Real-time Form 4 intelligence. Smarter insider tracking.
YoY shift: Neutral
Year-over-year tone shift - average net-tone change across Risk Factors and MD&A vs the prior 10-K. This filing is -0.02pp more bearish than last year's.
Why YoY instead of absolute: the LM lexicon has ~6.6× more negative words than positive (legal/risk-disclosure language is heavy on hedging), so every 10-K reads bearish on raw tone. Year-over-year change strips that bias and surfaces the actual shift in management's framing.
Tone shift by section
The two components the gauge averages: how Risk Factors and MD&A each shifted in net tone versus last year's 10-K. The headline above is their average, so a green needle over a soft section just means the other section carried it.
Risk Factors
+0.07pp
Flat
Net-tone change vs last year's 10-K.
MD&A
-0.12pp
Flat
Net-tone change vs last year's 10-K.
Per-snippet highlights
Sentence-level sentiment highlighting with category and subcategory filters is coming once the snippet-scoring pipeline lands. For now, dig into the actual section text on the Sections tab.
Language change vs prior 10-K
Risk Factors (Item 1A) - words with the biggest YoY frequency increase
Negative rising
No words rose this year.
Positive rising
profitability+2
Risk Factors (Item 1A)
3,868 words
ITEM 1A. RISK FACTORS
Risks Relating to Our Business
We have not been profitable.
We were formed in June 2007 and are currently developing Water On Demand, a new business model designed to address identified market demand. As we have not achievedprofitability, we face substantial risks, uncertainties, expenses and challenges. To address these risks, we must:
Language change vs prior 10-K
MD&A (Item 7) - words with the biggest YoY frequency increase
Negative rising
loss+1
Positive rising
No words rose this year.
MD&A (Item 7)
1,334 words
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION.
The following discussion and analysis should be read together with our financial statements and the related notes appearing elsewhere in this Annual Report on Form 10-K. This discussion contains forward-looking statements reflecting our current expectations that involve risks and uncertainties. See “Forward-Looking Statements” for a discussion of the uncertainties, risks and assumptions associated with these statements. Actual results and the timing of events could differ materially from those discussed in our forward-looking statements as a result of many factors, including those set forth under “Risk Factors” and elsewhere in this Annual Report on Form 10-K.
Respond effectively to competitive developments; and
Attract, integrate, retain and motivate qualified personnel.
There is no assurance we will operate profitably or maintain adequate working capital to meet our obligations as they become due. Investors should consider the risks and challenges typically faced by early-stage companies, especially in rapidly evolving markets. If we are unable to successfully execute our strategy or mitigate these risks, our business, prospects, financial condition, and results of operations could be materially and adversely affected.
We have a history of losses and can provide no assurance of our future operating results.
We have experienced net losses and negative cash flows from operating activities since our inception, and we expect these losses and negative cash flows to continue in the foreseeable future. As of December 31, 2025, and 2024, we had a working capital deficit of $(19,036,232) and $(45,437,508), respectively, and a shareholders’ deficit of $(28,382,938) and $(54,857,588), respectively.
For the years ended December 31, 2025, and 2024, we reported a net loss of $(13,558,351) and $(18,970,789), respectively. Our loss from operations was $(3,323,046) for the year ended December 31, 2025.
As of December 31, 2025, we had an aggregate accumulated deficit of $(155,711,198).
We may never achieveprofitability.
Our independent registered public accountants’ opinion on our December 31, 2025, audited financial statements includes an explanatory paragraph regarding substantial doubt about our ability to continue as a going concern. Our continued operations depend on our ability to raise capital through financing transactions and generating sufficient future sales.
There can be no assurance that we will successfullyachieve these objectives, and failure to do so could materially and adversely impact on our business, financial condition, and operating results.
We will need significant additional capital, which we may be unable to obtain.
Revenues from our operations are not currently sufficient to sustain our business, and we will require significant additional capital to continue operations. There is no assurance that additional financing will be available when needed or on terms acceptable to us. Failure to secure financing may require us to reduce or cease operations entirely.
We may seek capital through debt or equity financing. Equity financing is likely to dilute existing stockholders, and newly issued securities may include preferences, superior voting rights, or other terms favorable to new investors. Additionally, the issuance of warrants, convertible notes, or incentive equity awards may result in further dilution and non-cash expenses that negatively impact our financial condition.
