[10-Q] Vocodia Holdings Corp Quarterly Earnings Report
Rhea-AI Filing Summary
Vocodia Holdings Corp, a conversational AI technology provider, reported a small increase in quarterly sales but continued heavy losses and a worsening balance sheet for the nine months ended September 30, 2025. Net sales were about $51k for the quarter and $66k year-to-date, while the company recorded a quarterly net loss of roughly $1.9 million and a year-to-date loss of about $5.9 million, though this is narrower than the prior year’s nine‑month loss.
Cash was just $4.1k and total assets $51.8k, versus current liabilities of about $7.1 million, resulting in a stockholders’ deficit of roughly $7.1 million. Management states there is substantial doubt about the company’s ability to continue as a going concern and notes it expects to keep spending significantly on technology development.
To fund operations, Vocodia has relied on multiple high‑cost convertible notes, a May 2025 senior secured convertible note financing, warrant issuances and large conversions of debt into equity. Common shares outstanding jumped from about 300 million at year‑end 2024 to roughly 3.7 billion at September 30, 2025, and over 10.9 billion by December 19, 2025, highlighting substantial dilution as part of its financing strategy.
Positive
- None.
Negative
- None.
Insights
Vocodia shows severe balance-sheet stress, heavy dilution, and going concern risk despite modest loss improvement.
Vocodia’s operations remain very small relative to its capital structure. Net sales were about
The balance sheet is highly strained. As of
Management explicitly notes “substantial doubt” about the ability to continue as a going concern and plans to keep raising capital or refinancing debt. Common shares outstanding expanded from about 300M at
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM
(Mark One)
For
the quarterly period ended
OR
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) |
(I.R.S.
Employer Identification No.) | |
| (Address of principal executive offices) | (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(s) | Name of each exchange on which registered | ||
| OTC Markets, Inc. | ||||
| OTC Markets, Inc. | ||||
| OTC Markets, Inc.. |
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.
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).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer | ☐ | Accelerated filer | ☐ |
| ☒ | 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
Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes ☒ No ☐
As of December 19, 2025, the registrant had shares of common stock, $ par value per share, outstanding.
Table of Contents
| Page | ||
| PART I. | FINANCIAL INFORMATION | 1 |
| Item 1. | Condensed Consolidated Financial Statements (Unaudited) | |
| Condensed Consolidated Balance Sheets | 1 | |
| Condensed Consolidated Statements of Operations | 2 | |
| Condensed Consolidated Statements of Changes in Stockholders’ Equity (Deficit) | 3 | |
| Condensed Consolidated Statements of Cash Flows | 4 | |
| Notes to Unaudited Condensed Consolidated Financial Statements | 5 | |
| Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 31 |
| Item 3. | Quantitative and Qualitative Disclosures About Market Risk | 41 |
| Item 4. | Controls and Procedures | 41 |
| PART II. | OTHER INFORMATION | 42 |
| Item 1. | Legal Proceedings | 42 |
| Item 1A. | Risk Factors | 43 |
| Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 43 |
| Item 3. | Defaults Upon Senior Securities | 43 |
| Item 4. | Mine Safety Disclosures | 43 |
| Item 5. | Other Information | 43 |
| Item 6. | Exhibits | 44 |
| Signatures | 45 | |
| i |
PART I—FINANCIAL INFORMATION
Vocodia Holdings Corp
Condensed Consolidated Balance Sheets
| September 30, | December 31, | |||||||
| 2025 | 2024 | |||||||
| (unaudited) | ||||||||
| ASSETS | ||||||||
| Current Assets | ||||||||
| Cash | $ | $ | ||||||
| Accounts receivable, net | ||||||||
| Prepaid expenses and other assets | ||||||||
| Total Current Assets | ||||||||
| Non-Current Assets | ||||||||
| Property and equipment, net | ||||||||
| Digital assets | ||||||||
| Other assets | ||||||||
| Total Non-Current Assets | ||||||||
| TOTAL ASSETS | $ | $ | ||||||
| LIABILITIES AND SHAREHOLDERS’ DEFICIT | ||||||||
| Current Liabilities | ||||||||
| Accounts payable and accrued liabilities | $ | $ | ||||||
| Liquidate damages payable | ||||||||
| Contract liabilities | ||||||||
| Related party payable | ||||||||
| Note payable | ||||||||
| Convertible notes payable, net | ||||||||
| May 2025 convertible note | ||||||||
| Warrant liability | ||||||||
| Derivative liability | ||||||||
| Total Current Liabilities and Total Liabilities | ||||||||
| Commitments and contingencies | ||||||||
| Shareholders’ Deficit | ||||||||
| Preferred stock, $ par value; shares authorized; | ||||||||
| Series A Preferred Stock, shares designated, $ par value; shares issued and outstanding as of September 30, 2025, and December 31, 2024 | ||||||||
| Series B Preferred Stock, shares designated, $ par value; and shares issued and outstanding as of September 30, 2025, and December 31, 2024 | ||||||||
| Series C Convertible Preferred Stock, shares designated, $ par value; shares issued and outstanding as of September 30, 2025, and December 31, 2024 | ||||||||
| Series D Redeemable Preferred Stock, shares designated, $ par value; shares issued and outstanding as of September 30, 2025, and December 31, 2024 | ||||||||
| Common stock, $ par value: shares authorized; and shares issued and outstanding, as of September 30, 2025, and December 31, 2024, respectively | ||||||||
| Additional paid-in capital | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Total shareholders’ deficit | ( | ) | ( | ) | ||||
| TOTAL LIABILITIES AND SHAREHOLDERS’ DEFICIT | $ | $ | ||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
| 1 |
Vocodia Holdings Corp
Condensed Consolidated Statements of Operations
(Unaudited)
| For the Three Months Ended September 30, | For the Nine Months Ended September 30, | |||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||
| Sales, net | $ | $ | $ | $ | ||||||||||||
| Cost of sales | ||||||||||||||||
| Gross loss | ( | ) | ( | ) | ( | ) | ||||||||||
| Operating Expenses | ||||||||||||||||
| General and administrative expense | ||||||||||||||||
| Salaries and wages | ||||||||||||||||
| Research and development and other service providers | ||||||||||||||||
| Consulting expense – related party | ||||||||||||||||
| Total Operating Expenses | ||||||||||||||||
| Operating loss | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Other income (expense) | ||||||||||||||||
| Other income | ||||||||||||||||
| Gain on digital assets | ||||||||||||||||
| Gain on Solana used to repay loan held by related party | ||||||||||||||||
| Liquidated damages | ( | ) | ||||||||||||||
| Loss on issuance of May 2025 convertible note and warrants | ( | ) | ||||||||||||||
| Change in fair value of May 2025 convertible note | ( | ) | ( | ) | ||||||||||||
| Change in fair value of warrant liability | ||||||||||||||||
| Derivative expense and change in fair value of derivative liability | ( | ) | ( | ) | ||||||||||||
| Gain from forgiveness of payables | ||||||||||||||||
| Loss on settlement of debts | ( | ) | ( | ) | ( | ) | ||||||||||
| Bad debt expense | ( | ) | ||||||||||||||
| Interest expense | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Total other expense | ( | ) | ( | ) | ( | ) | ||||||||||
| Net Income (Loss) | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Basic and diluted loss per common share | ) | ) | ) | ) | ||||||||||||
| Weighted average number of common shares outstanding, basic and diluted | ||||||||||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
| 2 |
Vocodia Holdings Corp
Condensed Consolidated Statements of Stockholders’ Deficit
(Unaudited)
| For the Nine Months Ended September 30, 2025 | ||||||||||||||||||||||||||||||||||||
| Series A Preferred Stock | Series B Preferred Stock | Common Stock | Additional Paid-In | Accumulated | Total Stockholders’ | |||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Shares | Amount | Capital | Deficit | Equity | ||||||||||||||||||||||||||||
| Balances, December 31, 2024 | $ | | $ | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||||||||||
| Common stock issued for exercise of warrants | - | - | ( | ) | ||||||||||||||||||||||||||||||||
| Issuance of common stock for settlement of debt | - | - | ||||||||||||||||||||||||||||||||||
| Net Loss | - | - | - | ( | ) | ( | ) | |||||||||||||||||||||||||||||
| Balances, March 31, 2025 | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||||||||||||||||
| Exercise of warrants | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||||||
| Issuance of common stock for settlement of debt | - | - | ||||||||||||||||||||||||||||||||||
| Conversion of convertible notes to common stock | - | - | ||||||||||||||||||||||||||||||||||
| Net Loss | - | - | - | ( | ) | ( | ) | |||||||||||||||||||||||||||||
| Balances, June 30, 2025 | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||||||||||||||||
| Exercise of warrants | - | - | ( | ) | ||||||||||||||||||||||||||||||||
| Issuance of common stock for settlement of debt | - | - | ||||||||||||||||||||||||||||||||||
| Conversion of convertible notes to common stock | - | - | ||||||||||||||||||||||||||||||||||
| Issuance of common stock for services | - | - | ||||||||||||||||||||||||||||||||||
| Net Income (Loss) | - | - | - | ( | ) | ( | ) | |||||||||||||||||||||||||||||
| Balances, September 30, 2025 | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||
For the Nine Months Ended September 30, 2024 | ||||||||||||||||||||||||||||||||||||
| Series A Preferred Stock | Series B Preferred Stock | Common Stock | Additional Paid-In | Accumulated | Total Stockholders’ | |||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Shares | Amount | Capital | Deficit | Equity | ||||||||||||||||||||||||||||
| Balances, December 31, 2023 | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||||||||||||||||
| Issuance of Series B Preferred Stock | - | |||||||||||||||||||||||||||||||||||
| Common stock units issued for cash | - | - | ||||||||||||||||||||||||||||||||||
| Deferred offering costs | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||||||
| Issuance of common stock for settlement of debt | - | - | ||||||||||||||||||||||||||||||||||
| Common stock issued for conversion of debt | - | - | ||||||||||||||||||||||||||||||||||
| Common stock issued for conversion of Series B Preferred Stock | - | ( | ) | ( | ) | |||||||||||||||||||||||||||||||
| Common stock issued for exercise of warrants | - | - | ( | ) | ||||||||||||||||||||||||||||||||
| Series C warrants issued | - | - | - | |||||||||||||||||||||||||||||||||
| Stock based compensation | - | - | - | |||||||||||||||||||||||||||||||||
| Net Loss | - | - | - | ( | ) | ( | ) | |||||||||||||||||||||||||||||
| Balances, March 31, 2024 | $ | $ | $ | $ | $ | ( | ) | $ | ||||||||||||||||||||||||||||
| Common stock issued for exercise of warrants | ||||||||||||||||||||||||||||||||||||
| Net Loss | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||
| Balances, June 30, 2024 | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||||||||||||||||
| Common stock issued for exercise of warrants | - | - | ||||||||||||||||||||||||||||||||||
| Net Income (Loss) | - | - | - | ( | ) | ( | ) | |||||||||||||||||||||||||||||
| Balances, September 30, 2024 | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
| 3 |
Vocodia Holdings Corp
Condensed Consolidated Statements of Cash Flows
(Unaudited)
| For the Nine Months Ended September 30, | ||||||||
| 2025 | 2024 | |||||||
| Cash flows from operating activities: | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Adjustment to reconcile net loss to net cash used in operating activities: | ||||||||
| Depreciation | ||||||||
| Amortization of debt issuance costs | ||||||||
| Liquidated damages - warrants | ||||||||
| Gain on digital assets | ( | ) | ||||||
| Gain on Solana used to repay loan held by related party | ( | ) | ||||||
| Stock-based compensation | ||||||||
| Bad debt expense | ||||||||
| Convertible note default penalty | ||||||||
| Loss on issuance of May 2025 convertible note and warrants | ||||||||
| Change in fair value of May 2025 Convertible Note | ||||||||
| Change in fair value of warrant liability | ( | ) | ||||||
| Derivative expense and change in fair value of derivative liability | ( | ) | ||||||
| Loss on settlement of debt | ||||||||
| Settlement of accounts payable | ( | ) | ( | ) | ||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | ( | ) | ( | ) | ||||
| Prepaid expense and other assets | ( | ) | ||||||
| Other assets | ( | ) | ||||||
| Accounts payable and accrued expenses | ||||||||
| Related party payable | ( | ) | ||||||
| Net change in operating right-of-use lease asset and liability | ( | ) | ||||||
| Net cash used in operating activities | ( | ) | ( | ) | ||||
| Cash flows from investing activities: | ||||||||
| Purchase of property and equipment | ( | ) | ||||||
| Purchases of digital assets | ( | ) | ||||||
| Proceeds from sales of digital assets | ||||||||
| Net cash used in investing activities | ( | ) | ||||||
| Cash flows from financing activities: | ||||||||
| Proceeds from issuance of common stock units | ||||||||
| Deferred offering costs | ( | ) | ||||||
| Proceeds from exercise of warrants | ||||||||
| Proceeds from issuance of series B preferred stock | ||||||||
| Proceeds from related party payable | ||||||||
| Proceeds from notes payable | ||||||||
| Proceeds from convertible notes payable | ||||||||
| Proceeds from May 2025 convertible note | ||||||||
| Issuance costs of May 2025 convertible note | ||||||||
| Repayment of notes payable | ( | ) | ||||||
| Repayment of convertible notes payable | ( | ) | ( | ) | ||||
| Net cash provided by financing activities | ||||||||
| Net decrease in cash | ||||||||
| Cash, beginning of year | ||||||||
| Cash, end of year | $ | $ | ||||||
| Supplemental cash flow information: | ||||||||
| Cash paid for interest | $ | $ | ||||||
| Cash paid for taxes | $ | $ | ||||||
| Supplemental non-cash investing and financing activities: | ||||||||
| Series C warrants issued | $ | $ | ||||||
| Issuance of common stock for settlement of debt | $ | $ | ||||||
| Issuance of common stock for settlement of debt - related parties | $ | $ | ||||||
| Common stock issued for conversion of debt | $ | $ | ||||||
| Common stock issued for conversion of Series B Preferred Shares | $ | $ | ||||||
| Common stock issued for exercise of warrants | $ | $ | ||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
| 4 |
VOCODIA HOLDINGS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2025
NOTE 1 – ORGANIZATION AND GOING CONCERN
Organization and Business Overview
Vocodia
Holdings Corp (“Vocodia” or “the Company”) was incorporated in the State of Wyoming on
Click Fish Media, Inc. (“CFM”) was incorporated in the State of Florida on November 29, 2019, and is an IT services provider.
