ONEI 10-Q
OneMeta Inc. (ONEI)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For
the quarterly period ended
OR
| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from ________to ________.
Commission
File Number
(Exact name of registrant as specified in its charter)
(State or other jurisdiction of incorporation or organization) |
(IRS Employer Identification No.) |
(Address of principal executive offices, including zip code)
Registrant’s
telephone number, including area code:
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol | Name of exchange on which registered | ||
Indicate
by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2)
has been subject to filing requirements for the past 90 days.
Indicate
by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule
405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a 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 ☐ | 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 13(a) of the Exchange Act.
Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No
As of May 15, 2026, the registrant had shares of common stock outstanding.
TABLE OF CONTENTS
| PART I. | FINANCIAL INFORMATION | 3 |
| Item 1. | Financial Statements (Unaudited) | 3 |
| Balance Sheets | 3 | |
| Statements of Operations | 4 | |
| Statements of Changes in Stockholders’ Equity (Deficit) | 5 | |
| Statements of Cash Flows | 6 | |
| Notes to Financial Statements (Unaudited) | 7 | |
| Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 21 |
| Item 4. | Controls and Procedures | 27 |
| PART II. | OTHER INFORMATION | 28 |
| Item 1. | Legal Proceedings | 28 |
| Item 1A. | Risk Factors | 28 |
| Item 6. | Exhibits | 28 |
| SIGNATURES | 29 | |
| 2 |
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
ONEMETA INC.
BALANCE SHEETS
| March 31, 2026 | December 31, 2025 | |||||||
| (Unaudited) | ||||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash | $ | $ | ||||||
| Accounts receivable, net | ||||||||
| Subscription receivable | ||||||||
| Prepaid and other current assets | ||||||||
| Total current assets | ||||||||
| Noncurrent Assets: | ||||||||
| Property and equipment, net | ||||||||
| Total noncurrent assets | ||||||||
| Total assets | $ | $ | ||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT) | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | $ | ||||||
| Accrued expenses | ||||||||
| Accrued expenses, related party | ||||||||
| Related party advances | ||||||||
| Convertible notes payable | ||||||||
| Convertible notes payable, related party | ||||||||
| Promissory notes payable, net | ||||||||
| Deferred revenue | ||||||||
| Total current liabilities | ||||||||
| Noncurrent Liabilities: | ||||||||
| Convertible notes payable, net of current portion and discount | ||||||||
| Total noncurrent liabilities | ||||||||
| Total liabilities | ||||||||
| STOCKHOLDERS’ EQUITY (DEFICIT) | ||||||||
| Preferred stock, $ par value, shares authorized, | ||||||||
| Series A preferred stock, $ par value, shares authorized, issued and outstanding | ||||||||
| Series B-1 convertible preferred stock, $ par value, shares authorized, shares issued and outstanding | ||||||||
| Common stock, $ par value, shares authorized, and shares issued and outstanding, respectively | ||||||||
| Common stock liability | ||||||||
| Series B-1 convertible preferred stock liability | ||||||||
| Additional paid in capital | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Total stockholders’ equity (deficit) | ( | ) | ( | ) | ||||
| Total liabilities and stockholders’ equity (deficit) | $ | $ | ||||||
The accompanying notes are an integral part of these financial statements.
| 3 |
ONEMETA INC.
STATEMENTS OF OPERATIONS
(Unaudited)
| Three months ended | Three months ended | |||||||
| March 31, 2026 | March 31, 2025 | |||||||
| Revenue | $ | $ | ||||||
| Cost of revenue | ||||||||
| Gross profit | ||||||||
| Operating expenses: | ||||||||
| Research and development | ||||||||
| General and administrative | ||||||||
| Advertising and marketing | ||||||||
| Legal and professional | ||||||||
| Total operating expenses | ||||||||
| Loss from operations | ( | ) | ( | ) | ||||
| Other income (expense): | ||||||||
| Other income | ||||||||
| Interest expense | ( | ) | ( | ) | ||||
| Total other expense | ( | ) | ( | ) | ||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Net loss per common share: | ||||||||
| Basic | $ | ( | ) | $ | ( | ) | ||
| Diluted | $ | ( | ) | $ | ( | ) | ||
| Weighted average common shares outstanding: | ||||||||
| Basic | ||||||||
| Diluted | ||||||||
The accompanying notes are an integral part of these unaudited financial statements.
| 4 |
ONEMETA INC.
STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT)
For the three months ended March 31, 2026 and 2025
(Unaudited)
| Series A Preferred Stock | Series B-1 Convertible Preferred Stock | Common Stock | Common Stock | Series B-1 Convertible Preferred Stock | Additional paid-in | Accumulated | ||||||||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Shares | Amount | liability | liability | capital | Deficit | Total | ||||||||||||||||||||||||||||||||||
| Balance, December 31, 2024 | $ | $ | $ | $ | $ | $ | $ | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||
| Stock based compensation | - | - | - | |||||||||||||||||||||||||||||||||||||||||
| Net loss | - | - | - | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||||||
| Balance, March 31, 2025 | $ | $ | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||||||||||||||||||||||
| Balance, December 31, 2025 | $ | $ | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||||||||||||||||||||||
| Series B-1 Preferred stock repurchase deposit | - | - | - | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||||||
| Series B-1 Preferred stock liability | - | - | - | |||||||||||||||||||||||||||||||||||||||||
| Common shares liability | - | - | - | |||||||||||||||||||||||||||||||||||||||||
| Stock based compensation | - | - | - | |||||||||||||||||||||||||||||||||||||||||
| Imputed interest | - | - | - | |||||||||||||||||||||||||||||||||||||||||
| Relative fair value of warrants issued with convertible debt | - | - | - | |||||||||||||||||||||||||||||||||||||||||
| Net loss | - | - | - | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||||||
| Balance, March 31, 2026 | $ | $ | $ | $ | $ | $ | $ | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||
The accompanying notes are an integral part of these unaudited financial statements.
| 5 |
ONEMETA INC.
