on Section 4(a)(2) of the Securities Act as transactions by an issuer not involving a public offering. Mr. Mobley took the shares for investment purposes only and not with a view to or for sale in connection with any distribution thereof.
On March 31, 2024, we issued 427,392 shares of our Class A common stock to Nextelligence in connection with its conversion of outstanding debt in the amount of $377,893 we owed Nextelligence in connection with accounts payables that we collected on behalf of Nextelligence. In January 2017, we agreed with Nextelligence that any funds we collected on behalf of it from sales that occurred prior to June 30, 2017, would be payable in shares of our common stock in lieu of cash at the price of $0.50 per share, at Nextelligence’s sole discretion. The offer, sale and issuance of the 2017 agreement and the shares of Class A common stock were deemed to be exempt from registration under the Securities Act in reliance on Section 4(a)(2) of the Securities Act as transactions by an issuer not involving a public offering. Nextelligence took the shares for investment purposes only and not with a view to or for sale in connection with any distribution thereof.
On March 29, 2024, we issued 184,136 shares of our Class B common stock to William A. Mobley, Jr., in connection with his conversion of a convertible promissory note we entered into with Mr. Mobley on June 30, 2021. The outstanding principal and accrued interest balance of $92,068 was convertible at his option at a conversion price of $0.50 per share. The offer, sale and issuance of the convertible promissory note and the shares of Class B common stock were deemed to be exempt from registration under the Securities Act in reliance on Section 3(a)(9) and Section 4(a)(2) of the Securities Act as transactions by an issuer not involving a public offering. Mr. Mobley took the convertible note and the shares for investment purposes only and not with a view to or for sale in connection with any distribution thereof.
On March 29, 2024, we issued 29,494,851 shares of our Class A common stock to Nextelligence in connection with its conversion of a revolving convertible promissory note we entered into with Nextelligence on June 30, 2021. The outstanding principal and accrued interest balance of $14,747,425 was convertible at its option at a conversion price of $0.50 per share. The offer, sale and issuance of the convertible promissory note and the shares of Class A common stock were deemed to be exempt from registration under the Securities Act in reliance on Section 3(a)(9) and Section 4(a)(2) of the Securities Act as transactions by an issuer not involving a public offering. Nextelligence took the convertible note and the shares for investment purposes only and not with a view to or for sale in connection with any distribution thereof.
On March 29, 2024, we issued 29,679 shares of our Class B common stock to Public Wire, LLC, in connection with its conversion of debt we owed under a promissory note we entered into with Public Wire on June 30, 2021. The outstanding principal and accrued interest balance of $118,714 was converted at a conversion price of $4.00 per share pursuant to the terms of a Debt Conversion Agreement dated the same date. The offer, sale and issuance of the shares of Class B common stock were deemed to be exempt from registration under the Securities Act in reliance on Section 4(a)(2) of the Securities Act as transactions by an issuer not involving a public offering. Public Wire took the shares for investment purposes only and not with a view to or for sale in connection with any distribution thereof.
On March 29, 2024, we sold an aggregate of 217,544 shares of our Class A common stock to four accredited investors at a purchase price of $4.00 per share. The aggregate purchase price of $870,172 was paid by the conversion of outstanding debt we owed the four investors pursuant to the terms of Debt Conversion Agreements dated the same date. The offer, sale and issuance of the shares was deemed to be exempt from registration under the Securities Act in reliance on Section 4(a)(2) of the Securities Act as transactions by an issuer not involving a public offering. The recipients of securities in each of these transactions acquired the securities for investment only and not with a view to or for sale in connection with any distribution thereof and represented to us that they could bear the risks of the investment and could hold the securities for an indefinite period of time, and appropriate legends were affixed to the certificates representing the shares issued in these transactions. Each of the recipients of securities in these transactions represented to us in connection with their purchase that they were an accredited investor within the meaning of Rule 501 of Regulation D under the Securities Act.
II-3
On June 15, 2023, we issued 40 new warrants to accredited investors to purchase an aggregate of 7,637,962 shares of our Class A common stock in exchange for 40 warrants to purchase 7,637,962 shares of our Class A common stock that had expired without being exercised. Exercise prices remained the same and ranged from $0.50 to $8.00 per share. All of the warrants were immediately exercisable upon issuance, and all of the warrants expire on December 31, 2025. The offer and issuance of the warrants were deemed to be exempt from registration under the Securities Act in reliance on Section 4(a)(2) of the Securities Act as transactions by an issuer not involving a public offering and/or Section 3(a)(9) of the Securities Act as securities exchanged by us with our existing security holders exclusively where no commission or other remuneration is paid or given directly or indirectly for soliciting such exchange. Each warrant recipient had access to information concerning us and our business prospects and acquired the securities for investment only and not with a view to or for sale in connection with any distribution thereof and appropriate legends were affixed to the warrants.
During the period from December 13, 2022, through May 20, 2023, we granted options to purchase 9,686 shares of our Class A common stock to three employees pursuant to our 2021 Incentive Award Plan. The options were granted and issued in reliance upon the exemption from the registration provisions of the Securities Act set forth in Rule 701 in that the securities were granted and issued pursuant to a written compensatory benefit plan, and the number of securities granted and issued in reliance upon this rule during the previous consecutive 12-month period does not exceed 15% of our outstanding shares of Class A common stock.
We entered into one year employment agreement with Gary Engel, effective May 1, 2023. In conjunction with Mr. Engel entering into the employment agreement, we issued Mr. Engel a warrant to purchase 12,500 shares of our Class A common stock, exercisable at $6.00 per share. The warrant vests ratably over 12 months and may be exercised in whole or in part at any time or from time to time from the vesting date up to and including May 1, 2026. The warrant was offered and issued in reliance upon the exemption from the registration provisions of the Securities Act set forth in Rule 701 in that the securities were offered and sold pursuant to a written contract relating to compensation, and the number of securities granted and issued in reliance upon this rule during the previous consecutive 12-month period does not exceed 15% of our outstanding shares of Class A common stock.
During the period from November 4, 2022 through June 30, 2023, we sold an aggregate of 3,107,500 shares of our Class A common stock and warrants to purchase 3,107,500 shares of our Class A common stock, at an exercise price of $6.00 per share, to 20 accredited investors at a purchase price of $2.00 per share for an aggregate purchase price of $6,215,000, of which we received $6,215,000. The offer, sale and issuance of such Class A common stock and warrants were deemed to be exempt from registration under the Securities Act in reliance on Section 4(a)(2) of the Securities Act as transactions by an issuer not involving a public offering. The investors in each of these transactions had access to information concerning us and our business prospects and acquired the securities for investment only and not with a view to or for sale in connection with any distribution thereof and represented to us that they could bear the risks of the investment and could hold the securities for an indefinite period of time, and appropriate legends were affixed to the certificate representing the shares issued in these transactions. Each investor in these transactions represented to us in connection with their purchase that they were an accredited investor within the meaning of Rule 501 of Regulation D under the Securities Act.
During the period from September 20, 2022 through October 4, 2022, we sold an aggregate of 445,000 shares of our Class A common stock and warrants to purchase 445,000 shares of our Class A common stock, at an exercise price of $6.00 per share, to eight accredited investors at a purchase price of $2.00 per share for an aggregate purchase price of $890,000, of which we received $890,000. The offer, sale and issuance of such Class A common stock and warrants were deemed to be exempt from registration under the Securities Act in reliance on Section 4(a)(2) of the Securities Act as transactions by an issuer not involving a public offering. The investors in each of these transactions had access to information concerning us and our business prospects and acquired the securities for investment only and not with a view to or for sale in connection with any distribution thereof and represented to us that they could bear the risks of the investment and could hold the securities for an indefinite period of time, and appropriate legends were affixed to the certificate representing the shares issued in these transactions. Each investor in these transactions represented to us in connection with their purchase that they were an accredited investor within the meaning of Rule 501 of Regulation D under the Securities Act.
On October 4, 2022, we granted options to purchase 10,920 shares of our Class A common stock to two employees pursuant to our 2021 Incentive Award Plan. The options were granted and issued in reliance upon the exemption from the registration provisions of the Securities Act set forth in Rule 701 in that the securities were granted and issued pursuant to a written compensatory benefit plan, and the number of securities granted and issued in reliance upon this rule during the previous consecutive 12-month period does not exceed 15% of our outstanding shares of Class A common stock
On September 16, 2022, we issued 128,125 shares of our Class A common stock to Equity Trust Company Custodian FBO Michael D. Lafollette IRA in connection with the conversion of principal and accrued interest of a convertible note in the amount of $256,250. The investor had access to information concerning us and our business prospects and acquired the securities for investment only and not with a view to or for sale in connection with any distribution thereof, and represented to us that it was an accredited investor within the meaning of Rule 501 of Regulation D under the Securities Act, could bear the risks of the investment and could hold the securities for an indefinite period of time and appropriate legends were affixed to the securities issued in this transaction. The offer, sale and issuance of the shares and warrants were deemed to be exempt from registration under the Securities Act in reliance on Section 4(a)(2) of the Securities Act as transactions by an issuer not involving a public offering.
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Item 16. Exhibits and Financial Statement Schedules.
(a) The following exhibits are filed as part of this Registration Statement:
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| * | Previously filed |
| # | Denotes management compensation plan or contract. |
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Item 17. Undertakings.
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the Securities Act.
(ii) To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement.
(iii) To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement.
Provided, however, that Paragraphs (a)(1)(i), (ii), and (iii) of this section do not apply if the information required to be included in a post-effective amendment by those paragraphs is contained in reports filed with or furnished to the SEC by the registrant pursuant to section 13 or section 15(d) of the Securities Exchange Act of 1934, as amended, that are incorporated by reference in the registration statement.
(2) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering.
Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue.
The undersigned registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act, the information omitted from the form of prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this registration statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities Act, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Orlando, Florida, on December 9, 2025.
| FREECAST, INC. | ||
| By: | /s/ William A. Mobley, Jr. | |
| Name: William A. Mobley, Jr. | ||
| Title: Chief Executive Officer | ||
Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities and on the dates indicated.
| Signature | Title | Date | ||
| /s/ William A. Mobley, Jr. | Chief Executive Officer and Chairman of the Board of Directors | December 9, 2025 | ||
| William A. Mobley, Jr. | (principal executive officer) | |||
| /s/ Jonathan Morris | Chief Financial Officer and Director | December 9, 2025 | ||
| Jonathan Morris | (principal accounting and financial officer) | |||
| /s/ William P. Jennings, Jr. | Director | December 9, 2025 | ||
| William P. Jennings, Jr. |
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Exhibit 4.15
THE SECURITIES REPRESENTED BY THIS DOCUMENT AND THE SHARES ISSUABLE UPON CONVERSION THEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”) OR THE SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION, AND MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF BY THE HOLDER EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT FILED UNDER THE SECURITIES ACT OR AN EXEMPTION THEREFROM AS CONFIRMED BY AN OPINION OF COUNSEL IN FORM AND SUBSTANCE REASONABLY SATISFACTORY TO THE ISSUER THAT REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT.
REVOLVING CONVERTIBLE PROMISSORY NOTE
| Up to $5,000,000 | November 21, 2025 |
FOR VALUE RECEIVED, the undersigned FREECAST, INC., a Florida corporation (“Maker”) hereby promises to pay to the order of NEXTELLIGENCE, INC. (“Payee”) at such place as Payee may designate from time to time in writing to Maker, in immediately available funds of official currency of the United States, the aggregate principal amount as may be outstanding hereunder from time to time not to exceed Five Million Dollars ($5,000,000), together with interest thereon from the date of this Convertible Promissory Note (this “Note”), as provided herein. By acceptance of this Note, Payee agrees that it will promptly deliver and surrender this Note to Maker upon full payment thereof.
1. Principal Balance. As of the date first set forth above, the principal amount of this Note is $ 1,315,552.11, which reflects and consolidates the following loans made from Payee to Maker and not evidenced by a written instrument, each of which has been accruing interest at the rate of 12% per annum from and including the date of such loan to but excluding the date of this Note:
| (i) | a loan on October 9, 2025 in the amount of $10,000, plus accrued and unpaid interest of $141; |
| (ii) | a loan on October 15, 2025 in the amount of $185,000, plus accrued and unpaid interest of $2,250; |
| (iii) | a loan on October 17, 2025 in the amount of $50,000, plus accrued and unpaid interest of $575; |
| (iv) | a loan on October 23, 2025 in the amount of $150,000, plus accrued and unpaid interest of $1,430; |
| (v) | a loan on October 26, 2025 in the amount of $16,897, plus accrued and unpaid interest of $144; |
| (vi) | a loan on October 30, 2025 in the amount of $27,079, plus accrued and unpaid interest of $196; |
| (vii) | a loan on November 3, 2025 in the amount of $50,000, plus accrued and unpaid interest of $296; |
| (viii) | a loan on November 5, 2025 in the amount of $5,000, plus accrued and unpaid interest of $26 |
FLORIDA DOCUMENTARY STAMP TAX REQUIRED BY LAW IN THE AMOUNT OF $2,450 HAS BEEN PAID OR WILL BE PAID BY MAKER DIRECTLY TO THE DEPARTMENT OF REVENUE.
| (ix) | a loan on November 7, 2025 in the amount of $40,000, plus accrued and unpaid interest of $184; |
| (x) | a loan on November 12, 2025 in the amount of $200,000, plus accrued and unpaid interest of $592; |
| (xi) | a loan on November 13, 2025 in the amount of $125,000, plus accrued and unpaid interest of $329; and |
| (xii) | a loan on November 18, 2025 in the amount of $350,000, plus accrued and unpaid interest of $345 |
| (xiii) | a loan on November 19, 2025 in the amount of $100,000, plus accrued and unpaid interest of $66. |
2. Interest Rate. Interest shall accrue on the aggregate unpaid principal balance outstanding hereunder from time to time at the rate of 12% per annum from and including the date first set forth above to and excluding the Maturity Date (as defined below). Interest shall accrue on any principal balance that is not paid on the earlier of the Maturity Date and the date of an Event of Default (as defined below) at the rate of 18% per annum from and including the Maturity Date or the date of such Event of Default to but excluding the date of payment or conversion of principal. In no event, however, shall interest be payable at a rate higher than the highest rate permitted by applicable law. Interest on the principal balance outstanding will be calculated on the basis of the actual number of days elapsed over an assumed year consisting of 365 days, to the date of receipt by Payee of any interest and/or principal. Interest shall be payable on the unpaid principal balance of this Note, as the same may exist from time to time, from the date of issuance until paid or converted in full, in accordance with the terms herein and shall be payable: (a) on the Maturity Date; or (b) on any earlier date of payment or conversion of principal, in whole or in part and, if in part, as to the portion paid or converted.
3. Payment Terms. Any outstanding principal balance and accrued and unpaid interest shall be paid to Payee in full no later than June 30, 2026 (the “Maturity Date”).
4. Conversion Rights.
(a) Payee shall have the right by notice to Maker (“Conversion Notice”) to elect to convert the principal amount of this Note and accrued and unpaid interest thereon (the “Convertible Amount”) in whole or in part into shares (“Shares”) of Maker’s common stock, par value of $0.0001 per share (“Common Stock”), at the Conversion Price (as defined below) in lieu of having Maker repay this Note pursuant to Section 3 above. The date notice of conversion of all or any portion of the Note is given by Payee to Maker is referred to as the “Conversion Date.” No fractional Shares will be issued in connection with any conversion of the Convertible Amount, but instead will be rounded up to the nearest whole Share.
(b) The Convertible Amount is convertible at any time at the option of Payee by notice to Maker into that number of Shares equal to the Convertible Amount divided by Eight Dollars ($8.00), subject to adjustment as provided in the remaining provisions of this Note (the “Conversion Price”). The Shares or other securities into which this Note is convertible (and any Shares issued upon conversion or exercise of any such other securities) are referred to as the “Conversion Securities.” Payee may elect to convert this Note in part under any provision hereof permitting conversion and may elect multiple conversions.
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(c) Upon conversion of any portion of this Note and delivery of the Conversion Securities in accordance with the terms hereof, the portion of the principal balance of this Note so converted and all accrued interest due thereon as of the date of conversion will be deemed paid in full, and upon conversion of all outstanding principal and interest the Note will be deemed cancelled and of no force or effect.
5. Additional Matters Relating to Conversion.
(a) If Maker shall effect a stock split of the outstanding Common Stock after the date first set forth above, the applicable Conversion Price in effect immediately prior to the stock split shall be proportionately decreased. If Maker shall combine the outstanding shares of Common Stock after the date first set forth above, the applicable Conversion Price in effect immediately prior to the combination shall be proportionately increased.
