Vertical Data (VDTA) revenue drops but $11.2M prepayment lifts cash balance

Rhea-AI Filing Summary

Vertical Data Inc. reported early-stage operating results with modest revenue but significantly strengthened liquidity. For the six months ended March 31, 2026, revenue was $625,000 compared with $3,666,000 a year earlier, reflecting fewer product sales and timing of customer orders.

The company recorded a six‑month net loss of $1,982,636, slightly improved from a loss of $2,242,454 in the prior-year period, as operating expenses declined. Cash, cash equivalents and restricted cash rose to $4,698,427 at March 31, 2026, supported by an $11.2 million customer prepayment recorded as a contract liability.

Prepaid expenses increased to $6,468,024, mainly vendor deposits tied to future equipment purchases. Common shares outstanding decreased to 12,093,741 at March 31, 2026 from 41,193,052 at September 30, 2025 due to large founder share cancellations and option activity, leaving stockholders’ equity in a deficit position of $258,222.

Insights

Equity research analyst

Revenue fell sharply year over year, but cash was boosted by a large prepayment.

Vertical Data showed mixed signals in this period. Six‑month revenue dropped to $625,000 from $3,666,000, reflecting fewer AI hardware product sales and order timing. Despite this, net loss narrowed slightly to $1,982,636 as operating expenses declined.

Liquidity improved meaningfully. Operating cash flow turned positive at $4,063,709, largely driven by an $11.2 million customer prepayment booked as a contract liability for future equipment. Cash, cash equivalents and restricted cash reached $4,698,427 as of March 31, 2026, while the company continues to operate without traditional bank debt.

Capital structure changed significantly: founders surrendered 31.8 million shares and options were exercised, reducing shares outstanding to 12.1 million and shifting equity to a modest deficit of $258,222. Future filings may clarify how quickly the $11.2 million prepayment converts into recognized revenue and gross margin.

Key Figures

Six-month revenue: $625,000 Six-month net loss: $1,982,636 Customer prepayment: $11,200,000 +5 more

8 metrics

Six-month revenue $625,000 For the six months ended March 31, 2026

Six-month net loss $1,982,636 For the six months ended March 31, 2026

Customer prepayment $11,200,000 Contract liability as of March 31, 2026

Cash, cash equivalents and restricted cash $4,698,427 Balance at March 31, 2026

Operating cash flow $4,063,709 Net cash provided by operating activities, six months ended March 31, 2026

Prepaid expenses $6,468,024 Balance at March 31, 2026, mainly vendor deposits

Common shares outstanding 12,093,741 shares Issued and outstanding at March 31, 2026

Stockholders’ equity (deficit) -$258,222 Total equity at March 31, 2026

Key Terms

contract liability, restricted cash, stock-based compensation, Rule 506(b), +2 more

6 terms

contract liability financial

"Contract liability $ 11,200,000 ... primarily related to the future sale of computer equipment to the customer."

A contract liability is a legally binding obligation a company has under a contract to deliver goods, services, or a refund in the future in exchange for money or another benefit already received. Investors care because these obligations represent future cash outflows or performance risks—like an IOU on a household chore list—that can reduce available cash, affect earnings reliability, and change how risky or valuable a company’s financial position looks.

restricted cash financial

"the Company classified $1.2 million in cash as restricted cash as the Company was legally obligated to use the amount"

Cash that a company holds but cannot use for day-to-day operations because it is set aside for a specific purpose—such as meeting loan covenants, serving as collateral, funding an escrow, or complying with regulations. Like money in a locked savings account earmarked for a bill, restricted cash reduces the cash available to run the business and pay dividends or debts, so investors treat it differently when assessing a company’s true short-term financial strength.

stock-based compensation financial

"Employee stock-based compensation 1,118,770 ... Non-employee stock-based compensation 51,533"

Stock-based compensation is when a company pays employees, directors or consultants with shares or the right to buy shares instead of or in addition to cash. It matters to investors because issuing stock or options spreads ownership thinner (like cutting a pie into more slices), which can reduce each existing share’s claim on profits and can also change reported earnings; investors watch it to assess true cost of running the business and how management is incentivized.

Rule 506(b) regulatory

"All of the securities described above were issued in reliance on the exemption from registration provided by Rule 506(b)"

Rule 506(b) is a U.S. securities exemption that lets companies sell shares or debt privately without full public registration, provided sales are primarily to accredited investors, up to 35 non‑accredited but financially knowledgeable buyers, and there is no public advertising or solicitation. It matters to investors because offerings under 506(b) usually include less public disclosure than registered securities—like buying from a private seller rather than a retail store—so buyers must do more of their own fact‑checking and rely on their financial sophistication.

emerging growth company regulatory

"Emerging growth company"

An emerging growth company is a recently public or smaller public firm that qualifies for temporary, lighter regulatory and disclosure rules to reduce the cost and effort of being public. For investors, it means the company may provide less historical financial detail and face fewer reporting requirements than larger firms, so it can grow more quickly but also carries higher uncertainty—like buying a promising early-stage product with fewer user reviews.

ASC 606 Revenue from Contracts with Customers financial

"The Company recognizes revenue from its contracts with customers in accordance with the core principle outlined in ASC 606 Revenue from Contracts with Customers."

10-Q Quarterly Reports: What Changes Quarter to Quarter →

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended March 31, 2026

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

333-284187

(Commission File Number)

VERTICAL DATA INC.