STATEMENTS OF CASH FLOWS
(Unaudited)
| Three Months ended | Three Months ended | |||||||
| March 31, 2026 | March 31, 2025 | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Adjustment to reconcile net loss to cash used in operating activities: | ||||||||
| Imputed interest | ||||||||
| Stock based compensation | ||||||||
| Common stock liability | ||||||||
| Series B-1 Preferred stock liability | ||||||||
| Amortization of debt discount | ||||||||
| Depreciation expense | ||||||||
| Net change in: | ||||||||
| Accounts receivable | ( | ) | ( | ) | ||||
| Subscription receivable | ( | ) | ||||||
| Prepaid and other current assets | ||||||||
| Accounts payable | ||||||||
| Accrued expenses | ||||||||
| Accrued expenses, related party | ( | ) | ||||||
| Deferred revenue | ( | ) | ( | ) | ||||
| CASH FLOWS USED IN OPERATING ACTIVITIES | ( | ) | ( | ) | ||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
| Proceeds from senior secured promissory notes, related party | ||||||||
| Payments of senior secured notes payable, related party | ( | ) | ||||||
| Proceeds from convertible notes | ||||||||
| Proceeds from convertible notes, related party | ||||||||
| Proceeds from promissory notes, related party | ||||||||
| Repayment of senior secured promissory notes | ( | ) | ||||||
| Repayment of senior secured promissory notes | ( | ) | ||||||
| Proceeds from related party advances | ||||||||
| Payment of Series B-1 Preferred stock repurchase | ( | ) | ||||||
| CASH FLOWS PROVIDED BY FINANCING ACTIVITIES | ||||||||
| NET CHANGE IN CASH | ( | ) | ||||||
| Cash, beginning of period | ||||||||
| Cash, end of period | $ | $ | ||||||
| SUPPLEMENTAL CASH FLOW INFORMATION | ||||||||
| Cash paid on interest expense | $ | $ | ||||||
| Cash paid for income taxes | $ | $ | ||||||
| NON-CASH TRANSACTIONS | ||||||||
| Expenses paid on the Company’s behalf | $ | $ | ||||||
| Series B-1 Preferred stock repurchased with a note | $ | $ | ||||||
| Relative fair value of warrants issued with convertible debt | $ | $ | ||||||
| Series B-1 repurchase costs | $ | $ | ||||||
The accompanying notes are an integral part of these financial statements.
| 6 |
OneMeta Inc.
(Formerly OneMeta AI)
Notes to the Financial Statements
(Unaudited)
Note 1. Basis of Presentation
The accompanying unaudited interim financial statements of OneMeta Inc. (“we”, “our”, “OneMeta” or the “Company”) have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules of the Securities and Exchange Commission (“SEC”) and should be read in conjunction with the financial statements and notes thereto contained in the Company’s fiscal 2025 financial statements. In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position and the results of operations for the interim periods presented have been reflected herein. The results of operations for our interim periods are not necessarily indicative of the results to be expected for the full year. Notes to the financial statements that would substantially duplicate the disclosure contained in the financial statements for fiscal 2025, have been omitted.
OneMeta was originally incorporated as Promotions on Wheels Holdings, Inc., a Nevada corporation, on July 3, 2006. On December 26, 2008, the name of the Company was changed to Blindspot Alert, Inc. On September 11, 2009, the Company’s name was changed to WebSafety, Inc. On March 23, 2021, the Company’s name was changed to VeriDetx Corp. On June 8, 2021, the Company’s name was changed to WebSafety, Inc. On July 10, 2022, the Company’s name was changed to OneMeta AI. On June 20, 2023, the Company’s name was changed to OneMeta Inc.
Note 2. Summary of Significant Accounting Policies
Use of Estimates
In preparing financial statements in conformity with accounting principles generally accepted in the United States of America, management is required to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates in the accompanying financial statements involving the valuation of stock-based compensation, fair value measurement and long-term customer contracts.
Cash and Cash Equivalents
Cash equivalents include all highly liquid investments with original maturities of three months or less.
Accounts Receivable
Accounts
receivable are comprised of unsecured amounts due from customers. The Company carries its accounts receivable at their face amounts less
an allowance for credit losses. The allowance for credit losses is recognized based on management’s estimate of likely losses per
year, past experience, review of customer profiles and the aging of receivable balances. As of March 31, 2026 and December 31, 2025,
there was $
Related Parties
The Company follows ASC 850, “Related Party Disclosures,” for the identification of related parties and disclosure of related party transactions.
Fair Value of Financial Instruments
The Company’s financial instruments consist primarily of cash and accounts payable. The carrying values of these financial instruments approximate their respective fair values as they are short-term in nature or carry interest rates that approximate market rates.
| 7 |
Revenue Recognition
The Company recognizes revenue in accordance with ASC Topic 606, Revenue from Contracts With Customers, which was adopted on January 1, 2018 using the modified retrospective method, with no impact to the Company’s comparative financial statements. Revenues are recognized when control of the promised goods or services is transferred to the customer in an amount that reflects the consideration the Company expects to be entitled to in exchange for transferring those goods or services. Revenue is recognized based on the following five step model:
| ● | Identification of the contract with a customer |
| ● | Identification of the performance obligations in the contract |
| ● | Determination of the transaction price |
| ● | Allocation of the transaction price to the performance obligations in the contract |
| ● | Recognition of revenue when, or as, the Company satisfies a performance obligation |
Subscription and license
We enter into revenue arrangements in which a customer may purchase a combination of subscriptions, consulting services, training and education. Fully hosted subscription services (“SaaS”) allow customers to access hosted software during the contractual term without taking possession of the software.
We recognize revenue ratably over the contractual service term for hosted services that are priced based on a committed number of transactions where the delivery and consumption of the benefit of the services occur evenly over time, beginning on the date the services associated with the committed transactions are first made available to the customer and continuing through the end of the contractual service term. Over-usage fees and fees based on the actual number of transactions are billed in accordance with contract terms as these fees are incurred and are included in the transaction price of an arrangement as variable consideration. Revenue based on per-minute or per-word basis, where invoicing is aligned to the pattern of performance, customer benefit and consumption, are typically accounted for utilizing the “as-invoiced” practical expedient. Revenue for subscriptions sold as a fee per period is recognized ratably over the contractual term as the customer simultaneously receives and consumes the benefit of the underlying service.
Licenses for software may be purchased as a subscription for a fixed period of time or based on usage. Revenue from licenses is recognized at the point in time the software is available to the customer, provided all other revenue recognition criteria are met, and classified as revenue on our Statements of Operations. Our interpretation or translation services fees are based on a per-minute or per-word basis, are typically accounted for utilizing the “as-invoiced” practical expedient.
Our services are comprised primarily of fees related to training, and education for certain licenses that are recognized at a point in time. Training and education revenues are recognized as the services are performed.
OEM solution
The Company provides Over-the-phone, consecutive AI Translation Service (“VerbumCall SDK”) that uses WebSocket connections to provide an AI service designed to facilitate effortless communication across languages within the platforms. This product leverages advanced AI capabilities to provide consecutive audio translation, ensuring that both patrons and agents experience conversations without the need for additional steps or complicated setups.