(b) Maker shall at all times when this Note shall be outstanding, reserve and keep available out of Maker’s authorized but unissued Common Stock the total number of Shares for which this Note and all interest accrued thereon are at any time convertible.
6. Prepayment. Notwithstanding anything contained herein to the contrary, this Note is subject to prepayment in whole or in part at any time at the sole and absolute option of Maker, upon five business days’ prior written notice to Payee. The conversion rights of Payee shall continue to be exercisable during such five-day period and thereafter until payment is made in full to Payee, and Maker shall duly honor all conversions as to which a Conversion Notice is given by Payee during such five day period.
7. Events of Default. Any of the following shall constitute an “Event of Default” under this Note, and shall give rise to the remedies provided in Section 8 herein.
(a) Maker defaults in the payment of principal of or interest on this Note when due, including upon any prepayment provided for herein.
(b) Maker fails to or is unable to (including by reason of Maker having insufficient authorized capital), or notifies Payee, at any time, that it does not intend to comply with proper requests for conversion of the Note.
(c) Maker fails to instruct its transfer agent to remove any legends from Conversion Securities eligible to be sold under Rule 144 of the Securities Act and issue such unlegended certificates to Payee (or Payee’s transferee, if such request is made in connection with a transfer of Conversion Securities), or to cause to be provided to such transfer agent any opinion of counsel and/or certification of Maker required in order for such transfer agent to comply with such instructions, within three business days of Payee’s request so long as Payee has provided a customary representation letter to Maker that provides a reasonable basis to conclude, to the extent such conclusion is dependent upon matters to be confirmed by Payee, that such shares of Common Stock can be sold pursuant to Rule 144.
(d) Maker defaults in the compliance with any other term contained in this Note (which default is not described in subsections (a) through (c) above) and such default is not remedied or waived within ten business days after receipt by Maker of notice from Payee of such default.
(e) Maker shall be subject to a Bankruptcy Event. For purposes hereof, “Bankruptcy Event” means any of the following events: (i) Maker commences a case or other proceeding under any bankruptcy, reorganization, arrangement, adjustment of debt, relief of debtors, dissolution, insolvency or liquidation or similar law of any jurisdiction relating to Maker or any Significant Subsidiary thereof; (ii) there is commenced against Maker any such case or proceeding that is not dismissed within 60 days after commencement; (iii) Maker is adjudicated insolvent or bankrupt or any order of relief or other order approving any such case or proceeding is entered; (iv) Maker suffers any appointment of any custodian or the like for it or any substantial part of its property that is not discharged or stayed within 60 calendar days after such appointment; (v) Maker makes a general assignment for the benefit of creditors; (vi) Maker calls a meeting of its creditors with a view to arranging a composition, adjustment or restructuring of its debts; or (vii) Maker, by any act or failure to act, expressly indicates its consent to, approval of or acquiescence in any of the foregoing or takes any corporate or other action for the purpose of effecting any of the foregoing.
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8. Remedies on Event of Default. If any Event of Default will occur, Payee shall, in addition to any and all other available rights and remedies, have the right, at Payee’s option, to: (a) declare the entire unpaid outstanding principal balance of this Note, together with all interest accrued thereon, and all other sums due by Maker hereunder, to be immediately due and payable without presentment, demand, protest, or notice, all of which are hereby expressly unconditionally and irrevocably waived by Maker, provided that upon the occurrence of an Event of Default described in Section 7(e), the entire unpaid outstanding principal balance of this Note, together with all interest accrued thereon, and all other sums due by Maker hereunder, shall be immediately due and payable without any declaration or other act by Payee; and (b) pursue any and all available remedies for the collection of such principal and interest and all other sums due by Maker hereunder and to enforce its rights as described herein; and in such case Payee may also recover all costs of suit and other expenses in connection therewith, including reasonable attorney’s fees for collection and the right to equitable relief to enforce Payee’s rights as set forth herein without the requirement to post any bond or other financial surety. The remedies provided in this Note may be exercised by Payee without notice to Maker (to the extent permitted by law and except as notice is herein expressly required), and will be in addition to and not in substitution for the rights and remedies which would otherwise be vested in Payee for the recovery of damages or otherwise in the event of a breach of any of the undertakings of Maker hereunder. No failure by Payee to exercise and no delay in exercising any right, power or privilege under this Note will operate as a waiver thereof, nor will any single or partial exercise of any right, power or privilege hereunder preclude any other, further or additional exercise thereof.
9. Governing Law; Venue; Waiver of Jury Trial. This Note shall be governed by and construed in accordance with the laws of the State of Florida applied to contracts to be performed wholly within the State of Florida, without regard to conflicts of laws principles. Any judicial proceeding brought against Maker with respect to this Note or any related agreement may be brought in any court located in the State of Florida, United States of America, and, by execution and delivery of this Note, Maker accepts for itself and in connection with its properties, generally and unconditionally, the non-exclusive jurisdiction of the aforesaid courts, and irrevocably agrees to be bound by any judgment rendered thereby in connection with this Note. Maker hereby waives personal service of any and all process upon it and consents that all such service of process may be made by registered mail (return receipt requested) directed to Maker at its address set forth below and service so made shall be deemed completed five days after the same shall have been so deposited in the mails of the United States of America. Nothing herein shall affect the right to serve process in any manner permitted by law or shall limit the right of Payee to bring proceedings against Maker in the courts of any other jurisdiction. Maker waives any objection to jurisdiction and venue of any action instituted hereunder and shall not assert any defense based on lack of jurisdiction or venue or based upon forum non conveniens. Any judicial proceeding by Maker against Payee involving, directly or indirectly, any matter or claim in any way arising out of, related to or connected with this Note or any related agreement, shall be brought only in a federal or state court located in the State of Florida.
MAKER HEREBY EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION (A) ARISING UNDER THIS NOTE OR ANY OTHER INSTRUMENT, DOCUMENT OR NOTE EXECUTED OR DELIVERED IN CONNECTION HEREWITH, OR (B) IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO OR ANY OF THEM WITH RESPECT TO THIS NOTE OR ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH, OR THE TRANSACTIONS RELATED HERETO OR THERETO IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER SOUNDING IN CONTRACT OR TORT OR OTHERWISE AND EACH PARTY HEREBY CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY, AND THAT ANY PARTY TO THIS NOTE MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENTS OF THE PARTIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.
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10. Amendment. Neither any provision of this Note nor any performance hereunder may be amended or waived orally, but only by an agreement in writing and signed by the party against whom enforcement of any waiver, change, modification or discharge is sought.
11. Binding Effect. The rights and obligations of Maker under this Note will be binding upon its successors, assigns, heirs, administrators and transferees.
12. Successors and Assigns. This Note may be assigned, transferred or negotiated by Payee to any person at any time (a “Transfer”) only upon its surrender to Maker for registration of Transfer, duly endorsed, or accompanied by a duly executed written instrument of Transfer in form satisfactory to Maker. Thereupon, this Note shall be reissued to, and registered in the name of, the transferee, or a new note for like principal amount and interest shall be issued to, and registered in the name of, the transferee. Interest and principal shall be paid solely to the registered holder of this Note. Such payment shall constitute full discharge of Maker’s obligation to pay such interest and principal. Maker may not assign or transfer this Note or any of its rights hereunder without the prior written consent of Payee. This Note shall inure to the benefit of and be binding upon the parties hereto and their permitted assigns.
EXECUTED as of the date first set forth above.
| FREECAST, INC. | ||
| BY: | /s/ Jonathan Morris | |
| Jonathan Morris, CFO | ||
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Exhibit 5.1
BAHNSEN LEGAL GROUP, PLLC
Attorneys at law
December 9, 2025
FreeCast, Inc.
6901 TPC Drive, Suite 200
Orlando, Florida 32822
| Re: | FreeCast, Inc. |
Registration Statement on Form S-1 (Registration No. 333-275508)
Ladies and Gentlemen:
We have acted as special counsel to FreeCast, Inc., a Florida corporation (the “Company”), in connection with the preparation and initial filing on November 13, 2023 with the U.S. Securities and Exchange Commission (the “Commission”) pursuant to the Securities Act of 1933, as amended (the “Act”), and the rules and regulations promulgated thereunder, of the Company’s Registration Statement on Form S-1 (File No. 333-275508) (as amended, the “Registration Statement”), including the prospectus which forms a part of the Registration Statement (the “Prospectus”), for the registration of the offer and sale from time to time by the selling shareholders of the Company named in the Registration Statement (the “Registered Shareholders”) of up to 19,782,084 shares of the Company’s Class A common stock, $0.0001 par value per share (the “Shares”). This opinion is being furnished in connection with the requirements of Item 601(b)(5) of Regulation S-K under the Act, and no opinion is expressed herein as to any matter pertaining to the contents of the Registration Statement or the related Prospectus, other than as expressly stated herein with respect to the Shares.
In rendering the opinion stated herein, we have examined such matters of fact and questions of law as we have considered appropriate in order to render such opinion, including examination of the following: (1) the Company’s Second Amended and Restated Articles of Incorporation, as amended; (2) the Company’s Second Amended and Restated Bylaws; and (3) the Registration Statement, together with the exhibits filed as a part thereof. We have also examined originals or copies, certified or otherwise identified to our satisfaction, of such records of the Company and such agreements, certificates and receipts of public officials, certificates of officers or other representatives of the Company and others, and such other documents as to factual matters. We are opining herein as to the Florida Business Corporation Act, and we express no opinion with respect to any other laws.
Subject to the foregoing and the other matters set forth herein, it is our opinion that, as of the date hereof, the Shares to be sold by the Registered Shareholders have been duly authorized and are validly issued, fully paid and nonassessable.
This opinion is for your benefit in connection with the Registration Statement and may be relied upon by you and by persons entitled to rely upon it pursuant to the applicable provisions of the Act. We consent to your filing this opinion as an exhibit to the Registration Statement and to the reference to our firm in the Prospectus under the heading “Legal Matters.” In giving such consent, we do not thereby admit that we are in the category of persons whose consent is required under Section 7 of the Act or the rules and regulations of the Commission thereunder.
| Very truly yours, | |
| /s/ Bahnsen Legal Group, PLLC |
Bahnsen Legal Group, PLLC 131 NE 1st Avenue, Suite 100, Boca Raton, Florida 33432
Phone: 407-808-5700 Email: jeff@bahnsenlaw.com
Exhibit 10.30
Execution Version
EQUITY PURCHASE AGREEMENT
THIS EQUITY PURCHASE AGREEMENT (this “Agreement”) dated as of December 8, 2025 is made by and between Amiens Technology Investments LLC, a Delaware limited liability company (the “Investor”), and FREECAST, INC., a Florida corporation (the “Company”).
WHEREAS, the parties hereto desire that, upon the terms and subject to the conditions contained herein, the Company, upon the execution of this Agreement, shall have the right to issue and sell to the Investor, from time to time as provided herein, and the Investor shall purchase from the Company, up to $50,000,000 in the aggregate gross purchase price of newly issued shares of the Company’s Class A common stock, par value $0.0001 per share (the “Common Stock”);
WHEREAS, the Company has applied to list the Common Stock for trading on Nasdaq Global Market (“Nasdaq”); and
WHEREAS, the offer and sale of the shares of Common Stock issuable hereunder will be made in reliance upon Section 4(a)(2) under the Securities Act of 1933, as amended, and/or Rule 506 promulgated thereunder (the “Securities Act”), or upon such other exemption from the registration requirements of the Securities Act as may be available with respect to any or all of the transactions to be made hereunder.
NOW, THEREFORE, the parties hereto agree as follows:
Article I. Certain Definitions
Section 1.01 “Advance” shall mean any issuance and sale of Advance Shares from the Company to the Investor pursuant to Article II hereof.
Section 1.02 “Advance Date” shall mean the first (1st) Trading Day after expiration of the applicable Pricing Period for each Advance.
Section 1.03 “Advance Notice” shall mean, as applicable, an Advance Notice in the form of Exhibit A attached hereto delivered to the Investor.
Section 1.04 “Advance Notice Date” shall mean each date the Company is deemed to have delivered (in accordance with Section 2.01(b) and 2.01(c), as applicable, of this Agreement) an Advance Notice to the Investor, subject to the terms of this Agreement.
Section 1.05 “Advance Shares” shall mean the shares of Common Stock that the Company shall issue and sell to the Investor as requested by the Company pursuant to an Advance Notice.
Section 1.06 “Agreement” shall have the meaning set forth in the preamble of this Agreement.
Section 1.07 “Applicable Laws” shall mean all applicable laws, statutes, rules, regulations, orders, executive orders, directives, policies, guidelines and codes having the force of law, whether local, national, or international, as amended from time to time, including without limitation (i) all applicable laws that relate to money laundering, terrorist financing, financial record keeping and reporting, (ii) all applicable laws that relate to anti-bribery, anti-corruption, books and records and internal controls, including the United States Foreign Corrupt Practices Act of 1977, and (iii) any Sanctions laws.
Section 1.08 “Black Out Period” shall have the meaning set forth in Section 6.01(e).
Section 1.09 “Block Trades” means any privately negotiated transaction involving the sale or resale of shares of Common Stock, executed outside of the public exchange (including trades executed through alternative trading systems, dark pools, or direct negotiation), involving at least 10,000 shares of Common Stock, including trades where a broker-dealer attempts to sell the securities as agent but may position and resell a portion of the block as principal to facilitate the transaction. Such trades may be conducted without substantial marketing efforts prior to pricing and may include same-day trades, overnight trades or similar transactions.
Section 1.10 “Business Day” shall mean any day other than a Saturday, Sunday or other day on which commercial banks in The City of New York are authorized or required by law to remain closed; provided, however, for clarification, commercial banks shall not be deemed to be authorized or required by law to remain closed due to “stay at home”, “shelter-in-place”, “non-essential employee” or any other similar orders or restrictions or the closure of any physical branch locations at the direction of any governmental authority so long as the electronic funds transfer systems (including for wire transfers) of commercial banks in The City of New York generally are open for use by customers on such day
Section 1.11 “Closing” shall have the meaning set forth in Section 2.02.
Section 1.12 “Commencement Irrevocable Transfer Agent Instructions” shall have the meaning set forth in Section 6.06.
Section 1.13 “Commitment Amount” shall mean $50,000,000 of Common Stock.
Section 1.14 “Commitment Fee” shall have the meaning set forth in Section 11.04.
Section 1.15 “Commitment Shares” shall have the meaning set forth in Section 11.04.
Section 1.16 “Commitment Period” shall mean the period commencing on the Effective Date and expiring upon the date of termination of this Agreement in accordance with Section 9.01.
Section 1.17 “Common Stock” shall have the meaning set forth in recitals of this Agreement.
Section 1.18 “Common Stock Equivalents” means any securities of the Company or the Subsidiaries which would entitle the holder thereof to acquire at any time Common Stock, including, without limitation, any debt, preferred stock, right, option, warrant or other instrument that is at any time convertible into or exercisable or exchangeable for, or otherwise entitles the holder thereof to receive, Common Stock.
Section 1.19 “Company” shall have the meaning set forth in the preamble of this Agreement.
Section 1.20 “Condition Satisfaction Date” shall have the meaning set forth in Section 7.01.
Section 1.21 “Daily Traded Amount” shall mean the daily trading volume of the Common Stock on the Principal Market during Regular Trading Hours as reported by Bloomberg L.P.
Section 1.22 “Direct Listing” shall mean the commencement of trading of the Common Stock on Nasdaq.
Section 1.23 “Direct Listing Registration Statement” shall mean the Company’s Registration Statement on Form S-1 (File No. 333-275508), as amended, filed with the SEC in connection with the Direct Listing.
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Section 1.24 “DWAC Shares” shall mean shares of Common Stock issued pursuant to this Agreement that are (i) issued in electronic form, (ii) freely tradable and transferable and without restriction on resale and without stop transfer instructions maintained against the transfer thereof, and (iii) timely credited by the Company to the Investor’s or its designee’s specified Deposit/Withdrawal at Custodian (DWAC) account with DTC under its Fast Automated Securities Transfer (FAST) Program, or any similar program hereafter adopted by DTC performing substantially the same function.
Section 1.25 “Effective Date” shall mean the Trading Day immediately following the Direct Listing.
Section 1.26 “Exchange Act” shall mean the U.S. Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.