Raising capital can also involve substantial costs, including investment banking, legal, and accounting fees, along with other related expenses. Market conditions, combined with our history of losses, may impair our ability to obtain financing or increase its cost.
Furthermore, we have outstanding convertible preferred stock with variable conversion prices, and certain prior investors may be entitled to make good shares. The conversion of such preferred stock into common stock will result in additional dilution to existing stockholders. If we are unable to raise sufficient capital or generate adequate revenues, we may be forced to further reduce operations or cease operations entirely.
We have incurred substantial indebtedness.
As of December 31, 2025, we had $2,617,692 in outstanding convertible promissory notes, including $597,944 in other current notes, and $2,019,748 in long-term notes. Many of these notes are convertible at a discount, which could dilute stockholders and impact on our stock price.
Our debt obligations may strain cash flow, limit funds for operations, and increase default risk if we cannot meet payment terms. High leverage may also reduce financial flexibility, restrict borrowing, and make it harder to compete.
We may incur additional debt, which could worsen these risks and further constrain our financial position.
Our profitability is dependent upon the growth of our current operations and the start-up of new business entities.
We expect that a significant portion of our future revenues to reach profitability will come from the increase in existing operations and new business ventures. Until we can successfully generate such revenues, we will continue to incur operating losses.
If we fail to develop these revenue streams, our financial condition, results of operations, and prospects will be materially and adversely affected.
We will need to increase the size of our organization and may experience difficulties in managing growth.
We operate as a small company with a minimal number of employees. To address potential growth and market opportunities, we anticipate a significant expansion in headcount, facilities, infrastructure, and overhead. This growth will place added responsibilities on management, including identifying, recruiting, integrating and retaining qualified personnel.
Our ability to compete effectively and improve future financial performance will depend, in part, on how successfully we manage this growth. Failure to do so could negatively impact on our operations and business prospects.
We may not successfully license our technology or commercialize our products, which could result in continued losses and may require us to curtail or cease operations.
We are currently developing our new business model, Water on Demand. However, we cannot predict when, or if, we will achieveprofitability. There is no assurance that we will develop our systems quickly enough to meet market demands or that our systems will gain market acceptance.
If we fail to successfully develop, commercialize, or achieve market adoption for the Water on Demand business model, we will continue to incur losses, which may require us to curtail or cease operations.
If a competitor were to achieve a business breakthrough, our operations and business could be adversely impacted.
Several businesses currently deliver turnkey “water-as-a-service” systems. If a competitor achieves a significant breakthrough, we may face difficulties attracting customers and generating sales. Competitors with greater resources, including capital, technology, or market presence, may gain a significant advantage, negatively impacting our competitive position.
Additionally, as we are the master licensee of limited current patents, we may not be able to prevent the development of competing technologies that use similar methods, materials, or procedures. These competitive pressures could limit our ability to attract customer licenses or generate royalties and fees, which could materially and adversely affect our business, financial condition, and results of operations.
Our long-term success depends on developing a novel outsourcing model, and we face the risks inherent in a performance-based business model.
While our engineering and technology divisions are profitable, our success relies on the development of Water On Demand, a new business in the Design-Build-Own-Operate sector. There is no assurance that we will generate revenue from the financing and management of these systems.
A significant portion of our revenue depends on the performance and oversight of these systems, as well as the successful operations of our operating partners. This exposes us to risks outside of our control, including:
Dependence on the management and operational capabilities of our partners; and
The cyclicality of supply and demand for end-products ties to this business model.
If our managed contracts fail to achieveprofitability, our payments may decline, adversely impacting our results of operations, cash flows, and financial condition. Such impacts could be material.
We rely on strategic partners.
We depend on strategic partners to manage our planned outsourced systems. If our partners do not view us as significant to their business, they may reduce their commitment to us, terminate their relationship, pursue competing partnerships, or develop or acquire competing processes. Any of these actions could materially and adversely affect our business, operations, and financial condition.
A lack of government subsidies may hinder the usefulness of our technology.
We assemble and sell complete engineered solutions and products utilizing the expertise of PWT. Government subsidies that benefit in the industries we serve can vary and may be reduced or eliminated, which could materially and adversely impact on our business. Similarly, more stringent regulations could increase compliance costs or create additional barriers, further negatively affecting our business operations and financial condition.