On
August 2, 2022, Vocodia purchased all outstanding shares of CFM held by an owner under common ownership for $
Going Concern
The
Company’s consolidated financial statements are prepared in accordance with Generally Accepted Accounting Principles (“GAAP”)
of the United States including the assumption of a going concern basis, which contemplates the realization of assets and liquidation
of liabilities in the normal course of business. However, as shown in the accompanying consolidated financial statements, during the
nine months ended September 30, 2025, the Company had net loss of approximately $
Management
recognizes that the Company must obtain additional resources to successfully develop its technology and implement its business plans.
Through September 30, 2025, the Company has received funding in the form of indebtedness and from the sale stock subscriptions. In May
2025, the Company closed on a private offering pursuant to a Securities Purchase Agreement with an accredited investor, pursuant to which
the investor purchased a Senior Secured Convertible Note in the original principal amount of $
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying unaudited condensed consolidated financial statements were prepared using accounting principles generally accepted in the United States of America (“U.S GAAP”) for interim financial information and the instructions to Form 10-Q and Article 8 of Regulation S-X. Accordingly, these unaudited condensed consolidated financial statements do not include all information or notes required by U.S. GAAP for annual consolidated financial statements and should be read in conjunction with the Company’s annual financial statements for the year ended December 31, 2024 included within the Company’s Current Report on Form 10-K, originally filed with the SEC on April 30, 2025.
| 5 |
In the opinion of management, the unaudited consolidated condensed financial statements included herein contain all adjustments necessary to present fairly the Company’s financial position and the results of its operations and cash flows for the interim periods presented. Such adjustments are of a normal recurring nature. The results of operations for the nine months ended September 30, 2025, may not be indicative of results for the full year.
Basis of Consolidation
The financial statements have been prepared on a consolidated basis with those of the Company’s wholly owned subsidiaries, Vocodia FL, LLC, Vocodia JV, LLC, and CFM. All intercompany transactions and balances have been eliminated in consolidation.
Use of Estimates
The preparation of the Company’s condensed consolidated financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements, and the reported amounts of revenue and expenses during the reporting period. Significant estimates and assumptions reflected in these condensed consolidated financial statements include, but are not limited to, assumptions related to the Company’s valuation of derivatives and convertible notes, the valuation allowance on deferred tax assets, share based compensation, useful life for depreciation and amortization of long lived assets, determination of the incremental borrowing rates, short-term debt, convertible notes, stock options and stock warrants. The Company based its estimates on historical experience, known trends and other market-specific or other relevant factors that it believes to be reasonable under the circumstances. On an ongoing basis, management evaluates its estimates when there are changes in circumstances, facts and experience. Changes in estimates are recorded in the period in which they become known. Actual results could differ from those estimates.
Cash
The
Company considers all highly liquid money market funds and certificates of deposit with original maturities of less than three months
to be cash equivalents. The Company maintains its cash balance with various banks. The balances are insured by the Federal Deposit Insurance
Corporation (“FDIC”) up to $
Property and Equipment
Property and equipment are stated at cost less accumulated depreciation. Expenditures for major betterments and additions are charged to the property and equipment accounts, while replacements, maintenance, and repairs, which do not improve or extend the lives of the respective assets, are charged to expense. The carrying amounts of assets that are sold or retired, and their related accumulated depreciation are removed from the accounts in the year of disposal, and any resulting gain or loss is reflected in income. Depreciation is calculated on straight-line basis with estimated useful lives as follows:
| Furniture and fixtures | ||
| Computer equipment |
Accounts Receivable
Accounts receivables are recorded at the amount the Company expects to collect on the balance outstanding at year-end. Management closely monitors outstanding balances during the year and allocates an allowance account if appropriate. The Company estimates and records a provision for its expected credit losses related to its financial instruments, including its trade receivables and contract assets. The Company considers historical collection rates, the current financial status of its customers, macroeconomic factors, and other industry-specific factors when evaluating for current expected credit losses. Forward-looking information is also considered in the evaluation of current expected credit losses. However, because of the short time to the expected receipt of accounts receivable, the Company believes that the carrying value, net of expected losses, approximates fair value and therefore relies more on historical and current analysis of such financial instruments.
As
of September 30, 2025, and December 31, 2024, the Company had allocated
| 6 |
Revenue Recognition
The Company recognizes revenue in an amount that reflects the consideration to which it expects to be entitled in exchange for the transfer of promised goods or services to customers. The Company follows a five-step process to achieve this core principle: (1) identify the contract with the customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to the performance obligations in the contract; and (5) recognize revenue when (or as) the entity satisfies a performance obligation.
The Company’s revenues are currently derived from three sources: (1) implementation fees, (2) offering its software as a service on a recurring monthly basis, and (3) generation and verification of leads. Implementation fees are charged for setting up or calibrating its software so that the AI can be used by the customer for its particular use case and are usually a one-time cost. The Company’s contracts with customers are structured with stated prices per service performed, which are not subject to uncertainty or probability of significant reversal; thus, they do not represent variable consideration. The recurring monthly fees are charged for the ongoing use of the AI to continue to call/prospect for the Company’s customers and are charged on a monthly recurring basis. The Company awards discounts to its customers on a discretionary basis. The Company will consider additional revenue streams as its technology develops, and new opportunities present.
Fair Value of Financial Instruments
The Company follows accounting guidelines on fair value measurements for financial instruments measured on a recurring basis, as well as for certain assets and liabilities that are initially recorded at their estimated fair values. Fair Value is defined as the exit price, or the amount that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants as of the measurement date. The Company uses the following three-level hierarchy that maximizes the use of observable inputs and minimizes the use of unobservable inputs to value its financial instruments:
| ● | Level 1: Observable inputs such as unadjusted quoted prices in active markets for identical instruments. | |
| ● | Level 2: Quoted prices for similar instruments that are directly or indirectly observable in the marketplace. | |
| ● | Level 3: Significant unobservable inputs which are supported by little or no market activity and that are financial instruments whose values are determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which the determination of fair value requires a significant judgment or estimation. |
Financial instruments measured at fair value are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires the Company to make judgments and consider factors specific to the asset or liability. The use of different assumptions and/or estimation methodologies may have a material effect on estimated fair values. Accordingly, the fair value estimates disclosed, or initial amounts recorded, may not be indicative of the amount that the Company or holders of the instruments could realize in a current market exchange.
The carrying amounts of the Company’s financial instruments including cash, prepaid expenses, accounts payable, accrued liabilities and convertible debt, which approximate fair value due to the short-term maturities of these instruments.
Set out below are the Company’s financial instruments that are required to be remeasured at fair value on a recurring basis and their fair value hierarchy as of September 30, 2025, and as of December 31, 2024:
| September 30, 2025 | Level 1 | Level 2 | Level 3 | Carrying Value | ||||||||||||
| Liabilities: | ||||||||||||||||
| Derivative Liability – Conversion Feature | $ | $ | $ | $ | ||||||||||||
| Derivative Liability – December 2024 Note Conversion Feature | $ | $ | $ | $ | ||||||||||||
| May 2025 Convertible Note | $ | $ | $ | $ | ||||||||||||
| May 2025 Warrant Liability | $ | $ | $ | $ | ||||||||||||
| Derivative Liability – 1800 Diagonal Note | $ | $ | $ | $ | ||||||||||||
| December 31, 2024 | Level 1 | Level 2 | Level 3 | Carrying Value | ||||||||||||
| Liabilities: | ||||||||||||||||
| Derivative Liability – Conversion feature | $ | $ | $ | $ | ||||||||||||
| 7 |
Advertising
The
Company expenses advertising costs as incurred. Advertising expenses for the three and nine months ended September 30, 2024, were $
The Company accounts for employee and non-employee stock awards under ASC 718, Compensation – Stock Compensation, whereby equity instruments issued to employees for services are recorded based on the fair value of the instrument issued and those issued to nonemployees are recorded based on the fair value of the consideration received or the fair value of the equity instrument, whichever is more reliably measurable. Equity grants are amortized on a straight-line basis over the requisite service periods, which is generally the vesting period. If an award is granted, but vesting does not occur, any previously recognized compensation cost is reversed in the period related to the termination of service. Further information regarding share-based compensation can be found in Note 13 – Stock-Based Compensation and Warrants.
Derivative Financial Instruments
The Company does not use derivative instruments to hedge exposures to cash flow, market or foreign currency risks. We evaluate all of our financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives. For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value and is then re-valued at each reporting date, with changes in the fair value reported in the statements of operations. For our derivative financial instruments, the Company used either a Black Scholes valuation model or a Monte Carlo valuation model to value the derivative instruments at inception and on subsequent valuation dates. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is evaluated at the end of each reporting period. Derivative liabilities are classified in the balance sheet as current or non-current based on whether or not net-cash settlement or conversion of the instrument could be required within twelve (12) months of the balance sheet date.
Warrants
The Company accounts for warrants as either equity-classified or liability-classified instruments based on an assessment of the warrant’s specific terms and applicable authoritative guidance in FASB ASC 480, Distinguishing Liabilities from Equity (“ASC 480”) and ASC 815, Derivatives and Hedging (“ASC 815”). The assessment considers whether the warrants are freestanding financial instruments pursuant to ASC 480, meet the definition of a liability pursuant to ASC 480, and whether the warrants meet all of the requirements for equity classification under ASC 815, including whether the warrants are indexed to the Company’s own ordinary shares and whether the warrant holders could potentially require “net cash settlement” in a circumstance outside of the Company’s control, among other conditions for equity classification. This assessment, which requires the use of professional judgment, is conducted at the time of warrant issuance and as of each subsequent quarterly period end date while the warrants are outstanding.
For issued or modified warrants that meet all of the criteria for equity classification, the warrants are required to be recorded as a component of additional paid-in capital at the time of issuance. For issued or modified warrants that do not meet all the criteria for equity classification, the warrants are required to be recorded at their initial fair value on the date of issuance, and each balance sheet date thereafter. Changes in the estimated fair value of the warrants are recognized as a non-cash gain or loss on the statements of operations. The fair value of the warrants was estimated using a Monte Carlo pricing model.
| 8 |
May 2025 Convertible Note
As permitted under ASC 825 Financial Instruments (“ASC 825”), the Company elects to account for the May 2025 Convertible Note, which meets the required criteria, at fair value at inception and at each subsequent reporting date. Subsequent changes in fair value are recorded as a component of non-operating loss in the consolidated statements of operations. This election is made on an instrument-by-instrument basis as permitted under ASC 825. The portion of total changes in fair value of the convertible promissory note attributable to changes in instrument-specific credit risk are determined through specific measurement of periodic changes in the discount rate assumption exclusive of base market changes and are presented as a component of comprehensive income in the accompanying Consolidated Statements of Operation. As a result of electing the fair value option, direct costs and fees related to the May 2025 Convertible Note are expensed as incurred.
The Company estimates the fair value of the May 2025 Convertible Note using a Monte Carlo simulation model, which uses as inputs the fair value of our common stock and estimates for the equity volatility and volume volatility of our common stock, the time to expiration of the convertible promissory note, the risk-free interest rate for a period that approximates the time to expiration, and probability of default. Therefore, we estimate our expected future volatility based on the actual volatility of our common stock and historical volatility of our common stock utilizing a lookback period consistent with the time to expiration. The time to expiration is based on the contractual maturity date, giving consideration to the voluntary, mandatory and potential accelerated redemption scenarios. The risk-free interest rate is determined by reference to the U.S. Treasury yield curve in effect at the time of measurement for time periods approximately equal to the time to expiration. Probability of default is estimated using Bloomberg’s Default Risk function which uses our financial information to calculate a default risk specific to the Company.
Net loss per share of common stock requires presentation of basic earnings per share on the face of the statements of operations for all entities with complex capital structures and requires a reconciliation of the numerator and denominator of the basic earnings per share computation. In the accompanying financial statements, basic loss per share is computed by dividing net loss by the weighted average number of shares of common stock outstanding during the year. Diluted earnings per share is computed by dividing net income by the weighted average number of shares of common stock and potentially dilutive outstanding shares of common stock during the period to reflect the potential dilution that could occur from common shares issuable through contingent share arrangements, warrants unless the result would be antidilutive.