Section 1.27 “Fundamental Transaction” means (i) the Company, directly or indirectly, in one or more related transactions effects any merger or consolidation of the Company with or into another Person, (ii) the Company or any Subsidiary, directly or indirectly, effects any sale, lease, license, assignment, transfer, conveyance or other disposition of all or substantially all of its assets in one or a series of related transactions, (iii) any, direct or indirect, purchase offer, tender offer or exchange offer (whether by the Company or another Person) is completed pursuant to which holders of Common Stock are permitted to sell, tender or exchange their shares for other securities, cash or property and has been accepted by the holders of 50% or more of the outstanding Common Stock or 50% or more of the voting power of the common equity of the Company, (iv) the Company, directly or indirectly, in one or more related transactions effects any reclassification, reorganization or recapitalization of the Common Stock or any compulsory share exchange pursuant to which the Common Stock is effectively converted into or exchanged for other securities, cash or property, or (v) the Company, directly or indirectly, in one or more related transactions consummates a stock or share purchase agreement or other business combination (including, without limitation, a reorganization, recapitalization, spin-off, merger or scheme of arrangement) with another Person or group of Persons whereby such other Person or group acquires 50% or more of the outstanding shares of Common Stock or 50% or more of the voting power of the common equity of the Company.
Section 1.28 “GAAP” means United States generally accepted accounting principles as in effect from time to time, applied consistently throughout the periods referenced and consistently with (a) the principles and standards set forth in the opinions and pronouncements of the Financial Accounting Standards Board or any successor entity, (b) to the extent consistent with such principles, generally accepted industry practices and (c) to the extent consistent with such principles and practices, the past practices of the Company as reflected in its financial statements disclosed in the Direct Listing Registration Statement.
Section 1.29 “Indebtedness” means (i) all indebtedness for borrowed money, (ii) all obligations issued, undertaken or assumed as the deferred purchase price of property or services (including, without limitation, “capital leases” in accordance with GAAP) (other than trade payables entered into in the ordinary course of business consistent with past practice), (iii) all reimbursement or payment obligations with respect to letters of credit, surety bonds and other similar instruments, (iv) all obligations evidenced by notes, bonds, debentures or similar instruments, including obligations so evidenced incurred in connection with the acquisition of property, assets or businesses, (v) all indebtedness created or arising under any conditional sale or other title retention agreement, or incurred as financing, in either case with respect to any property or assets acquired with the proceeds of such indebtedness (even though the rights and remedies of the seller or bank under such agreement in the event of default are limited to repossession or sale of such property), (vi) all monetary obligations under any leasing or similar arrangement which, in connection with GAAP, consistently applied for the periods covered thereby, is classified as a capital lease, (vii) all indebtedness referred to in clauses (i) through (vi) above secured by (or for which the holder of such Indebtedness has an existing right, contingent or otherwise, to be secured by) any lien upon or in any property or assets (including accounts and contract rights) owned by any Person, even though the Person which owns such assets or property has not assumed or become liable for the payment of such indebtedness, and (viii) all Contingent Obligations in respect of indebtedness or obligations of others of the kinds referred to in clauses (i) through (vii) above.
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Section 1.30 “Indemnified Liabilities” shall have the meaning set forth in Section 5.01.
Section 1.31 “Investor” shall have the meaning set forth in the preamble of this Agreement.
Section 1.32 “Investor Indemnitees” shall have the meaning set forth in Section 5.01.
Section 1.33 “Market Price” shall mean the lowest daily VWAP of the Common Stock during the Pricing Period.
Section 1.34 “Material Adverse Effect” shall mean any event, occurrence or condition that has had or would reasonably be expected to have (i) a material adverse effect on the legality, validity or enforceability of this Agreement or the transactions contemplated herein, (ii) a material adverse effect on the results of operations, assets, business or financial condition of the Company and its Subsidiaries, taken as a whole, or (iii) a material adverse effect on the Company’s ability to perform in any material respect on a timely basis its obligations under this Agreement.
Section 1.35 “Material Outside Event” shall have the meaning set forth in Section 6.08.
Section 1.36 “Maximum Advance Amount” in respect of each Advance Notice means an amount equal to the lower of (i) 150% of average of the Daily Traded Amount during the five (5) Trading Days immediately preceding an Advance Notice and (ii) such number of shares of Common Stock equal to $2,000,000 as of the date of each Advance Notice. This amount can be increased at the sole option of the Investor, per each Advance Notice.
Section 1.37 “Nasdaq” shall have the meaning set forth in recitals of this Agreement.
Section 1.38 “OFAC” shall have the meaning set forth in Section 4.28.
Section 1.39 “Ownership Limitation” shall have the meaning set forth in Section 2.01(c)(i).
Section 1.40 “Payment Adjustment” shall have the meaning set forth in Section 2.05.
Section 1.41 “Permitted Liens” shall mean (i) statutory or common law liens of mechanics, materialmen, warehousemen, landlords, carriers, repairmen or construction contractors and other similar liens that arise in the ordinary course of business and that relate to amounts not yet delinquent or that are being contested in good faith through appropriate actions, (ii) liens arising under original purchase price conditional sales contracts and equipment leases with third parties entered into in the ordinary course of business, (iii) liens for utilities, taxes, assessments or other governmental charges (including, without limitation, water and sewer charges) which are not yet delinquent or being contested in good faith through appropriate actions and for which appropriate reserves have been established in accordance with GAAP, (iv) liens, encumbrances and restrictions on real property (including mortgages, easements, defects or imperfections of title, encroachments, conditions, covenants, licenses, rights of way and similar restrictions of record or that would be shown by a current title report or similar report or listing of such real property) that (A) are matters of record, (B) would be disclosed by a current, accurate survey or physical inspection of such real property or (C) do not materially interfere with the present uses of such real property, (v) with respect to any leased real property (A) the interests and rights of the respective lessors under the terms of the leases with respect thereto, including any statutory landlord liens and any lien thereon and (B) any liens, encumbrances and restrictions on real property (including easements, defects or imperfections of title, encroachments, conditions, covenants, rights of way and similar restrictions of record) touching and concerning the land of which the leased real property is a part that do not materially interfere with the present uses of such leased real property, (vi) with respect to any leased real property, zoning, building, subdivision, entitlement and other land use and environmental regulations promulgated by any governmental authority, or (vii) deposits to secure the performance of bids, trade contracts (other than for borrowed money), leases, statutory obligations, surety and appeal bonds, performance bonds and other obligations of a like nature, in each case incurred in the ordinary course of business.
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Section 1.42 “Person” shall mean an individual, a corporation, a partnership, a limited liability company, a trust or other entity or organization, including a government or political subdivision or an agency or instrumentality thereof.
Section 1.43 “Plan of Distribution” shall mean the section of a Registration Statement disclosing the plan of distribution of the Shares.
Section 1.44 “Pre-Settlement Shares” shall have the meaning set forth in Section 2.01(d).
Section 1.45 “Pricing Period” shall mean the Trading Day commencing on the Trading Day immediately following the Advance Notice Date and ending at 4:00 p.m. New York City time (or the close of Regular Trading Hours on the Principal Market, if earlier) on the fifth (5th) Trading Day following the Advance Notice Date.
Section 1.46 “Pricing Period Settlement Date” shall have the meaning set forth in Section 2.02(b).
Section 1.47 “Principal Market” shall mean Nasdaq; provided however, that in the event the Common Stock is ever listed or traded on the Nasdaq Global Select Market, the Nasdaq Capital Market, The New York Stock Exchange or NYSE American then the “Principal Market” shall mean such other market or exchange on which the Company’s Common Stock is then listed or traded to the extent such other market or exchange is the principal trading market or exchange for the Common Stock.
Section 1.48 “Proceeding” against a Person means an action, suit, litigation, arbitration, investigation, complaint, dispute, contest, hearing, inquiry, inquest, audit, examination or other proceeding threatened or pending against, affecting or purporting to affect such Person or its property, whether civil, criminal, administrative, investigative or appellate, in law or equity before any arbitrator or governmental authority.
Section 1.49 “Prospectus” shall mean any prospectus (including, without limitation, all amendments and supplements thereto) used by the Company in connection with a Registration Statement.
Section 1.50 “Prospectus Supplement” shall mean any prospectus supplement to a Prospectus filed with the SEC pursuant to Rule 424(b) under the Securities Act, including, without limitation, any prospectus supplement to be filed in accordance with Section 6.01 hereof.
Section 1.51 “Purchase Price” shall mean the Pre-Settlement Purchase Price or Settlement Purchase Price, as applicable.
| (a) | “Pre-Settlement Purchase Price” shall mean price per Advance Share obtained by multiplying (a) the lowest daily VWAP of the Common Stock during the five (5) Trading Days immediately preceding the applicable Advance Notice Date by (b) 95%. |
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| (b) | “Settlement Purchase Price” shall mean price per Advance Share obtained by multiplying (a) the Market Price on the Pricing Period Settlement Date by (b) 95%. |
Section 1.52 “Registrable Securities” shall mean (i) the Shares and (ii) any securities issued or issuable with respect to any Shares by way of exchange, stock dividend or stock split or in connection with a combination of shares, recapitalization, merger, consolidation or other reorganization or otherwise.
Section 1.53 “Registration Limitation” shall have the meaning set forth in Section 2.01(c)(ii)
Section 1.54 “Registration Statement” shall mean a registration statement on Form S-1 or Form S-3 or on such other form promulgated by the SEC for which the Company then qualifies and which counsel for the Company shall deem appropriate, and which form shall be available for the registration of the resale by the Investor of the Registrable Securities under the Securities Act, which registration statement provides for the resale from time to time of the Shares as provided herein.
Section 1.55 “Regular Trading Hours” means the regular trading hours during any Trading Day that the Principal Market is open, starting 9:30 a.m. New York City time and ending 4:00 p.m. New York City time (or at the time the Principal Market closes, if earlier) on such Trading Day (for avoidance of doubt, Regular Trading Hours excludes pre-market and post-market trading).
Section 1.56 “Restricted Period” shall have the meaning set forth in Section 6.16.
Section 1.57 “Restricted Person” shall have the meaning set forth in Section 6.16.
Section 1.58 “Sanctions” shall have the meaning set forth in Section 4.28.
Section 1.59 “Sanctioned Countries” shall have the meaning set forth in Section 4.28.
Section 1.60 “SEC” shall mean the U.S. Securities and Exchange Commission.
Section 1.61 “SEC Documents” shall have the meaning set forth in Section 4.05.
Section 1.62 “Securities Act” shall have the meaning set forth in the recitals of this Agreement.
Section 1.63 “Settlement Document” in respect of an Advance Notice delivered by the Company, shall mean a settlement document in the form annexed hereto as Exhibit B.
Section 1.64 “Settlement Shares” shall have the meaning set forth in Section 2.02(a).
Section 1.65 “Shares” shall mean the Commitment Shares and the shares of Common Stock to be issued from time to time hereunder pursuant to an Advance.
Section 1.66 “Standstill Period” shall have the meaning set forth in Section 6.19.
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Section 1.67 “Subsequent Placement” means the issuance, offer, sale or grant of any option or right to purchase, or otherwise disposition of (or announcement of any issuance, offer, sale, grant of any option or right to purchase or other disposition of) any equity security or equity-linked or related security (including, without limitation, any “equity security” (as that term is defined under Rule 405 promulgated under the Securities Act)), any Common Stock Equivalents, any debt, any preferred shares or any purchase rights (any such issuance, offer, sale, grant, disposition or announcement); provided, however, that a Subsequent Placement shall not include the issuance of (i) any securities upon the exercise or exchange of or conversion of any securities exercisable or exchangeable for or convertible into shares of Common Stock issued and outstanding on the date of this Agreement, provided that such securities have not been amended since the date of this Agreement to increase the number of such securities or to decrease the exercise price, exchange price or conversion price of such securities (other than in connection with stock splits or combinations) or to extend the term of such securities, and (ii) any securities issued in connection with strategic acquisitions or other transactions approved by a majority of the disinterested directors of the Company, provided that such securities are issued as “restricted securities” (as defined in Rule 144) and carry no registration rights that require or permit the filing of any registration statement in connection therewith during the Standstill Period, and provided that any such issuance shall only be to a Person (or to the equityholders of a Person) which is, itself or through its subsidiaries, an operating company or an owner of an asset in a business synergistic with the business of the Company and shall provide to the Company additional benefits in addition to the investment of funds, but shall not include a transaction in which the Company is issuing securities primarily for the purpose of raising capital or to an entity whose primary business is investing in securities.
Section 1.68 “Subsequent Placement Notice” shall have the meaning set forth in Section 6.21(6).
Section 1.69 “Subsidiaries” shall mean any Person in which the Company, directly or indirectly, (x) owns a majority of the outstanding capital stock or holds a majority of the equity or similar interest of such Person or (y) controls or operates all or substantially all of the business, operations or administration of such Person, and the foregoing are collectively referred to herein as “Subsidiaries.”
Section 1.70 “Trading Day” shall mean any day during which the Principal Market shall be open for business.
Section 1.71 “Transaction Documents” shall have the meaning set forth in Section 4.02.
Section 1.72 “Variable Rate Transaction” means a transaction in which the Company (i) issues or sells any shares of Common Stock or Common Stock Equivalents that are convertible into, exchangeable or exercisable for, or include the right to receive additional shares of Common Stock or Common Stock Equivalents either (A) at a conversion price, exercise price, exchange rate or other price that is based upon and/or varies with the trading prices of or quotations for the Common Stock at any time after the initial issuance of such equity or debt securities (including, without limitation, pursuant to any “cashless exercise” provision), or (B) with a conversion, exercise or exchange price that is subject to being reset at some future date after the initial issuance of such equity or debt security or upon the occurrence of specified or contingent events directly or indirectly related to the business of the Company or the market for the Common Stock (including, without limitation, any “full ratchet,” “share ratchet,” “price ratchet,” or “weighted average” anti-dilution provisions, but not including any standard anti-dilution protection for any reorganization, recapitalization, non-cash dividend, stock split, reverse stock split or other similar transaction), (ii) issues or sells any equity or debt securities, including without limitation, shares of Common Stock or Common Stock Equivalents, either (A) at a price that is subject to being reset at some future date after the initial issuance of such debt or equity security or upon the occurrence of specified or contingent events directly or indirectly related to the business of the Company or the market for the Common Stock (other than standard anti-dilution protection for any reorganization, recapitalization, non- cash dividend, stock split, reverse stock split or other similar transaction), or (B) that is subject to or contains any put, call, redemption, buy-back, price- reset or other similar provision or mechanism (including, without limitation, a “Black-Scholes” put or call right) that provides for the issuance of additional equity securities of the Company or the payment of cash by the Company, or (iii) enters into any agreement, including, but not limited to, an at-the-market offering or “equity line of credit” or other continuous offering or similar offering of shares of Common Stock or Common Stock Equivalents whereby the Company may sell shares of Common Stock or Common Stock Equivalents at a future determined price.
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Section 1.73 “Volume Threshold” means a number of Shares equal to the quotient of the number of Advance Shares requested by the Company in an Advance Notice divided by 0.10.
Section 1.74 “Volume Adjusted Advance Amount” shall have the meaning set forth in Section 2.01(c)(iii).
Section 1.75 Volume Limit” means the trading volume of the Common Stock on the Principal Market during Regular Trading Hours during the applicable Pricing Period as reported by Bloomberg L.P. multiplied by ten percent (10%).
Section 1.76 “Volume Threshold Failure” shall have the meaning set forth in Section 2.02(c)(iii).
Section 1.77 “VWAP” shall mean for any Trading Day, the daily volume weighted average price of the Common Stock for such Trading Day on the Principal Market during Regular Trading Hours as reported by Bloomberg L.P.