The Company has multiple performance obligations in the customer contract with inContact. The Company is to generate revenue through the following sources: sale of OEM Solution software and professional services, which consist of implementation, configuration, custom development, optimization, training and technical support services of the OEM Solution.
| 8 |
VerbumAgentis
On
March 31, 2025, the Company entered into a reseller and distribution agreement to provide software development kit (SDK) to the reseller
to use and/or resell to their customers. The Company will provide the reseller with a VerbumAgentis communication platform and an encryption
key to install on their computer system and servers. In return, the reseller is to pay an initial one-time paid-up fee of $
VerbumAgentis is a standalone communication platform with core capabilities such as chat-based interaction, transcription, and multilingual simultaneous interpretation for voice-to-voice customer interactions. It includes real-time bidirectional communication and integrations. While live translation leverages underlying language models (SDK), the core platform delivers independent value even without SDK execution for each interaction.
VerbumAgentis is installed on client’s servers that they control. The Company is to deliver and install the VerbumAgentis platform on the customers’ server and provide translation services on an as requested basis by the end customers. The customer benefits from the VerbumAgentis platform as a standalone system once installed on their infrastructure. Further, the translation services and other per usage items outlined in the contract are obligations that arise when those services are initiated by the customer.
Disaggregation of revenues
The Company disaggregates revenue between subscription and license revenue and professional service revenue.
| Three Months Ended March 31, 2026 | Three Months Ended March 31, 2025 | |||||||
| Subscription, license and software revenue | $ | $ | ||||||
| Professional services | ||||||||
| OEM Solution usage | ||||||||
| Total revenue | $ | $ | ||||||
Deferred Revenue
Deferred
revenue includes service and support contracts and represents the undelivered performance obligation of agreements that are typically
for one year or less. On October 8, 2024, the Company entered into an OEM Agreement to provide OEM Solutions hosting consisting of over-the-phone
consecutive AI language translation solutions. Upon execution of the agreement, the Company received $
During
the period ended March 31, 2026, the Company recorded additional $
Stock-Based Compensation
All stock-based awards to employees and non-employee contractors, including any grants of stock and stock options, are measured at fair value at the grant date and recognized over the relevant vesting period in accordance with the Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Topic 718. Stock based awards to non-employees are recognized as a selling, general and administrative expense over the period of performance. Such awards are measured at fair value at the date of grant. In addition, for awards that vest immediately, the awards are measured at fair value and recognized in full at the grant date.
| 9 |
Basic loss per common share is computed by dividing the net loss available to common shareholders by the weighted-average number of common shares outstanding during the period. Diluted loss per common share is determined by using the weighted-average number of common shares outstanding during the period, adjusted for the dilutive effect of common stock equivalents. In periods when losses are reported, the weighted-average number of common shares outstanding excludes common stock equivalents, because their inclusion would be anti-dilutive. As of March 31, 2026, the Company’s potentially dilutive shares, which were not included in the calculation of net loss per share, included warrants to purchase common shares, options to purchase common shares, conversion of Series B-1 shares to purchase common shares, conversion of Series A shares to purchase common shares, and the conversion of the convertible notes to common shares. Accordingly, the number of weighted average shares outstanding, as well as the amount of net loss per share are presented for basic and diluted per share calculations As of March 31, 2026 and 2025, reflected in the accompanying statement of operations.
Segments Reporting
The Company manages its operations as a single segment for the purpose of assessing performance and making operating decisions. The Company’s Chief Operating Decision Maker (“CODM”) is its Chief Executive Officer. The CODM allocates resources and evaluates the performance of the Company using information about combined net income from operations. All significant operating decisions are based upon an analysis of the Company as one operating segment, which is the same as its reporting segment.
Recent Accounting Pronouncements
Disaggregation of Income Statement Expenses
In November 2024, the FASB issued Accounting Standards Update No. 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40) (“ASU 2024-03”). ASU 2024-03 requires specified information about certain costs and expenses be disclosed in the notes to the financial statements, including the expense caption on the face of the income statement in which they are disclosed, in addition to a qualitative description of remaining amounts not separately disaggregated. Entities will also be required to disclose their definition of “selling expenses” and the total amount in each annual period. The standard is effective for the Company for annual periods beginning January 1, 2027 and for interim periods beginning January 1, 2028, with updates applied either prospectively or retrospectively. Early adoption is permitted. The Company is currently evaluating the impact of this guidance on its disclosures.
Credit Losses
In July 2025, the FASB issued ASU 2025-05, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets, which provides updates related to CECL guidance for certain short-term receivables. The ASU is effective for fiscal years beginning after December 15, 2025. We adopted ASU No. 2025-05 during the year ended December 31, 2026, with no material impact to the Company’s financial statements or results of operations.
Note 3. Going Concern
These financial statements have been prepared in accordance with generally accepted accounting principles applicable to a going concern, which assumes that the Company will be able to meet its obligations and continue its operations for its next fiscal year. Realization values may be substantially different from carrying values as shown and these financial statements do not give effect to adjustments that would be necessary to the carrying values and classification of assets and liabilities should the Company be unable to continue as a going concern. As of March 31, 2026, the Company had not yet achieved profitable operations and expects to incur further losses in the development of its business, all of which raise substantial doubt about the Company’s ability to continue as a going concern. The Company’s ability to continue as a going concern is dependent upon its ability to generate future profitable operations and/or to obtain the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they come due. The Company is actively seeking funding through debt and equity offerings. Management cannot be certain that such events or a combination thereof can be achieved.
| 10 |
Note 4. Related Party Transactions
Expense paid on the Company’s behalf
During
the three months ended March 31, 2026 and 2025, former chief financial officer paid $
During
the three months ended March 31, 2026 and 2025, the chief executive officer paid $
Accruals
As
of March 31, 2026, the accrued related party salary and accrued interest expense was $
During
the period ended March 31, 2026, the board approved a health stipend for the Company’s Chief Executive Officer, Saul Leal, in the
amount of $ per month with a
Advances
On
February 2, 2026, the Company’s Chief Executive Officer advanced the Company $
Secure promissory note
On
January 27, 2026, the Company entered into a promissory note agreement for $
During
the years ended December 2025 and 2024, the Company entered into multiple secured promissory notes agreements with the Company’s
former Chief Executive Officer, Rowland Day, for total proceeds of $
| 11 |
Settlement Agreement
Effective
October 31, 2025, Rowland W. Day II resigned from his positions as President, Chief Financial Officer, Secretary, Chief Legal
Officer, and as a member of the Board of Directors of the Company. In connection with his resignation, the Company made payments to
Mr. Day in the amount of $
Convertible notes payable
During
the year ended December 31, 2025 and the period ended March 31, 2026, the Company issued a series of
During
the period ended March 31, 2026, the Company and four noteholders amended the terms of the convertible note agreements to retroactively
accrue interest on their notes from the effective date of the agreements on a rate of
Company
evaluated the conversion feature and determined that no embedded derivative liability existed on the issuance dates of the convertible
notes. As of March 31, 2026 and December 31, 2025, the convertible notes payable principal balance was $
The Company evaluated the conversion feature and determined that, since the conversion price is fixed, no embedded derivative liability existed as of March 31, 2026. As March 31, 2026, the matured convertible notes would potentially be converted into common shares.