The dilutive effect of restricted stock units, options and warrants subject to vesting and other share-based payment awards is calculated using the “treasury stock method,” which assumes that the “proceeds” from the exercise of these instruments are used to purchase common shares at the average market price for the period. The dilutive effect of convertible securities is calculated using the “if-converted method.” Under the if-converted method, securities are assumed to be converted at the beginning of the period, and the resulting shares of common stock are included in the denominator of the diluted calculation for the entire period being presented.
| 9 |
| September 30, | September 30, | |||||||
| 2025 | 2024 | |||||||
| Shares | Shares | |||||||
| Warrants | ||||||||
| Convertible notes payable | ||||||||
| Liquidated damages payable | ||||||||
Leases
The Company assesses whether a contract is or contains a lease at inception of the contract and recognizes right-of-use assets (“ROU”) and corresponding lease liabilities at the lease commencement date. The lease term is used to calculate the lease liability, which includes options to extend or terminate the lease when it is reasonably certain that the option will be exercised. The leases the Company currently holds do not have implicit borrowing rates; therefore, the Company utilizes its incremental borrowing rate to measure the ROU assets and liabilities. Operating lease expense is generally recognized on a straight-line basis over the lease term. All leases that have lease terms of one year or less are considered short-term leases and therefore are not recorded through a ROU asset or liability. The Company has elected to apply the practical expedient to not separate the lease and non-lease components of a contract.
The Company determines the appropriate incremental borrowing rate by identifying a reference rate and making adjustments that take into consideration financing options and certain lease-specific circumstances. For the reference rate, the Company used the seven-year mortgage interest rate. As of September 30, 2025, and December 31, 2024, the Company did not have any leases with terms longer than a year.
Emerging Growth Company
Section 102(b)(1) of the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”) exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Securities Exchange Act of 1934, as amended) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that an emerging growth company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such election to opt out is irrevocable. The Company has elected not to opt out of such extended transition period, which expires December 31, 2026, unless the Company is otherwise disqualified. Accordingly, when a standard is issued or revised and it has different application dates for public or private companies, the Company, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard.
This may make comparison of the Company’s condensed consolidated financial statements with another public company that is neither an emerging growth company nor an emerging growth company that has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting standards used.
Recently Issued Accounting Pronouncements
In December 2023, the FASB issued ASU 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures,” which requires disaggregated information about a reporting entity’s effective tax rate reconciliation as well as information on income taxes paid. The guidance is effective for the Company’s fiscal years beginning after February 1, 2025, with early adoption permitted. The Company does not expect the adoption of this standard to have any material impact on its financial statements.
| 10 |
In November 2024, the FASB issued ASU 2024-03, Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses, requiring public entities to disclose additional information about specific expense categories in the notes to the financial statements on an interim and annual basis. ASU 2024-03 is effective for fiscal years beginning after December 15, 2026, and for interim periods beginning after December 15, 2027, with early adoption permitted. The Company is currently evaluating the impact of adopting ASU 2024-03.
There have been no other recent accounting pronouncements, changes in accounting pronouncements or recently adopted accounting guidance during the nine months ended September 30, 2025, that are of significance or potential significance to the Company.
Recently Adopted Accounting Pronouncements
In December 2023, the FASB issued ASU 2023-08, Intangibles—Goodwill and Other—Crypto Assets (Subtopic 350-60): Accounting for and Disclosure of Crypto Assets. ASU 2023-08 requires in-scope crypto assets (including the Company’s digital assets) to be measured at fair value in the balance sheet, with gains and losses from changes in the fair value of such crypto assets recognized in net income each reporting period. ASU 2023-08 also requires certain interim and annual disclosures for crypto assets within the scope of the standard. The Company adopted this guidance effective January 1, 2025, on a prospective basis. The adoption of ASU 2023-08 did not have a material impact on the Company’s financial statements.
NOTE 3 – PREPAID EXPENSE AND OTHER ASSETS
As of September 30, 2025, and December 31, 2024, prepaid expenses and other assets consisted of the following:
| September 30, | December 31, | |||||||
| 2025 | 2024 | |||||||
| Prepaid operating expense | $ | $ | ||||||
| Prepaid insurance | ||||||||
| Loan to related party | ||||||||
| Total prepaid expense and other assets | $ | $ | ||||||
NOTE 4 – PROPERTY AND EQUIPMENT
As of September 30, 2025, and December 31, 2024, property and equipment consisted of the following:
| September 30, | December 31, | |||||||
| 2025 | 2024 | |||||||
| Furniture and Fixtures | $ | $ | ||||||
| Computer Equipment | ||||||||
| Total Property and Equipment | ||||||||
| Less: accumulated depreciation and amortization | ( | ) | ( | ) | ||||
| Property and Equipment, net | $ | $ | ||||||
During
the three months ended September 30, 2025, and 2024, depreciation expense relating to property and equipment was $
| 11 |
NOTE 5 – DIGITAL ASSETS
The Company accounts for its digital assets as indefinite-lived intangible assets in accordance with ASC 350, Intangibles—Goodwill and Other and ASU 2023-08. As of September 30, 2025, the Company’s digital assets were composed primarily of Solana and Ethereum, with trivial holdings of Bitcoin. The Company’s digital assets are initially recorded at cost. Subsequent to the Company’s adoption of ASU 2023-08 on January 1, 2025, digital assets are measured at fair value as of each reporting period. The Company determines the fair value of its digital assets in accordance with ASC 820, Fair Value Measurement, based on quoted (unadjusted) prices on the Kraken exchange, the active exchange that the Company has determined is its principal market for Solana (Level 1 inputs). Changes in fair value are recognized as incurred in the Company’s Consolidated Statements of Operations, within “Losses on digital assets”, within the Company’s Consolidated Statement of Operations.
The following table summarizes the Company’s digital asset holdings as of September 30, 2025, and December 31, 2024:
| September 30, | December 31, | |||||||
| 2025 | 2024 | |||||||
| Number of Solana units held | | |||||||
| Digital asset carrying value | $ | $ | ||||||
Solana, Bitcoin and Ethereum are digital assets, which is a novel asset class that is subject to significant legal, commercial, regulatory and technical uncertainty. Holding these digital assets does not generate any cash flow and involves custodial fees and other costs. Additionally, the price of these digital assets has historically experienced significant price volatility, and a significant decrease in the price of Solana or Ethereum would adversely affect the Company’s financial condition and results of operations. The Company’s strategy of acquiring and holding digital assets also exposes it to counterparty risks with respect to the custody of its digital assets, cybersecurity risks, and other risks inherent to holding a digital asset. In particular, the Company is subject to the risk that, if its private keys with respect to its digital assets are lost or destroyed or other similar circumstances or events occur, the Company may lose some or all of its digital assets, which could materially adversely affect the Company’s financial condition and results of operations.
Related Party Digital Asset Loan Collateral
During
the second quarter of 2025, the Company’s CEO Brian Podolak (“Podolak”) borrowed funds pursuant to a $
On
July 23, 2025, Podolak’s personal loan was amended to increase its principal to $
As
of September 30, 2025, the Company had a related party erceivable balance of $
NOTE 6 – ACCOUNTS PAYABLE AND ACCRUED EXPENSES
Accounts payable and accrued expenses consisted of the following at September 30, 2025, and December 31, 2024:
| September 30, | December 31, | |||||||
| 2025 | 2024 | |||||||
| Accounts payable | $ | $ | ||||||
| Accrued expenses | ||||||||
| Accrued interest | ||||||||
| Accounts payable and accrued expenses | $ | $ | ||||||
| 12 |
NOTE 7 – OPERATING LEASES
As of September 30, 2025, and December 31, 2024, the Company had two short-term month-to-month leases. The Company previously had one long-term lease that was used for the Company’s corporate offices. However, the Company moved out of the premises on December 15, 2024. As of September 30, 2025, and December 31, 2024, our lease liabilities were .
| Three Months Ended | ||||
| September 30, | ||||
| 2024 | ||||
| The components of lease expense were as follows: | ||||
| Short-term lease cost | $ | |||
| Operating lease cost | ||||
| Total lease cost | $ | |||
| Nine Months Ended | ||||
| September 30, | ||||
| 2024 | ||||
| The components of lease expense were as follows: | ||||
| Short-term lease cost | $ | |||
| Operating lease cost | ||||
| Total lease cost | $ | |||
| Supplemental cash flow information related to leases was as follows: | ||||
| Operating cash flows from operating leases | $ | |||
| Weighted-average remaining lease term - operating leases (year) | ||||
| Weighted-average discount rate - operating leases | % | |||
NOTE 8 – NOTE PAYABLE
On
December 16, 2024, the Company issued a note payable of $
| 13 |
NOTE 9 – CONVERTIBLE NOTES PAYABLE
The components of convertible notes payable as of September 30, 2025, and December 31, 2024, were as follows:
| Principal | Maturity | Interest | September 30, | December 31, | ||||||||||||||
| Issuance Date | Amount | Date | Rate | 2025 | 2024 | |||||||||||||
| September 2024 Note | % | $ | $ | | ||||||||||||||
| November 2024 Note | % | |||||||||||||||||
| December 2024 Note | % | |||||||||||||||||
| January 2025 Note | % | |||||||||||||||||
| March 2025 Note 1 | % | |||||||||||||||||
| March 2025 Note 2 | % | |||||||||||||||||
| March 2025 Note 3 | % | |||||||||||||||||
| March 2025 Note 4 | % | |||||||||||||||||
| Total face value | $ | $ | ||||||||||||||||
| Unamortized debt discount and issuance costs | ( | ) | ( | ) | ||||||||||||||
| Total convertible notes | ||||||||||||||||||
| Current portion of convertible notes | ( | ) | ( | ) | ||||||||||||||
| Long-term convertible notes | $ | $ | ||||||||||||||||
September 2024 Note
On
September 18, 2024, the Company entered into a convertible note (the “September 2024 Note”) with a principal amount of $
The
September 2024 Note requires payments of principal and accrued interest as follows:
The
Company recognized the amortization of debt discounts of $
November 2024 Note
On
November 13, 2024, the Company entered into a convertible note (the “November 2024 Note”) with a principal amount of $
On
May 13, 2025, the holder of the November 2024 Note elected to convert $
| 14 |
During
the three and nine months ended September 30, 2025, the Company recognized interest expense of $
December 2024 Note
On
December 20, 2024, the Company entered into a convertible note (the “December 2024 Note”) with a principal amount of $
On
January 17, 2025, the December 2024 Note was amended to increase its principal to $
The Company regularly evaluates its convertible notes for derivative liabilities each reporting period. As of September 30, 2025, the Company determined that in accordance with ASC 815 Derivatives and Hedging the conversion feature of the December 2024 Note required bifurcation and separate accounting as a derivative liability from the host instrument. The Company has valued the conversion feature using a Monte Carlo valuation model (Note 11 – Derivative Liabilities).
On
July 14, 2025, the holder of the December 2024 Note elected to convert $
March 2025 Notes
On
March 3, 2025, the Company entered into a convertible note (the “March 2025 Note 1”) with a principal of $
During the current quarter, the conversion feature became exercisable (180 days after issuance). As of September 30, 2025, the Company determined that in accordance with ASC 815 Derivatives and Hedging the conversion feature of the March 2025 Note required bifurcation and separate accounting as a derivative liability from the host instrument. The Company has valued the conversion feature using a Monte Carlo valuation model (Note 11 – Derivative Liabilities).
| 15 |
On
March 7, 2025, and March 18, 2025, the Company entered into two convertible notes (the “March 2025 Note 2” and “March
2025 Note 3”, respectively) with an investor. The March 2025 Note 2 and March 2025 Note 3 both have a principal of $
During
the three and nine months ended September 30, 2025, the Company recognized interest expense of $
The
Company analyzed the conversion features of the March 2025 Note 2, and the March 2025 Note 3 and determined that in accordance with ASC
815 Derivatives and Hedging, the conversion features of the notes required bifurcation and separate accounting as derivative liabilities
from the host instruments. The Company has valued the conversion features using the Black-Scholes pricing model. The derivative liability
for the March 2025 Note 2 and March 2025 Note 3 was recognized upon issuance of the notes at a fair value of $
On
March 12, 2025, the Company entered into a convertible note (the “March 2025 Note 4”) with a total principal of $
| 16 |
NOTE 10 – MAY 2025 CONVERTIBLE NOTE
On
May 13, 2025, the Company closed on a private offering pursuant to a Securities Purchase Agreement (the “Agreement”) with
an accredited investor (the “Investor”), pursuant to which the Investor purchased a Senior Secured Convertible Note (the
“May 2025 Convertible Note”) in the original principal amount of $
The
May 2025 Convertible Note is convertible into shares of the Company’s common stock at a Conversion Price equal to the lower of
(i) $
As
of September 30, 2025, the Company has issued an aggregate principal of $
Additionally,
for each dollar of principal issued under the May 2025 Convertible Note the Company shall issue the Investor a warrant to purchase
Due
to certain embedded contingent redemption features within the May 2025 Convertible Note, the Company elected to account for the May 2025
Convertible Note and all the embedded features at fair value at inception. Subsequent changes in fair value are recorded as a component
of other income (loss) in the consolidated statements of operations. As a result of electing the fair value option, $
For
the nine months ended September 30, 2025, the Company recorded a loss of $
Interest
expense on the May 2025 Convertible Note was $
The following table presents the change in the balances of the May 2025 Convertible Note for the periods identified:
| Balance, January 1, 2025 | $ | |||
| Note issuances | ||||
| Change in fair value | ( | ) | ||
| Balance, June 30, 2025 | $ | |||
| Plus: accrued interest | ||||
| Balance, June 30, 2025 | $ | |||
| Change in fair value | ||||
| Plus: proceeds received | ||||
| Plus: debt discount | ||||
| Plus: accrued interest | ||||
| Balance, September 30, 2025 – Convertible Notes FVO | $ |
In
July of 2025 the Company issued an aggregate principal of $
| 17 |
NOTE 11 – DERIVATIVE LIABILITITES
The
Company regularly evaluates its convertible notes for derivative liabilities each reporting period. As of September 30, 2025, the Company
determined that in accordance with ASC 815 Derivatives and Hedging the conversion feature of the December 2024 Note and March
2025 Note required bifurcation and separate accounting as a derivative liability from the host instrument. For the December 2024 Note,
the derivative liability was revalued at September 30, 2025, resulting in a fair value of $
ASC 815 requires the Company to assess the fair market value of derivative liabilities at the end of each reporting period and recognize any change in the fair market value as other income or expense. The Company determined the derivative liabilities from convertible notes to be a Level 3 fair value measurement. The Company used a Monte Carlo valuation model to calculate the fair value of the derivative liability from the conversion feature of the December 2024 Note and March 2025 Note. The company used the Black-Scholes pricing model to calculate the fair value as of the issuance date and each reporting date for the conversion features of the other convertible notes (Note 9 – Convertible Notes Payable). Changes to the inputs used in the Monte Carlo valuation model or the Black-Scholes pricing model could produce a significantly higher or lower fair value measurement.