Article II. Advances
Section 2.01 Advances; Mechanics. Upon the terms and subject to the conditions of this Agreement, during the Commitment Period, the Company, at its sole discretion, shall have the right, but not the obligation, to issue and sell to the Investor, and the Investor shall purchase from the Company, Advance Shares by the delivery to the Investor from time to time of an Advance Notice on the following terms:
| (a) | Advance Notice. At any time during the Commitment Period the Company may require the Investor to purchase Shares by delivering an Advance Notice to the Investor, subject to the satisfaction or waiver by the Investor of the conditions set forth in Section 7.01, and in accordance with the following provisions: |
| (i) | The Company shall, in its sole discretion, select the number of Advance Shares, not to exceed the Maximum Advance Amount, it desires to issue and sell to the Investor in each validly delivered Advance Notice. |
| (ii) | There shall be no mandatory minimum Advances and no non-usages fee for not utilizing the Commitment Amount or any part thereof. |
| (b) | Date of Delivery of an Advance Notice. An Advance Notice shall be delivered in accordance with the instructions set forth on the bottom of Exhibit A attached hereto and which must be received by the Investor no later than 9:00 a.m. Eastern Time on a Trading Day for such notice to be deemed valid. Advance Notices can be submitted no more than once per any given calendar month, unless otherwise mutually agreed upon by the Investor and the Company in writing. Subject to the preceding sentence, and subject to the satisfaction of the conditions under this Agreement, the Company may deliver Advance Notices from time to time, provided that it has delivered all Shares relating to all prior Advance Notices in accordance with this Agreement. |
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| (c) | Advance Limitations. Regardless of the number of Advance Shares requested by the Company in the Advance Notice, the final number of Shares to be issued and sold pursuant to an Advance Notice shall be reduced (if at all) in accordance with each of the following limitations: |
| (i) | Ownership Limitation; Commitment Amount. At the request of the Company, the Investor shall (within one Business Day of such request) inform the Company of the amount of Common Stock the Investor then beneficially owns. Notwithstanding anything to the contrary contained in this Agreement, the Investor shall not be obligated to purchase or acquire, and shall not purchase or acquire, any shares of Common Stock under this Agreement which, when aggregated with all other shares of Common Stock beneficially owned by the Investor and its affiliates (as calculated pursuant to Section 13(d) of the Exchange Act and Rule 13d-3 promulgated thereunder), would result in the beneficial ownership by the Investor and its affiliates (on an aggregated basis) to exceed 4.99% of the then outstanding voting power or number of shares of Common Stock (the “Ownership Limitation”). The Investor may, upon written notice to the Company, increase or decrease the Ownership Limitation, provided that (a) the Ownership Limitation shall in no event exceed 9.99% of the then outstanding voting power or number of shares of Common Stock and (b) any increase in the Ownership Limitation will not be effective until the 61st day after such written notice is delivered to the Company. Upon the written request of the Investor, the Company shall promptly (but no later than one Business Day after the next Business Day on which the transfer agent for the Common Stock (the “Transfer Agent”) is open for business) confirm orally or by email or other writing to the Investor the number of shares of Common Stock then outstanding. In connection with each Advance Notice delivered by the Company, any portion of the number of Advance Shares that would (i) cause the Investor to exceed the Ownership Limitation or (ii) cause the aggregate number of Shares issued and sold to the Investor hereunder (excluding, for the avoidance of doubt, the Commitment Shares) to exceed the Commitment Amount shall automatically be withdrawn with no further action required by the Company, and such Advance Notice shall be deemed automatically modified to reduce the number of Advance Shares requested by an amount equal to such withdrawn portion; provided that in the event of any such automatic withdrawal and automatic modification, Investor will promptly notify the Company of such event. |
| (ii) | Registration Limitation. In no event shall an Advance exceed the amount registered under the Registration Statement then in effect (the “Registration Limitation”). In connection with each Advance Notice, any portion of an Advance that would exceed the Registration Limitation shall automatically be withdrawn with no further action required by the Company and such Advance Notice shall be deemed automatically modified to reduce the aggregate amount of the requested Advance by an amount equal to such withdrawn portion in respect of each Advance Notice; provided that in the event of any such automatic withdrawal and automatic modification, the Investor will promptly notify the Company of such event. |
| (iii) | Volume Threshold Limitation. In connection with any Advance Notice, if the total number of shares of Common Stock traded on the Principal Market during the applicable Pricing Period (excluding any Block Trades), is less than the applicable Volume Threshold (the “Volume Threshold Failure”), then the number of Advance Shares issued and sold pursuant to such Advance Notice shall automatically be reduced to the greater of (i) the applicable Volume Limit and (ii) the number of Shares sold by the Investor during such Pricing Period (the “Volume Adjusted Advance Amount”), but in each case not to exceed the amount requested in the Advance Notice or any limitations set forth in Section 2.01(c). |
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| (d) | Pre-Settlement. No later than the Trading Day (or such earlier date as required pursuant to the Exchange Act or other applicable law, rule or regulation for the settlement of a trade initiated on the Advance Notice Date of such shares of Common Stock issuable pursuant to the Advance Notice) immediately following the Advance Notice Date, the Company shall instruct the Transfer Agent to deliver to the Investor as DWAC Shares such number of shares of Common Stock (the “Pre-Settlement Shares”) equal to the product of (A) the quotient of (y) the Maximum Advance Amount divided by (z) the Pre-Settlement Purchase Price, and as to which the Holder shall be the owner thereof as of such time of delivery of such Pre-Settlement Shares, multiplied by (B) 100%. All such determinations to be appropriately adjusted for any share split, share dividend, share combination or other similar transaction during any such measuring period. |
| (e) | Unconditional Contract. Notwithstanding any other provision in this Agreement, the Company and the Investor acknowledge and agree that upon the Investor’s receipt of a valid Advance Notice the parties shall be deemed to have entered into an unconditional contract binding on both parties for the purchase and sale of Advance Shares pursuant to such Advance Notice in accordance with the terms of this Agreement and (i) subject to Applicable Laws and (ii) subject to Section 6.08, the Investor may sell Common Stock during the Pricing Period. |
Section 2.02 Closings. The closing of each Advance and each sale and purchase of Advance Shares (each, a “Closing”) shall take place as soon as practicable on or after each Advance Date in accordance with the procedures set forth below. The parties acknowledge that the Purchase Price is not known at the time the Advance Notice is delivered (at which time the Investor is irrevocably bound) but shall be determined on each Closing based on the daily prices of the Common Stock that are the inputs to the determination of the Purchase Price as set forth further below. At the end of each Pricing Period, the Company will deliver the Shares sold to the Investor against payment of the Purchase Price by the Investor to the Company’s designated account by wire transfer of immediately available funds. In connection with each Closing, the Company and the Investor shall fulfill each of its obligations as set forth below:
| (a) | Payment for Advance Shares. If the Company delivers a valid Advance Notice to the Investor and delivers the Pre-Settlement Shares in accordance with the terms herein, then the Investor shall deliver the Settlement Document applicable to such Advance Notice on the Pricing Period Settlement Date (as defined herein) and shall pay to the Company an amount equal to the product of (x) the Settlement Shares (as defined below) and (y) the Settlement Purchase Price, as set forth in such Settlement Document as full payment for such Advance Shares via wire transfer of immediately available funds. |
| (b) | Settlement. No later than one (1) Trading Day after the end of the Pricing Period (the “Pricing Period Settlement Date”), the Company shall cause the Transfer Agent to deliver to the Investor as DWAC Shares such number of shares of Common Stock (the “Settlement Shares”) equal to the amount set forth in such Settlement Document divided by the Settlement Purchase Price. The number of shares of Common Stock to be delivered on the Pricing Period Settlement Date shall be reduced by the number of Pre-Settlement Shares delivered, if any. Notwithstanding anything herein to the contrary, if the number of Pre-Settlement Shares delivered to the Investor exceeds the number of Settlement Shares, then the Investor shall promptly return such excess shares. |
| (c) | In no event shall the Settlement Shares due to be purchased by the Investor on a Pricing Period Settlement Date exceed the total number of Pre-Settlement Shares delivered to the Investor in connection with such Advance Notice. |
| (d) | On or prior to the Advance Date, each of the Company and the Investor shall deliver to the other all documents, instruments and writings expressly required to be delivered by either of them pursuant to this Agreement in order to implement and effect the transactions contemplated herein. |
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| (e) | Notwithstanding anything to the contrary in this Agreement, if on any day during the Pricing Period, (i) the Company notifies Investor that a Material Outside Event has occurred or (ii) the Company notifies the Investor of a Black Out Period, the parties agree that the pending Advance shall end and the final number of Advance Shares to be purchased by the Investor at the Closing for such Advance shall be equal to the number of shares of Common Stock sold by the Investor during the applicable Pricing Period prior to the notification from the Company of a Material Outside Event or Black Out Period. |
Section 2.03 Hardship.
| (a) | In the event the Investor sells Common Stock after receipt of an Advance Notice and the Company fails to perform its obligations as mandated in Section 2.02, the Company agrees that in addition to and in no way limiting the rights and obligations set forth in Article V hereto and in addition to any other remedy to which the Investor is entitled at law or in equity, including, without limitation, specific performance, it will hold the Investor harmless against any loss, claim, damage, or expense (including reasonable legal fees and expenses), as incurred, arising out of or in connection with such default by the Company and acknowledges that irreparable damage may occur in the event of any such default. It is accordingly agreed that the Investor shall be entitled to an injunction or injunctions to prevent such breaches of this Agreement and to specifically enforce (subject to the Securities Act and other rules of the Principal Market), without the posting of a bond or other security, the terms and provisions of this Agreement. |
| (b) | In the event the Company provides an Advance Notice and the Investor fails to perform its obligations as mandated in Section 2.02, provided that such failure is solely as a result of the gross negligence or willful misconduct of the Investor that has been judicially determined in a non-appealable decision, the Investor agrees that in addition to and in no way limiting the rights and obligations set forth in Article V hereto and in addition to any other remedy to which the Company is entitled at law or in equity, including, without limitation, specific performance, it will hold the Company harmless against any loss, claim, damage, or expense (including reasonable legal fees and expenses), as incurred, arising out of or in connection with such default by the Investor and acknowledges that irreparable damage may occur in the event of any such default. It is accordingly agreed that the Company shall be entitled to an injunction or injunctions to prevent such breaches of this Agreement and to specifically enforce (subject to the Securities Act and other rules of the Principal Market), without the posting of a bond or other security, the terms and provisions of this Agreement. |
| (c) | The Company acknowledges that failure to issue and deliver the Advance Shares to the Investor within one (1) Trading Day of the issuance of an Advance Notice or failure to have any restrictive legends removed from any Advance Shares after provided with proper representations from the Investor will cause definable financial hardship to the Investor and be considered a breach of this Agreement. |
Section 2.04 Completion of Resale Pursuant to the Registration Statement. After the Investor has purchased the full Commitment Amount and has completed the subsequent resale of the full Commitment Amount pursuant to the Registration Statement, the Investor will notify the Company by email or other writing that all subsequent resales are completed and the Company will be under no further obligation to maintain the effectiveness of the Registration Statement. Additionally, provided the Investor does not hold any Advance Shares, the Company shall have no further obligation to maintain the effectiveness of any Registration Statement after the later of: (i) the termination of this Agreement in accordance with its terms; and (ii) the 180th day following the latest Closing that has occurred.
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Article III. Representations and Warranties of Investor
The Investor represents and warrants to the Company, as of the date hereof, as of each Advance Notice Date and each Advance Date that:
Section 3.01 Organization and Authorization. The Investor is duly organized, validly existing and in good standing under the laws of Delaware and has the requisite corporate power and authority to enter into and perform its obligations under this Agreement and to purchase or acquire Shares in accordance with the terms hereof. The decision to invest and the execution and delivery of this Agreement by the Investor, the performance by the Investor of its obligations hereunder and the consummation by the Investor of the transactions contemplated hereby have been duly authorized and require no further consent or authorization by the Investor or its members. The undersigned has the right, power and authority to execute and deliver this Agreement and all other instruments on behalf of the Investor or its shareholders. This Agreement has been duly executed and delivered by the Investor and, assuming the execution and delivery hereof and acceptance thereof by the Company, will constitute the legal, valid and binding obligations of the Investor, enforceable against the Investor in accordance with its terms.
Section 3.02 Evaluation of Risks. The Investor has such knowledge and experience in financial, tax and business matters as to be capable of evaluating the merits and risks of, and bearing the economic risks entailed by, an investment in the Common Stock of the Company and of protecting its interests in connection with the transactions contemplated hereby. The Investor acknowledges and agrees that its investment in the Company involves a high degree of risk, and that the Investor may lose all or a part of its investment.
Section 3.03 No Legal, Investment or Tax Advice from the Company. The Investor acknowledges that it had the opportunity to review this Agreement and the transactions contemplated by this Agreement with its own legal counsel and investment and tax advisors. The Investor is relying solely on such counsel and advisors and not on any statements or representations of the Company or any of the Company’s representatives or agents for legal, tax, investment or other advice with respect to the Investor’s acquisition of Common Stock hereunder, the transactions contemplated by this Agreement or the laws of any jurisdiction, and the Investor acknowledges that the Investor may lose all or a part of its investment.
Section 3.04 Investment Purpose. The Investor is acquiring the Common Stock for its own account, for investment purposes and not with a view towards, or for resale in connection with, the public sale or distribution thereof, in violation of the Securities Act or any applicable state securities laws; provided, however, that by making the representations herein, the Investor does not agree, or make any representation or warranty, to hold any of the Shares for any minimum or other specific term and reserves the right to dispose of the Shares at any time in accordance with, or pursuant to, a Registration Statement filed pursuant to this Agreement or an applicable exemption under the Securities Act. The Investor does not presently have any agreement or understanding, directly or indirectly, with any Person to sell or distribute any of the Shares. The Investor acknowledges that it may be disclosed as an “underwriter” and will be disclosed as a “selling stockholder” in each Registration Statement and in any Prospectus contained therein.
Section 3.05 Information. The Investor and its advisors (and its counsel), if any, have been furnished with all materials relating to the business, finances and operations of the Company and information the Investor deemed material to making an informed investment decision. The Investor and its advisors (and its counsel), if any, have been afforded the opportunity to ask questions of the Company and its management and have received answers to such questions. Neither such inquiries nor any other due diligence investigations conducted by such Investor or its advisors (and its counsel), if any, or its representatives shall modify, amend or affect the Investor’s right to rely on the Company’s representations and warranties contained in this Agreement. The Investor acknowledges and agrees that the Company has not made to the Investor, and the Investor acknowledges and agrees it has not relied upon, any representations and warranties of the Company, its employees or any third party other than the representations and warranties of the Company contained in this Agreement. The Investor understands that its investment involves a high degree of risk. The Investor has sought such accounting, legal and tax advice, as it has considered necessary to make an informed investment decision with respect to the transactions contemplated hereby.
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Section 3.06 General Solicitation. Neither the Investor, nor any of its affiliates, nor any person acting on its or their behalf, has engaged or will engage in any form of general solicitation or general advertising in connection with any offer or sale of the Common Stock by the Investor. The Investor is not purchasing or acquiring the Shares as a result of any form of general solicitation or general advertising in connection with any offer or sale of the Common Stock.
Section 3.07 No Conflicts. The execution, delivery and performance by the Investor of this Agreement and the consummation by the Investor of the transactions contemplated hereby do not and shall not (i) result in a violation of such Investor’s applicable organizational instruments, (ii) conflict with, constitute a default (or an event which, with notice or lapse of time or both, would become a default) under, or give rise to any rights of termination, amendment, acceleration or cancellation of, any material agreement, mortgage, deed of trust, indenture, note, bond, license, lease agreement, instrument or obligation to which the Investor is a party or is bound, or (iii) result in a violation of any federal, state, local or foreign statute, rule, or regulation, or any order, judgment or decree of any court or governmental agency applicable to the Investor or by which any of its properties or assets are bound or affected, except, in the case of clauses (ii) and (iii), for such conflicts, defaults, terminations, amendments, acceleration, cancellations and violations as would not, individually or in the aggregate, prohibit or otherwise interfere with, in any material respect, the ability of the Investor to enter into and perform its obligations under this Agreement.
Section 3.08 Reliance on Exemptions. The Investor understands that the Shares are being offered and sold to it in reliance on specific exemptions from the registration requirements of U.S. federal and state securities laws and that the Company is relying in part upon the truth and accuracy of, and the Investor’s compliance with, the representations, warranties, agreements, acknowledgments and understandings of the Investor set forth herein in order to determine the availability of such exemptions and the eligibility of the Investor to acquire the Shares.
Section 3.09 No Governmental Review. The Investor understands that no United States federal or state agency or any other government or governmental agency has passed on or made any recommendation or endorsement of the Shares or the fairness or suitability of the investment in the Shares nor have such authorities passes upon or endorsed the merits of the offering of the Shares.
Article IV. Representations and Warranties of the Company
Except where specifically set forth below with respect to certain specified representations and warranties or in a disclosure schedule delivered by the Company to the Investor concurrently with this Agreement, which is hereby incorporated by reference in, and constitutes an integral part of, this Agreement (the “Disclosure Schedules”), the Company represents and warrants to the Investor as of the date hereof, as of each Advance Notice Date and each Advance Date (other than representations and warranties which address matters only as of a certain date, which shall be true and correct as written as of such certain date), that:
Section 4.01 Organization and Qualification. Each of the Company and its Subsidiaries is an entity duly organized and validly existing under the laws of their respective jurisdiction of organization, and has the requisite power and authority to own its properties and to carry on its business as now being conducted. Each of the Company and its Subsidiaries is duly qualified to do business and is in good standing (to the extent applicable) in every jurisdiction in which the nature of the business conducted by it makes such qualification necessary, except to the extent that the failure to be so qualified or be in good standing would not have a Material Adverse Effect.