(Exact name of registrant as specified in its charter)

Nevada		99-2841705
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)
1980 Festival Plaza Drive Suite 300 Las Vegas, NV		89135
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code: (888) 462-3453

Securities registered pursuant to Section 12(b) of the Act: None

Title of each class		Trading symbol(s)		Name of each exchange on which registered
Common Stock		VDTA		OTC Link

Securities registered pursuant to Section 12(g) of the Act: Common Stock, $0.001 par value

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. ☐ Yes ☒ No

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. ☐ Yes ☒ No

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 such filing requirements for the past 90 days. Yes ☒ No ☐

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 (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a small 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 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 13, 2026, there were 13,571,706 shares of the registrant’s common stock outstanding.

TABLE OF CONTENTS

		PAGE
Cautionary Note Concerning Forward-Looking Statements		3
PART I. FINANCIAL INFORMATION		F-1
ITEM 1.	Financial Statements	F-1
	Balance Sheets as of March 31, 2026 (unaudited) and September 30, 2025	F-1
	Unaudited Statements of Operations for the Three and Six Months Ended March 31, 2026 and 2025	F-2
	Unaudited Statements of Changes in Shareholder’s Deficit For the Three and Six Months Ended March 31, 2026 and 2025	F-3
	Unaudited Statements of Cash Flows for the Six Months Ended March 31, 2026 and 2025	F-4
	Notes to Consolidated Financial Statements (unaudited)	F-5
ITEM 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	4
ITEM 3.	Quantitative and Qualitative Disclosures about Market Risk	8
ITEM 4.	Controls and Procedures	8
PART II. OTHER INFORMATION		9
ITEM 1.	Legal Proceedings	9
ITEM 1A.	Risk Factors	9
ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds	9
ITEM 3.	Defaults Upon Senior Securities	9
ITEM 4.	Mine Safety Disclosures	9
ITEM 5.	Other Information	9
ITEM 6.	Exhibits	9
SIGNATURES		10

2

Cautionary Note Concerning Forward-Looking Statements

This Quarterly Report on Form 10-Q contains “forward-looking statements”. These forward-looking statements, including without limitation forward-looking statements made under the caption “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” involve risks and uncertainties. Any statements contained in this Quarterly Report that are not statements of historical fact may be deemed to be forward-looking statements. Forward-looking statements include, without limitation, statements as to our future operating results; plans for the marketing of our services; future economic conditions; the effect of our market and product development efforts; and expectations or plans relating to the implementation or realization of our strategic goals and future growth, including through potential future acquisitions. Forward-looking statements may include, among other things, statements relating to future sales, earnings, cash flow, results of operations, use of cash and other measures of financial performance, as well as statements relating to future dividend payments. Other forward-looking statements may be identified through the use of words such as “believes,” “anticipates,” “may,” “should,” “will,” “plans,” “projects,” “expects,” “expectations,” “estimates,” “predicts,” “targets,” “forecasts,” “strategy,” and other words of similar meaning in connection with the discussion of future operating or financial performance. These statements are based on current expectations, estimates and projections about the industries in which we operate, and the beliefs and assumptions made by management. Because forward-looking statements relate to the future, they are subject to inherent risks, uncertainties and changes in circumstances that are difficult to predict. Accordingly, the Company’s actual results may differ materially from those contemplated by the forward-looking statements. Investors, therefore, are cautioned against relying on any of these forward-looking statements. They are neither statements of historical fact nor guarantees or assurances of future performance.

3

PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

VERTICAL DATA INC.

CONSOLIDATED BALANCE SHEETS

(UNAUDITED AS OF MARCH 31, 2026 AND AUDITED AS OF SEPTEMBER 30, 2025) 

		As of March 31,				As of September 30,
		2026				2025
ASSETS
Current assets:
Cash		$	3,498,427			$	372,718
Restricted cash			1,200,000				-
Prepaid expenses			6,468,024				144,994
Total current assets			11,166,451				517,712
Property and equipment, net			1,276				1,457
Total assets		$	11,167,727			$	519,169
LIABILITIES AND EQUITY
Current liabilities:
Accrued liabilities		$	138,449			$	252,058
Contract liability			11,200,000				-
Insurance premium financing payable			87,500				-
Total current liabilities			11,425,949				252,058
Total liabilities			11,425,949				252,058
Equity:
Common stock, $ 0.0001 par value, 100,000,000 shares authorized;  12,093,741 and 41,193,052 shares issued and outstanding at  March 31, 2026 and September 30, 2025, respectively.			1,209				4,119
Additional paid in capital			5,893,882				4,433,669
Accumulated deficit			(6,153,313	)			(4,170,677	)
Total equity (deficit)			(258,222	)			267,111
Total liabilities and equity		$	11,167,727			$	519,169

The accompanying notes are an integral part of these financial statements.

F-1

VERTICAL DATA INC.