| As of March 31, 2026 | As of December 31, 2025 | |||||||
| Convertible notes payable, relate party | $ | $ | ||||||
| Total convertible notes payable, relate party | ||||||||
| Less: current portion | ( | ) | ( | ) | ||||
| Long term convertible notes payable, relate party, net of current | $ | $ | ||||||
| 12 |
Note 5. Convertible Notes Payable
In
December 2024, the Company issued convertible notes payable to three investors in exchange for $
During
the period ended March 31, 2026, the Company and four noteholders amended the terms of the convertible note agreements to retroactively
accrue interest on their notes from the effective date of the agreements on a rate of
Company
evaluated the conversion feature and determined that no embedded derivative liability existed on the issuance dates of the convertible
notes. As of March 31, 2026 and December 31, 2025, the convertible notes payable principal balance was $
The Company evaluated the conversion feature and determined that, since the conversion price is fixed, no embedded derivative liability existed as of March 31, 2026. As March 31, 2026, the matured convertible notes would potentially be converted into common shares.
On
November 3, 2025, the Company entered into a Convertible Notes Agreement and a Warrant Purchase Agreements (the “Purchase Agreements”),
dated as of October 31, 2025, with two investors (the “Holders”) for their purchase of (i)
On
February 11, 2026, the Company entered into two Promissory Note Agreements (the “Additional Notes”) with the Holders for
an additional $
| 13 |
On March 17, 2026, the Company entered into a First Amendment to Note and Warrant Purchase Agreement (the “Amendment” or “Amended and Restated Note”) with the Holders. Pursuant to the Amended and Restated Note, the Company and the Holders combined the Existing Notes and the Additional Notes in their entirety under the terms of the Amended and Restated Note. Under the Amended and Restated Note, the maturity date of the Existing Notes was amended on March 26, 2026.
The
Company recognized amortization on the debt discount of $
| As of March 31, 2026 | As of December 31, 2025 | |||||||
| Convertible notes payable | $ | $ | ||||||
| Total convertible notes payable | ||||||||
| Less: current portion | ( | ) | ( | ) | ||||
| Long term convertible notes payable, net of current | $ | $ | ||||||
Note 6. Promissory Notes
On
September 11, 2025, the Company entered into a Promissory Note for a principal amount of $
During
the period ended March 31, 2026, the Company repaid $
On
October 13, 2025, the Company entered into a Promissory Note for a principal amount of $
During
the period ended March 31, 2026, the Company repaid $
On
March 26, 2026, the Company entered Secured Promissory Note Agreements with two investors for their purchase of (i)
| 14 |
The
Company recognized amortization on the debt discount of $
| As of March 31, 2026 | As of December 31, 2025 | |||||||
| Promissory notes payable, net | $ | $ | ||||||
| Total Promissory notes payable, net | ||||||||
| Less: current portion | ( | ) | ( | ) | ||||
| Long term Promissory notes payable, net of current | $ | $ | ||||||
As
of March 31, 2026, the unamortized debt discount was $
Note 7. Equity
The Company is currently authorized to issue up to shares of common stock with a par value of $. In addition, The Company is authorized to issue shares of preferred stock with a par value of $. The specific rights of the preferred stock, when so designated, shall be determined by the board of directors.
Common Stock
As of March 31, 2026 and December 31, 2025, there were and shares issued and outstanding, respectively.
Preferred Stock
Series A Convertible Preferred Stock
Our
board of directors designated shares of our preferred stock as Series A Convertible Preferred Stock (“Series A”) with
a par value of $. Series A has liquidation and dividend preferences.
Series B-1 Convertible Preferred Stock
Our
board of directors designated shares of our preferred stock as Series B-1 Convertible Preferred Stock (“Series B-1”)
with a par value of $. Series B-1 has liquidation and dividend preferences.
Effective October 31, 2025, Rowland W. Day II resigned from his positions as President, Chief Financial Officer, Secretary, Chief Legal Officer, and as a member of the Board of Directors of the Company. In connection with his resignation, the Company agreed to enter into a Stock Repurchase Agreement providing for repurchase by the Company from the Trust of up to shares of the Company’s Series B-1 Preferred Stock and shares of common stock, at per-share prices ranging from $-$ for the preferred shares and $-$ for the common shares, depending on the repurchase date.
On
March 26, 2026, the Company entered into an amendment to the Stock Repurchase Agreement pursuant to which the Expiration Date was
extended to April 10, 2026. As part of the extension of the settlement date, the Company is to pay an additional $
| 15 |
On
March 9, 2026, the board of directors approved the issuance of share of Series B-1 Convertible Preferred Stock to Mr. Leal as
a bonus. The shares of Series B-1 convertible preferred stock valued at the at-converted value of $
Series B-2 Convertible Preferred Stock
Our board of directors designated shares of our preferred stock as Series B-2 Convertible Preferred Stock (“Series B-2”) with a par value of $. On May 1, 2023, the Articles of Incorporation of the Company were amended such that Series B-2 shares are authorized. Series B-2 have no liquidation or dividend preferences. Each share of Series B-2 has voting rights equal to the amount of shares of common stock the Series B-2 is convertible to and is convertible on a 1 to 1 common share basis and shall automatically be converted into common shares up the Public Offering Closing. As of March 31, 2026 and December 31, 2025, there are shares of Series B-2 issued and outstanding.
Common Stock Liability
Common stock to be issued for cash
During
the period ended March 31, 2026, the Company granted the issuance of shares of common stock for $
During the period ended March 31, 2026, total amount of shares payable and total value recorded as common stock liability issued for cash was and $, respectively.
Common stock to be issued for interest
During
the period ended March 31, 2026, the Company granted the issuance of shares of common stock in lieu of interest on convertible
and promissory notes with a fair value of $
During the period ended March 31, 2026, total amount of shares payable and total value recorded as common stock liability issued for interest on notes was and $, respectively.
Common stock to be issued for accounts payable settlement
During
the period ended March 31, 2026, the Company granted the issuance of shares of common stock to settle an accounts payable balance
with a fair value of $
During the period ended March 31, 2026, total amount of shares payable and total value recorded as common stock liability issued for accounts payable settlement was and $, respectively.
Common stock to be issued for service
During
the period ended March 31, 2026, the Company granted the issuance of shares to a consultant for service rendered during the period.