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Section 4.02 Authorization, Enforcement, Compliance with Other Instruments. The Company has the requisite corporate power and authority to enter into and perform its obligations under this Agreement and the other Transaction Documents and to issue the Common Stock in accordance with the terms hereof and thereof. The execution and delivery by the Company of this Agreement and the other Transaction Documents, and the consummation by the Company of the transactions contemplated hereby and thereby (including, without limitation, the issuance of the Common Stock) have been or (with respect to consummation) will be duly authorized by the Company’s board of directors and no further consent or authorization will be required by the Company, its board of directors or its stockholders. This Agreement and the other Transaction Documents to which the Company is a party have been (or, when executed and delivered, will be) duly executed and delivered by the Company and, assuming the execution and delivery thereof and acceptance by the Investor, constitute (or, when duly executed and delivered, will be) the legal, valid and binding obligations of the Company, enforceable against the Company in accordance with their respective terms, except as such enforceability may be limited by general principles of equity or applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or other laws relating to, or affecting generally, the enforcement of applicable creditors’ rights and remedies and except as rights to indemnification and to contribution may be limited by federal or state securities law. “Transaction Documents” means, collectively, this Agreement and each of the other agreements and instruments entered into or delivered by any of the parties hereto in connection with the transactions contemplated hereby and thereby, as may be amended from time to time.
Section 4.03 Authorization of the Shares. The Shares to be issued under this Agreement have been, or with respect to Shares to be purchased by the Investor pursuant to an Advance Notice, will be, when issued and delivered pursuant to the terms approved by the board of directors of the Company or a duly authorized committee thereof, or a duly authorized executive committee, against payment therefor as provided herein, duly and validly authorized and issued and fully paid and nonassessable, free and clear of any pledge, lien, encumbrance, security interest or other claim, including any statutory or contractual preemptive rights, resale rights, rights of first refusal or other similar rights, and are registered pursuant to Section 12 of the Exchange Act. The Shares, when issued, will conform to the description thereof set forth in or incorporated into the Prospectus. An aggregate of 10,000,000 shares of Common Stock have been duly authorized and reserved by the Company for issuance and sale to the Investor as Shares pursuant to Advance Notices under this Agreement.
Section 4.04 No Conflict. The execution, delivery and performance of the Transaction Documents by the Company and the consummation by the Company of the transactions contemplated hereby and thereby (including, without limitation, the issuance of the Common Stock) will not (i) result in a violation of the articles of incorporation or other organizational documents of the Company or its Subsidiaries (with respect to consummation, as the same may be amended prior to the date on which any of the transactions contemplated hereby are consummated), (ii) conflict with, or constitute a default (or an event which with notice or lapse of time or both would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation of, any agreement, indenture or instrument to which the Company or its Subsidiaries is a party, or (iii) result in a violation of any law, rule, regulation, order, judgment or decree (including federal and state securities laws and regulations) applicable to the Company or its Subsidiaries or by which any property or asset of the Company or its Subsidiaries is bound or affected except, in the case of clause (ii) or (iii) above, to the extent such violations that would not reasonably be expected to have a Material Adverse Effect.
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Section 4.05 Financial Statements. The consolidated financial statements of the Company included in the Direct Listing Registration Statement and, following the Direct Listing, the consolidated financial statements of the Company included or incorporated by reference in all reports, schedules, forms, statements and other documents required to be filed by it with the SEC pursuant to the Exchange Act and all exhibits included therein and financial statements and schedules thereto and documents incorporated by reference therein, and all registration statements filed by the Company under the Securities Act (including any Registration Statements filed hereunder), being hereinafter referred to as the “SEC Documents”), as applicable, together with the related notes and schedules, present fairly, in all material respects, the consolidated financial position of the Company and the Subsidiaries as of the dates indicated and the consolidated statements of operations, cash flows and changes in stockholders’ equity of the Company for the periods specified and have been prepared in compliance with the requirements of the Securities Act and Exchange Act and in conformity with GAAP applied on a consistent basis (except for (i) such adjustments to accounting standards and practices as are noted therein, (ii) in the case of unaudited interim financial statements, to the extent such financial statements may not include footnotes required by GAAP or may be condensed or summary statements and (iii) such adjustments which are not material, either individually or in the aggregate) during the periods involved; the other financial and statistical data with respect to the Company and the Subsidiaries contained or incorporated by reference in the Direct Listing Registration Statement and the SEC Documents, as applicable, are accurately and fairly presented in all material respects and prepared on a basis consistent with the financial statements and books and records of the Company; there are no financial statements (historical or pro forma) that are required to be included or incorporated by reference in the Direct Listing Registration Statement and the SEC Documents, as applicable, that are not included or incorporated by reference as required; and the Company and the Subsidiaries do not have any material liabilities or obligations, direct or contingent (including any off-balance sheet obligations), not described in the Direct Listing Registration Statement or and the SEC Documents, as applicable, (excluding the exhibits thereto).
Section 4.06 Registration Statement and Prospectus. Each Registration Statement and the offer and sale of Shares as contemplated hereby, if and when filed, will meet the requirements of Rule 415 under the Securities Act and comply in all material respects with said Rule. Any statutes, regulations, contracts or other documents that are required to be described in a Registration Statement or a Prospectus, or to be filed as exhibits to a Registration Statement have been so described or filed. Copies of each Registration Statement, any Prospectus, and any such amendments or supplements thereto and all documents incorporated by reference therein that were filed with the SEC on or prior to the date of this Agreement have been delivered, or are available through EDGAR, to the Investor and its counsel. The Company has not distributed and, prior to the later to occur of each Closing and completion of the distribution of the Shares, will not distribute any offering material in connection with the offering or sale of the Shares other than a Registration Statement and the Prospectus to which the Investor has consented.
Section 4.07 No Misstatement or Omission. Each Registration Statement, when it became or becomes effective, and any Prospectus, on the date of such Prospectus or amendment or supplement, conformed and will conform in all material respects with the requirements of the Securities Act. At each Advance Date, the Registration Statement, and the Prospectus, each as of such date, will conform in all material respects with the requirements of the Securities Act. Each Registration Statement, when it became or becomes effective, did not, and will not, contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading. Each Prospectus did not, or will not, include an untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. The documents incorporated by reference in a Prospectus or any Prospectus Supplement did not, and any further documents filed and incorporated by reference therein will not, when filed with the SEC, contain an untrue statement of a material fact or omit to state a material fact required to be stated in such document or necessary to make the statements in such document, in light of the circumstances under which they were made, not misleading. The foregoing shall not apply to statements in, or omissions from, any such document made in reliance upon, and in conformity with, information furnished to the Company by the Investor specifically for use in the preparation thereof.
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Section 4.08 Conformity with Securities Act and Exchange Act. Each Registration Statement, each Prospectus, or any amendment or supplement thereto, and the documents incorporated by reference in each Registration Statement, Prospectus or any amendment or supplement thereto, when such documents were or are filed with the SEC under the Securities Act or the Exchange Act or became or become effective under the Securities Act, as the case may be, conformed or will conform in all material respects with the requirements of the Securities Act and the Exchange Act, as applicable.
Section 4.09 Equity Capitalization. On the Effective Date, the authorized share capital of the Company shall be provided to the Investor as a supplement hereto prior to the completion of the Effective Date. The Common Stock will be registered pursuant to Section 12(b) of the Exchange Act and will be listed on the Principal Market under the trading symbol “CAST” on the Effective Date. From and after the effective date of the Direct Listing Registration Statement, the Company will not take any action designed to, or reasonably likely to have the effect of, terminating the registration of the Common Stock under the Exchange Act or delisting the Common Stock from the Principal Market, nor has the Company received any notification that the SEC or the Principal Market is contemplating terminating such registration or listing.
Section 4.10 Intellectual Property Rights. The Company and its Subsidiaries own or possess adequate rights or licenses to use all material trademarks, trade names, service marks, service mark registrations, service names, patents, patent rights, copyrights, inventions, licenses, approvals, governmental authorizations, trade secrets and rights, if any, necessary to conduct their respective businesses as now conducted, except as would not cause a Material Adverse Effect. The Company and its Subsidiaries have not received written notice of any infringement by the Company or its Subsidiaries of trademark, trade name rights, patents, patent rights, copyrights, inventions, licenses, service names, service marks, service mark registrations, or trade secrets, except as would not cause a Material Adverse Effect. To the knowledge of the Company, there is no material claim, action or proceeding (a) except as set forth in the Direct Listing Registration Statement or SEC Documents, as applicable, being made or (b) being brought against, or to the Company’s knowledge, being threatened against the Company or its Subsidiaries regarding trademark, trade name, patents, patent rights, invention, copyright, license, service names, service marks, service mark registrations, trade secret or other infringement, in each case, except as would not cause a Material Adverse Effect.
Section 4.11 Employee Relations. Neither the Company nor, to the Company’s knowledge, any of its Subsidiaries is involved in any labor dispute nor, to the knowledge of the Company or any of its Subsidiaries, is any such dispute threatened, in each case which is reasonably likely to cause a Material Adverse Effect.
Section 4.12 Title. Except as would not cause a Material Adverse Effect, the Company (or its Subsidiaries) have indefeasible fee simple or leasehold title to its properties and material assets owned by it, free and clear of any pledge, lien, security interest, encumbrance, claim or equitable interest other than (x) such as are not material to the business of the Company or (y) Permitted Liens. Any real property and facilities held under lease by the Company and its Subsidiaries are held by them under valid, subsisting and enforceable leases with such exceptions as are not material and do not interfere with the use made and proposed to be made of such property and buildings by the Company and its Subsidiaries.
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Section 4.13 Insurance. The Company and each of its Subsidiaries are insured by insurers of recognized financial responsibility against such losses and risks and in such amounts as management of the Company believes to be prudent and customary in the businesses in which the Company and its Subsidiaries are engaged. The Company has no reason to believe that it will not be able to renew its existing insurance coverage as and when such coverage expires or to obtain similar coverage from similar insurers as may be necessary to continue its business at a cost that would not have a Material Adverse Effect.
Section 4.14 Regulatory Permits. Except as would not cause a Material Adverse Effect, the Company and its Subsidiaries possess all material certificates, authorizations and permits issued by the appropriate federal, state or foreign regulatory authorities necessary to own their respective businesses, and neither the Company nor, to the Company’s knowledge, any such Subsidiary has received any written notice of proceedings relating to the revocation or modification of any such certificate, authorization or permits.
Section 4.15 Internal Accounting Controls. The Company maintains a system of internal accounting controls sufficient to provide reasonable assurance that (i) transactions are executed in accordance with management’s general or specific authorizations, (ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with generally accepted accounting principles and to maintain asset accountability, (iii) access to assets is permitted only in accordance with management’s general or specific authorization and (iv) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences, and management is not aware of any material weaknesses that are not disclosed in the Direct Listing Registration Statement or SEC Documents, as applicable, as and when required.
Section 4.16 Absence of Litigation. There is no action, suit, proceeding, inquiry or investigation before or by any court, public board, government agency, self-regulatory organization or body pending against or affecting the Company, the Common Stock or any of the Company’s Subsidiaries, wherein an unfavorable decision, ruling or finding would have a Material Adverse Effect.
Section 4.17 General Solicitation. Neither the Company, nor any of its affiliates, nor any person acting on its or their behalf, has engaged or will engage in any form of general solicitation or general advertising in connection with any offer or sale of the Common Stock.
Section 4.18 Tax Status. Except as would not have a Material Adverse Effect, each of the Company and its Subsidiaries (i) has timely made or filed all foreign, federal and state income and all other tax returns, reports and declarations required by any jurisdiction to which it is subject, (ii) has timely paid all taxes and other governmental assessments and charges that are material in amount, shown or determined to be due on such returns, reports and declarations, except those being contested in good faith and (iii) has set aside on its books provision reasonably adequate for the payment of all taxes for periods subsequent to the periods to which such returns, reports or declarations apply. Except as would not have a Material Adverse Effect, the Company has not received written notification of any unpaid taxes in any material amount claimed to be due by the taxing authority of any jurisdiction, and the officers of the Company and its Subsidiaries know of no basis for any such claim where failure to pay would cause a Material Adverse Effect.
Section 4.19 Certain Transactions. Except as disclosed in the Direct Listing Registration Statement or not required to be disclosed pursuant to Applicable Laws, none of the officers or directors of the Company is presently a party to any transaction with the Company (other than for services as employees, officers and directors), including any contract, agreement or other arrangement providing for the furnishing of services to or by, providing for rental of real or personal property to or from, or otherwise requiring payments to or from any officer or director, or to the knowledge of the Company, any corporation, partnership, trust or other entity in which any officer or director has a substantial interest or is an officer, director, trustee or partner.
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Section 4.20 Rights of First Refusal. The Company is not obligated to offer the Common Stock offered hereunder on a right of first refusal basis to any third parties including, but not limited to, current or former stockholders of the Company, underwriters, brokers, agents or other third parties.
Section 4.21 Dilution. The Company is aware and acknowledges that issuance of Common Stock hereunder could cause dilution to existing stockholders and could significantly increase the outstanding number of Common Stock. The Company further acknowledges that its obligations under the Transaction Documents, including, without limitation, its obligation to issue the Shares and the Commitment Shares pursuant to this Agreement, are unconditional and absolute and not subject to any right of set off, counterclaim, delay or reduction, regardless of the effect of any such dilution or any claim the Company may have against the Investor and regardless of the dilutive effect that such issuance may have on the ownership of the other stockholders of the Company.
Section 4.22 Acknowledgment Regarding Investor’s Purchase of Shares. The Company acknowledges and agrees that the Investor is acting solely in the capacity of an arm’s length investor with respect to this Agreement and the transactions contemplated hereunder. The Company further acknowledges that the Investor is not acting as a financial advisor or fiduciary of the Company (or in any similar capacity) with respect to this Agreement and the transactions contemplated hereunder and any advice given by the Investor or any of its representatives or agents in connection with this Agreement and the transactions contemplated hereunder is merely incidental to the Investor’s purchase of the Shares hereunder. The Company is aware and acknowledges that it shall not be able to request Advances under this Agreement if the Registration Statement is not effective, if any issuances of Common Stock pursuant to any Advances would violate any rules of the Principal Market or if the Company has not satisfied or complied with its other obligations or covenants pursuant to this Agreement.. The Company acknowledges and agrees that it is capable of evaluating and understanding, and understands and accepts, the terms, risks and conditions of the transactions contemplated by this Agreement. Furthermore, notwithstanding Section 3.08, the Company acknowledges and agrees that (a) the Investor may engage in the trading of options with respect to the Common Stock, (b) upon receipt of an Advance Notice the Investor has the right to sell (i) the Shares to be issued to the Investor pursuant to the Advance Notice prior to receiving such Shares, or (ii) other Common Stock sold by the Company to Investor pursuant to this Agreement and which the Investor has continuously held as a long position.
Section 4.23 Finder’s Fees. Except for fees payable to Maxim Group LLC, neither the Company nor any of the Subsidiaries has incurred any liability for any finder’s fees, brokerage commissions or similar payments in connection with the transactions herein contemplated.
Section 4.24 Relationship of the Parties. Neither the Company, nor any of its Subsidiaries, affiliates, nor to the actual knowledge of the Company, any person acting on its or their behalf is a client or customer of the Investor or any of its affiliates and neither the Investor nor any of its affiliates has provided, or will provide, any services to the Company or any of its subsidiaries, or, to the actual knowledge of the Company, any person acting on its or their behalf. The Investor’s relationship to Company is solely as investor as provided for in the Transaction Documents.
Section 4.25 Compliance with Laws. The Company and each of its Subsidiaries are in compliance in all material respects with Applicable Laws; to the knowledge of the Company, the Company has not received a written notice of non-compliance, nor knows of facts that any director, or officer, or employee of the Company or any Subsidiary nor, to the Company’s knowledge, any agent, affiliate or other person acting on behalf of the Company or any Subsidiary has, not complied with Applicable Laws, in each case that would have a Material Adverse Effect.