The following table summarizes the assumptions used to calculate the fair value of the December 2024 Note and March 2025 Note derivative liability measured using a Monte Carlo valuation model as of September 30, 2025:
December 2024 Note derivative liability
| September 30, | ||||
| 2025 | ||||
| Share Price | $ | |||
| Expected volatility | % | |||
| Risk-free interest rate | % | |||
March 2025 Note derivative liability
| August 30, | September 30, | |||||||
| 2025 | 2025 | |||||||
| Share Price | $ | $ | ||||||
| Expected volatility | % | % | ||||||
| Risk-free interest rate | % | % | ||||||
The following table summarizes the assumptions used to calculate the fair value of the derivative liabilities measured using the Black-Scholes pricing model as of September 30, 2025, and December 31, 2024:
| September 30, | December 31, | |||||||
| 2025 | 2024 | |||||||
| Expected conversion price | $ | $ | ||||||
| Expected term | ||||||||
| Expected volatility | % | % | ||||||
| Expected dividend yield | % | % | ||||||
| Risk-free interest rate | % | % | ||||||
| 18 |
For the nine months ended September 30, 2025, and 2024, the estimated fair values of the liabilities measured on a recurring basis are as follows:
| Balance - December 31, 2024 | $ | |||
| Addition of new derivatives recognized as debt discounts | ||||
| Addition of new derivatives recognized as loss on derivatives | ||||
| Change in fair value of the derivative | ( | ) | ||
| Balance - March 31, 2025 | $ | |||
| Recognition of derivative liability due to December 2024 Note conversion feature | ||||
| Change in the fair value of the derivative | ||||
| Balance – June 30, 2025 | $ | |||
| Change in the fair value of the derivative | ||||
| Balance – September 30, 2025 | $ |
The aggregate change on derivatives during the nine months ended September 30, 2025, and 2024 is as follows:
| Nine Months Ended | ||||||||
| September 30, | ||||||||
| 2025 | 2024 | |||||||
| Day one loss due to derivative liabilities on convertible note | $ | ( | ) | $ | ||||
| Gain (loss) on change in fair value of the derivative liabilities | ( | ) | ||||||
| $ | ( | ) | $ | |||||
NOTE 12 – WARRANT LIABILITY
On
May 13, 2025, the Company issued the May 2025 Convertible Note alongside warrants to purchase
The
Company evaluated the warrants in accordance with the guidance at ASC 480 ASC 815 and determined that the warrants are precluded from
being considered indexed to the entity’s own stock, resulting in the warrants being classified as a liability. Due to path dependent
exercise price reset features, the fair value of the warrants was estimated utilizing a Monte Carlo simulation using relevant assumptions
on the grant date, resulting in a total fair value of $
For
the three and nine months ending September 30, 2025, the Company recognized a gain of $
As
of September 30, 2025, the Company had
NOTE 13 – STOCKHOLDERS’ EQUITY
Authorized Capital Stock
Effective February 28, 2025, the Company amended its articles of incorporation to increase the number of authorized common shares to .
The Company has authorized shares of common stock with a par value of $ per share and shares of Preferred Stock with a par value of $ per share. The Company shall have the authority to issue the shares of Preferred Stock in one or more series with such rights, preferences and designations as determined by the Board of Directors of the Company.
| 19 |
Series A Preferred Stock
Effective
February 24, 2025, the Company amended the Designation of the Series A Preferred Stock to restore voting rights previously eliminated.
Pursuant to the amendment, Holders of the Series A Preferred Stock shall have the right to vote on any matters brought before the stockholders
of the Company for a vote as a single class.
The Company has designated preferred shares, par value $, as Series A Preferred Stock.
The Series A Preferred Stockholders are not entitled to any dividends, or mandatory conversion right or liquidation preference, however, they do have a voluntary conversion right.
Holders
of the Company’s Series A Preferred Stock shall have the right to convert at a ratio of
As of September 30, 2025, and December 31, 2024, shares of Series A Preferred Stock were issued and outstanding.
Series B Preferred Stock
Effective September 27, 2023, the Company has amended the certificate of designation to authorize preferred shares, par value $, as Series B Preferred Stock. Series B Preferred Stock has no voting rights but shall be mandatorily converted into common stock with voting rights upon the completion of our initial public offering or a change of control. The Series B Preferred Stockholders are not entitled to any dividends.
In
January 2024, the Company issued an aggregate of shares of our Series B Preferred Stock to several individuals for $
As of September 30, 2025, and December 31, 2024, shares of Series B Preferred Stock were issued and outstanding.
Series C Convertible Preferred Stock
On August 2, 2024, the Company issued a Certificate of Designation of Series C Convertible Preferred Stock designating shares of its authorized and unissued preferred stock as Series C Preferred Stock with a stated value of $ per share (the “Stated Value”). The Series C Convertible Preferred Stock sets forth the rights, preferences and limitations of the shares of Series C Preferred Stock.
The following is a summary of the terms of the Series C Preferred Stock:
| ● | Dividends.
The holders of Series C Preferred Stock will be entitled to receive dividends, based on the Stated Value, at a rate of eight
percent ( |
| 20 |
| ● | Voting Rights. The Series C COD provides that holders of Series C Preferred Shares shall have the right to vote on all matters presented to the stockholders for approval together with the shares of Common Stock, voting together as a single class, on an “as converted” basis, other than in regards to the Exchange Limitation. | |
| ● | Liquidation.
In addition, upon any liquidation, dissolution or winding-up of the Company, prior and in preference to the Common Stock, holders
of Series C Preferred Stock shall be entitled to receive out of the assets available for distribution to stockholders before any
amount shall be paid to the holders of any of shares of Junior Stock, but pari passu with any Parity Stock then outstanding, an amount
per Preferred Share equal to the greater of (A) | |
| ● | Conversion. The number of shares of Common Stock issuable upon conversion of any share of Series C Preferred Stock shall be determined by dividing (x) the Conversion Amount of such Preferred Share by (y) the Conversion Price (the “Conversion Rate”): |
| (i) | “Conversion
Amount” means, with respect to each Share, as of the applicable date of determination, the sum of (1) | |
| (ii) | “Conversion
Price” means, with respect to each Share, as of any Conversion Date or other date of determination, an initial price of $ |
| 21 |
| ● | Redemption.
Upon the occurrence of a Triggering Event, each Holder shall (in addition to all other rights it may have hereunder or under
applicable law) have the right, exercisable at the sole option of such Holder, to require the Company with respect to each share
of Preferred Stock to redeem each share of Preferred Stock then held by such Holder for a redemption price, in cash, equal to |
As of September 30, 2025, and December 31, 2024, shares of Series C Convertible Preferred Stock were issued and outstanding.
Series D Redeemable Preferred Stock
On August 2, 2024, the Company issued a Certificate of Designation of Series D Preferred Stock designating shares of its authorized and unissued preferred stock as Series D Preferred Stock with a stated value of $ per share (the “Stated Value”). The Series D Preferred Stock sets forth the rights, preferences and limitations of the shares of Series D Preferred Stock. The defined terms not otherwise defined below are as defined in the Series D Preferred Stock.
The following is a summary of the terms of the Series D Preferred Stock:
| ● | Dividends. Under the terms of the Series D Preferred Stock, the Company shall not pay any dividends on the Series D Preferred Stock. | |
| ● | Voting
Rights. Each share of Series D Preferred Stock shall entitle the holder thereof (a) to vote exclusively with respect to the
Reverse Stock Split proposal at the Company’s next stockholder meeting following the Original Issue Date (and the Series D
Preferred Stock shall not be entitled to vote on any other matter except to the extent required under Title 17 of the Wyoming Statutes
or provided herein) and (b) to | |
| ● | Liquidation.
In addition, upon any liquidation, dissolution or winding-up of the Company, prior and in preference to the Common Stock, the Holders
shall be entitled to receive out of the assets available for distribution to stockholders an amount in cash equal to | |
| ● | Redemption. On the earlier of the date on which (i) the Company obtains Stockholder Approval and (ii) the SPA is terminated prior to the Second Closing, the Company shall immediately redeem, out of funds legally available therefor, each of the Series D Preferred Stock then outstanding at a redemption price equal to the Redemption Price, without the requirement for any notice or demand or other action by any Holder or any other person or entity, provided that a Holder may, in its sole discretion, waive such right to receive payment on the date of Stockholder Approval or such termination, in whole or in part, and any such waiver shall not affect any other rights of such Holder or any other Holder hereunder. Upon receipt of full payment in cash for a complete redemption, each Holder will promptly submit to the Company such Holder’s Series D Preferred Stock certificates, if any, and such redeemed shares shall no longer be deemed to be outstanding. |
| 22 |
As of September 30, 2025, and December 31, 2024, shares of Series D Redeemable Preferred Stock were issued and outstanding.
Common Stock
Each
share of Common Stock entitles the holder to
During the nine months ended September 30, 2024, the Company had the following common stock transactions:
| ● | The
Company issued units as part of its IPO; each unit consisted of common share, Series A Warrant and Series B Warrant.
The units were issued at a price of $ per unit for gross proceeds of $ | |
| ● | The
company issued | |
| ● | The
Company issued common shares, with a fair value of $ | |
| ● | The Company issued common shares due to the cashless exercise of warrants. |
During the nine months ended September 30, 2025, the Company had the following common stock transactions:
| ● | During the three months ended March 31, 2025, common shares were issued due to the cashless exercise of Series B warrants. |
| ● | During the three months ended March 31, 2025, common shares were issued due to the cashless exercise of Series C warrants. |
| ● | During the three months ended June 30, 2025, common shares were issued due to the cashless exercise of Series B warrants. |
| ● | During
the three months ended March 31, 2025 the Company issued shares of common stock
to settle $ |
| ● | During
the three months ended June 30, 2025, the Company issued shares of common stock
to settle $ |
| ● | During
the three months ended June 30, 2025, the Company issued shares of common stock
due to the conversion of $ |
| ● | During
the three months ended June 30, 2025, the Company issued shares of common stock
due to the conversion of $ |
| ● | During the three months ended September 30, 2025, common shares were issued due to the cashless exercise of Series B warrants and Series C warrants. |
| ● | During
the nine months ended September 30, 2025, the Company issued shares of common
stock to settle $ |
| ● | During
the three months ended September 30, 2025, the Company issued shares of common
stock due to the conversion of $ |
| ● | During
the three months ended September 30, 2025, the Company issued shares of common
stock due to the conversion of $ |
| ● | During
the three months ended September 30, 2025, the Company issued shares of common
stock due to the conversion of $ |
As of September 30, 2025, and December 31, 2024, and shares of common stock were issued and outstanding, respectively.
| 23 |
The Company did not recognize any stock-based compensation during the nine months ended September 30, 2025, and 2024. During the nine months ended September 30, 2025, and 2024, stock-based compensation was recognized as follows:
| September 30, | September 30, | |||||||
| 2025 | 2024 | |||||||
| Professional fees -restricted stock awards | $ | $ | ||||||
| $ | $ | |||||||
The Company valued compensation expenses to employees based on fair value of common stock using a weighted average price of shares issued to unrelated parties for cash and compensation multiplied by the number of shares issued to the employees.
Warrants
During
the three months ended March 31, 2024, the Company issued
During
the three months ended March 31, 2024, the Company issued
During
the three months ended March 31, 2024, the Company issued
A summary of the activity of the warrants during the nine months ended September 30, 2025, is as follows:
| Warrants Outstanding | Weighted | |||||||||||
| Number of | Weighted Average Exercise | Average Remaining life | ||||||||||
| Warrants | Price | (years) | ||||||||||
| Outstanding, December 31, 2024 | $ | |||||||||||
| Granted | - | |||||||||||
| Expired/cancelled | - | |||||||||||
| Exercised | ( | ) | - | |||||||||
| Outstanding, March 31, 2025 | $ | |||||||||||
| Granted | - | |||||||||||
| Expired/cancelled | - | |||||||||||
| Exercised | ( | ) | - | |||||||||
| Outstanding, June 30, 2025 | ||||||||||||
| Granted | ||||||||||||
| Expired/cancelled | ||||||||||||
| Exercised | ( | ) | ||||||||||
| Outstanding September 30, 2025 | ||||||||||||
| Exercisable, September 30, 2025 | ||||||||||||
The intrinsic value of the warrants as of September 30, 2025, is $.
| 24 |
NOTE 15 – RELATED PARTY TRANSACTIONS
Related Party Operating Expenses
During
the three months ended September 30, 2025, and 2024, the Company incurred approximately $
During
the nine months ended September 30, 2025, and 2024, the Company incurred approximately $
Related Party Consulting Services
The
Company incurred related party consulting services during the three months ended September 30, 2025, and 2024 of $
Related Party Note Payable.