The shares had a fair value of $
During
the period ended March 31, 2026, the Company entered into several consultant agreements where the Company granted the issuance of
common shares to the consultant. The shares had a fair value of $
| 16 |
On
January 1, 2026, the Company entered into a consultant agreement where the consultant will receive common shares on a monthly
basis beginning on the effective date of the agreement. During the period ended March 31, 2026, the Company granted the issuance of
common shares to the consultant. The shares had a fair value of $
On
December 18, 2025, the Company entered into a six month term consultant agreement where the consultant will receive common shares
on a monthly basis beginning on the effective date of the agreement. During the period ended March 31, 2026, the Company granted the
issuance of common shares to the consultant. The shares had a fair value of $
On
August 1, 2025, the Company entered into a consultant agreement where the consultant will receive common shares on a monthly basis
beginning on the effective date of the agreement. On December 15,2025, the Company entered into an amendment to the consultant agreement
to increase the number of monthly common shares to common shares per month beginning on January 1, 2026. In 2025, the Company
granted the issuance of common shares to the consultant. During the period ended March 31, 2026, the Company granted the issuance
of common shares to the consultant. The shares had a fair value of $
On
August 1, 2025, the Company entered into a consultant agreement where the consultant will receive common shares on a monthly basis
beginning on the effective date of the agreement. In 2025, the Company granted the issuance of common shares to the consultant.
During the period ended March 31, 2026, the Company granted the issuance of common shares to the consultant. The shares had a
fair value of $
During the period ended March 31, 2026, total amount of shares payable and total value recorded as common stock liability issued for service was and $, respectively.
As of March 31, 2026, the total common stock liability for common stock and vested restricted stock was shares of common stock.
Restricted Common Stock
On
March 30, 2026, the Company granted the issuance of restricted common shares to an advisor. restricted common shares vest
immediately and the remaining balance vests in twelve months equal instalments. The restricted common shares had a fair value of $
On
November 10, 2025, the Company entered into a service agreement where the Company will grant the issuance of restricted common
shares to the advisor on or before January 18, 2026. The Company granted the issuance of the restricted common shares on December 12,
2025. The restricted common shares were granted with a six month restriction period. The restricted common shares had a fair value of
$
On
October 1, 2025, the Company granted the issuance of restricted common shares to an advisor. The restricted common shares vest
in twelve months equal instalments. The restricted common shares had a fair value of $
| 17 |
On
December 1, 2024, the Company granted the issuance of restricted common shares to an advisor. The restricted common shares vest
in twelve months equal instalments. The restricted common shares had a fair value of $
Stock Warrants
During
the period ended March 31, 2026, the Company issued common stock warrants with exercise price of $ in conjunction with
convertible secured promissory notes agreements. The warrants had a relative fair value of $
| Period Ended | ||||
| March 31, 2026 | ||||
| Fair value of common stock on measurement date | $ | per share | ||
| Risk free interest rate (1) | % | |||
| Volatility (2) | % | |||
| Dividend yield (3) | % | |||
| Expected term (in years) | ||||
| (1) | |
| (2) | |
| (3) |
The following table summarizes the stock warrant activity for the three months ended March 31, 2026:
| Warrants | Weighted-Average Exercise Price Per Share | |||||||
| Outstanding, December 31, 2025 | $ | |||||||
| Granted | ||||||||
| Exercised | ||||||||
| Forfeited | ||||||||
| Expired | ||||||||
| Outstanding, March 31, 2026 | $ | |||||||
As of March 31, 2026 the outstanding and exercisable warrants have a weighted average remaining term of with no intrinsic value.
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Stock Options
On February 23, 2026, the Company issued options to employees. The options issued have a one-year term at an exercise price of $. The options issued to the employees vest immediately on the date of issuance. The total fair value of these option grants at issuance was $. The Company valued the stock options using the Black-Scholes model with the following key assumptions:
| Period Ended | ||||
| March 31, 2026 | ||||
| Fair value of common stock on measurement date | $ | per share | ||
| Risk free interest rate (1) | % | |||
| Volatility (2) | % | |||
| Dividend yield (3) | % | |||
| Expected term (in years) | ||||
| (1) | |
| (2) | |
| (3) |
During the three months ended March 31, 2026, the Company recognized $ of expense related to outstanding stock options.
The following table summarizes the stock option activity for the three months ended March 31, 2026:
| Options | Weighted-Average Exercise Price Per Share | |||||||
| Outstanding, December 31, 2025 | $ | |||||||
| Granted | ||||||||
| Exercised | ||||||||
| Forfeited | ( | ) | ||||||
| Expired | ||||||||
| Outstanding, March 31, 2026 | $ | |||||||
| Exercisable, March 31, 2026 | $ | |||||||
As of March 31, 2026, the outstanding and exercisable options have a weighted average remaining term of with an intrinsic value of $.
Note 8: Commitments
In
December 2024, The Company entered into an employment agreement with Mr. Leal, of which will become effective as of the effective date
of the registration statement on Form S-1 in connection with the Company’s planned public offering of its shares. Pursuant to the
employment agreements, Mr. Leal has agreed to serve as Chief Executive Officer and as a Director for five years from the effective date
in consideration for an annualized salary of $
On July 22, 2025, the Company entered into an Independent Software Vendor Program Agreement (the “Agreement”) with Five9, Inc. (“Five9”), a Delaware corporation. Five9 is a leading provider of intelligent cloud software and applications for contact centers. Pursuant to the Agreement, Five9 granted the Company a non-exclusive, worldwide, royalty-free, non-sublicensable and non-transferable license to access the Five9 developer account with the purpose of integrating the Company’s products and services and becoming an accredited vendor under Five9’s ISV program. The Company has agreed to pay a non-refundable ISV Program participation fee to Five9 for the initial one-year term of the Agreement and for each one-year renewal term thereafter. Further, each party to the Agreement may receive referral fees from the other party for the referral of prospective customers.
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On August 22, 2025, the Company entered into a Genesys AppFoundery ISV Partner Agreement with Genesys Cloud Services, Inc. (“Genesys”), a California corporation. Genesys manages the Genesys AppFoundry, a marketplace of solutions that offers Genesys customers a curated selection of integrations and applications. The agreement governs the Company’s non-exclusive participation as an AppFoundry ISV Partner in the Genesys AppFoundry Program. The Company has agreed to pay a non-refundable revenue share to Genesys during the term of the Agreement based on a percentage of the revenue invoiced by the Company or Genesys in connection with the sale of the Company’s software through the AppFoundry marketplace. The agreement may be terminated by either party without cause upon ninety (90) days written notice to the other party.