UNAUDITED CONSOLIDATED STATEMENT OF OPERATIONS

(UNAUDITED)

		2026				2025				2026				2025
		Three Months Ended March 31,								Six Months Ended March 31,
		2026				2025				2026				2025
Revenue		$	568,000			$	-			$	625,000			$	3,666,000
Cost of goods sold			434,000				-				482,900				3,598,000
Gross margin		$	134,000			$	-				142,100				68,000
Operating expenses:
General and administrative			1,464,001				1,404,996				2,124,736				2,310,454
Total operating expenses			1,464,001				1,404,996				2,124,736				2,310,454
Loss from operations			(1,330,001	)			(1,404,996	)			(1,982,636	)			(2,242,454	)
Net loss		$	(1,330,001	)		$	(1,404,996	)		$	(1,982,636	)		$	(2,242,454	)
Net loss per common share:
Basic and diluted		$	(0.12	)		$	(0.03	)		$	(0.17	)		$	(0.06	)
Weighted average common shares outstanding:
Basic and diluted			11,415,281				40,948,719				11,812,693				39,974,129

The accompanying notes are an integral part of these financial statements.

F-2

VERTICAL DATA INC.

UNAUDITED CONSOLIDATED STATEMENT OF SHAREHOLDERS’ EQUITY

(UNAUDITED)

		# of Shares				Amount				APIC				Deficit				Total
		Common Stock												Accumulated
		# of Shares				Amount				APIC				Deficit				Total
September 30, 2024			38,397,052				3,839				1,102,685				(350,599	)			755,925
Issuance of common stock			2,186,000				219				1,093,181				-				1,093,400
Stock-based compensation			-				-				464,118				-				464,118
Net loss			-				-				-				(837,458	)			(837,458	)
December 31, 2024			40,583,052				4,058				2,659,984				(1,188,057	)			1,475,985
Issuance of common stock			610,000				61				304,939				-				305,000
Stock-based compensation			-				-				980,614				-				980,614
Net loss			-				-				-				(1,404,996	)			(1,404,996	)
March 31, 2025			41,193,052				4,119				3,945,537				(2,593,053	)			1,356,603
September 30, 2025			41,193,052				4,119				4,433,669				(4,170,677	)			267,111
Issuance of common stock			364,000				36				181,964				-				182,000
Common stock cancellation			(31,752,690	)			(3,175	)			3,175				-				-
Stock-based compensation			-				-				266,076				-				266,076
Net loss			-				-				-				(652,635	)			(652,635	)
December 31, 2025			9,804,362				980				4,884,884				(4,823,312	)			62,552
Balance			9,804,362				980				4,884,884				(4,823,312	)			62,552
Issuance of common stock			2,289,379				229				104,771				-				105,000
Employee stock-based compensation			-				-				852,694				-				852,694
Non-employee stock-based compensation			-				-				51,533				-				51,533
Net loss			-				-				-				(1,330,001	)			(1,330,001	)
March 31, 2026			12,093,741				1,209				5,893,882				(6,153,313	)			(258,222	)
Balance			12,093,741				1,209				5,893,882				(6,153,313	)			(258,222	)

The accompanying notes are an integral part of these unaudited financial statements.

F-3

VERTICAL DATA INC.

UNAUDITED CONSOLIDATED STATEMENT OF CASH FLOWS

(UNAUDITED)

		2026				2025
		Six Months Ended March 31,
		2026				2025
Cash flows from operating activities:
Net loss		$	(1,982,636	)		$	(2,242,454	)
Adjustments to reconcile net (loss) income to net cash used in operating activities
Employee stock-based compensation			1,118,770				1,444,732
Non-employee stock-based compensation			51,533				-
Depreciation expense			181				150
Changes in operating assets and liabilities:
Prepaid expenses			(6,210,530	)			(96,885	)
Other current assets			-				664,000
Accrued liabilities			(113,609	)			(97,390	)
Contract liability			11,200,000				-
Other current liabilities			-				(224,000	)
Net cash provided by (used in) operating activities		$	4,063,709			$	(551,847	)
Cash flows from investing activities:
Purchase of property and equipment			-				(459	)
Net cash used in investing activities		$	-			$	(459	)
Cash flows from financing activities:
Issuance of common stock			287,000				1,398,400
Payments on insurance premium financing payable			(25,000	)			-
Net cash provided by financing activities		$	262,000			$	1,398,400
Net change in cash, cash equivalents and restricted cash		$	4,325,709			$	846,094
Cash, cash equivalents and restricted cash, beginning of period			372,718				427,722
Cash, cash equivalents and restricted cash, end of period		$	4,698,427			$	1,273,816
Cash, cash equivalents and restricted cash reconciliation:
Cash and cash equivalents		$	3,498,427			$	1,273,816
Restricted cash			1,200,000				-
Total cash, cash equivalents and restricted cash		$	4,698,427			$	1,273,816
Supplemental disclosures of cash flow information:
Cash paid for interest		$	1,037				-
Cash paid for taxes			-				-
Supplemental disclosures of non-cash investing and financing activities:
Insurance premiums financed with issuance of a liability		$	112,500				-

The accompanying notes are an integral part of these unaudited financial statements.

F-4

VERTICAL DATA INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. NATURE OF OPERATIONS

Vertical Data Inc. (the “Company”) was incorporated in Nevada on May 3, 2024 and has a fiscal year-end of September 30. The Company’s current service to its customers is comprised solely of the sale of artificial intelligence related hardware. The Company plans to expand its service offerings in the future to include technology consulting, design and engineering, project management, systems integration, system installation and facilities management. The Company’s corporate office is located in Las Vegas, Nevada.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND NEW ACCOUNTING STANDARDS

The accompanying notes to the Company’s unaudited interim financial statements have been prepared in accordance with the requirements of ASC 270, Interim Reporting and Article 8 of Regulation S-X. To that extent, footnote disclosure which would substantially duplicate the disclosure contained in the Company’s latest audited financial statements has been omitted.