On
August 1, 2022, the Company entered into a lending arrangement with a related party, the prior owner of Click Fish Media. The loan is
for a two (
Related Party Management Fees
As
of September 30, 2025, and December 31, 2024, the Company had an outstanding accounts payable balance of $
During
the nine months ended September 30, 2025, and 2024, the Company recognized expenses of $
Related Party Debt Conversion to Common Stock
In
January 2024, shares, valued at $ per share, for a total value of $
In
January 2024, shares, valued at $ per share, for a total value of $
In
January 2024, shares, valued at $ per share, for a total value of $
| 25 |
Related Party Digital Asset Loan Collateral
During
the second quarter of 2025 the Company’s CEO Brian Podolak (“Podolak”) borrowed funds pursuant to a $
On
July 23, 2025, Podolak’s personal loan was amended to increase its principal to $
On
August 19, 2025, the Company fully repaid the outstanding loan with a principal balance of $
NOTE 16 – LEGAL PROCEEDINGS
From time to time, we may be involved in various disputes and litigation matters that arise in the ordinary course of business.
Telephone Consumer Protection Act’s (TCPA) Litigation
On December 20, 2023, an individual filed a putative class action lawsuit against a customer of the Company that was using the Company’s DISA’s. The complaint was later amended to add the Company as a party. The plaintiff alleged violations of the Telephone Consumer Protection Act’s (TCPA) prerecorded call provision and the South Carolina Telephone Privacy Protection Act, based on two prerecorded calls allegedly received on October 10 and November 28, 2023, despite the plaintiff’s phone number being on the National Do-Not-Call Registry since 2009.
Both the Company and its customer denied liability and filed motions to dismiss and to strike the class allegations. While the motions were pending and the parties had agreed to mediation, the parties subsequently reached a settlement agreement to resolve all claims related to this action.
On
November 4, 2024, the parties entered into a confidential settlement agreement and release, pursuant to which the Company and other defendants
agreed to pay a total of $
Dismissal and Closure of Arbitration with ProofPositive, LLC
ProofPositive LLC (“ProofPositive”) commenced an arbitration (“Arbitration”) before the American Arbitration Association (“AAA”) against the Company, Brian Podolak and his wife (under a pseudonym) (“Respondents”) on or about May 31, 2024. In the Arbitration, ProofPositive asserted a number of claims, including claims under the Arizona Securities Act, arising from Respondents’ alleged failure to pay sums purportedly due under a loan agreement and promissory note, an addendum and consulting agreement. The Company denies liability and intends to continue to vigorously defend any action, although the probability of a favorable or unfavorable outcome is difficult to estimate as of this date. The result or impact of such allegations are uncertain, including whether or not they could result in damages and/or awards of attorneys’ fees or expenses.
On October 30, 2024, the AAA notified the parties that the arbitration file had been closed and marked as Withdrawn as of that date. The AAA further indicated that any outstanding administrative fees or arbitrator compensation and expenses incurred during the case remain due and payable to the AAA, regardless of the status of the award or apportionment of costs. The Company is not aware of any further proceedings in this matter at this time.
| 26 |
The result or impact of such allegations is now considered resolved as the arbitration has been withdrawn and closed, and no determination on the merits was made. The Company does not anticipate any further material impact from this matter, other than the payment of any outstanding administrative fees, if any.
Release and Satisfaction of Judgement with MAI Voice GCO, LLC
On
December 16, 2024, MAI Voice GCO, LLC filed a verified complaint alleging breach of contract and seeking $
Berkowitz Pollack & Brant Advisors – Garnishment Proceedings
On
March 2025, Berkowitz Pollack & Brant Advisors and Accountants LLP filed a lawsuit against the Company for unpaid professional fees
in the amount of $
On
December 5, 2025, the Company consented to the entry of a Final Judgment in Garnishment in the amount of $
Settlement Agreement with CCFD, Inc.
On
April 9, 2024, the Company entered into a Creative Services Agreement with CCFD, Inc. (as successor in interest to The Right Method,
LLC) for public relations, media relations, and branding services. CCFD asserted that it had fully performed its contractual obligations
and claimed that $
On
October 15, 2025, the Company and CCFD, Inc. entered into a Settlement Agreement to resolve all claims related to the Creative Services
Agreement.
Settlement Agreement with Carstens, Allen & Gourley, LLP
Carstens,
Allen & Gourley, LLP (“Carstens”) commenced an action before the Texas Civil Court against the Company on or about August
12, 2024 (“Lawsuit”). In the Lawsuit, Carstens alleges that the Company was in breach of contract by failure and refusal
to pay attorneys’ fees that it owes to Carstens. The Company has entered into settlement negotiations with Carstens. In December
2024, Carstens filed for a default judgement for the unpaid fees. The Company is negotiating with Carstens for a mutually acceptable
settlement.
| 27 |
As
a result of the settlement agreement with Carstens the Company recognized a loss on settlement of debt of $
NOTE 17 – COMMITMENTS AND CONTINGENCIES
From time to time, the Company may become subject to threatened and/or asserted claims arising in the ordinary course of business. Management is not aware of any matters, either individually or in the aggregate, which are reasonably likely to have a material adverse effect on the Company’s financial condition, results of operations or liquidity.
On
March 6, 2025, the Company entered into a liquidated damages settlement (“Damages Settlement 1”) of $
During
the three months ended March 31, 2025, the Company issued shares of common stock valued at $
On
March 20, 2025, the Company entered into a liquidated damages settlement (“Damages Settlement 2”) of $
During
the three months ended March 31, 2025, the Company issued shares of common stock valued at $
As
of September 30, 2025, the Company had an outstanding liquidated damages payable balance of $
As
of September 30, 2025, the Company recorded advertising costs of $
NOTE 18 – SUBSEQUENT EVENTS
Management has evaluated subsequent events through the date these consolidated financial statements were available to be issued. Based on our evaluation no material events have occurred that require disclosure, except as follows:
| 28 |
Conversion of Convertible Notes to Common Stock
On
October 15, 2025, the holder of the November 2024 Note and the Company agreed to convert $
Between
October 3 and November 10, 2025, the holder of the December 2024 Note and the Company agreed to convert $
Between
October 3 and October 22, 2025, the holder of the March 2025 Note 1 and the Company agreed to convert $
Between
October 28 and November 13, 2025, the holder of the March 2025 Note 4 and the Company agreed to convert $
Conversion of Liquidated Damages Payable to Common Stock
Between
October 3, 2025, and November 18, 2025, the Company issued shares of common stock valued at $
Exercise of Warrants
On October 10, 2025, the Company issued shares of common stock due to the cashless exercise of Series B warrants.
Regulation A, Tier 2 Equity Offering
Subsequent
to September 30, 2025, the Company conducted a Regulation A, Tier 2 offering of its common stock through a series of subscription agreements.
The company offered shares at a purchase price of $ per share, with a maximum offering size of $
ClearThink STRATA Purchase Agreement
On
October 13, 2025, the Company entered into a STRATA Purchase Agreement with ClearThink Capital Partners, LLC, pursuant to which the Company
may sell, from time to time, up to $
ClearThink Capital Partners Registration Rights Agreement
On
October 13, 2025, the Company entered into a Registration Rights Agreement with ClearThink Capital Partners, LLC, in connection with
the Strata Purchase Agreement. Under the terms of the Registration Rights Agreement, the Company is required to file a registration statement
with the Securities and Exchange Commission (SEC) within 45 days of execution, covering the resale of up to $
ClearThink Capital Partners Convertible Note
On
October 13, 2025, the Company entered into a convertible note agreement with ClearThink Capital Partners, LLC, pursuant to which the
Company issued a $
The
note is convertible at the option of the holder at any time after 180 days from issuance or upon an event of default, at an initial conversion
price of $
The note and related agreements contain several restrictions and conditions on the issuance of shares upon conversion, including:
| ● | The holder may not convert any portion of the note if, after such conversion, the holder and its affiliates would beneficially own more than 9.99% of the Company’s outstanding common stock. | |
| ● | The Company must at all times reserve at least two times the number of shares issuable upon full conversion of the note (based on the then-current conversion price), with a minimum reserve of shares. | |
| ● | If the conversion price falls below the par value of the common stock, the Company is required to seek stockholder approval to reduce the par value to the lowest value permitted by law. | |
| ● | Shares issued upon conversion are restricted securities and may not be sold or transferred unless registered under the Securities Act of 1933 or an exemption from registration is available, such as Rule 144. Certificates for such shares will bear a restrictive legend until such time as the legend may be removed in accordance with applicable law. | |
| ● | The Company is required to deliver shares upon conversion within three business days, with penalties for late delivery. |
| 29 |
1800 Diagonal Lending LLC Convertible Promissory Note
On
October 13, 2025, the Company issued a convertible promissory note in the principal amount of $
Release and Satisfaction of Judgement with MAI Voice GCO, LLC
On
October 20, 2025, MAI Voice GCO, LLC, through its legal representative, executed a Release and Satisfaction of Judgment, confirming full
satisfaction and payment of the judgment entered on May 7, 2025, in the amount of $
Berkowitz Pollack & Brant Advisors – Garnishment Proceedings
On
October 22, 2025, the court issued a Writ of Garnishment against the Company’s bank account at JPMorgan Chase Bank, N.A., in the
amount of $
On
December 5, 2025, the Company consented to the entry of a Final Judgment in Garnishment in the amount of $
Troutman Amin, LLP Litigation
On
November 21, 2025, Troutman Amin, LLP (“Troutman”), a former legal services provider to Vocodia Holdings Corp. (“the
Company”), filed a complaint in the Superior Court of the State of California, County of Orange, against the Company and certain
related parties. The complaint alleges claims for fraud, concealment, and breach of contract in connection with unpaid legal fees and
services rendered under a contract entered into in January 2024. Troutman seeks compensatory and exemplary damages, as well as attorneys’
fees, and alleges that the amount in controversy exceeds $
The Company is currently evaluating the allegations and intends to vigorously defend against the claims. As of the date of this filing, the Company is unable to predict the outcome of this matter or estimate the amount or range of potential loss, if any, that may result from this litigation. The Company will continue to monitor the proceedings and assess any developments that may require further disclosure or accrual in future periods.
| 30 |
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our consolidated financial statements and the related notes included elsewhere in this Quarterly Report on Form 10-Q. Our consolidated financial statements have been prepared in accordance with U.S. GAAP. In addition, our consolidated financial statements and the financial data included in this Quarterly Report on Form 10-Q reflect our reorganization and have been prepared as if our current corporate structure had been in place throughout the relevant periods. Actual results could differ materially from those projected in the forward-looking statements. For additional information regarding these and other risks and uncertainties, please see the items listed above under the section captioned “Risk Factors”, as well as any other cautionary language contained in this Quarterly Report on Form 10-Q. Except as may be required by law, we undertake no obligation to update any forward-looking statements to reflect events after the date of this Quarterly Report on Form 10-Q.
CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q contains certain “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). These forward-looking statements represent our expectations, beliefs, intentions, or strategies concerning future events, including, but not limited to, any statements regarding our assumptions about financial performance; the continuation of historical trends; growth strategies; the sufficiency of our cash balances for future liquidity and capital resource needs; the expected impact of changes in accounting policies on our results of operations, financial condition or cash flows; anticipated problems and our plans for future operations; our future financing plans and anticipated needs for working capital; and the economy in general or the future of the food production industry, all of which were subject to various risks and uncertainties. Such statements, when used in this Annual Report on Form 10-K and other reports, statements, and information we have filed with the Securities and Exchange Commission (“SEC”), in our press releases, presentations to securities analysts or investors, in oral statements made by or with the approval of an executive officer, are generally identifiable by use of the words “may,” “will,” “should,” “expect,” “anticipate,” “continue,” “estimate,” “believe,” “intend,” or “project” or the negative of these words or other variations on these words or comparable terminology. However, any statements contained in this Annual Report on Form 10-K that are not statements of historical fact may be deemed to be forward-looking statements. These statements are expressed in good faith and based upon a reasonable basis when made, but there can be no assurance that these expectations will be achieved or accomplished.
This information may involve known and unknown risks, uncertainties, and other factors that may cause our actual results, performance, or achievements to be materially different from the future results, performance, or achievements expressed or implied by any forward-looking statements. These statements may be found under Part I Item 1 “Business” and Part II Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” as well as in other parts of this Quarterly Report on Form 10-Q. Actual events or results may differ materially from those discussed in forward-looking statements as a result of various factors as described in this Quarterly Report on Form 10-Q generally. In light of these risks and uncertainties, there can be no assurance that the forward-looking statements contained in this Quarterly Report on Form 10-Q will in fact occur. In addition to the information expressly required to be included in this filing, we will provide such further material information, if any, as may be necessary to ensure that the required statements, in light of the circumstances under which they are made, are not misleading.
Although forward-looking statements in this Quarterly Report on Form 10-Q reflect the good faith judgment of our management, forward-looking statements are inherently subject to known and unknown risks, business, economic and other risks and uncertainties that may cause actual results to be materially different from those discussed in these forward-looking statements. Readers are urged not to place undue reliance on these forward-looking statements, which speak only as of the date of this Quarterly Report on Form 10-Q. We assume no obligation to update any forward-looking statements in order to reflect any event or circumstance that may arise after the date of this Quarterly Report on Form 10-Q, other than as may be required by applicable law or regulation. Readers are urged to carefully review and consider the various disclosures made by us in our reports filed with the Securities and Exchange Commission (“SEC”) which attempt to advise interested parties of the risks and factors that may affect our business, financial condition, results of operation and cash flows. If one or more of these risks or uncertainties materialize, or if the underlying assumptions prove incorrect, our actual results may vary materially from those expected or projected.