Note 9: Subsequent Events
On
April 8, 2026, the Company entered into a Master Reseller Agreement (the “Reseller Agreement”) for an initial term of
three-years. Upon execution of the agreement, the Company received $
As
of April 10, 2026, the Company purchased shares of the Company’s Series B-1 Preferred Stock held by Rowland at a price
of $ per Series B-1 Preferred share for a total cash consideration of $
On April 7, 2026, the Company defaulted on the March 26, 2026 Secured Promissory Notes. The Company granted the issuance of common stock shares to the holders for failure to pay the principal and accrued interest on the maturity date.
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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
You should read the following discussion and analysis of our financial condition and results of operations in conjunction with the financial statements and the related notes appearing elsewhere in this Form 10-Q. This discussion contains forward-looking statements reflecting our current expectations that involve risks and uncertainties. See Item 1A. “Risk Factors” of our Form 10-K for the year ended December 31, 2025, available on the Security and Exchange Commission’s (“SEC”) EDGAR website at www.sec.gov, for a discussion of the uncertainties, risks and assumptions associated with these statements. Actual results and the timing of events could differ materially from those discussed in our forward-looking statements as a result of many factors, including those set forth under “Risk Factors” and elsewhere in this Form 10-Q.
Overview
The Company operates to develop artificial intelligence products that enable companies and individuals to reach their highest potential by eliminating language barriers in daily communications by providing high-quality, accurate, and efficient interpretation and translation services using natural language processing (NLP) technology. The Company’s focus is on developing a proprietary architecture that is faster and more accurate than any other company, with a commitment to providing superior quality services to its customers. The Company intends to serve a wide variety of markets and customers and will be focused on becoming a leader in the creation of pragmatic products for the interpretation and translation industry.
Business Summary
We develop and market artificial intelligence products that eliminate language barriers in daily communications by providing high-quality, accurate, and efficient interpretation and translation services using natural language processing (NLP) technology. Our proprietary AI and machine learning architecture enable seamless translation and transcription of spoken and written words in seconds across multiple languages. Our VerbumSuite platform facilitates fluid and effective communication among individuals regardless of linguistic differences. With support for real-time conversations over-the-phone, virtual meetings, and online chats in over 140 languages and dialects, Verbum is reshaping how organizations, educational institutions, and customer service centers connect and collaborate. The Company develops and markets artificial intelligence products that eliminate language barriers in daily communications by providing high-quality, accurate, and efficient interpretation and translation services using natural language processing (NLP) technology. Our focus is on developing a proprietary architecture that is faster and more accurate than any other company, with a commitment to providing superior quality services to its customers. We intend to serve a wide variety of markets and customers and are focused on becoming a leader in the creation of products for the interpretation, translation, and transcription industries. Driven by a vision to create a more understanding world and revolutionize global communication, we are committed to solving complex problems with practical solutions. We recognize that artificial intelligence has the potential to turn good decisions into great ones, and we strive to harness this potential to drive positive change across industries.
Our Products
Our current VerbumSuite products described in detail below are built on our proprietary and patented systems and methods for substantially real-time speech, transcription, and translation technology. We are also developing additional proprietary products and features to expand the service capabilities built on our core technological foundation.
| ● | Verbum. Verbum supports real time web-based conversations, discussions, meetings, and online chats in 140 languages, enabling fluent and effective communication among individuals that do not speak the same language. This product is distributed through our online platform, direct sales to businesses and organizations, and we are attempting to develop partnerships with existing video conferencing providers. The competitive position is against other video conferencing providers that also offer live interpretation services, such as Microsoft Teams, Zoom and Google Meet. We believe our main competitors are organizations that supply human interpreters which can be ten times more expensive than our Verbum product. The Verbum product is available to customers at a wholesale price of $0.30 to $0.36 per minute, as compared to human interpreters, which can range from $45.00 to $150.00 per hour, or $1.25 to $3.00 per minute.(1) The primary market for our Verbum product is for organizations or individuals that require real-time interpretation services. |
(1) As reported in “Medical Interpreters in Outpatient Practice”, available at https://pmc.ncbi.nlm.nih.gov/articles/PMC5758324/.
VerbumOnSiteTM – Real Time Translation Powered by AI
| ● | Multilingual Events - unlocks the power of seamless communication at live events through real-time translation and captioning services. Attendees can effortlessly scan a QR code to access real-time captions in over 140 languages directly on their phones. | |
| ● | Ease of Integration - integrates into the event setup, ensuring a smooth and hassle-free experience for organizers and attendees. User-friendly, web-based design and compatibility incorporates powerful multilingual features without technical complexities. |
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| ● | Inclusive Communication - committed to breaking language barriers and making events accessible to all such as for those with hearing disabilities. Our solution provides real-time, multilingual closed captions, ensuring full engagement in conversations and presentations and fostering an inclusive event experience. | |
| ● | Currently available for use in live events requiring multilingual support. |
VerbumCallTM – AI-Powered Over-the-Phone Interpretation with No App or Internet Required
| ● | Multilingual Calls - unlocks the power of seamless communication over the phone; similar to having a translator readily available in 140+ languages. VerbumCall transforms any mobile device into a personal translator without the need for internet connection or additional applications. | |
| ● | Ease of Integration - integrates into the users current systems incorporating powerful multilingual calls without technical complexities. | |
| ● | Scalable & Confidential - offers a scalable solution that adapts to the users business needs, whether making one call or thousands of calls. Our AI-powered conversations enable calls to be private and secure, ensuring business communications are confidential and protected. | |
| ● | Currently available for integration with major Contract Center as a Service (CCaaS) providers. |
VerbumTM for Microstoft Teams – AI Translation for Multilingual Meetings
| ● | Enhances the Microsoft Teams experience by facilitating multilingual groups to come together in meetings. Enables collaborators from all over the world to work together without language barriers. Each attendee chooses the language that they will be speaking in and the language in which they want to see captions and chat. As each person speaks in their preferred language from a list of 95+ languages, it is translated in near real-time for the rest of the group. | |
| ● | When a user selects their preferred language, it does not impact the other users in the meeting. The system allows each user to understand and be understood using their preferred language. | |
| ● | Translates chat messages into 3 selected languages in near real-time to allow flow of communication. | |
| ● | Enables a transcript function allowing the user to upload documents that can be translated into 95+ languages and shared with the whole team. | |
| ● | No formal legal or commercial agreement is required with Microsoft for the operation of this product within Microsoft Teams. The Company fully complies with Microsoft’s comprehensive development, publishing, and certification standards to ensure functionality, security and accessibility. | |
| ● | Integration with Microsoft Teams is achieved through Microsoft Teams APIs and compliance with a detailed manifest that undergoes thorough third-party review. The manifest governs Verbum’s features and ensures secure, real-time multilingual translation capabilities, including captions and chat translations for over 120 languages. Verbum interacts with Microsoft Teams by processing real-time meeting audio and chat data (with user permission) to deliver high-accuracy, AI-powered translations directly within the Microsoft Teams interface. | |
| ● | Fully operational and available to users. |
| ● | Verbum SDK. Verbum Software Developer Kit allows software programmers, potential channel partners, and corporate development teams to integrate our powerful multilingual communications platform Verbum™ — into new or existing Software-as-a-Service applications and/or client/server programs, helping them remove communications barriers for multinational organizations and/or those serving customers who speak/read different languages. This product may be distributed through partnerships with software developers or through direct sales to businesses and organizations that require interpretation services for their software. The competitive position would be against other software development kit providers that also offer interpretation services, such as Microsoft Azure or Amazon Translate. The expected market for this product is software developers and businesses that require interpretation services for their software applications. |
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Components of Our Results of Operations
Net Revenue
We currently derive our revenue primarily from the sale of our products. We expect our net revenue to increase in the foreseeable future as we add new customers and offer additional products, though net revenue may fluctuate from quarter to quarter due to a variety of factors, including the pace of research and development and completion of additional products.