In the opinion of management, these unaudited interim consolidated financial statements include all adjustments and accruals, consisting only of normal, recurring adjustments that are necessary for a fair statement of the results of all interim periods reported herein. The results of the interim periods are not necessarily indicative of the results expected for the full fiscal year or any other interim period or any future year or period.

Basis of Presentation

The accompanying financial statements have been prepared using the accrual basis of accounting in accordance with generally accepted accounting principles (“GAAP”) promulgated in the United States of America. The financial statements include Vertical Data Inc. and its subsidiaries Vertical Data Nordic and VDCA Inc. as of March 31, 2026. Vertical Data Nordic and VDCA Inc. were recently established in Sweden and Canada, respectively, for the purpose of conducting business operations in those countries. The entities did not commence principal operations as of March 31, 2026. The Company’s fiscal year-end is September 30.

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires the Company’s management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statement and the reported amounts of revenues and expenses during the reporting period. Making estimates requires management to exercise significant judgment. It is at least reasonably possible that the estimate of the effect of a condition, situation or set of circumstances that existed at the date of the financial statements, which management considered in formulating its estimate, could change in the near term due to one or more future confirming events. The Company bases its estimates on historical experience and on various assumptions that are believed to be reasonable, the results of which form the basis for the amounts recorded in the financial statements.

Recognition of Revenue from Contracts with Customers

The Company recognizes revenue from its contracts with customers in accordance with the core principle outlined in ASC 606 Revenue from Contracts with Customers. Specifically, the Company recognizes revenue “to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which we expect to be entitled in exchange for those goods or services”. To that extent, the Company recognizes revenue in accordance with the ASC Topic by applying the following five steps:

	●	Step 1-Identify the contract(s) with a customer
	●	Step 2-Identify the performance obligations in the contract
	●	Step 3-Determing the transaction price
	●	Step 4-Allocate the transaction price to the performance obligations in the contract
	●	Step 5-Recognize revenue when (or as) the Company satisfies a performance obligation

F-5

The Company’s contracts with its customers currently only contain a single performance obligation comprised solely of the sale of IT equipment. To that extent, the Company does not provide any installation or customization services at this time that might be considered a separate performance obligation. Further, as noted above, revenue is recognized at a point in time upon delivery of the equipment to the customer at the agreed upon location. The Company does not currently extend any form of payment terms to its customers and, as such, full payment for the equipment is received from the customer (via wire payment) immediately upon delivery of the equipment. The Company will recognize a contract liability to the extent it receives consideration from a customer prior to providing the equipment.

During the interim period ended March 31, 2026, the Company received an $11.2 million customer prepayment primarily related to the future sale of computer equipment to the customer. The Company expects to recognize the amount to revenue during its interim period ended June 30, 2026.

Restricted Cash

The Company presents cash and cash items that are restricted as to withdrawal and usage as restricted cash on its consolidated balance sheet. As of March 31, 2026, the Company classified $1.2. million in cash as restricted cash as the Company was legally obligated to use the amount to purchase computer equipment from a vendor for an existing customer.

Segments

The Company currently reports under a single operating segment, which constitutes all of the consolidated entity. Further, the Company’s CODM, which is its CEO, reviews the entity-wide operating results and performance. As such, the measure of profit or loss for the segment is net loss as presented in our consolidated statement of operations.

Recent Accounting Pronouncements

In November 2023, the FASB issued Accounting Standards Update (“ASU”) 2023-07, Segment Reporting—Improvements to Reportable Segment Disclosures (“ASU 2023-07”), which requires incremental disclosures related to a public entity’s reportable segments. Required disclosures include, on an annual and interim basis, significant segment expenses that are regularly provided to the CODM and included within each reported measure of segment profit or loss, an amount for other segment items (which is the difference between segment revenue less segment expenses and less segment profit or loss) and a description of its composition, the title and position of the CODM, and an explanation of how the CODM uses the reported measure(s) of segment profit or loss in assessing segment performance and deciding how to allocate resources. The standard also permits disclosure of more than one measure of segment profit. ASU 2023-07 is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. The Company adopted the new standard on September 30, 2025. The adoption of the new standard did not have a material impact to our financial statements.

In November 2024, the FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40). The amendments in this update require disclosure, in the notes to financial statements, of specified information about certain costs and expenses at each interim and annual reporting period. The amendments are effective for annual periods beginning after December 15, 2026, and reporting periods beginning after December 15, 2027, with early adoption permitted. The Company is currently evaluating the impact of the new ASU to its financial statements.

3. PREPAID EXPENSES

Prepaid expenses consisted of the following:

SCHEDULE OF PREPAID EXPENSES

		March 31, 2026				September 30, 2025
Prepaid commissions		$	171,625			$	132,625
Vendor deposits			6,170,718				-
Prepaid insurance			125,000				-
Other			681				12,369
Prepaid expenses		$	6,468,024			$	144,994

As of March 31, 2026 and September 30, 2025, prepaid expenses totaled $6,468,024 and $144,994, respectively. Vendor deposits of $6,170,718 as of March 31, 2026 represent payments made to the Company’s equipment vendor for the settlement of contract liabilities related to future purchase of equipment for its customers. The Company did not receive the equipment as of the March 31, 2026 balance sheet date.