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Section 4.26 Sanctions Matters. Neither the Company nor any of its Subsidiaries or, to the knowledge of the Company, any director, officer or controlled affiliate of the Company or any director or officer of any Subsidiary, is a Person that is, or is owned or controlled by a Person that is (i) the subject of any sanctions administered or enforced by the U.S. Department of Treasury’s Office of Foreign Asset Control (“OFAC”), the United Nations Security Council, the European Union, or His Majesty’s Treasury, including, without limitation, designation on OFAC’s Specially Designated Nationals and Blocked Persons List or OFAC’s Foreign Sanctions Evaders List (collectively, “Sanctions”), or (ii) located, organized or resident in a country or territory that is the subject of Sanctions that broadly prohibit dealings with that country or territory (including, without limitation, the Crimea region, the Donetsk People’s Republic and Luhansk People’s Republic in Ukraine, Cuba, Iran, North Korea, Russia, Sudan and Syria (the “Sanctioned Countries”)). Neither the Company nor any of its Subsidiaries will, directly or indirectly, use the proceeds from the sale of Advance Shares, or lend, contribute or otherwise make available such proceeds to any subsidiary, joint venture partner or other Person (a) for the purpose of funding or facilitating any activities or business of or with any Person that, at the time of such funding or facilitation, is the subject of Sanctions or in a Sanctioned Country in violation of Sanctions, or (b) in any other manner that will result in a violation of Sanctions or Applicable Laws by any Person (including any Person participating in the transactions contemplated by this Agreement, whether as underwriter, advisor, investor or otherwise). For the past three years, neither the Company nor any of its Subsidiaries has engaged in, and is now not engaged in, any dealings or transactions with any Person, that at the time of the dealing or transaction is or was the subject of Sanctions or was in a Sanctioned Country in violation of Sanctions.
Article V. Indemnification
The Investor and the Company hereby agree to the following with respect to itself:
Section 5.01 Indemnification by the Company. In consideration of the Investor’s execution and delivery of this Agreement and acquiring the Shares hereunder, and in addition to all of the Company’s other obligations under this Agreement, the Company shall defend, protect, indemnify and hold harmless the Investor and its affiliates, and each of their respective officers, directors, managers, members, partners, employees and agents (including, without limitation, those retained in connection with the transactions contemplated by this Agreement) and each person who controls the Investor within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act (collectively, the “Investor Indemnitees”) from and against any and all actions, causes of action, suits, claims, losses, costs, penalties, fees, liabilities and damages, and reasonable and documented expenses in connection therewith (irrespective of whether any such Investor Indemnitee is a party to the action for which indemnification hereunder is sought), and including attorneys’ fees and disbursements (the “Indemnified Liabilities”), incurred by the Investor Indemnitees or any of them, including, but not limited to, as a result of, or arising out of, or relating to (a) any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement for the registration of the Shares as originally filed or in any amendment thereof, or in any related prospectus, or in any amendment thereof or supplement thereto, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading in the case of a prospectus or supplement thereto, in light of the circumstances under which they were made; provided, however, that the Company will not be liable in any such case to the extent that any such loss, claim, damage or liability arises out of or is based upon any such untrue statement or alleged untrue statement or omission or alleged omission made therein in reliance upon and in conformity with written information furnished to the Company by or on behalf of the Investor specifically for inclusion therein; (b) any material misrepresentation or breach of any material representation or material warranty made by the Company in this Agreement or any other certificate, instrument or document contemplated hereby or thereby; (c) any material breach of any material covenant, material agreement or material obligation of the Company contained in this Agreement or any other certificate, instrument or document contemplated hereby or thereby; or (d) any action instituted against the Investor in any capacity, or any its respective Affiliates, including by the Company, or any stockholder of the Company who is not an Affiliate of Investor, with respect to any of the transactions contemplated herein (unless such action is solely based upon a material breach of such Investor’s representations, warranties or covenants hereunder or any agreements or understandings Investor may have with any such stockholder or any violations by Investor of state or federal securities laws or any conduct by Investor which is finally judicially determined to constitute fraud, gross negligence or willful misconduct). To the extent that the foregoing undertaking by the Company may be unenforceable under Applicable Law, the Company shall make the maximum contribution to the payment and satisfaction of each of the Indemnified Liabilities, which is permissible under Applicable Law. The indemnification required by this Section 5.01 shall be made by periodic payments of the amount thereof during the course of the investigation or defense, as and when bills are received or are incurred. The indemnity agreements contained herein shall be in addition to any cause of action or similar right of Investor against the Company or others and any liabilities the Company may be subject to pursuant to law.
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Section 5.02 Notice of Claim. Promptly after receipt by an Investor Indemnitee of notice of the commencement of any action or proceeding (including any governmental action or proceeding) involving an Indemnified Liability, such Investor Indemnitee shall, if a claim for an Indemnified Liability in respect thereof is to be made against any indemnifying party under this Article V, deliver to the indemnifying party a written notice of the commencement thereof; but the failure to so notify the indemnifying party will not relieve it of liability under this Article V except to the extent the indemnifying party is prejudiced by such failure. The indemnifying party shall have the right to participate in, and, to the extent the indemnifying party so desires, jointly with any other indemnifying party similarly noticed, to assume control of the defense thereof with counsel mutually reasonably satisfactory to the indemnifying party and the Investor Indemnitee; provided, however, that an Investor Indemnitee shall have the right to retain its own counsel with the actual and reasonable third party fees and expenses of not more than one counsel for such Investor Indemnitee to be paid by the indemnifying party, if, in the reasonable opinion of counsel retained by the indemnifying party, the representation by such counsel of the Investor Indemnitee and the indemnifying party would be inappropriate due to actual or potential differing interests between such Investor Indemnitee and any other party represented by such counsel in such proceeding. The Investor Indemnitee shall cooperate fully with the indemnifying party in connection with any negotiation or defense of any such action or claim by the indemnifying party and shall furnish to the indemnifying party all information reasonably available to the Investor Indemnitee which relates to such action or claim. The indemnifying party shall keep the Investor Indemnitee reasonably apprised as to the status of the defense or any settlement negotiations with respect thereto. No indemnifying party shall be liable for any settlement of any action, claim or proceeding effected without its prior written consent, provided, however, that the indemnifying party shall not unreasonably withhold, delay or condition its consent. No indemnifying party shall, without the prior written consent of the Investor Indemnitee, consent to entry of any judgment or enter into any settlement or other compromise which does not include as an unconditional term thereof the giving by the claimant or plaintiff to such Investor Indemnitee of a release from all liability in respect to such claim or litigation. Following indemnification as provided for hereunder, the indemnifying party shall be subrogated to all rights of the Investor Indemnitee with respect to all third parties, firms or corporations relating to the matter for which indemnification has been made. The indemnification required by this Article V shall be made by periodic payments of the amount thereof during the course of the investigation or defense, as and when bills are received, and payment therefor is due.
Section 5.03 Remedies. The remedies provided for in this Article V are not exclusive and shall not limit any right or remedy which may be available to any indemnified person at law or equity. The obligations of the parties to indemnify or make contribution under this Article V shall survive expiration or termination of this Agreement.
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Article VI.
Covenants
The Company covenants with the Investor, and the Investor covenants with the Company, as follows, which covenants of one party are for the benefit of the other party, during the Commitment Period:
Section 6.01 Registration Rights.
| (a) | Filing of a Registration Statement. The Company shall use commercially reasonable efforts to prepare and file with the SEC a Registration Statement, or multiple Registration Statements for the resale by the Investor of the Registrable Securities. The Company shall file a registration statement within fifteen (15) days following the Effective Date and shall use commercially reasonable efforts to have such Registration Statement declared effective within ninety (90) days of the Effective Date. The Company shall use commercially reasonable efforts to continuously maintain the effectiveness of the Registration Statement until all of the Registrable Securities have been sold or may be sold without restriction pursuant to Rule 144. A resale registration statement registering the resale of the Shares to be issued to the Investor pursuant to Advances under this Agreement shall be effective before the Company may begin giving Advance Notices. |
| (b) | Maintaining a Registration Statement. The Company shall use commercially reasonable efforts to maintain the effectiveness of any Registration Statement with respect to the Shares that has been declared effective at all times during the Commitment Period, provided, however, that if the Company has received notification pursuant to Section 2.04 that the Investor has completed resales pursuant to the Registration Statement for the full Commitment Amount, then the Company shall be under no further obligation to maintain the effectiveness of the Registration Statement. Notwithstanding anything to the contrary contained in this Agreement, the Company shall ensure that, when filed, each Registration Statement (including, without limitation, all amendments and supplements thereto) and the prospectus (including, without limitation, all amendments and supplements thereto) used in connection with such Registration Statement shall not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein, or necessary to make the statements therein (in the case of prospectuses, in the light of the circumstances in which they were made) not misleading. During the Commitment Period, the Company shall notify the Investor promptly if (i) the Registration Statement shall cease to be effective under the Securities Act, (ii) the Common Stock shall cease to be authorized for listing on the Principal Market, or (iii) the Common Stock cease to be registered under Section 12(b) or Section 12(g) of the Exchange Act or (iv) the Company fails to file in a timely manner all reports and other documents required of it as a reporting company under the Exchange Act. |
| (c) | Filing Procedures. The Company shall (A) permit counsel to the Investor an opportunity to review and comment upon (i) each Registration Statement prior to its filing with the SEC and (ii) all amendments and supplements to each Registration Statement (including, without limitation, the Prospectus contained therein) (except for Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, and any similar or successor reports or Prospectus Supplements the contents of which is limited to that set forth in such reports) within a reasonable number of days prior to their filing with the SEC, and (B) shall reasonably consider any comments of the Investor and its counsel on any such Registration Statement or amendment or supplement thereto or to any Prospectus contained therein. The Company shall promptly furnish to the Investor, without charge, to the extent permitted by Applicable Laws, (i) electronic copies of any correspondence from the SEC or the Staff to the Company or its representatives relating to each Registration Statement (which correspondence shall be redacted to exclude any material, non-public information regarding the Company or any of its Subsidiaries), (ii) after the same is prepared and filed with the SEC, one (1) electronic copy of each Registration Statement and any amendment(s) and supplement(s) thereto, including, without limitation, financial statements and schedules, all documents incorporated therein by reference, if requested by the Investor, and all exhibits and (iii) upon the effectiveness of each Registration Statement, one (1) electronic copy of the Prospectus included in such Registration Statement and all amendments and supplements thereto; provided, however, the Company shall not be required to furnish any document to the extent such document is available on EDGAR). |
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| (d) | Amendments and Other Filings. The Company shall use commercially reasonable efforts to (i) prepare and file with the SEC such amendments (including post-effective amendments) and supplements to a Registration Statement and the related prospectus used in connection with such Registration Statement, which prospectus is to be filed pursuant to Rule 424 promulgated under the Securities Act, as may be necessary to keep such Registration Statement effective at all times during the Commitment Period, and prepare and file with the SEC such additional Registration Statements in order to register for resale under the Securities Act all of the Registrable Securities; (ii) cause the related prospectus to be amended or supplemented by any required prospectus supplement (subject to the terms of this Agreement), and as so supplemented or amended to be filed pursuant to Rule 424 promulgated under the Securities Act; (iii) provide the Investor copies of all correspondence from and to the SEC relating to a Registration Statement (provided that the Company may redact any information contained therein which would constitute material non-public information, and (iv) comply with the provisions of the Securities Act with respect to the Registration Statement. In the case of amendments and supplements to a Registration Statement which are required to be filed pursuant to this Agreement (including pursuant to this Section 6.01(d) by reason of the Company’s filing a report on Form 10-K, Form 10-Q, or Form 8-K or any analogous report under the Exchange Act, provided, that such report is not automatically incorporated by reference into the applicable Registration Statement, the Company shall use commercially reasonable efforts to file such report in a prospectus supplement filed pursuant to Rule 424 promulgated under the Securities Act to incorporate such filing into the Registration Statement, if applicable, or shall file such amendments or supplements with the SEC either on the day on which the Exchange Act report is filed which created the requirement for the Company to amend or supplement the Registration Statement, if feasible, or otherwise promptly thereafter. |
| (e) | Blue-Sky. The Company shall use its commercially reasonable efforts to, if required by Applicable Laws, (i) register and qualify the Common Stock covered by a Registration Statement under such other securities or “blue sky” laws of such jurisdictions in the United States as the Investor reasonably requests, (ii) prepare and file in those jurisdictions, such amendments (including post-effective amendments) and supplements to such registrations and qualifications as may be necessary to maintain the effectiveness thereof during the Commitment Period, (iii) take such other actions as may be necessary to maintain such registrations and qualifications in effect at all times during the Commitment Period, and (iv) take all other actions reasonably necessary or advisable to qualify the Common Stock for sale in such jurisdictions; provided, however, that the Company shall not be required in connection therewith or as a condition thereto to (w) make any change to its certificate of incorporation or bylaws or any other organizational documents of the Company or any of its Subsidiaries, (x) qualify to do business in any jurisdiction where it would not otherwise be required to qualify but for this Section 6.01, (y) subject itself to general taxation in any such jurisdiction, or (z) file a general consent to service of process in any such jurisdiction. The Company shall promptly notify the Investor of the receipt by the Company of any notification with respect to the suspension of the registration or qualification of any of the Common Stock for sale under the securities or “blue sky” laws of any jurisdiction in the United States or its receipt of actual written notice of the initiation or threat of any proceeding for such purpose. |
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Section 6.02 Suspension of Registration Statement.
| (a) | Establishment of a Black Out Period. During the Commitment Period, the Company from time to time may suspend the use of the Registration Statement by written notice to the Investor in the event that the Company determines in its sole discretion in good faith that such suspension is necessary to (A) delay the disclosure of material nonpublic information concerning the Company, the disclosure of which at the time is not, in the good faith opinion of the Company, in the best interests of the Company or (B) amend or supplement the Registration Statement or Prospectus so that such Registration Statement or Prospectus shall not include an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading (a “Black Out Period”). |
| (b) | No Sales by Investor During the Black Out Period. During such Black Out Period, the Investor agrees not to sell any Common Stock of the Company pursuant to such Registration Statement, but may sell Common Stock pursuant to an exemption from registration, if available, subject to the Investor’s compliance with Applicable Laws. |
| (c) | Limitations on the Black Out Period. The Company shall not impose any Black Out Period that is longer than 30 consecutive days (or 90 days in any calendar year) or in a manner that is more restrictive (including, without limitation, as to duration) than the comparable restrictions that the Company may impose on transfers of the Company’s equity securities by its directors and senior executive officers. In addition, the Company shall not deliver any Advance Notice during any Black Out Period. If the public announcement of such material, nonpublic information is made during a Black Out Period, the Black Out Period shall terminate immediately after such announcement, and the Company shall immediately notify the Investor of the termination of the Black Out Period. |
Section 6.03 Listing of Common Stock. As of each Advance Date, the Shares to be sold by the Company from time to time hereunder will have been registered under Section 12(b) of the Exchange Act and approved for listing on the Principal Market, subject to official notice of issuance.
Section 6.04 Opinion of Counsel. Prior to the date of the delivery by the Company of the first Advance Notice, the Investor shall have received an opinion letter from counsel to the Company in form and substance reasonably satisfactory to the Investor.
Section 6.05 Exchange Act Registration. The Company will use commercially reasonable efforts to file in a timely manner all reports and other documents required of it as a reporting company under the Exchange Act and will not take any action or file any document (whether or not permitted by Exchange Act or the rules thereunder) to terminate or suspend its reporting and filing obligations under the Exchange Act.
Section 6.06 Transfer Agent Instructions. For any time while there is a Registration Statement in effect for this transaction, the Company shall (if required by the Transfer Agent) instruct legal counsel for the Company to deliver to the Transfer Agent (with a copy to the Investor) instructions to issue Common Stock to the Investor free of restrictive legends upon each Advance if the delivery of such instructions are consistent with Applicable Law. On the effective date of the initial Registration Statement, the Company shall deliver or cause to be delivered to its Transfer Agent (and thereafter, shall deliver or cause to be delivered to any subsequent Transfer Agent of the Company) irrevocable instructions executed by the Company and acknowledged in writing by the Transfer Agent (the “Commencement Irrevocable Transfer Agent Instructions”) directing the Transfer Agent to issue to the Investor or its designee all of the Shares included in the Registration Statement as DWAC Shares in accordance with this Agreement. With respect to any post-effective amendment to the initial Registration Statement, any new Registration Statement or any post-effective amendment to any new Registration Statement, in each case declared effective by the SEC after the effective date of the initial Registration Statement, the Company shall deliver or cause to be delivered to the Transfer Agent (and thereafter, shall deliver or cause to be delivered to any subsequent Transfer Agent) irrevocable instructions in the form substantially similar to the Commencement Irrevocable Transfer Agent Instructions executed by the Company and acknowledged in writing by the Transfer Agent to issue the Registrable Securities included therein as DWAC Shares in accordance with the terms of this Agreement.
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Section 6.07 Corporate Existence. The Company will use commercially reasonable efforts to preserve and continue the corporate existence of the Company during the Commitment Period.
