10-Q: Authentic Holdings Reports Increased Revenue but Continues to Face Going Concern Challenges in Q1 2025

Authentic Holdings saw revenue increase in Q1 2025, but the company continues to struggle with significant debt, accumulated deficits, and doubts about its ability to continue as a going concern.

Summary

• Authentic Holdings Inc. reported its financial results for the quarter ended March 31, 2025.
• The company's revenue increased to $153,314, compared to $40,240 for the same period in 2024.
• However, the company recorded a net loss of $1,413,629, compared to a net loss of $1,071,951 in the prior year.
• Operating expenses increased to $417,684 from $245,358, driven by amortization of license agreements and increased salary expenses.
• The company's accumulated deficit reached $40,772,534, and it has a working capital deficit of $6,679,251.
• The report indicates substantial doubt about the company's ability to continue as a going concern due to significant debt in default and limited cash resources.
• Management plans to address these issues through increased sales, debt/equity financing, and traditional financing sources.
• The company is involved in three pending litigation matters and faces risks related to competition and the implementation of its business plan.
• The company acquired assets from Goliath Motion Picture Promotions and plans to market its television shows and movie library.
• The company is also developing an NFT platform and exploring opportunities in the vinyl record business.
• The company's disclosure controls and procedures were deemed ineffective due to material weaknesses in internal control over financial reporting.

Sentiment

Score: 3

Explanation: The sentiment is low due to the company's significant net losses, accumulated deficit, working capital deficit, substantial debt in default, and doubts about its ability to continue as a going concern. While there are some positive developments, the overall financial situation is precarious.

Positives

• Revenue increased significantly in Q1 2025, indicating potential growth in the company's operations.
• The acquisition of assets from Goliath Motion Picture Promotions could lead to increased revenue streams.
• The development of an NFT platform and exploration of the vinyl record business present new opportunities for revenue generation.
• The company is actively pursuing partnerships and agreements to expand its market reach and content distribution.

Negatives

• The company continues to experience significant net losses, widening from $1,071,951 in Q1 2024 to $1,413,629 in Q1 2025.
• The accumulated deficit has grown to $40,772,534, indicating a history of financial challenges.
• The company has a substantial working capital deficit of $6,679,251, raising concerns about its short-term financial stability.
• The company has a significant amount of debt in default, including convertible notes, secured promissory notes, related party promissory notes and self-liquidating promissory notes.
• The company's disclosure controls and procedures were deemed ineffective due to material weaknesses in internal control over financial reporting.

Risks

• The company's ability to continue as a going concern is in doubt due to significant debt, accumulated deficits, and limited cash resources.
• The company faces risks related to competition from larger organizations with greater financial resources.
• The company is involved in three pending litigation matters, which could result in financial liabilities.
• The company's success depends on its ability to implement and achieve success with its business plan, which is subject to various risks and uncertainties.
• The company's reliance on debt and equity financing arrangements may be insufficient to fund its expenditures or other cash requirements.
• The company's disclosure controls and procedures were deemed ineffective due to material weaknesses in internal control over financial reporting.

Future Outlook

The company intends to fund operations through increased sales and debt and/or equity financing arrangements, which may be insufficient to fund its expenditures or other cash requirements, until the company generates positive cash flow from operations.

Management Comments

• Maybacks is looking to capitalize on the cutting the cord phenomenon and take advantage of its low operating costs and ability to offer free TV and channel access for established organizations at a fraction of what cable and satellite dish companies charge.
• We have realized revenues during the quarter ended March 31, 2024, for the year ended December 31, 2024, and for the quarter ended March 31, 2025, and we are hopeful more advertising agreements are signed and more ad pressions sold to generate future revenue for our company.

Industry Context

The company operates in the competitive media and merchandising industry, facing competition from larger, more established companies with greater financial resources. The company is attempting to capitalize on trends such as cord-cutting and the growing popularity of NFTs.

Comparison to Industry Standards

• The report mentions Sling TV, owned by DISH Network, as an example of an Over the Air and platform driven television network with greater financial resources and experience.
• The company acknowledges that it competes with firms, including corporations with large divisions, many of these companies have greater financial, technical, or marketing resources, longer operating histories, greater brand recognition or larger customer bases than we do and are able to respond more effectively to changing business and economic conditions than we can.
• The company's strategy involves competing with these larger rivals and gaining market share through unique content and distribution partnerships.

Legal Proceedings

• The company is a party to three pending litigation matters: Randazzo LLC v. Avani Holdings LLC & Global Fashion Technologies, Inc., Patricia Witthuhn v. Global Fashion Technologies, Inc., and William Corso v. Global Fashion Technologies, Inc.

Related Party Transactions

• On March 31, 2025 and December 31, 2024, the Company had accumulated balances due its President, Chris Giordano and its CEO, Paul Serbiak in the amounts of $446,583 and $479,533, respectively.
• On June 18, 2019, the Company issued a promissory note at a principal amount of $447,150 as part of the consideration for the acquisition of assets from AH Originals, Inc., a corporation controlled by the same owner-group of Global Fiber Technologies, Inc.
• In August 2015, the Company issued an unsecured promissory note to an investor in the amount of $50,000, convertible to common stock at $1.00 per share.
• The Company received a loan from its CEO Paul Serbiak totaling $210,534.
• On March 13, 2025, the Company entered into a Debt Exchange Agreements with each of Chris Giordano, our President and Director, and Paul Serbiak, our Chief Executive Officer and Director, pursuant to which they converted an aggregate of $2,000,000 in debt held by the Company.

Stakeholder Impact

• Shareholders face the risk of further dilution if the company raises capital through equity financing.
• Employees may be impacted by the company's financial challenges and potential restructuring or cessation of operations.
• Creditors face the risk of non-payment due to the company's significant debt and limited cash resources.
• Customers may be affected by the company's ability to provide services and products if it faces financial difficulties.

Next Steps

• The company plans to market its television shows and movie library on both Over the Air and Streaming Platforms in conjunction with a comprehensive marketing effort to create both content and distribution partnerships.
• The company intends to fund operations through increased sales and debt and/or equity financing arrangements.
• The company plans to seek additional financing in a private equity offering to secure funding for operations.
• The Company plans to take remedial action to address these weaknesses during the fiscal year ended 2025.

Key Dates

Keywords

Authentic Holdings, financial results, Q1 2025, revenue, net loss, going concern, debt, NFT platform, Maybacks, Goliath Motion Picture Promotions, internal control, material weakness