F-6

4. PROPERTY AND EQUIPMENT

Property and equipment consisted of the following:

SCHEDULE OF PROPERTY AND EQUIPMENT

Description		March 31, 2026				September 30, 2025
Tools, machinery, and equipment		$	1,811			$	1,811
Less – accumulated depreciation			(535	)			(354	)
Total property and equipment, net		$	1,276			$	1,457

Total depreciation expense was $91 and $181 for three and six months ended March 31, 2026, respectively, and $83 and $150 for the three and six months ended March 31, 2025, respectively.

5. ACCRUED LIABILITIES

Accrued liabilities consisted of the following:

SCHEDULE OF ACCRUED LIABILITIES

		March 31, 2026				September 30, 2025
Wages accrual		$	48,000			$	102,397
Expenses accrual			82,306				131,115
Credit card accrual			8,143				18,546
Total accrued liabilities		$	138,449			$	252,058

6. INSURANCE PREMIUM FINANCING PAYABLE

On January 30, 2026, the Company entered into a premium financing agreement to fund an annual Director and Officer (D&O) insurance policy. The agreement provided for a total financed amount of $112,500, representing the premium balance after a down payment of $37,500. The note carries a finance charge of $4,667, resulting in total obligation of $117,167.

The note is payable in 9 equal monthly installments of $13,019, maturing on October 30, 2026. The total finance charge of $4,667 is amortized as interest expense over the term of the agreement within general and administrative in the statement of operations. As of March 31, 2026, the outstanding principal balance of this note, net of unamortized discount, was $87,500.

7. STOCKHOLDERS’ EQUITY

Upon formation, the authorized capital of the Company was 100,000,000 shares consisting of 100,000,000 shares of common stock, par value $0.0001.

Common Stock

The Company’s common shares do not include any dividend or liquidation preferences, participation rights, call prices or unusual voting rights.

Common Stock Issuances

During the three months ended March 31, 2026, the Company sold 280,000 shares of Company stock in an unregistered offering for net proceeds of $40,000.

During the six months ended March 31, 2026, the Company sold 644,000 shares of Company stock in an unregistered offering for net proceeds of $222,000.

Share Cancellation

During October of 2025, certain founders and other Company shareholders voluntarily surrendered an aggregate of 31,752,690 shares of Common Stock to the Company for no consideration. The cancellation was not given retroactive effect on the balance sheet as, pursuant to SAB Topic 4.C, it was not a stock dividend, stock split or reverse split.

Stock Option Cancellations

During October of 2025, the Company cancelled 2,426,488 stock options that were issued to five individuals. The Company recorded an immaterial amount of incremental stock-based compensation expense related to these cancellations.

F-7

Stock Option Exercises

During January of 2026, a total of 1,300,000 stock options were exercised at a weighted average exercise price of $0.05, resulting in proceeds of $65,000.

During January of 2026, a total of 788,199 stock options were exercised. These stock options were exercised as a cashless exercise whereby the consideration provided for exercise was forfeiture of 78,820 shares, resulting in net shares issued of 709,379.

Common Stock to be Issued for Services Provided

During the three months ended March 31, 2026, the Company entered into agreements with various service providers to settle existing obligations through the future issuance of 864,900 shares resulting in the settlement of liabilities totaling $432,450. No gain or loss was recognized from recognition of the transaction.

During the three months ended March 31, 2026, the Company entered into a agreements with two employees for the payment of bonuses through the future issuance of 360,000 shares resulting in the settlement of liabilities totaling $180,000. No gain or loss was recognized from the transaction.

During the three months ended March 31, 2026, the Company entered into an agreement with a service provider for to settle an existing obligation through the future issuance of 103,065 shares resulting in the settlement of liabilities totaling $51,533. No gain or loss was recognized from recognition of the transaction.

8. SUBSEQUENT EVENTS

In accordance with ASC 855 Subsequent Events, the Company has evaluated events and transactions subsequent to March 31, 2026 through the date these financial statements were issued. Management did not identify any subsequent events that would require disclosure in these consolidated financial statements.

F-8

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 together with our most recent audited financial statements and related notes. Some of the information contained in this discussion and analysis constitutes forward-looking statements that involve risks and uncertainties. Actual results could differ materially from those discussed in these forward-looking statements.

The results of operations for the interim period ended March 31, 2026, are not necessarily indicative of the results that may be expected for any other future period. The following discussion should be read in conjunction with the unaudited interim and annual financial statements and the notes thereto included in Company’s previously filed Form 10-K. Further, the Company’s Management Discussion and Analysis of Financial Condition and Results of Operations has been prepared in accordance with Item 303(c) of Regulation S-K.

Overview

Vertical Data Inc. is a systems and solutions technology provider delivering high performance compute solutions to enterprise and data center clients. We distribute computer systems and information technology (“IT”) systems including graphics processing unit (“GPU”) servers, storage solutions, system components, software, networking and communications equipment, and related complementary products and services.

We distribute technology products from original equipment manufacturers (“OEMs”) as well as suppliers of next-generation technologies and delivery models such as converged and hyper-converged infrastructure. We purchase peripherals, IT systems, systems components, software, and networking equipment from a network of suppliers, consisting of mainly two vendors, and sell them to our data center and enterprise customers. The Company also engages in the coordination and provision of data center services and hosting services for our customers.