This Quarterly Report on Form 10-Q also contains estimates, projections, and other information concerning our industry, our business, and particular markets, including data regarding the estimated size of those markets. Information that is based on estimates, forecasts, projections, market research, or similar methodologies is inherently subject to uncertainties and actual events or circumstances may differ materially from events and circumstances reflected in this information. Unless otherwise expressly stated, we obtained this industry, business, market, and other data from reports, research surveys, studies, and similar data prepared by market research firms and other third parties, industry, general publications, government data, and similar sources.
Overview
Vocodia Holdings Corp (“VHC”) was incorporated in the State of Wyoming on April 27, 2021, and is a conversational AI technology provider. Vocodia’s technology is designed to drive better sales and services for its customers. Clients turn to Vocodia for their product and service needs.
Business Summary
We are an AI software company that builds practical AI functions and makes them easily obtainable for businesses on cloud-based platform solutions at low costs and scalable to multiagent vast enterprise solutions.
| 31 |
Our operations include our wholly owned subsidiary, Click Fish Media, Inc. (“CFM”), which was incorporated in the State of Florida on November 26, 2019, and is an IT services provider. CFM was formerly owned by James Sposato, who is an officer and director of the Company. CFM was acquired by us from Mr. Sposato in accordance with the Contribution Agreement, dated August 1, 2022. In the Contribution Agreement, Mr. Sposato (“Contributor”), has contributed, assigned, transferred and delivered to us, the outstanding capital stock of CFM and we have accepted the contributed shares from the Contributor. As full consideration for the contribution, we have paid the Contributor consideration in the amount of $10.
An illustration of our organizational structure is provided below:
We aim to offer corporate clients scalable enterprise AI sales and customer service solutions intended to rapidly increase sales and service, while lowering employment costs.
We seek to enhance rapport and relationship building for customers, which is a necessary component of sales. We believe that there is a positive correlation between AI which sounds similar to a human voice over the phone and better customer rapport and customer service benefits. With our advanced AI, we believe that it will be difficult for customers to distinguish between speaking to a human sales representative and to an AI bot. We believe we can increase customer satisfaction and maximize potential service efficiency for our clients. Our goal is to provide quick training and deployment, potentially unlimited scalability, easy integration with existing corporate platforms and other benefits to our customers from AI’s efficiency. We strive to help our customers manage budgets and perform better than the high costs of existing sales and service personnel.
On February 26, 2024, we completed our initial public offering (the “IPO”) of 1,400,000 units, each consisting of one share of common stock, par value $0.0001 (“Common Stock”), one Series A Warrant to purchase one share of Common Stock at $4.25 (the “Series A Warrant”), and one Series B Warrant to purchase one share of Common Stock at $8.50 (the “Series B Warrant”), at a price to the public of $4.25 per Unit.
| 32 |
The gross proceeds from the IPO, before underwriting discounts and commissions and estimated offering expenses payable by us, were approximately $5,950,000. On February 22, 2024, our Common Stock, Series A Warrants and Series B Warrants began trading on the BZX Exchange, a division of Cboe Global Markets, under the ticker symbols “VHAI,” “VHAI+A” and “VHAI+B”, respectively.
On June 14, 2024, Vocodia Holdings Corp. (the “Company”) received a letter (the “Letter”) from the Listing Qualifications Department of The Cboe BZX Exchange, Inc. (“Cboe”) notifying the Company that Cboe had decided to exercise its discretionary authority pursuant to Exchange Rule 14.2 to delist the Company and suspend trading of the Company’s Common Stock (VHAI), Series A Warrants (VHAI+A) and Series B Warrants (VHAI+B) on June 24, 2024. The Letter cited that the basis for this decision is that the Company is currently not in compliance with (i) Exchange Rule 14.9(e)(1)(B) because its Common Stock did not maintain a minimum bid price of $1.00 over 30 consecutive business days and (ii) Exchange Rule 14.9(e)(2) because the Company has failed to me at least one of the following requirements: (A) stockholders’ equity of at least $2.5 million; (B) market value of listed securities of at least $35 million; or (C) net income from continuing operations of $500,000 in the most recently completed fiscal year or in two of the three most recently complete fiscal years.
Pursuant to Exchange Rule 14.12(h) the Company appealed the staff’s decision, and an appeal hearing was held on August 8, 2024, before a two-member Panel (the “Panel”). On September 6, 2024, the Company received notice that the Panel rejected the Company’s appeal and determined to delist the Company’s securities. The receipt of the Panel’s decision will result in the immediate delisting of the Company’s Common Stock and Warrants on the Cboe, under the symbols “VHAI,” “VHAI+A,” and “VHAI+B”, and a Form 25-NSE will be filed with the Commission, which will remove the Company’s securities from listing and registration on Cboe. The Company did not appeal the Panel’s decision. Therefore, the trading of the Company’s Common Stock and Warrants was suspended at the close of business on September 10, 2024, and delisted from Cboe, as indicated in the Panel’s letter.
The Company’s common stock began trading under the trading symbols “VHAI,” “VHAI+A,” and VHAI+B” on the OTC Pink Market operated on the OTC Markets system effective with the open of the markets on September 11, 2024. The Company intends to apply to have its common stock quoted on the OTCQB Venture Market on the OTC Markets; however, there can be no assurances that its common stock and warrants will be approved, or will continue, to be traded on such market.
Results of Operations
Comparison of the three months ended September 30, 2025, to the three months ended September 30, 2024.
The following tables set forth selected consolidated statements of operations data and such data as a percentage of total revenues for each of the periods indicated:
| Three Months Ended | ||||||||||||||||
| September 30, | ||||||||||||||||
| 2025 | 2024 | Change | % | |||||||||||||
| Revenues | $ | 51,324 | $ | 50,156 | 1,168 | 2 | % | |||||||||
| Cost of revenue | 40,636 | 74,062 | (33,426 | ) | -45 | % | ||||||||||
| Gross profit (loss) | 10,688 | (23,906 | ) | 34,594 | -145 | % | ||||||||||
| Operating costs and expenses: | ||||||||||||||||
| Operating expense | 410,034 | 1,307,101 | (897,067 | ) | -69 | % | ||||||||||
| Other income (expenses) | (1,491,892 | ) | 325 | (1,492,217 | ) | -459,144 | % | |||||||||
| Net loss | $ | (1,891,238 | ) | $ | (1,330,682 | ) | (560,556 | ) | 42 | % | ||||||
Revenues increased by $1,168, or 2%, to $51,324 for the three months ended September 30, 2025, from $50,156 for the three months ended September 30, 2024. Beginning in January 2024, we suspended sales of our DISA product in order to update its functionality so it could scale to the needs of our customers. Beginning in the first half of 2025 we began engaging new customers with our DISA product.
Cost of Revenue
Cost of revenue decreased by $33,426, or 45%, to $40,636 for the three months ended September 30, 2025, from $74,062 for the three months ended September 30, 2024, primarily due to decreased cost of our cloud hosting platform.
Gross Loss
The increase in our gross profit by $34,594 to a gross profit of $10,688 for the three months ended September 30, 2025 from a gross loss of $23,906 for the three months ended September 30, 2024, is primarily attributable to the decrease in cost of revenue.
| 33 |
Operating Expenses
| Three Months Ended | ||||||||||||||||
| September 30, | ||||||||||||||||
| 2025 | 2024 | Change | % | |||||||||||||
| Operating Expenses | ||||||||||||||||
| General and administrative expenses | $ | 368,534 | $ | 740,010 | (371,476 | ) | -50 | % | ||||||||
| Salaries and wages | 3,000 | 349,731 | (346,731 | ) | -99 | % | ||||||||||
| Research and development and other service providers | - | 217,360 | (217,360 | ) | -100 | % | ||||||||||
| Consulting expense – related party | 38,500 | - | 38,500 | 100 | % | |||||||||||
| Total Operating Expenses | $ | 410,034 | $ | 1,307,101 | (897,067 | ) | -69 | % | ||||||||
Operating expense decreased by $897,067 or 69% to $410,034 for the three months ended September 30, 2025, from $1,307,101 for the three months ended September 30, 2024, primarily due to the reduction in general and administrative expenses related to going public in early 2024, a reduction in software development costs related to our DISA products and a reduction in salaries and wages and stock-based compensation expenses paid to employees and service providers.
General and Administrative Expenses decreased by $371,476 or 50% to $368,534 during the three months ended September 30, 2025, from $740,010 during the three months ended September 30, 2024. The decrease is primarily a result of a reduction of costs incurred that were related to going public during the first quarter of 2024 such as insurance, professional fees, and investor relations.
Salaries and wages decreased by $346,731 or 99%, to $3,000 for the three months ended September 30, 2025, from $349,731 for the three months ended September 30, 2024, due to a reduction in staff in 2024 and a reduction in stock-based compensation paid.
Research and development and other service providers expense decreased by $217,360, or 100%, to $0 for the three months ended September 30, 2025, from $217,360 for the three months ended September 30, 2024, primarily related to a decrease in software development costs related to our DISA products.
Related party consulting expenses increased by $38,500, or 100%, to $38,500 for the three months ended September 30, 2025, from $0 for the three months ended September 30, 2024. The expenses are due to consulting services provided by a company owned by our CEO.
Total other income (expense)
During the three months ended September 30, 2025, the Company recognized total other expenses of $1,491,892, which included a gain in the change in fair value of the warrant liability of $732,101, derivative expense and the change in fair value of the derivative liability of $1,164,441, a gain on digital assets of $18,352, a gain on Solana used to repay a related party loan of $6,992, a loss in the change in fair value of the May 2025 convertible note of $492,933, and other income of $21,808. These gains were partially offset by a loss on settlement of debts of $191,527 and interest expense of $422,244.
Comparison of the nine months ended September 30, 2025, to the nine months ended September 30, 2024
The following tables set forth selected consolidated statements of operations data and such data as a percentage of total revenues for each of the periods indicated:
| Nine months ended | ||||||||||||||||
| September 30, | ||||||||||||||||
| 2025 | 2024 | Change | % | |||||||||||||
| Revenues | $ | 66,461 | $ | 50,231 | 16,230 | 32 | % | |||||||||
| Cost of revenue | 126,575 | 130,321 | (3,746 | ) | -3 | % | ||||||||||
| Gross profit (loss) | (60,114 | ) | (80,090 | ) | 19,976 | -25 | % | |||||||||
| Operating costs and expenses: | ||||||||||||||||
| Operating expense | 1,222,316 | 5,706,554 | (4,484,238 | ) | -79 | % | ||||||||||
| Other income (expenses) | (4,651,592 | ) | (4,048,400 | ) | (603,192 | ) | 15 | % | ||||||||
| Net loss | $ | (5,934,022 | ) | $ | (9,835,044 | ) | 3,901,022 | -40 | % | |||||||
| 34 |
Revenues increased by $16,230, or 32%, to $66,461 for the nine months ended September 30, 2025, from $50,231 for the nine months ended September 30, 2024. Beginning in January 2024, we suspended sales of our DISA product in order to update its functionality so it could scale to the needs of our customers. Beginning in the first half of 2025 we began engaging new customers with our DISA product.
Cost of Revenue
Cost of revenue decreased by $3,746, or 3%, to $126,575 for the nine months ended September 30, 2025, from $130,321 for the nine months ended September 30, 2024, primarily due to reduced cost of our cloud hosting platform.
Gross Loss
The decrease in our gross loss by $19,976 to a gross loss of $60,114 for the nine months ended September 30, 2025, from a gross loss of $80,090 for the nine months ended September 30, 2024, is primarily attributable to the decrease in our cost of revenue.
Operating Expenses
| Nine months ended | ||||||||||||||||
| September 30, | ||||||||||||||||
| 2025 | 2024 | Change | % | |||||||||||||
| Operating Expenses | ||||||||||||||||
| General and administrative expenses | $ | 1,058,489 | 3,188,266 | (2,129,777 | ) | -67 | % | |||||||||
| Salaries and wages | 3,000 | 1,179,038 | (1,176,038 | ) | -100 | % | ||||||||||
| Research and development and other service providers | 53,550 | 1,339,250 | (1,285,700 | ) | -96 | % | ||||||||||
| Consulting expense – related party | 107,277 | - | 107,277 | 100 | % | |||||||||||
| Total Operating Expenses | $ | 1,222,316 | 5,706,554 | (4,484,238 | ) | -79 | % | |||||||||
Operating expense decreased by $4,484,238 or 79% to $1,222,316 for the nine months ended September 30, 2025, from $5,706,554 for the nine months ended September 30, 2024, primarily due to the reduction in general and administrative expenses related to going public in early 2024, a reduction in software development costs related to our DISA products and a reduction in salaries and wages and stock-based compensation expenses paid to employees and service providers.
General and Administrative Expenses decreased by $2,129,777 or 67% to $1,051,294 during the nine months ended September 30, 2025, from $3,188,266 during the nine months ended September 30, 2024. The decrease is primarily a result of a reduction of the Company’s costs related to going public during the first quarter of 2024 such as insurance, professional fees, and investor relations.
Salaries and wages decreased by $1,176,038, or 100%, to $3,000 for the nine months ended September 30, 2025, from $1,179,038 for the nine months ended September 30, 2024, due to a reduction in staff in 2024 and a reduction in stock-based compensation paid.
Research and development and other service providers expense decreased by $1,285,700, or 96%, to $53,550 for the nine months ended September 30, 2025, from $1,339,250 for the nine months ended September 30, 2024, primarily related to a decrease in software development costs related to our DISA products.
Related party consulting expenses increased by $107,277, or 100%, to $107,277 for the nine months ended September 30, 2025, from $80,917 for the nine months ended September 30, 2024. The expenses are due to consulting services provided by a company owned by our CEO.