Operating Expenses
Operating expenses consist primarily of research and development, salaries and benefits, infrastructure and equipment, professional services and distribution and delivery.
| ● | Research and Development: Developing and maintaining the proprietary NLP technology and architecture will be a significant future expense for the Company. This will include expenses related to hiring and retaining top talent, conducting research and development, and investing in technology infrastructure and equipment. |
| ● | Salaries and Benefits: The Company plans to invest in hiring and retaining additional employees to perform various functions, such as software development, customer support, sales, and administration. This will include salaries, benefits, and other employee-related expenses. |
| ● | Infrastructure and Equipment: The Company will invest in technology infrastructure and equipment to support its software development and distribution operations. This will include expenses related to servers, software licenses, hardware, and office equipment. |
| ● | Professional Services: Depending on the Company’s needs, it may need to engage professional services such as legal, accounting, or consulting services, which would be an expense for the Company. |
| ● | Distribution and Delivery: The Company will need to invest in distribution and delivery methods for its products, such as software updates, shipping, or online delivery. This will include expenses related to logistics, software licensing, or server maintenance. |
Total Other Expense
Other expenses consist primarily of interest expense. It also includes any gains and loss attributable to the changes in fair market value from the derivative liabilities associated with the issuance of convertible notes.
Results of Operations for the Three Months Ended March 31, 2026 and 2025
The following table summarizes selected items from the statement of operations for the three months ended March 31, 2026 and 2025, respectively.
| Three months ended | Three months ended | Increase/ | ||||||||||
| March 31, 2026 | March 31, 2025 | (Decrease) | ||||||||||
| Revenue | $ | 180,117 | $ | 128,518 | $ | 51,599 | ||||||
| Cost of Revenue | 65,560 | - | 65,560 | |||||||||
| Gross Profit | 114,557 | 128,518 | (13,961 | ) | ||||||||
| Operating expenses: | ||||||||||||
| Research and development | 406,311 | 349,586 | 56,725 | |||||||||
| General and administrative | 1,937,753 | 481,320 | 1,456,433 | |||||||||
| Advertising and marketing | 2,011 | 8,725 | (6,714 | ) | ||||||||
| Legal and professional | 154,367 | 218,420 | (64,053 | ) | ||||||||
| Total operating expenses | 2,500,442 | 1,058,051 | 1,442,391 | |||||||||
| Loss from operations | (2,385,885 | ) | (929,533 | ) | (1,456,352 | ) | ||||||
| Other income (expense): | ||||||||||||
| Other income | 5,304 | - | 5,304 | |||||||||
| Interest expense | (926,373 | ) | (24,682 | ) | (901,691 | ) | ||||||
| Total other expense | (921,069 | ) | (24,682 | ) | (896,387 | ) | ||||||
| Net loss | $ | (3,306,954 | ) | $ | (954,215 | ) | $ | (2,352,739 | ) | |||
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Revenue and Cost of Revenue
Our revenue for the three months ended March 31, 2026 was $180,117, compared to $128,518 for the three months ended March 31, 2025, an increase of $51,599. Our cost of revenue for the three months ended March 31, 2026 was $65,560, compared to $0 for the three months ended March 31, 2025, an increase of $65,560. The Company entered into several new sales and service contracts and began recognizing revenue from the new contracts during the half-end of the year ended December 31, 2025 and during the period ended March 31, 2026.
Operating Expenses
Our total operating expenses for the three months ended March 31, 2026, were $2,500,442, compared to $1,058,051for the three months ended March 31, 2025, an increase of $1,442,391. The increase in our operating expenses was primarily a result of an increase in (i) research and development expenses, from $349,586 for the three months ended March 31, 2025 to $406,311 for the three months ended March 31, 2026, (ii) general and administrative expenses, from $481,320 for the three months ended March 31, 2025 to $1,937,753 for the three months ended March 31, 2026, and (iii) legal and professional expenses, from $218,420 for the three months ended March 31, 2025 to $154,367 for the three months ended March 31, 2026, each of which were connected to management’s efforts to perform obligations related to new sales contracts, increased efforts to develop new products and improve new products and increased consulting fees related to the registration of the Company with the SEC.
Other Expense
For the three months ended March 31, 2026, other expense was $921,069. For the three months ended March 31, 2025, other expense was $24,682. Other expense increased by $896,387 was due to increased interest expense and amortization of debt discount, which was attributable to increased borrowings in 2026.
Net Loss
Net loss for the three months ended March 31, 2026, was $3,306,954, compared to $954,215 for the three months ended March 31, 2025, an increased net loss of $2,352,739. The increased net loss was primarily due to $1,442,391 of increased operating expenses.
Liquidity and Capital Resources
The following table summarizes our total current assets, liabilities and working capital as of March 31, 2026 and December 31, 2025.
| March 31, | December 31, | |||||||
| 2026 | 2025 | |||||||
| Current Assets | $ | 243,519 | $ | 121,937 | ||||
| Current Liabilities | $ | 6,319,486 | $ | 3,044,251 | ||||
| Working Capital (Deficit) | $ | (6,075,967 | ) | $ | (2,922,314 | ) | ||
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As of March 31, 2026, we had working capital deficit of $6,075,967. We have incurred net losses since our inception and we anticipate net losses and negative operating cash flows for the near future and we may not be profitable or realize growth in the value of our assets. We have incurred net losses since our inception and we anticipate net losses and negative operating cash flows for the near future and we may not be profitable or realize growth in the value of our assets. To date, our primary sources of capital have been cash generated from common stock sales and debt financing.