Our Company’s business model focuses on supporting the demand for enterprise AI compute capability. We are characterized by high volumes of sales and price sensitivity by our end users. The market for IT products is generally characterized by declining unit prices and short product life cycles. We set our sales price based on the market supply and demand characteristics for each particular product or bundle of products we distribute and services we provide. In addition, we try to provide just-in-time delivery of the IT products to avoid taking significant inventory in order to ensure positive working capital cycles and to ensure our product offerings tie with current market demands.

We are highly dependent on the end-market demand for IT products and on our partners’ strategic initiatives and business models. This end market demand is influenced by many factors including the introduction of new IT products and software by OEMs, replacement cycles for existing IT products, trends toward AI computing, overall economic growth and general business activity. A difficult and challenging economic environment may also lead to consolidation or decline in the IT industries and increased price-based competition

We are an early-stage company. Our financial results reflect our investment in building a direct sales force for revenue-producing initiatives and the development of a business development team for identifying target customers and key equipment and hardware suppliers.

We are a value-added reseller of best-in-class technology and computing solutions to data centers. Our mission is to expand the availability of high-performance computing to the global landscape. We accomplish this by providing infrastructure hardware and services to data centers and enterprises looking to utilize high performance compute such as machine learning and inference.

We intend to make deliberate and substantial investments in support of our mission and long-term growth. For example, we have invested in building a team of expert and experienced consultants and business development personnel that is responsible for development and expansion of our customer base and our technology supplier base. We also plan to make significant investments in sales and marketing and incentives to grow and retain our customer base.

Our priorities are to (a) continue to invest in identifying best-in-class technologies that will enable us to expand our product offerings, (b) establishing and extending our product offerings in new jurisdictions, and (c) expand our product and service offerings that are related to and complimentary of our existing product offerings.

Our current business is highly scalable with relatively minimal incremental spend in adding consulting resources to our sales and business development personnel. We will continue to manage our fixed-cost base in conjunction with our market entry plans and focus our variable spend on marketing, customer experience and support to become the value-added reseller of choice for customers and to maintain favorable relationships with suppliers. We also expect to improve our profitability over time as our revenue and gross margin expand as customer relationships mature and expand, and our variable marketing expenses and fixed costs stabilize or grow at a slower rate.

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Our path to profitability is based on the acceleration of positive contribution profit growth driven by increased revenue and gross margin generation from ongoing customer acquisition, strong customer retention, improved monetization from increased sales volume, as well as scale benefits from investments in our general and administrative functions. On an adjusted EBITDA basis, we expect to achieve profitability when total contribution profit exceeds the fixed costs of our business, which depends, in part, on the number of customers that have access to our product offerings and the other factors summarized in the section entitled “Cautionary Statement Regarding Forward-Looking Statements”.

We distribute our products and technology solutions through direct sales channels managed by our team of consultants in addition to our own direct-to-customer platforms and web pages.

The Company was incorporated in Nevada on May 3, 2024, and our corporate office is currently located in Las Vegas, Nevada. During the three months ended March 31, 2026, the Company purchased an 85% ownership interest in VDA Nordica. VDA Nordica was established to assist in the development of data centers in Sweden and had not commenced principal operations as of the most recent balance sheet date.

Liquidity and Capital Resources

The Company has funded its operations primarily through ongoing sales of equipment and GPU compute capacity to its customers and through private equity offerings to investors. During the six months ended March 31, 2026, these sales resulted in gross proceeds of approximately $0.2 million. As of March 31, 2026, the Company has not borrowed money to fund its business through either notes payable or lines of credit. The Company plans to continue to fund its operations through private equity offerings as well as cash generated from its ongoing business operations.

The Company purchases equipment from certain suppliers to sell to its customers. However, as of March 31, 2026, the Company has not entered into any long-term commitments or contractual obligations with those suppliers to purchase equipment. Further, while the Company entered into a lease agreement during October of 2024, the agreement is on a month-to-month basis and we do not expect the agreement to have a material impact on our financial statements or results of operations.

Cash Flows

For the Three and Six Months Ended March 31, 2026

The following table summarizes the Company’s cash flows for the six months ended March 31, 2026: 

		Six Months Ended March 31,
		2026				2025
Net loss		$	(1,982,636	)		$	(2,242,454	)
Net cash provided by (used in) operating activities			4,063,709				(551,847	)
Net cash used in investing activities			-				(459	)
Net cash provided by financing activities			262,000				1,398,400
Net change in cash, cash equivalents and restricted cash		$	4,325,709			$	846,094
Cash, cash equivalents and restricted cash, beginning of period			372,718				427,722
Cash, cash equivalents and restricted cash, end of period		$	4,698,427			$	1,273,816

Operating Activities

Net provided by operating activities for the six months ended March 31, 2026 was approximately $4.1 million. The amount was primarily comprised of a net loss of approximately $2.0 million, offset by stock-based compensation expense of approximately $1.2 million and a net change in assets and liabilities of approximately $4.9 million.

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Net cash used in operating activities for the six months ended March 31, 2025 was approximately $0.6 million. The amount was primarily comprised of a net loss of $2.2 million, offset by stock-based compensation expense of approximately $1.4 million and the net change in assets and liabilities of approximately $0.2 million.