Total other income (expense)
During the nine months ended September 30, 2025, we had other expenses of $4,651,592, which consisted of the loss on issuance of the May 2025 convertible note of $756,621, liquidated damages of $710,375, interest expense of $832,864, derivative expense and change in the fair value of the derivative liability of $2,293,151, the loss on settlement of debts of $359,357, bad debt expense of $50,000, and offset by the change in fair value of warrant liability of $699,771, gain from forgiveness of payables of $79,500, the change in the fair value of May 2025 convertible note, the gain on digital assets of $2,948, gain on Solana used to repay loan held by related party of $6,992, and other income of $21,808.
| 35 |
Liquidity and Capital Resources
The following table provides selected financial data about us as of September 30, 2025, and December 31, 2024
| September 30, | December 31, | |||||||||||||||
| 2025 | 2024 | Change | % | |||||||||||||
| Current assets | 28,607 | 128,357 | (99,750 | ) | -78 | % | ||||||||||
| Current liabilities | 7,124,541 | 2,363,345 | 4,4761,106 | 201 | % | |||||||||||
| Working capital (deficiency) | (7,095,844 | ) | (2,234,988 | ) | (4,860,856 | ) | 217 | % | ||||||||
Liquidity is the ability of an enterprise to generate adequate amounts of cash to meet its needs for cash requirements. As of September 30, 2025, and December 31, 2024, we had cash of $4,057 and $281, respectively. Current assets decreased by $99,750, or 78%, to $28,607 as of September 30, 2025, from $128,357 as of December 31, 2024. The decrease was primarily attributable to a reduction in prepaid expense of $72,895 and a reduction of accounts receivable of $30,631.
Current liabilities increased by $4,476,106 or 201%, to $7,124,541 as of September 30, 2025, from $2,363,345 as of December 31, 2024. The increase was primarily attributable to increase in accounts payable and accrued liabilities of $1,158,702, an increase in the derivative liability of $682,846, an increase in the liability from the May 2025 convertible note of $398,031, and an increase in convertible notes payable of $312,336.
We believe we will not have sufficient cash on hand to support our operations for at least 12 months. As of September 30, 2025, we had a working capital deficiency of $4,941,906. As discussed below, this condition and other factors raise substantial doubt regarding our ability to continue as a going concern.
We intend to generally rely on cash from operations and equity and debt offerings to the extent necessary and available, to satisfy our liquidity needs. There are several factors that could result in the need to raise additional funds, including a failure to generate revenue in the short term, a lack of anticipated sales growth and increased costs. Our efforts are directed toward generating positive cash flow and, ultimately, profitability. As our efforts during our fiscal 2024 and the nine months ended September 30, 2025, have not generated positive cash flows, we will need to raise additional capital. Should capital not be available to us at reasonable terms, other actions will become necessary, including implementing cost control measures and additional efforts to increase sales. We may also be required to take more strategic actions such as exploring strategic options for the sale of our company, the creation of joint ventures or strategic alliances under which we will pursue business opportunities, or other alternatives.
Cash Flow
| Nine months ended | ||||||||||||
| September 30, | ||||||||||||
| 2025 | 2024 | Change | ||||||||||
| Cash used in operating activities | $ | (653,478 | ) | $ | (5,289,085 | ) | $ | 4,635,607 | ||||
| Cash used in investing activities | $ | 917 | $ | (2,131 | ) | $ | 3,048 | |||||
| Cash provided financing activities | $ | 656,337 | $ | 5,292,432 | $ | (4,636,095 | ) | |||||
| 36 |
Cash Flow from Operating Activities
Nine months ended September 30, 2025, and 2024
We did not generate positive cash flows from operating activities during the nine months ended September 30, 2025, and 2024.
Cash flows used in operating activities for the nine months ended September 30, 2025, comprised of a net loss of $5,934,022 reduced by non-cash expenses of $4,067,996. Non-cash expenses were primarily composed of the derivative expense and change in fair value of derivative liability, the amortization of debt issuance costs, liquidated damages from warrants, the loss on issuance of the May 2025 convertible note and warrants, loss on settlement of debt and bad debt expense. Cash flows of $1,212,548 were also produced by the changes in the levels of operating assets and liabilities, primarily related to an increase in accounts payable and accrued expenses, and a decrease in prepaid expense and other assets.
Cash flows used in operating activities for the nine months ended September 30, 2024, was comprised of a net loss of $9,835,044, reduced by non-cash expenses of $4,118,685. Non-cash expenses were primarily composed of the loss on settlement of debt, the amortization of debt issuance costs, stock-based compensation, and a convertible note default penalty, offset primarily by the change in fair value of the derivative liability and the gain on settlement of accounts payable. Cash flows of $427,264 were also used by the changes in the levels of operating assets and liabilities, primarily related to an increase in prepaid expenses and other assets, offset by primarily by an increase in accounts payable and accrued expenses.
Cash Flows from Investing Activities
During the nine months ended September 30, 2025, cash flows from investing activities were composed of $180,562 used to purchase digital assets, offset by the proceeds from the sale of digital assets of $181,479.
During the nine months ended September 30, 2024, cash flows from investing activities were composed of $2,131 used to purchase property and equipment.
Cash Flows from Financing Activities
During the nine months ended September 30, 2025, cash provided by financing activities of $656,337 included $285,714 from the proceeds from convertible notes payable, $350,000 proceeds from the May 2025 convertible note and $47,222 of issuance costs from the May 2025 convertible note, offset by $26,599 used to repay convertible notes payable.
During the nine months ended September 30, 2024, cash provided by financing activities of $5,292,432 included $5,372,787 of proceeds from the sales of common stock units, proceeds of $605,000 from the sale of Series B Preferred shares, proceeds of $82,121 from the exercise of warrants and $30,000 from the issuance of note payable, offset by the repayment of convertible notes payable of $802,984, the repayment of notes payable of $55,000, and deferred offering costs of $24,375.
Off-Balance Sheet Arrangements
We do not have any off-balance sheet arrangements or relationships with unconsolidated entities or financial partnerships, such as entities often referred to as structured finance or special purpose entities.
Going Concern
Our accompanying consolidated financial statements are prepared in accordance with Generally Accepted Accounting Principles (“GAAP”) of the United States including the assumption of a going concern basis, which contemplates the realization of assets and liquidation of liabilities in the normal course of business. However, as shown in the accompanying consolidated financial statements, during the nine months ended September 30, 2025, we had a net loss of approximately $3.8 million. As of September 30, 2025, we had an accumulated deficit of $106.5 million and negative working capital of $7.1 million. During the nine months ended September 30, 2025, we used cash in operations of approximately $0.7 million. We expect to continue to incur significant expenditures to develop our technology. As such, there is substantial doubt about the Company’s ability to continue as a going concern.
Critical Accounting Policies
Our accounting policies are more fully described in our unaudited financial statements. The preparation of financial statements in conformity with generally accepted accounting principles in the United States requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Although these estimates are based on our best knowledge of current and anticipated events, actual results could differ from the estimates.
| 37 |
We have identified the following accounting policies as those that require significant judgments, assumptions and estimates and that have a significant impact on our financial condition and results of operations. These policies are considered critical because they may result in fluctuations in our reported results from period to period, due to the significant judgments, estimates and assumptions about complex and inherently uncertain matters and because the use of different judgments, assumptions or estimates could have a material impact on our financial condition or results of operations. We evaluate our critical accounting estimates and judgments required by our policies on an ongoing basis and update them as appropriate based on changing conditions.
Fair Value of Financial Instruments
The Company accounts for financial instruments under Financial Accounting Standards Board (“FASB”) ASC 820, Fair Value Measurements. ASC 820 provides a framework for measuring fair value and requires disclosures regarding fair value measurements. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, based on the Company’s principal or, in absence of a principal, most advantageous market for the specific asset or liability.
The Company uses a three-tier fair value hierarchy to classify and disclose all assets and liabilities measured at fair value on a recurring basis, as well as assets and liabilities measured at fair value on a non-recurring basis, in periods subsequent to their initial measurement. The hierarchy requires the Company to use observable inputs when available, and to minimize the use of unobservable inputs, when determining fair value.
The three tiers are defined as follows:
| ● | Level 1 – Observable inputs that reflect quoted market prices (unadjusted) for identical assets or liabilities in active markets; | |
| ● | Level 2 – Observable inputs other than quoted prices in active markets that are observable either directly or indirectly in the marketplace for identical or similar assets and liabilities; and | |
| ● | Level 3 – Unobservable inputs that are supported by little or no market data, which require the Company to develop its own assumptions. |
The determination of fair value and the assessment of a measurement’s placement within the hierarchy requires judgment. Level 3 valuations often involve a higher degree of judgment and complexity. Level 3 valuations may require the use of various cost, market, or income valuation methodologies applied to unobservable management estimates and assumptions. Management’s assumptions could vary depending on the asset or liability valued and the valuation method used. Such assumptions could include estimates of prices, earnings, costs, actions of market participants, market factors, or the weighting of various valuation methods. The Company may also engage external advisors to assist us in determining fair value, as appropriate.
Derivative Financial Instruments
The Company does not use derivative instruments to hedge exposures to cash flow, market or foreign currency risks. We evaluate all of our financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives. For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value and is then re-valued at each reporting date, with changes in the fair value reported in the statements of operations. For our derivative financial instruments, the Company used either a Black Scholes valuation model or a Monte Carlo valuation model to value the derivative instruments at inception and on subsequent valuation dates. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is evaluated at the end of each reporting period. Derivative liabilities are classified in the balance sheet as current or non-current based on whether or not net-cash settlement or conversion of the instrument could be required within twelve (12) months of the balance sheet date.
| 38 |
Warrants
The Company accounts for warrants as either equity-classified or liability-classified instruments based on an assessment of the warrant’s specific terms and applicable authoritative guidance in FASB ASC 480, Distinguishing Liabilities from Equity (“ASC 480”) and ASC 815, Derivatives and Hedging (“ASC 815”). The assessment considers whether the warrants are freestanding financial instruments pursuant to ASC 480, meet the definition of a liability pursuant to ASC 480, and whether the warrants meet all of the requirements for equity classification under ASC 815, including whether the warrants are indexed to the Company’s own ordinary shares and whether the warrant holders could potentially require “net cash settlement” in a circumstance outside of the Company’s control, among other conditions for equity classification. This assessment, which requires the use of professional judgment, is conducted at the time of warrant issuance and as of each subsequent quarterly period end date while the warrants are outstanding.
For issued or modified warrants that meet all of the criteria for equity classification, the warrants are required to be recorded as a component of additional paid-in capital at the time of issuance. For issued or modified warrants that do not meet all the criteria for equity classification, the warrants are required to be recorded at their initial fair value on the date of issuance, and each balance sheet date thereafter. Changes in the estimated fair value of the warrants are recognized as a non-cash gain or loss on the statements of operations. The fair value of the warrants was estimated using a Monte Carlo pricing model.
May 2025 Convertible Note
As permitted under ASC 825 Financial Instruments (“ASC 825”), the Company elects to account for the May 2025 Convertible Note, which meets the required criteria, at fair value at inception and at each subsequent reporting date. Subsequent changes in fair value are recorded as a component of non-operating loss in the consolidated statements of operations. This election is made on an instrument-by-instrument basis as permitted under ASC 825. The portion of total changes in fair value of the convertible promissory note attributable to changes in instrument-specific credit risk are determined through specific measurement of periodic changes in the discount rate assumption exclusive of base market changes and are presented as a component of comprehensive income in the accompanying Consolidated Statements of Operation. As a result of electing the fair value option, direct costs and fees related to the May 2025 Convertible Note are expensed as incurred.
The Company estimates the fair value of the May 2025 Convertible Note using a Monte Carlo simulation model, which uses as inputs the fair value of our common stock and estimates for the equity volatility and volume volatility of our common stock, the time to expiration of the convertible promissory note, the risk-free interest rate for a period that approximates the time to expiration, and probability of default. Therefore, we estimate our expected future volatility based on the actual volatility of our common stock and historical volatility of our common stock utilizing a lookback period consistent with the time to expiration. The time to expiration is based on the contractual maturity date, giving consideration to the voluntary, mandatory and potential accelerated redemption scenarios. The risk-free interest rate is determined by reference to the U.S. Treasury yield curve in effect at the time of measurement for time periods approximately equal to the time to expiration. Probability of default is estimated using Bloomberg’s Default Risk function which uses our financial information to calculate a default risk specific to the Company.
Research and Development
The Company accounts for research and development costs in accordance with ASC subtopic 730-10, Research and Development (“ASC 730-10”).
| 39 |
Under ASC 730-10, all research and development costs must be expensed as incurred. Accordingly, internal research and development costs are expensed as incurred. Third-party research and development costs are expensed when the contracted work has been performed or as milestone results have been achieved as defined under the applicable agreement. Company-sponsored research and development costs related to both present and future products are expensed in the period incurred.
Stock-based Compensation. The Company accounts for our stock-based compensation under ASC 718 “Compensation – Stock Compensation” using the fair value-based method. Under this method, compensation cost is measured at the grant date based on the value of the award and is recognized over the service period, which is usually the vesting period. This guidance establishes standards for the accounting for transactions in which an entity exchanges equity instruments for goods or services. It also addresses transactions in which an entity incurs liabilities in exchange for goods or services that are based on the fair value of the entity’s equity instruments or that may be settled by the issuance of those equity instruments.
The Company uses the fair value method for equity instruments granted to non-employees and uses the Black-Scholes model for measuring the fair value of options.