As of December 31, 2025, the Company had not yet achieved profitable operations and expects to incur further losses in the development of its business, all of which raise substantial doubt about the Company’s ability to continue as a going concern. The Company’s ability to continue as a going concern is dependent upon its ability to generate future profitable operations and/or to obtain the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they come due. Management is seeking to obtain additional funds by equity financing and or related party advances, however, there is no assurance of additional funding being available. If we fail to increase our revenue, raise capital or enter into such agreements as and when needed, we may have to significantly delay, scale back or discontinue our operations or the development and commercialization of one or more of our products. Where the anticipated offering is successful, we may decide to raise additional financing, in addition to the net proceeds from this offering, to support further growth of our operations. Where the anticipated offering is unsuccessful, we expect to use proceeds from the issuance of equity, debt financings, or other capital transactions to fund our operations and satisfy our liquidity requirements.
We believe our ability to achieve commercial success and continued growth will be dependent upon our ability to sell our products and our continued access to capital either through sales of our equity or cash generated from operations. We will attempt to obtain additional capital through private investors; however, we have no agreements or understandings with third parties at this time in regard to investing additional monies.
The Company doesn’t have any plans to repurchase any of its equity or debt.
Cash Flow
Comparison of the Three Months Ended March 31, 2026 and the Three Months Ended March 31, 2025
The following table sets forth the primary sources and uses of cash for the periods presented below:
| Three Months Ended | ||||||||
| March 31, | ||||||||
| 2026 | 2025 | |||||||
| Net cash used in operating activities | $ | (32,378 | ) | $ | (616,575 | ) | ||
| Net cash provided by financing activities | 87,918 | 443,000 | ||||||
| Net change in cash | $ | 55,540 | $ | (173,575 | ) | |||
Net Cash Used in Operating Activities
Net cash used in operating activities was $32,378 for the three months ended March 31, 2026, compared to $616,575 for the three months ended March 31, 2025, a decrease of $584,197. The change was primarily attributable to changes in equity related liabilities, amortization expense, accounts receivable, accounts payable and deferred revenue.
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Net Cash Provided by Financing Activities
Net cash provided by financing activities was $87,918 for the three months ended March 31, 2026, compared to $443,000 for the three months ended March 31, 2025, an decrease of $355,082. Our decrease cash provided by financing activities was primarily attributable to our decrease in proceeds from debt financing and increased payments on debt financing during the period ended March 31, 2026.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
Our financial results are affected by the selection and application of accounting policies and methods. In the three-month period ended March 31, 2026, there were no changes to the application of critical accounting policies previously disclosed in the Registration Statement.
CAUTIONARY NOTICE REGARDING FORWARD-LOOKING STATEMENTS
This report includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). All statements in this report, other than statements of historical fact, are “forward-looking statements” for purposes of these provisions, including any projections of earnings, revenues or other financial items, any statements of the plans and objectives of our management for future operations, any statements concerning proposed new products or services, any statements regarding the integration, development or commercialization of the business or any assets acquired from other parties, any statements regarding future economic conditions or performance, and any statements of assumptions underlying any of the foregoing. In some cases, forward-looking statements can be identified by the use of terminology such as “may,” “will,” “expects,” “plans,” “anticipates,” “intends,” “seeks,” “believes,” “estimates,” “potential,” “forecasts,” “continue,” or other forms of these words or similar words or expressions, or the negative thereof or other comparable terminology. Although we believe that the expectations reflected in the forward-looking statements contained herein are reasonable, there can be no assurance that such expectations or any of the forward-looking statements will prove to be correct, and actual results will likely differ, and could differ materially, from those projected or assumed in the forward-looking statements. Investors are cautioned not to unduly rely on any such forward-looking statements.
All subsequent forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by these cautionary statements. Our actual results will likely differ, and may differ materially, from anticipated results. Financial estimates are subject to change and are not intended to be relied upon as predictions of future operating results. All forward-looking statements included in this report are made as of the date hereof and are based on information available to us as of such date. We assume no obligation to update any forward-looking statement. If we do update or correct one or more forward-looking statements, investors and others should not conclude that we will make additional updates or corrections.
NOTICE REGARDING TRADEMARKS
This report includes trademarks, tradenames and service marks that are our property or the property of others. Solely for convenience, such trademarks and tradenames sometimes appear without any “™” or “®” symbol. However, failure to include such symbols is not intended to suggest, in any way, that we will not assert our rights or the rights of any applicable licensor, to these trademarks and tradenames.
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ITEM 4. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
Our management is responsible for establishing and maintaining adequate disclosure controls and procedures for our company. Consequently, our management, with the participation of our chief executive officer and chief financial officer, evaluated the effectiveness of our disclosure controls and procedures pursuant to Rule 13a-15 under the Exchange Act as of March 31, 2026. In designing and evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints, and that management is required to apply its judgment in evaluating the benefits of possible controls and procedures relative to their costs. Based on that evaluation, our chief executive officer concluded that our disclosure controls and procedures are designed at a reasonable assurance level and are ineffective to provide reasonable assurance that information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms, and that such information is accumulated and communicated to our management, including our chief executive officer and chief financial officer, as appropriate, to allow timely decisions regarding required disclosure.
Based on the evaluation of our internal control over financial reporting, our management concluded that our internal control over financial reporting were not effective as of December 31, 2025 and March 31, 2026.
A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a more than remote possibility that a misstatement of our company’s annual or interim financial statements could occur. In its assessment of the effectiveness of our internal control over financial reporting, we determined that there were control deficiencies that constituted material weaknesses which are indicative of many small companies with small staff, such as:
(1) inadequate segregation of duties and effective risk assessment;
(2) insufficient written policies and procedures for documenting all transactions with vendors;
(3) insufficient written policies and procedure for the approval, identification and reporting of related-party transactions;
(4) inadequate internal control procedures over financial reporting, resulting in non-reliance on previously issued financial statements; and
(5) inadequate written policies and procedures for documenting informal agreements.
Changes in Internal Control Over Financial Reporting
During the three-month period ended March 31, 2026, there were no changes in our internal control over financial reporting that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934).
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PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
We are not currently party to any pending legal proceedings that we believe would, individually or in the aggregate, have a material adverse effect on our financial condition, cash flows or results of operations.
ITEM 1A. RISK FACTORS
As a smaller reporting company, we are not required to provide information typically disclosed under this item.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
None
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
None
ITEM 4. MINE SAFETY DISCLOSURES
The disclosure required by this item is not applicable.
ITEM 5. OTHER INFORMATION
During
the three-month period ended March 31, 2026, no director or officer
ITEM 6. EXHIBITS.
| * | Filed herewith |
| ** | Previously filed |
| † | Indicates management contract or compensatory plan or arrangement |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registration has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| Signature | Title | Date | ||
| /s/ Saul Leal | Chief Executive Officer | May 15, 2026 | ||
| Saul Leal | (Principal Executive and Financial Officer) |
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