Investing Activities

There were no investing activities during the six months ended March 31, 2026.

During the six months ended March 31, 2025, we purchased equipment totaling $459.

Financing Activities

Net cash provided by financing activities for the six months ended March 31, 2026, consisted of sales of common shares resulting in net proceeds of approximately $0.2 million and cash received for stock option exercises of approximately $0.1 million, partially offset by $25,000 of payments on insurance premium financing payable.

Net cash provided from financing activities for the six months ended March 31, 2025 consisted solely of the continued private equity offering resulting in net proceeds of approximately $1.4 million.

Results of Operations

We are an early-stage company, and our historical results may not be indicative of our future results. Accordingly, the drivers of our future financial results, as well as the components of such results, may not be comparable to our historical or future results of operations.

Our financial results for the three and six months ended March 31, 2026 and 2025 are summarized as follows: 

		Three Months Ended March 31,								Six Months Ended March 31,
		2026				2025				2026				2025
Revenue		$	568,000			$	-			$	625,000			$	3,666,000
Cost of goods sold			434,000				-				482,900				3,598,000
Gross margin		$	134,000			$	-				142,100				68,000
Operating expenses:
General and administrative			1,464,001				1,404,996				2,124,736				2,310,454
Total operating expenses			1,464,001				1,404,996				2,124,736				2,310,454
Loss from operations			(1,330,001	)			(1,404,996	)			(1,982,636	)			(2,242,454	)
Net loss		$	(1,330,001	)		$	(1,404,996	)		$	(1,982,636	)		$	(2,242,454	)

Comparison of the three and six months ended March 31, 2026 and 2025

Revenue

Total revenue was $568,000 and $0 for the three months ended March 31, 2026 and 2025, respectively. Revenue increased by $568,000, or 100%, due to an increase in the number of products sold during the current period as compared to the prior comparable period. Revenue increased compared to the prior-year period primarily due to the timing of orders. We have continued to expand our sales pipeline, which we believe supports increased customer adoption and conversion of opportunities, and we expect revenue to improve as delayed transactions progress and deliveries occur. However, revenue may vary from period to period based on the timing of customer orders, deliveries, and customer acceptance, among other factors.

6

Total revenue was $625,000 and $3,666,000 for the six months ended March 31, 2026 and 2025, respectively. Revenue decreased by $3,041,000, or 83%, due to a reduction in the number of products sold during the current period as compared to the prior comparable period. Revenue decreased compared to the prior-year period primarily due to the timing of orders. Certain transactions expected to close during the quarter were delayed as customer decision-making and procurement cycles extended and supplier and inventory lead times lengthened, resulting in deliveries shifting into subsequent periods. We believe the revenue decrease is not indicative of underlying demand trends. We have continued to expand our sales pipeline, which we believe supports increased customer adoption and conversion of opportunities, and we expect revenue to improve as delayed transactions progress and deliveries occur. However, revenue may vary from period to period based on the timing of customer orders, deliveries, and customer acceptance, among other factors.

Cost of Sales

Total cost of sales was $434,000 and $0 for the three months ended March 31, 2026 and 2025, respectively. Cost of sales increased by $434,000 due to the increase in revenue.

Total cost of sales was $482,900 and $3,598,000 for the six months ended March 31, 2026 and 2025, respectively. Cost of sales decreased by $3,115,100, or 87%, due to the reduction in revenue.

Operating Expenses

Total operating expense was approximately $1.5 million and $1.4 million for the three months ended March 31, 2026 and 2025, respectively. Operating expense increased by approximately $59,000, or 4%, primarily due to increases in professional services expense of approximately $194,000, server space and energy of approximately $187,000, contract labor costs of approximately $166,000, salaries of approximately $90,000, commissions and fees of approximately of $59,000, software expense of approximately $41,000 and other expenses of approximately $68,000, partially offset by decreases in stock-based compensation of approximately $740,000 and travel and entertainment of approximately $6,000.

Total operating expense was approximately $2.1 million and $2.3 million for the six months ended March 31, 2026 and 2025, respectively. Operating expense decreased by approximately $186,000, or 8%, primarily due to decreases in stock-based compensation of approximately $938,000 and commissions & fees of approximately $10,000, partially offset by increases in contract labor of approximately $199,000, server space and energy storage of approximately $187,000, professional services expense of approximately $169,000, salaries expense of approximately $75,000, software expense of approximately $65,000, travel and entertainment of approximately $7,000 and other expenses of $60,000.

Critical Accounting Estimates

There have been no material changes in the Company’s Critical Accounting Estimates as compared to our most recent fiscal year ended September 30, 2025.

Recent Accounting Pronouncements

In November 2023, the FASB issued Accounting Standards Update (“ASU”) 2023-07, Segment Reporting—Improvements to Reportable Segment Disclosures (“ASU 2023-07”), which requires incremental disclosures related to a public entity’s reportable segments. Required disclosures include, on an annual and interim basis, significant segment expenses that are regularly provided to the CODM and included within each reported measure of segment profit or loss, an amount for other segment items (which is the difference between segment revenue less segment expenses and less segment profit or loss) and a description of its composition, the title and position of the CODM, and an explanation of how the CODM uses the reported measure(s) of segment profit or loss in assessing segment performance and deciding how to allocate resources. The standard also permits disclosure of more than one measure of segment profit. ASU 2023-07 is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. The Company adopted the new standard on September 30, 2025. The adoption of the new standard did not have a material impact to our financial statements.