Section 6.08 Notice of Certain Events Affecting Registration; Suspension of Right to Make an Advance. During the Commitment Period, the Company will promptly notify the Investor, and confirm by email or other writing, promptly following its becoming aware of the occurrence of any of the following events in respect of a Registration Statement or related Prospectus relating to an offering of Common Stock (in each of which cases the information provided to Investor will be kept strictly confidential): (i) except for receipt of any request for additional information by the SEC or any other Federal or state governmental authority during the period of effectiveness of the Registration Statement or any request for amendments or supplements to the Registration Statement or related Prospectus; (ii) the issuance by the SEC or any other Federal governmental authority of any stop order suspending the effectiveness of the Registration Statement or the initiation of any proceedings for that purpose; (iii) receipt of any notification with respect to the suspension of the qualification or exemption from qualification of any of the Common Stock for sale in any jurisdiction or the initiation or written threat of any proceeding for such purpose; (iv) the happening of any event that makes any statement made in the Registration Statement or related Prospectus or any document incorporated or deemed to be incorporated therein by reference untrue in any material respect or that requires the making of any changes in the Registration Statement, related Prospectus or documents so that, in the case of the Registration Statement, it will not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading, and that in the case of the related Prospectus, it will not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, or of the necessity to amend the Registration Statement or supplement a related Prospectus to comply with the Securities Act or any other law, and the Company will promptly make available to the Investor any such supplement or amendment to the related Prospectus; (v) the Company’s reasonable determination that a post-effective amendment to the Registration Statement would be required under Applicable Law; (vi) the Common Stock shall cease to be authorized for listing on the Principal Market; or (vii) the Company fails to file in a timely manner all reports and other documents required of it as a reporting company under the Exchange Act. The Company shall not deliver to the Investor any Advance Notice, and the Company shall not sell any Shares pursuant to any pending Advance Notice (other than as required pursuant to Section 2.02(d)), during the continuation of any of the foregoing events (each of the events described in the immediately preceding clauses (i) through (vii), inclusive, a “Material Outside Event”).
Section 6.09 Consolidation. If an Advance Notice has been delivered to the Investor, then the Company shall not effect any consolidation of the Company with or into, or a transfer of all or substantially all the assets of the Company to another entity before the transaction contemplated in such Advance Notice has been closed in accordance with Section 2.02 hereof, and all Shares in connection with such Advance have been received by the Investor.
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Section 6.10 Issuance of the Common Stock. The issuance and sale of the Common Stock hereunder shall be made in accordance with the provisions and requirements of Section 4(a)(2) of the Securities Act and/or Rule 506 promulgated thereunder, and any applicable state securities law.
Section 6.11 Expenses. The Company, whether or not the transactions contemplated hereunder are consummated or this Agreement is terminated, will pay all expenses incident to the performance of its obligations hereunder, including but not limited to (i) the preparation, printing and filing of the Registration Statement and each amendment and supplement thereto, of each prospectus and of each amendment and supplement thereto; (ii) the preparation, issuance and delivery of any Shares issued pursuant to this Agreement, (iii) the reasonable fees and disbursements of Investor’s counsel up to, but not more than, $75,000, unless pre-approved in writing by the Company (iv) the qualification of the Shares under securities laws in accordance with the provisions of this Agreement, including filing fees in connection therewith, (v) the printing and delivery of copies of any prospectus and any amendments or supplements thereto reasonably requested by the Investor, (vi) the fees and expenses incurred in connection with the listing or qualification of the Shares for trading on the Principal Market, and (vii) filing fees of the SEC and the Principal Market.
Section 6.12 Securities Laws Disclosure; Publicity. Within four (4) Business Days after the date hereof, the Company shall file an amendment to its Direct Listing Registration Statement to disclose all material terms of this Agreement, including filing the Transaction Documents as exhibits thereto, and all other material information provided to the Investor. From and after the effective date of the Direct Listing Registration Statement, the Company represents to the Investor that it shall have publicly disclosed all material, non-public information delivered to the Investor by the Company or any of its Subsidiaries, or any of their respective officers, directors, employees or agents in connection with the transactions contemplated by the Transaction Documents. In addition, effective upon the filing of such amendment to the Direct Listing Registration Statement, the Company acknowledges and agrees that any and all confidentiality or similar obligations under any agreement, whether written or oral, between the Company, any of its Subsidiaries or any of their respective officers, directors, agents, employees or affiliates on the one hand, and the Investor or any of its affiliates on the other hand, shall terminate. The Company and the Investor shall consult with each other in issuing any press releases with respect to the transactions contemplated hereby, and neither the Company nor the Investor shall issue any such press release nor otherwise make any such public statement without the prior consent of the Company, with respect to any press release of the Investor, or without the prior consent of the Investor, with respect to any press release of the Company, which consent shall not unreasonably be withheld or delayed, except if such disclosure is required by law, in which case the disclosing party shall promptly provide the other party with prior notice of such public statement or communication. Notwithstanding the foregoing, the Company shall not publicly disclose the name of the Investor, or include the name of the Investor in any filing with the SEC or any regulatory agency or Principal Market, without the prior written consent of the Investor, except (a) as required by federal securities law in connection with the filing of final Transaction Documents with the SEC and (b) to the extent such disclosure is required by law or Principal Market or Financial Industry Regulatory Authority regulations, in which case the Company shall provide the Investor with prior notice of such disclosure permitted under this clause (b).
Section 6.13 Advance Notice Limitation. The Company shall not deliver an Advance Notice if a stockholder meeting or corporate action date, or the record date for any stockholder meeting or any corporate action, would fall during the period beginning one (1) Trading Day prior to the date of delivery of such Advance Notice and ending one (1) Trading Day following the Closing of such Advance.
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Section 6.14 Use of Proceeds. The proceeds from the sale of the Shares by the Company to Investor shall be used by the Company first, for the repayment of any outstanding senior convertible indebtedness of the Company, and second, in the manner as will be set forth in the Prospectus included in any Registration Statement (and any post-effective amendment thereto) and any Prospectus Supplement thereto filed pursuant to this Agreement. Neither the Company nor any Subsidiary will, directly or indirectly, use the proceeds of the transactions contemplated herein to repay any advances or loans to any executives or employees of the Company or any Subsidiary or to make any payments in respect of any related party obligations, including without limitation any payables or notes payable to related parties of the Company or any Subsidiary whether or not such amounts are described on the balance sheets of the Company in the Direct Listing Registration Statement or subsequent SEC Document or any Subsidiary or described in any “Related Party Transactions” section of the Direct Listing Registration Statement or subsequent SEC Document; provided, however, that the Company may use the proceeds of the transactions contemplated herein to repay any advances or loans due to Nextelligence, Inc. in an aggregate amount not to exceed $2,500,000, provided that such proceeds were not derived from any Advance Notices delivered within the three (3) calendar months prior to such repayment.
Section 6.15 Market Activities. Neither the Company, nor any Subsidiary, nor any of their respective officers, directors or controlling persons will, directly or indirectly, (i) take any action designed to cause or result in, or that constitutes or might reasonably be expected to constitute or result, in the stabilization or manipulation of the price of any security of the Company to facilitate the sale or resale of Common Stock or (ii) sell, bid for, or purchase Common Stock in violation of Regulation M, or pay anyone any compensation for soliciting purchases of the Shares.
Section 6.16 Selling Restrictions. Except as expressly set forth above in Section 4.24 and below, the Investor covenants that from and after the date hereof through and including the Trading Day next following the expiration or termination of this Agreement as provided in Section 9.01 (the “Restricted Period”), none of the Investor any of its officers, or any entity managed or controlled by the Investor (collectively, the “Restricted Persons” and each of the foregoing is referred to herein as a “Restricted Person”) shall, directly or indirectly, (i) engage in any “short sale” (as such term is defined in Rule 200 of Regulation SHO of the Exchange Act) of the Common Stock or (ii) engage in any hedging transaction, which establishes a net short position with respect to any securities of the Company (including the Common Stock), with respect to each of clauses (i) and (ii) hereof, either for its own principal account or for the principal account of any other Restricted Person. Notwithstanding the foregoing, it is expressly understood and agreed that nothing contained herein shall (without implication that the contrary would otherwise be true) prohibit any Restricted Person during the Restricted Period from: (1) selling “long” (as defined under Rule 200 promulgated under Regulation SHO) the Shares; or (2) selling a number of shares of Common Stock equal to the number of Advance Shares that such Restricted Person is unconditionally obligated to purchase under a pending Advance Notice but has not yet received from the Company or the Transfer Agent pursuant to this Agreement.
Section 6.17 Assignment. Neither this Agreement nor any rights or obligations of the parties hereto may be assigned to any other Person, provided, however, that the Investor may assign its rights and obligations hereunder to an affiliate.
Section 6.18 Non-Public Information. The Company covenants and agrees that, other than as expressly required by Section 6.08 hereof, or, with the Investor’s consent pursuant to Section 6.12, it shall refrain from disclosing, and shall instruct its officers, directors, employees and agents to refrain from disclosing, any material non-public information (as determined under the Securities Act, the Exchange Act, or the rules and regulations of the SEC) to the Investor, unless prior to disclosure of such information the Company identifies such information as being material non-public information and provides the Investor with the opportunity to accept or refuse to accept such material non-public information for review. Unless specifically agreed to in writing, in no event shall the Investor have a duty of confidentiality, or be deemed to have agreed to maintain information in confidence, with respect to the delivery of any Advance Notices.
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Section 6.19 Subsequent Equity Sales. From the later of: (i) the Effective Date, and (ii) the first Advance Notice Date, until the date that this Agreement is terminated in accordance with the terms herein, the Company agrees that for the period commencing on each Advance Notice Date and ending on the date immediately following the 20th Trading Day after such Advance Notice Date (the “Standstill Period”), without the prior written consent of the Investor, neither the Company nor any Subsidiary shall (i) issue, enter into any agreement to issue or announce the issuance or proposed issuance of any shares of Common Stock or Common Stock Equivalents, including issuances to any officer, director, or employee of the Company or an affiliate of any of the forgoing Persons (collectively, the “Insiders” and each, an “Insider”) other than (A) in connection with hiring, retaining or the departure of an Insider, (B) pursuant to an equity incentive plan approved by the board of the directors and stockholders of the Company, (C) in connection with the Direct Listing, (D) in connection with the exercise of or issuance of Common Stock Equivalents to an Insider, (E) in connection with the issuance and sale of convertible promissory notes of the Company to an Insider, or (F) in connection with the issuance of securities upon the exercise or exchange of or conversion of any securities exercisable or exchangeable for or convertible into shares of Common Stock issued and outstanding on the date of this Agreement, provided that such securities have not been amended since the date of this Agreement to increase the number of such securities or to decrease the exercise price, exchange price or conversion price of such securities (other than in connection with stock splits or combinations) or to extend the term of such securities or (ii) file any registration statement or any amendment or supplement with respect thereto, other than (A) pursuant to this Agreement or as otherwise approved by the Investor in writing, (B) the filing of a registration statement on Form S-8 in connection with any equity incentive plan, or (C) the filing of any amendment to the Direct Listing Registration Statement, or (iii) be engaged in any “at the market offering” and “equity line of credit” transaction or sell any shares of Common Stock or Common Stock Equivalents in connection with any such transaction other than pursuant to this Agreement.
Section 6.20 No Variable Rate Transactions. From the Effective Date until the later of (i) the one (1) year anniversary of the Effective Date, and (ii) the date that this Agreement is terminated in accordance with the terms herein, provided that, in the event of a termination, the Company has delivered all Shares relating to all prior Advance Notices in accordance with this Agreement, the Company and each Subsidiary shall be prohibited from effecting or entering into an agreement to effect any Subsequent Placement of shares of Common Stock or Common Stock Equivalents (or a combination thereof) involving a Variable Rate Transaction, without the prior written consent of the Investor. The Investor shall be entitled to seek injunctive relief against the Company to preclude any such issuance, which remedy shall be in addition to any right to collect damages, without the necessity of showing economic loss and without any bond or other security being required.
Section 6.21 Participation Right.
| (a) | From the Effective Date until the date that is the thirty-six (36) month anniversary of the date of this Agreement, upon the occurrence of any Subsequent Placement, the Investor shall have the right to participate in up to an amount of the Subsequent Placement equal to 30% of the Subsequent Placement (the “Participation Maximum”) on the same terms, conditions and price provided for in the Subsequent Placement. |
| (b) | Between the time period of 4:00 pm (New York City time) and 6:00 pm (New York City time) on the Trading Day immediately prior to the Trading Day of the expected announcement of the Subsequent Placement (or, if the Trading Day of the expected announcement of the Subsequent Placement is the first Trading Day following a holiday or a weekend (including a holiday weekend), between the time period of 4:00 pm (New York City time) on the Trading Day immediately prior to such holiday or weekend and 2:00 pm (New York City time) on the day immediately prior to the Trading Day of the expected announcement of the Subsequent Placement), the Company shall deliver to the Investor a written notice of the Company’s intention to effect a Subsequent Placement (a “Subsequent Placement Notice”), which notice shall describe in reasonable detail the proposed terms of such Subsequent Placement, the amount of proceeds intended to be raised thereunder and the Person or Persons through or with whom such Subsequent Placement is proposed to be effected and shall include a term sheet and transaction documents relating thereto as an attachment. |
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| (c) | If the Investor desires to participate in such Subsequent Placement, it must provide written notice to the Company by 6:30 am (New York City time) on the Trading Day following the date on which the Subsequent Placement Notice is delivered to the Investor (the “Notice Termination Time”) that the Investor is willing to participate in the Subsequent Placement, the amount of such participation, and representing and warranting that the Investor has such funds ready, willing, and available for investment on the terms set forth in the Subsequent Placement Notice. If the Company receives no such notice from the Investor as of such Notice Termination Time, the Investor shall be deemed to have notified the Company that it does not elect to participate in such Subsequent Placement. |
| (d) | If, by the Notice Termination Time, notification by the Investor of its willingness to participate in the Subsequent Placement (or to cause its designees to participate) is, in the aggregate, less than the Participation Maximum, then the Company may effect the remaining portion of such Subsequent Placement on the terms and with the Persons set forth in the Subsequent Placement Notice. |
| (e) | The Company must provide the Investor with a second Subsequent Placement Notice, and the Investor will again have the right of participation set forth above in this Section 6.21, if the definitive agreement related to the initial Subsequent Placement Notice is not entered into for any reason on the terms set forth in such Subsequent Placement Notice within twenty (20) Trading Days after the date of delivery of the initial Subsequent Placement Notice. |
| (f) | In addition, the Company and the Investor agree that, in connection with a Subsequent Placement, the transaction documents related to the Subsequent Placement shall include a requirement for the Company to issue a widely disseminated press release by 9:30 am (New York City time) on the Trading Day of execution of the transaction documents in such Subsequent Placement (or, if the date of execution is not a Trading Day, on the immediately following Trading Day) that discloses the material terms of the transactions contemplated by the transaction documents in such Subsequent Placement. |
| (g) | Notwithstanding anything to the contrary in this Section 6.21 and unless otherwise agreed to by the Investor, the Company shall either confirm in writing to the Investor that the transaction with respect to the Subsequent Placement has been abandoned or shall publicly disclose its intention to issue the securities in the Subsequent Placement, in either case in such a manner such that the Investor will not be in possession of any material, non-public information, by 9:30 am (New York City time) on the second (2nd) Trading Day following date of delivery of the Subsequent Placement Notice. If by 9:30 am (New York City time) on such second (2nd) Trading Day, no public disclosure regarding a transaction with respect to the Subsequent Placement has been made, and no notice regarding the abandonment of such transaction has been received by the Investor, such transaction shall be deemed to have been abandoned and the Investor shall not be deemed to be in possession of any material, non-public information with respect to the Company or any of its Subsidiaries. |
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| (h) | In the event that the Company fails to notify the Investor of a Subsequent Placement in accordance with paragraph (b) of this Section 6.21 or otherwise fails to comply with any of the provisions of this Section 6.21, then the Investor shall have the right, by delivering a written notice to the Company, during the thirty (30) day calendar period commencing on the date of the first public announcement of the Subsequent Placement to, at the Investor’s option, participate in the Subsequent Placement or subscribe for the securities offered in such Subsequent Placement in a separate transaction on substantially equivalent terms as that of the Subsequent Placement. |
Section 6.22 Nasdaq LAS. The Company shall notify the SEC and the Principal Market, if and as applicable, in accordance with their respective rules and regulations, of the transactions contemplated by the Transaction Documents, and shall take all necessary action, undertake all proceedings and obtain all registrations, permits, consents and approvals for the legal and valid issuance of the Shares to the Investor in accordance with the terms of the Transaction Documents, as applicable (including, without limitation, the submission of a Listing of Additional Shares Notification Form covering the Shares to the Principal Market prior to the date hereof).