The industries in which we operate may endure deflationary cycles, affecting our ability to sell and license our systems.
Deflationary events, including industry sector downturns or economic collapses, could materially and adversely affect demand for our systems, limiting our ability to generate revenue from sales or licenses and negatively impacting our business, financial condition, and results of operations.
If we lose key employees and consultants or are unable to attract or retain qualified personnel, our business could suffer.
Our success relies heavily on attracting and retaining skilled scientific, engineering, and management professionals. We are particularly dependent on T. Riggs Eckelberry and Ken Berenger, CEO and Co-Founder of WODI, whose contributions have been integral to the development of our technology and business. The loss of either person could significantly impact our operations. As Mr. Eckelberry and Mr. Berenger do not have an employment agreement with us, there is no guarantee of their continued association.
The departure of either of these individuals, or other key personnel, could hinder our ability to compete, advance our technology, , and execute our business strategies effectively
Competition from other companies in our market may affect the market for our technology.
The entry of new companies into our market continues to increase competition. Established domestic and foreign companies with longer experience in prefabricated or modular water systems or DBOO models often have greater financial and operational resources. These competitors may benefit from superior capabilities in employee recruitment and retention, manufacturing, and marketing, providing them with a competitive edge. Additionally, competitors may strengthen their market positions through asset acquisitions and expansions. If we or our customers cannot compete effectively or respond to these competitive pressures, our operational results and financial condition could be materially affected.
Risks Related to Our Intellectual Property
Failure to establish, maintain and enforce intellectual property rights may negatively impact on our financial condition, operations and business.
Our ability to protect intellectual property acquired under the master license is crucial to our financial and operating performance. We rely on trade secrets, copyright laws, and external patent licensing, supplemented by confidentiality agreements and restrictions on disclosing proprietary know-how.
Although we protect our technology as trade secrets and technical know-how, these methods offer less legal protection than patents. Only patents can prevent others from using independently developed similar technology. Competitors gaining access to or surpassing our trade secrets through observation or other means could diminish their value.
Despite implementing systems to safeguard confidentiality, these measures may not provide sufficient protection. While we require employees, consultants, advisors, and partners to sign non-disclosure agreements, we cannot guarantee their effectiveness. Additionally, technology deployed at customer sites may be observable by third parties without non-disclosure agreements, limiting its protection as a trade secret.
Enforcing intellectual property rights is challenging and may require costlylitigation with uncertain outcomes, diverting resources and management attention.
The perceived strength of our intellectual property is critical to the value of our customer licenses. Failure to secure and enforce intellectual property could hinder customer acquisition and materially impact on our business, financial condition, and prospects.
Although we have filed various patent applications for some of our original technologies, some have been abandoned or transferred. In certain cases, we have opted to protect our intellectual property through a trade secrets policy.
Although we have filed various patent applications for some of our original technologies, some have been abandoned or transferred. In certain cases, we have opted to protect our intellectual property through a trade secrets policy.
We safeguard our intellectual property using a combination of patents and trade secrets. However, trade secrets do not provide the same level of protection as patents, and patents may not guarantee meaningful protection or commercial advantage. In the U.S., patents only offer protection for 20 years from the filing date, and delays in patent issuance reduce the enforcement period. Additionally, the claims in issued patents may not be broad enough to prevent others from developing similar technologies or achieving comparable results.
Our ability to license and exploit technology under our patents may also be constrained by the intellectual property rights of others. Numerous U.S. and foreign-issued patents and pending patent applications in our field may have priority over our applications, potentially leading to invalidation or limitations on our rights. Furthermore, our competitors could challenge the validity or enforceability of any patents that are issued by our applications.
These risks may impact on our ability to protect and commercialize our intellectual property effectively, which could have a material adverse effect on our business and operations.
We may face claims that we are violating the intellectual property rights of others.
We may encounter claims from direct competitors, other water companies, scientists, or research institutions asserting that our business models, technology, or the commercial use of such technology infringe on their intellectual property rights. As we have not conducted infringement, freedom-to-operate, or landscape analyses, we cannot be certain that our technologies and processes do not violate the rights of others. These claims may increase as we grow our market profile and begin generating revenue.
We may also face infringementclaims from employees, consultants, agents, or outside organizations involved in developing our technology. Although we have sought to protect ourselves through contractual provisions, these may not be sufficient, and these parties may claim full or partial ownership of the intellectual property in the technology they developed for us.