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In November 2024, the FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40). The amendments in this update require disclosure, in the notes to financial statements, of specified information about certain costs and expenses at each interim and annual reporting period. The amendments are effective for annual periods beginning after December 15, 2026, and reporting periods beginning after December 15, 2027, with early adoption permitted. The Company is currently evaluating the impact of the new ASU to its financial statements.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item, as disclosed in our most recent Form 10-K filed with the Securities and Exchange Commission on December 29, 2025.

ITEM 4. CONTROLS AND PROCEDURES.

Disclosure Controls and Procedures

Our management, with the participation of our chief executive officer and chief financial officer, evaluated the effectiveness of our disclosure controls and procedures as of December 31, 2025. The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, are controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the Company’s management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure. Management recognizes that controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives, and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

Based on this evaluation of our disclosure controls and procedures as of March 31, 2026, our chief executive officer and chief financial officer concluded that our disclosure controls and procedures were not effective.

Changes in Internal Control Over Financial Reporting

There were no changes to our internal control over financial reporting during the three months ended March 31, 2026 that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.

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PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

The Company currently is not a party to any legal proceedings and, to the Company’s knowledge; no such proceedings are threatened or contemplated.

ITEM 1A. RISK FACTORS

Investment in our securities involves risk. An investor or potential investor should consider the risks included under the caption “Risk Factors” in our Form S-1/A that was declared effective on July 09, 2025 when making investment decisions regarding our securities. The risk factors disclosed in our Form S-1/A have not materially changed since the date of such filing.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

During the three months ended March 31, 2026, the Company entered into the following unregistered sales of equity securities:

	●	Sold 280,000 shares of common stock for gross proceeds of $40,000 to certain accredited investors. The sale did not include any underwriting discounts or commissions and
	●	Issued 2,009,379 shares of common stock upon the exercise of certain stock options

All of the securities described above were issued in reliance on the exemption from registration provided by Rule 506(b) of the Securities Act of 1933.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

None.

ITEM 6. EXHIBITS

The following exhibits are filed as part of this Form 10-Q:

Exhibit Number		Description
31.1*		Certification of Chief Executive Officer pursuant to 18 U.S.C.§ 1350, as adopted pursuant to § 302 of the Sarbanes-Oxley Act of 2002.
31.2*		Certification of Chief Financial Officer pursuant to 18 U.S.C.§ 1350, as adopted pursuant to § 302 of the Sarbanes-Oxley Act of 2002.
32.1*		Certification of Chief Executive Officer pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002.
32.2*		Certification of Chief Financial Officer pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002.
101.INS**		Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document)
101.SCH**		Inline XBRL Taxonomy Extension Schema Document
101.CAL**		Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF**		Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB**		Inline XBRL Taxonomy Extension Labels Linkbase Document
101.PRE**		Inline XBRL Taxonomy Extension Presentation Linkbase Document
104**		Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

* Filed herewith

** XBRL (Extensible Business Reporting Language) information is furnished and not filed or a part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

VERTICAL DATA INC.

Signature		Title		Date
/s/ Deven Soni				May 15, 2026
Deven Soni		(President and Chief Executive Officer)
/s/ Christopher Creatura				May 15, 2026
Christopher Creatura		(Chief Financial Officer)

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FAQ

How did Vertical Data Inc. (VDTA) perform financially in the six months ended March 31, 2026?

Vertical Data generated revenue of $625,000 and recorded a net loss of $1,982,636 for the six months ended March 31, 2026. The loss narrowed versus the prior-year period, mainly due to lower operating expenses despite a sharp decline in sales volume.

Why did VDTA’s revenue decline compared with the prior-year period?

Six‑month revenue fell to $625,000 from $3,666,000, an 83% decrease, primarily because fewer AI hardware products were sold. Management attributes the decline mainly to timing of customer orders, extended decision-making cycles, and longer supplier lead times shifting deliveries into later periods.

What is the significance of VDTA’s $11.2 million contract liability as of March 31, 2026?

The $11.2 million contract liability represents a large customer prepayment for future computer equipment. Vertical Data expects to recognize this amount as revenue in the interim period ending June 30, 2026, once equipment is delivered, providing a near-term backlog and supporting future reported sales and cash flow.

How strong is Vertical Data Inc.’s liquidity position as of March 31, 2026?

At March 31, 2026, Vertical Data held $3,498,427 of cash plus $1,200,000 of restricted cash, totaling $4,698,427. Operating activities provided $4,063,709 of cash in the six-month period, largely from the significant customer prepayment, and the company reported no bank debt aside from insurance financing.

How did VDTA’s share count and equity change during the period?

Common shares outstanding dropped to 12,093,741 at March 31, 2026 from 41,193,052 at September 30, 2025. This primarily reflects voluntary cancellation of 31,752,690 founder and other shares and stock option exercises, resulting in stockholders’ equity turning into a deficit of $258,222.

What unregistered equity transactions did Vertical Data Inc. complete in the quarter?

During the three months ended March 31, 2026, Vertical Data sold 280,000 common shares for $40,000 in gross proceeds and issued 2,009,379 shares upon stock option exercises. These securities were issued under the Rule 506(b) exemption of the Securities Act of 1933.