The fair value of stock-based compensation is determined as of the date of the grant or the date at which the performance of the services is completed (measurement date) and is recognized over the vesting periods.
When determining fair value, the Company considers the following assumptions in the Black-Scholes model:
| ● | Exercise price, | |
| ● | Expected dividends, | |
| ● | Expected volatility, | |
| ● | Risk-free interest rate; and | |
| ● | Expected life of option |
Recent Accounting Standards. Changes to accounting principles are established by the FASB in the form of Accounting Standards Updates (“ASU’s”) to the FASB’s Codification. We consider the applicability and impact of all ASU’s on our financial position, results of operations, stockholders’ deficit, cash flows, or presentation thereof. Management has evaluated all recent accounting pronouncements as issued by the FASB in the form of Accounting Standards Updates (“ASU”) through the date these financial statements were available to be issued and found the following recent accounting pronouncements issued, but not yet effective accounting pronouncements, are not expected to have a material impact on the financial statements of the Company.
In August 2020, FASB issued ASU 2020-06, Accounting for Convertible Instruments and Contracts in an Entity; Own Equity (“ASU 2020-06”), as part of its overall simplification initiative to reduce costs and complexity of applying accounting standards while maintaining or improving the usefulness of the information provided to users of financial statements. Among other changes, the new guidance removes from GAAP separation models for convertible debt that require the convertible debt to be separated into a debt and equity component, unless the conversion feature is required to be bifurcated and accounted for as a derivative or the debt is issued at a substantial premium. As a result, after adopting the guidance, entities will no longer separately present such embedded conversion features in equity and will instead account for the convertible debt wholly as debt. The new guidance also requires use of the “if-converted” method when calculating the dilutive impact of convertible debt on earnings per share, which is consistent with the Company’s current accounting treatment under the current guidance. The guidance is effective for financial statements issued for fiscal years beginning after December 15, 2023, and interim periods within those fiscal years, with early adoption permitted, but only at the beginning of the fiscal year.
We do not expect the adoption of this pronouncement to have a material effect on our financial statements.
| 40 |
Recent Accounting Pronouncements
See Note 2 to our unaudited condensed consolidated financial statements included herein and Note 2 to our audited annual financial statements for the year ended December 31, 2024 included in the 2024 Form 10-K for information about recent accounting pronouncements, the timing of their adoption, and our assessment, to the extent we have made one, of their potential impact on our financial condition and results of operations.
JOBS Act Accounting Election
We are an “emerging growth company,” as defined in the JOBS Act. Under the JOBS Act, emerging growth companies can delay adopting new or revised accounting standards issued subsequent to the enactment of the JOBS Act until such time as those standards apply to private companies.
We have elected to use this extended transition period to enable us to comply with new or revised accounting standards that have different effective dates for public and private companies until the earlier of the date that we (i) are no longer an emerging growth company or (ii) affirmatively and irrevocably opt out of the extended transition period provided in the JOBS Act. As a result, our financial statements may not be comparable to companies that comply with new or revised accounting pronouncements as of public company effective dates.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
As a “smaller reporting company” as defined by Item 10 of Regulation S-K, we are not required to provide information required by this Item.
ITEM 4. CONTROLS AND PROCEDURES
As a public company, we will be subject to the reporting requirements of the Exchange Act, and the Sarbanes-Oxley Act. We expect that the requirements of these rules and regulations will continue to increase our legal, accounting and financial compliance costs, make some activities more difficult, time consuming and costly, and place significant strain on our personnel, systems and resources.
The Sarbanes-Oxley Act requires, among other things, that we maintain effective disclosure controls and procedures, and internal control over financial reporting.
We do not yet have effective disclosure controls and procedures, or internal controls over all aspects of our financial reporting. We are continuing to develop and refine our disclosure controls and other procedures that are designed to ensure that information required to be disclosed by us in the reports that we will file with the SEC is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms. Our management has deemed certain conditions to be material weaknesses and significant deficiencies in our internal controls. For example, we failed to employ a sufficient number of staff to maintain optimal segregation of duties and to provide optimal levels of oversight and we rely upon a third-party accounting firm to assist us with generally accepted in the United States of America (“GAAP”) compliance. Our management is responsible for establishing and maintaining adequate internal control over our financial reporting, as defined in Rule 13a-15(f) under the Exchange Act. We will be required to expend time and resources to further improve our internal controls over financial reporting, including by expanding our staff. However, we cannot assure you that our internal control over financial reporting, as modified, will enable us to identify or avoid material weaknesses in the future.
Our current controls and any new controls that we develop may become inadequate because of changes in conditions in our business, including increased complexity resulting from our international expansion. Further, weaknesses in our disclosure controls or our internal control over financial reporting may be discovered in the future. Any failure to develop or maintain effective controls, or any difficulties encountered in their implementation or improvement, could harm our operating results or cause us to fail to meet our reporting obligations and may result in a restatement of our financial statements for prior periods. Any failure to implement and maintain effective internal control over financial reporting could also adversely affect the results of management reports and independent registered public accounting firm audits of our internal control over financial reporting that we will eventually be required to include in our periodic reports that will be filed with the SEC. Ineffective disclosure controls and procedures, and internal control over financial reporting could also cause investors to lose confidence in our reported financial and other information, which would likely have a negative effect on the market price of our common stock.
We are not currently required to comply with the SEC rules that implement Section 404 of the Sarbanes-Oxley Act and are therefore not required to make a formal assessment of the effectiveness of our internal control over financial reporting for that purpose. As a public company, we will be required to provide an annual management report on the effectiveness of our internal control over financial reporting commencing with our second annual report on Form 10-K. Our independent registered public accounting firm is not required to audit the effectiveness of our internal control over financial reporting until after we are no longer an “emerging growth company” as defined in the JOBS Act. At such time, our independent registered public accounting firm may issue a report that is adverse in the event it is not satisfied with the level at which our internal control over financial reporting is documented, designed or operating.
| 41 |
PART II—OTHER INFORMATION
Item 1. Legal Proceedings.
From time to time, we may be involved in various disputes and litigation matters that arise in the ordinary course of business.
Telephone Consumer Protection Act’s (TCPA)
On December 20, 2023, an individual filed a putative class action lawsuit against a customer of the Company that was using the Company’s DISA’s. Shortly thereafter, the individual filed a first amended complaint (FAC) adding the Company as a party. The FAC states that Plaintiff’s phone number has been on the National Do-Not-Call Registry since 2009. Despite this, Plaintiff alleges he received two prerecorded calls from the Company on behalf of its Customer on October 10 and November 28, 2023. Based on these alleged violations, Plaintiff asserts that the Company violated the Telephone Consumer Protection Act’s (TCPA) prerecorded call provision and the South Carolina Telephone Privacy Protection Act. In response to the FAC, both the Company and its Customer filed a motion to dismiss and motion to strike the class allegations. The motions are fully briefed, but the Court has yet to issue a ruling. The parties each exchanged discovery responses. The parties agreed to attend mediation on October 15, 2024. The Company denies liability and intends to continue to vigorously defend any action, although the probability of a favorable or unfavorable outcome is difficult to estimate as of this date. The result or impact of such allegations are uncertain, including whether or not they could result in damages and/or awards of attorneys’ fees or expenses.
Dismissal and Closure of Arbitration with ProofPositive, LLC
ProofPositive LLC (“ProofPositive”) commenced an arbitration (“Arbitration”) before the American Arbitration Association (“AAA”) against the Company, Brian Podolak and his wife (under a pseudonym) (“Respondents”) on or about May 31, 2024. In the Arbitration, ProofPositive asserted a number of claims, including claims under the Arizona Securities Act, arising from Respondents’ alleged failure to pay sums purportedly due under a loan agreement and promissory note, an addendum and consulting agreement. The Company denies liability and intends to continue to vigorously defend any action, although the probability of a favorable or unfavorable outcome is difficult to estimate as of this date. The result or impact of such allegations are uncertain, including whether or not they could result in damages and/or awards of attorneys’ fees or expenses.
On October 30, 2024, the AAA notified the parties that the arbitration file had been closed and marked as Withdrawn as of that date. The AAA further indicated that any outstanding administrative fees or arbitrator compensation and expenses incurred during the case remain due and payable to the AAA, regardless of the status of the award or apportionment of costs. The Company is not aware of any further proceedings in this matter at this time.
The result or impact of such allegations is now considered resolved as the arbitration has been withdrawn and closed, and no determination on the merits was made. The Company does not anticipate any further material impact from this matter, other than the payment of any outstanding administrative fees, if any.
Release and Satisfaction of Judgement with MAI Voice GCO, LLC
On December 16, 2024, MAI Voice GCO, LLC filed a verified complaint alleging breach of contract and seeking $32,090. The Company denies liability and intends to vigorously defend the action that was brought, although the probability of a favorable or unfavorable outcome is difficult to estimate as of this date. The result or impact of such allegations are uncertain, including whether or not they could result in damages and/or awards of attorneys’ fees or expenses. Subsequent to quarter end, on October 20, 2025, MAI Voice GCO, LLC, through its legal representative, executed a Release and Satisfaction of Judgment, confirming full satisfaction and payment of the judgment. On October 22, 2025, the Circuit Court of Kane County, Illinois, entered an order vacating the judgment and dismissing the matter with prejudice. As a result, there are no further obligations or liabilities related to this proceeding as of the date of this filing. (Note 18 – Subsequent Events)
Berkowitz Pollack & Brant Advisors – Garnishment Proceedings
In March 2025, Berkowitz Pollack & Brant Advisors filed a lawsuit against the Company for unpaid professional fees in the amount of $48,057. On October 22, 2025, the court issued a Writ of Garnishment against the Company’s bank account at JPMorgan Chase Bank, N.A., in the amount of $51,332.00, which includes the original claim, post-judgment costs, interest, and potential attorney’s fees. The Company is required to respond to the writ and the garnishee is required to disclose any assets or funds held on behalf of the Company. As of the date of this filing, the garnishment proceedings remain ongoing, and the ultimate outcome and impact on the Company’s financial position cannot be determined. (Note 18 – Subsequent Events)
Settlement Agreement with CCFD, Inc.
On April 9, 2024, the Company entered into a Creative Services Agreement with CCFD, Inc. (as successor in interest to The Right Method, LLC) for public relations, media relations, and branding services. CCFD asserted that it had fully performed its contractual obligations and claimed that $243,000 was owed by the Company. CCFD prepared an arbitration demand for filing with the American Arbitration Association, which was presented to the Company. The Company disputed the amount claimed.
On October 15, 2025, the Company and CCFD, Inc. entered into a Settlement Agreement to resolve all claims related to the Creative Services Agreement. Under the terms of the Settlement Agreement, the Company agreed to pay CCFD a total of $150,000 in monthly installments of $7,500, commencing November 1, 2025, with all payments to be made in full satisfaction of all claims. The Settlement Agreement includes mutual releases of all claims, and provides that, upon timely payment of all installments, CCFD will waive all claims for legal fees, costs, and interest. In the event of default, the unpaid balance becomes immediately due, with interest and collection costs, and CCFD may seek judgment for the outstanding amount. (Note 18 – Subsequent Events)
Settlement Agreement with Carstens, Allen & Gourley, LLP
Carstens, Allen & Gourley, LLP (“Carstens”) commenced an action before the Texas Civil Court against the Company on or about August 12, 2024 (“Lawsuit”). In the Lawsuit, Carstens alleges that the Company was in breach of contract by failure and refusal to pay attorneys’ fees that it owes to Carstens. The Company has entered into settlement negotiations with Carstens. In December 2024, Carstens filed for a default judgement for the unpaid fees. The Company is negotiating with Carstens for a mutually acceptable settlement. In April 2025, the Company reached a settlement agreement, to pay Carstens the total sum of $160,000 with interest of $10,366 in 13 payments. A late payment fee of 12.5% is incurred on any payments the Company does not pay when due. Upon signing the settlement, Carstens filed with the courts to dismiss the lawsuit.
As a result of the settlement agreement with Carstens the Company recognized a loss on settlement of debt of $53,093. As of September 30, 2025, the Company had an accrued expenses balance of $189,552 due to the settlement agreement with Carstens. The Company recognized late penalty fees of $22,355 due to the balance owed to Carstens during the three months ended September 30, 2025. The late penalty fee was recorded as part of the loss on settlement of debts on the consolidated statement of operations.
| 42 |
Item 1A. Risk Factors.
We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information under this item.
You should carefully consider the risk factors discussed in our Annual Report on Form 10-K under the heading “Part I, Item 1A. Risk Factors,” which risks could materially affect our business, financial condition or future results. Such risks are not the only risks facing the Company. Additional risks and uncertainties not currently known to us, or that we currently deem to be immaterial, also may have a material adverse effect on our business, financial condition and future results or enhance the adverse impact of the risks known to us.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
None.
Item 3. Defaults Upon Senior Securities.
None
Item 4. Mine Safety Disclosures.
Not applicable.
Item 5. Other Information.
Subsequent Events
[*]
| 43 |
Item 6. Exhibits.
Furnish the exhibits required by Item 601 of Regulation S-K (§ 229.601 of this chapter).
| Exhibit Number | Description | |
| 31.1* | Certification of Principal Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |
| 31.2* | Certification of Principal Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |
| 32.1* | Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | |
| 32.2* | Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 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 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 Label Linkbase Document | |
| 101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document | |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
| * | Filed herewith. |
| 44 |
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.
| VOCODIA HOLDINGS CORP | ||
| Date: December 19, 2025 | By: | /s/ Brian Podolak |
| Brian Podolak | ||
| Chief Executive Officer | ||
| (Principal Executive Officer, Principal Financial and Accounting Officer) | ||
| 45 |