If we are found to infringe on others’ intellectual property rights, we could incur significant costs to implement work-around solutions, which may not be feasible or technically equivalent to our current technology. In such cases, we might need to license third-party intellectual property, which may not be available on acceptable terms or at all. Failure to resolve such issues could result in substantial monetary judgments or injunctions that might force us to cease operations.
Even if we are not infringing on others’ intellectual property rights, we could still incur substantial costs defending ourselves against such claims. Additionally, if our license agreements require us to indemnify our customer licenses for claims related to intellectual property infringement, we may bear significant costs defending and indemnifying them. These disputes, even if meritless, could divert management attention and resources. Parties bringing claims may have greater resources, potentially leading us to settle claims we might otherwise successfullydefend.
Any claimsalleging intellectual property infringement, whether against us or our customer licenses, could materially and adversely impact our financial condition, business operations, and results.
Risks Related to Our Common Stock
Our common stock may be diluted through the issuance of additional shares, convertible securities, warrants or options.
To raise capital, we have issued common stocks, convertible securities (such as convertible debentures, convertible preferred stock, and notes), and warrants, some of which include anti-dilution and similar protections. Additionally, we have issued incentive compensation to employees and directors. Shares of common stock are reserved for issuance upon the exercise of these securities, and we may increase the number of reserved shares in the future.
Issuing additional common stock, convertible securities, options, and warrants may reduce the percentage ownership of existing stockholders, apply downward pressure on the market price of our stock, trigger adjustments to the conversion and exercise prices of outstanding notes and warrants, and potentially obligate us to issue additional shares to certain stockholders. These actions could affect the rights of current stockholders and the overall value of our common stock.
Our chief executive officer holds the majority of the voting power of our shareholders.
T. Riggs Eckelberry, as the holder of our Series C Preferred Stock, controls 51% of the voting power of the Company’s shareholders. This gives Mr. Eckelberry the ability to determine the outcome of all shareholder matters, which may result in decisions that differ from the interests of other shareholders.
We have created various series of preferred stock and our articles of incorporation allow for our board to create additional new series of preferred stock without further approval by our stockholders, which could adversely affect the rights of the holders of our common stock.
Our Board of Directors has the authority to determine the rights and preferences of preferred stock and to issue additional shares without requiring approval from stockholders. This includes the creation of new series of preferred stock with preferential rights that could adversely affect the rights of common stockholders.
Our issuance of common stock upon conversion of preferred stock may dilute stockholder ownership.
We currently have an outstanding series of preferred stock convertible into common stock, including a series with variable conversion prices. In some cases, these entitlements include the issuance of make-good shares to certain prior investors (see Note 4 – Preferred Stock). The conversion of these preferred shares into common stock will dilute the holdings of existing common stockholders, which may negatively impact the market price of our common stock.
There is a limited public market for our common stock.
Our common stock is not listed on any national securities exchange, making it more difficult for investors to buy or sell shares compared to stocks traded on an exchange. While our common stock is quoted on the OTC Pink, this inter-dealer, over-the-counter market offers significantly less liquidity than national exchanges like the NASDAQ Capital Market.
The limited liquidity may adversely affect the trading volume and price of our common stock. Additionally, the lack of a national exchange listing may make our stock less appealing for margin loans, institutional investments, and use as consideration in future capital-raising transactions or other purposes.
The price of our common stock is volatile, which may lead to investment losses.
The market for our common stock is highly volatile, with significant fluctuations driven by factors such as quarterly variations in operating and financial results, as well as general economic and market conditions. Additionally, statements or changes in opinions, ratings, or earnings estimates from brokerage firms or industry analysts regarding our industry or company could adversely impact our stock price.
This volatility may result in investment losses for our stockholders. Historically, periods of significant stock price fluctuations have often led to securities class action litigation. If such litigation is brought against us, it could result in substantial legal costs and consume management’s time and resources, potentially impacting our operations.
Shares eligible for future sale may adversely affect the market.
Certain stockholders may sell their shares of common stock in the open market under Rule 144 of the Securities Act of 1933, as amended, subject to certain limitations. Generally, pursuant to Rule 144, non-affiliate stockholders may sell freely after six months, subject only to the current public information requirement. Affiliates, however, are subjected to additional restrictions, including volume limitations, manner of sale rules, (for equity securities), and notice requirements under Rule 144.