Article VII.
Conditions for Delivery of Advance Notice
Section 7.01 Conditions Precedent to the Right of the Company to Deliver an Advance Notice. The right of the Company to deliver an Advance Notice and the obligations of the Investor hereunder with respect to an Advance are subject to the satisfaction or waiver, on each Advance Notice Date (a “Condition Satisfaction Date”), of each of the following conditions:
| (a) | Accuracy of the Company’s Representations and Warranties. The representations and warranties of the Company in this Agreement shall be true and correct as of each Advance Notice Date (other than representations and warranties that are made as of another date, which shall be true and correct as of such other date) and there shall not have been any breach of the Company’s representations and warranties or covenants contained in this Agreement or any related agreements with the Investor. |
| (b) | Registration of the Common Stock with the SEC. There is an effective Registration Statement pursuant to which the Investor is permitted to utilize the Prospectus thereunder to resell all of the shares of Common Stock issuable pursuant to such Advance Notice. The Company shall have filed with the SEC all reports, notices and other documents required under the Exchange Act and applicable SEC regulations during the twelve-month period immediately preceding the applicable Condition Satisfaction Date or such shorter period during which the Company shall have been subject to such requirements. |
| (c) | Authority. The Company shall have obtained all permits and qualifications required by any applicable state for the offer and sale of all the Common Stock issuable pursuant to such Advance Notice, or shall have the availability of exemptions therefrom. The sale and issuance of such Common Stock shall be legally permitted by all laws and regulations to which the Company is subject. |
| (d) | No Material Outside Event. No Material Outside Event shall have occurred and be continuing. |
| (e) | Performance by the Company. The Company shall have performed, satisfied and complied in all material respects with all covenants, agreements and conditions required by this Agreement to be performed, satisfied or complied with by the Company at or prior the applicable Condition Satisfaction Date. |
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| (f) | No Injunction. No statute, rule, regulation, executive order, decree, ruling or injunction shall have been enacted, entered, promulgated or endorsed by any court or governmental authority of competent jurisdiction that prohibits any of the transactions contemplated by this Agreement. |
| (g) | No Suspension of Trading in or Delisting of Common Stock. The Common Stock is quoted for trading on the Principal Market and all of the Shares issuable pursuant to such Advance Notice will be listed or quoted for trading on the Principal Market. The issuance of Common Stock with respect to the applicable Advance Notice will not violate the stockholder approval requirements of the Principal Market. The Common Stock shall not have ceased to be eligible for trading on the Principal Market and shall not have received any notice from the Principal Market that such eligibility is in any jeopardy during the 180-day period beginning from the Advance Notice Date. |
| (h) | Not Penny Stock. The Common Stock is not “penny stock” as defined in rules promulgated by the SEC for purposes of 3(a)(51) of the Exchange Act. |
| (i) | DTC Authorization. The Common Stock shall be DTC authorized and participating in the DWAC/FAST systems. If despite the Investor’s commercially reasonable efforts, the Investor’s prime broker relationships notify the Investor that they are unable to settle the Pre-Settlement Shares and/or the Settlement Shares for any reason, the applicable Advance Notice shall be considered cancelled with no further force and effect and such Closing shall not occur. |
| (j) | Authorized. There shall be a sufficient number of authorized but unissued and otherwise unreserved shares of Common Stock for the issuance of all of the Shares issuable pursuant to such Advance Notice. |
| (k) | Insolvency. The Company shall not have been declared bankrupt or insolvent and the Company shall not have participated or been threatened with participation in insolvency or bankruptcy proceedings. |
| (l) | Executed Advance Notice. The representations contained in the applicable Advance Notice shall be true and correct in all material respects as of the applicable Condition Satisfaction Date. |
| (m) | Delivery of Commencement Irrevocable Transfer Agent Instructions. The Commencement Irrevocable Transfer Agent Instructions shall have been executed by the Company and delivered to and acknowledged in writing by the Transfer Agent, directing the Transfer Agent to issue to the Investor or its designated broker-dealer all of the Commitment Shares and the Shares included in the initial Registration Statement as DWAC Shares in accordance with this Agreement. |
| (n) | Consecutive Advance Notices. Except with respect to the first Advance Notice, the Company shall have delivered all Shares relating to all prior Advances. |
| (o) | No Disputes. No bona fide dispute between the Company and the Investor shall exist with respect to any Transaction Document. |
| (p) | No Fundamental Transaction. Since the date of this Agreement, no Fundamental Transaction shall have occurred. |
| (q) | Non-Public Information. The Investor shall have neither received, nor be in possession of, any material, non-public information regarding the Company or any of its Subsidiaries. |
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Article VIII. Choice of Law/Jurisdiction
Section 8.01 Choice of Law. Except as otherwise expressly provided in any other Transaction Document, this Agreement, the other Transaction Documents and all claims, disputes, Proceedings, and matters related hereto or thereto or arising hereunder or thereunder or arising from or relating to the relationship among any of the parties hereto or thereto, are governed by, and shall be construed, interpreted and enforced exclusively in accordance with, the laws of the State of Delaware (without giving effect to the conflict of laws provisions thereof to the extent such principles or rules would require or permit the application of the laws of any jurisdiction other than those of the State of Delaware).
Section 8.02 Choice of Forum. Any such Proceeding shall be brought exclusively in the Delaware state courts sitting in Wilmington, Delaware or the federal courts of the United States of America for the District of Delaware sitting in Wilmington, Delaware; provided, that the Investor may bring Proceedings in other jurisdictions to enforce any Transaction Document.
Article IX. Termination
Section 9.01 Termination.
| (a) | Unless earlier terminated as provided hereunder, this Agreement shall terminate automatically on the earliest of (i) the first day of the month following the 36-month anniversary of the Effective Date, (ii) the date on which the Investor shall have made payment of Advances pursuant to this Agreement for Common Stock equal to the Commitment Amount, (iii) the date on which the Company announces or publicly discloses a material restatement of its financial statements for two (2) or more fiscal quarters, (iv) the date a Variable Rate Transaction has occurred, and (v) the date the Company has failed to comply with the covenants and obligations contained in Section 6.21 herein. |
| (b) | This Agreement may be terminated at any time by the mutual written consent of the parties, effective as of the date of such mutual written consent unless otherwise provided in such written consent. |
| (c) | The Company has the right to terminate this Agreement at any time, upon five Trading Days’ prior written notice to the Investor, provided that (i) there are no outstanding Advance Notices, the Common Stock under which have yet to be issued, and (ii) the Company has paid all amounts owed to the Investor pursuant to this Agreement. |
| (d) | Nothing in this Section 9.01 shall be deemed to release the Company or the Investor from any liability for any breach under this Agreement, or to impair the rights of the Company and the Investor to compel specific performance by the other party of its obligations under this Agreement. The provisions contained in Articles V, X and XI shall survive termination hereunder. |
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Article X. Notices
Other than with respect to Advance Notices, which must be in writing and will be deemed delivered on the day set forth in Section 2.01(b), any notices, consents, waivers, or other communications required or permitted to be given under the terms of this Agreement must be in writing and will be deemed to have been delivered (i) upon receipt, when delivered personally; (ii) upon receipt, when sent by e-mail if sent on a Trading Day, or, if not sent on a Trading Day, on the immediately following Trading Day; (iii) five (5) calendar days after being sent by U.S. certified mail, return receipt requested, (iv) one (1) calendar day after deposit with a nationally recognized overnight delivery service, in each case properly addressed to the party to receive the same. The addresses and e-mail addresses for such communications (except for Advance Notices which shall be delivered in accordance with Exhibit A hereof) shall be:
|
If to the Company to: |
FreeCast, Inc. 6901 TPC Drive, Suite 200 Orlando, Florida 32822 |
| Attention: William A. Mobley, Jr. | |
|
Telephone: (407) 374-1607 Email: bmobley@freecast.com | |
|
With a copy to (which shall not constitute notice or delivery of process) to: |
Bahnsen Legal Group, PLLC 131 NE 1st Avenue, Suite 100 Boca Raton, Florida 33432 Attention: Jeffery A. Bahnsen, Esq. Telephone: (727) 888-3026 Email: jeff@bahnsenlaw.com |
|
|
|
| If to the Investor(s): | Legal Notices |
| Amiens Technology Investments LLC | |
| Attention: Waqas Khatri | |
| Telephone: (646) 721-3358 | |
|
Email: research@ayrtonllc.com | |
|
With a copy (which shall not constitute notice or delivery of process) to: |
Sullivan & Worcester LLP 1251 Avenue of the Americas, 19th Floor New York, NY 10020 Attention: David Danovitch, Esq. |
| Telephone: (212) 660-3000 | |
| Email: ddanovitch@sullivanlaw.com |
or at such other address and/or e-mail and/or to the attention of such other person as the recipient party has specified by written notice given to each other party prior to the effectiveness of such change by means provided in this Article X. Written confirmation of receipt (i) given by the recipient of such notice, consent, waiver or other communication, (ii) electronically generated by the sender’s email service provider containing the time, date, and recipient email address or (iii) provided by a nationally recognized overnight delivery service shall be rebuttable evidence of personal service or receipt from a nationally recognized overnight delivery service in accordance with clause (i), (ii) or (iii) above, respectively.
Article XI. Miscellaneous
Section 11.01 Counterparts. This Agreement may be executed in identical counterparts, both which shall be considered one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to the other party. Facsimile or other electronically scanned and delivered signatures (including any electronic signature covered by the U.S. federal ESIGN Act of 2000, Uniform Electronic Transactions Act, the Electronic Signatures and Records Act or other applicable law, e.g., www.docusign.com), including by e-mail attachment, shall be deemed to have been duly and validly delivered and be valid and effective for all purposes of this Agreement.
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Section 11.02 Entire Agreement; Amendments. This Agreement supersedes all other prior oral or written agreements between the Investor, the Company, their respective affiliates and persons acting on their behalf with respect to the matters discussed herein, and this Agreement contains the entire understanding of the parties with respect to the matters covered herein and, except as specifically set forth herein, neither the Company nor the Investor makes any representation, warranty, covenant or undertaking with respect to such matters. No provision of this Agreement may be waived or amended other than by an instrument in writing signed by the parties to this Agreement.
Section 11.03 Reporting Entity for the Common Stock. The reporting entity relied upon for the determination of the trading price or trading volume of the Common Stock on any given Trading Day for the purposes of this Agreement shall be Bloomberg, L.P. or any successor thereto. The written mutual consent of the Investor and the Company shall be required to employ any other reporting entity.
Section 11.04 Commitment Fee. The Company will issue to the Investor, as a commitment fee, an amount equal to 1.5% of the Commitment Amount (the “Commitment Fee”) by the issuance to the Investor of a number of shares of Common Stock (the “Commitment Shares”) as follows: (i) one-third (1/3) of the Commitment Shares shall be issued to the Investor on the occurrence of the first Closing hereunder; (ii) one-third (1/3) of the Commitment Shares shall be issued to the Investor on the date the Investor has purchased an aggregate of $15.0 million of Shares pursuant to this Agreement; and (iii) the remaining one-third (1/3) of the Commitment Shares shall be issued to the Investor on the date the Investor has purchased an aggregate of $30.0 million of Shares pursuant to this Agreement (each, a “Commitment Fee Measurement Date”). The number of Commitment Shares issued to the Investor on each Commitment Fee Measurement Date shall equal one-third (1/3) of the Commitment Fee divided by the lower of (x) $10.00 and (y) the Market Price then in effect. In the event the Company fails to comply with its covenants and obligations contained in Section 6.20 or Section 6.21 contained herein, all Commitment Shares due to the Investor pursuant to this Section 11.04 that have not been previously issued will be automatically issued to the Investor on the date of such breach and the Company acknowledges such issuance shall not limit any other right or remedy which may be available to the Investor at law or equity resulting from such breach. The resale of the Commitment Shares issued hereunder shall be included on the initial Registration Statement.
Section 11.05 Brokerage. Each of the parties hereto represents that it has had no dealings in connection with this transaction with any finder or broker who will demand payment of any fee or commission from the other party. The Company on the one hand, and the Investor, on the other hand, agree to indemnify the other against and hold the other harmless from any and all liabilities to any person claiming brokerage commissions or finder’s fees on account of services purported to have been rendered on behalf of the indemnifying party in connection with this Agreement or the transactions contemplated hereby.
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IN WITNESS WHEREOF, the parties hereto have caused this Equity Purchase Agreement to be executed by the undersigned, thereunto duly authorized, as of the date first set forth above.
| COMPANY: | ||
| FREECAST, INC. | ||
| By: | /s/ William A. Mobley, Jr. | |
| Name: | William A. Mobley, Jr. | |
| Title: | Chief Executive Officer | |
| INVESTOR: | ||
| AMIENS TECHNOLOGY INVESTMENTS LLC | ||
| By: | /s/ Waqas Khatri | |
| Name: | Waqas Khatri | |
| Title: | Director | |
SIGNATURE PAGE TO FREECAST, INC. EQUITY PURCHASE AGREEMENT
EXHIBIT A
ADVANCE NOTICE
FREECAST, INC.
| Dated: ______________ | Advance Notice Number: _______ |
The undersigned, _______________________, hereby certifies, with respect to the sale of Common Stock of FreeCast, Inc. (the “Company”) issuable in connection with this Advance Notice, delivered pursuant to that certain EQUITY PURCHASE AGREEMENT, dated as of December [8], 2025 (the “Agreement”), as follows (with capitalized terms used herein without definition having the same meanings as given to them in the Agreement):
1. The undersigned is the duly elected ______________ of the Company.
2. There are no fundamental changes to the information set forth in the Registration Statement which would require the Company to file a post-effective amendment to the Registration Statement.
3. The Company has performed in all material respects all covenants and agreements to be performed by the Company contained in the Agreement on or prior to the Advance Notice Date. All conditions to the delivery of this Advance Notice are satisfied as of the date hereof.
4. The number of Advance Shares the Company is requesting is _____________________.
5. The VWAP of the Common Stock on the Advance Notice Date is ______________.
6. The cost basis for the Advance Shares the Company is requesting is _______________.
7. The number of shares of Common Stock of the Company outstanding as of the date hereof is ___________.
8. The number of shares of Common Stock of the Company outstanding as of the Effective Date is ___________.
9. The Registration Limitation is ___________ shares of Common Stock, of which _______ shares of Common Stock remain available and unissued prior the settlement of this Advance Notice and _______ shares of Common Stock will be available following the settlement of this Advance Notice.
The undersigned has executed this Advance Notice as of the date first set forth above.
| FREECAST, INC. | |
| By: __________________________________ |
Please deliver this Advance Notice by email to:
Email:
Attention:
Confirmation Telephone Number:
EXHIBIT B
FORM OF SETTLEMENT DOCUMENT
VIA EMAIL
| [—] | |
| Attn: | |
| Email: | Advance Notice Date: _______________, |
| 202__ |
| Below please find the settlement information with respect to the Payment Adjustment: | ||
|
1. |
Number of Advance Shares requested in the Advance Notice | |
| 2. | Number of Pre-Settlement Shares Delivered (product of (A) quotient of (y) the Maximum Advance Amount divided by (z) the Pre-Settlement Purchase Price, and (B) 100%) (including any additional Pre-Settlement Shares requested by Investor, if any) | |
| 3. | Number of Advance Shares, as adjusted pursuant to Section 2.10(c) (if any) | |
| 4. | Number of Shares to be returned to the Company, if any (if Row 2 is greater than Row 3, the difference between Row 2 and Row 3) | |
| 5. | Total Advance Shares (Row 2 minus Row 4) | |
| 6. | Market Price |
|
| 7. | Purchase Price per Share (product of Row 6 and 95.0%) | |
| 8. | Aggregate Purchase Price due to Company (Row 5 multiplied by Row 7): | |
Sincerely,
Agreed and approved.
By [______________]:
__________________________________
Name:
Exhibit 23.1
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
As independent registered public accountants, we hereby consent to the use of our report dated September 29, 2025, with respect to the financial statements of FreeCast, Inc. for the years ended June 30, 2025, and 2024, in this Registration Statement on Form S-1/A relating to the registration of 19,782,084 Shares of Class A Common Stock. We also consent to the reference to our firm under the caption “Experts” in this Registration Statement.
/s/ Sadler, Gibb & Associates, LLC
Draper, UT
December 9, 2025