Substantial sales of our common stock under Rule 144 could negatively impact the market price of our shares, potentially causing a material adverse effect.
Our stock is subject to the penny stock rules, which may restrict resale and reduce liquidity.
Our common stock is classified as a “penny stock” under Section 15(g) and Rule 15g-9 of the Securities Exchange Act of 1934, as amended. Generally, a penny stock is any equity security with a market price below $5.00 per share, unless it meets specific exceptions such as being listed on a qualifying national securities exchange, issued by a registered investment company, or meeting SEC exemptions based on price or the issuer’s net tangible assets.
As a penny stock, our shares are subject to SEC rules that impose additional sales practice requirements on broker-dealers. These rules affect transactions involving individuals other than established customers or accredited investors, making it more burdensome for broker-dealers to trade our shares.
These restrictions may reduce the liquidity and trading volume of our common stock, potentially limiting resale opportunities and adversely affecting its market price.
Financial Industry Regulatory Authority, Inc. (“FINRA”) sales practice requirements may limit a shareholder’s ability to buy and sell our common shares.
In addition to the “penny stock” rules, the Financial Industry Regulatory Authority, Inc. (“FINRA”) has implemented rules requiring broker-dealers to ensure that recommended investments are suitable for their customers. Before recommending speculative, low-priced securities like our common stock to non-institutional customers, broker-dealers must make reasonable efforts to gather information about the customer’s financial status, tax status, investment objectives, and other relevant details.
FINRA has indicated that speculative, low-priced securities are often unsuitable for many customers. These requirements increase the difficulty for broker-dealers to recommend our stock, potentially restricting shareholders’ ability to buy or sell shares and negatively affecting the market for our stock.
If we fail to maintain effective internal controls over financial reporting, our stock price may be negatively impacted.
We are required to establish and maintain effective internal controls over financial reporting. Weaknesses or failures in these controls could adversely affect our ability to provide accurate and reliable public disclosures about our business, financial condition, and results of operations.
Management’s assessment of our internal controls may identify deficiencies that require correction or remediation, potentially raising concerns among investors. Any actual or perceived weaknesses in our internal controls or disclosures regarding their status could adversely affect investor confidence and, consequently, the market price of our common stock.
We are required to comply with certain provisions of Section 404 of the Sarbanes-Oxley Act of 2002 and if we fail to comply in a timely manner, our business could be harmed, and our stock price could decline.
Under Section 404 of the Sarbanes-Oxley Act, we are required to conduct an annual assessment of our internal controls over financial reporting. For certain issuers, this includes an attestation of the assessment by an independent registered public accounting firm. Meeting these evolving and complex standards involves significant documentation, testing, and remediation efforts, resulting in substantial ongoing expenses and resource allocation.
It is challenging to predict the time and cost required to assess and remediate our internal controls over financial reporting each year. Delays or difficulties in completing this process could prevent timely compliance. Although attestation requirements by our independent registered public accounting firm do not currently apply to us, we may become subject to them in the future, potentially leading to further challenges in implementing necessary changes.
If our Chief Executive Officer or Chief Financial Officer determines that our internal controls are not effective as defined under Section 404, we may face regulatory scrutiny or adverse market reactions. Such outcomes could negatively impact investor confidence and the market value of our stock.
We do not intend to pay dividends on our common stock.
We do not anticipate paying cash dividends on our common stock in the foreseeable future. Even if we have sufficient funds to legally pay dividends, our board of directors may choose, at its discretion, not to declare or pay dividends.
The declaration and amount of any future dividends will depend on various factors, including our operating results, cash flows, financial condition, capital requirements, and other considerations deemed relevant by our board of directors. Additionally, our outstanding series of preferred stock are entitled to dividends before any dividends can be paid to holders of our common stock.
Critical Accounting Policies
The SEC defines “critical accounting policies” as those requiring management’s most challenging, subjective or complex judgments, often involving estimates of inherently uncertain matters that may change over time.
While not all accounting policies involve such judgements or estimates, the following policies meet the SEC’s definition of critical accounting policy.
Recently Issued Accounting Pronouncements
Management adopted a recently issued accounting pronouncement during the year ended December 31, 2025, as disclosed in the Notes to the consolidated financial statements included in this report.
Revenue Recognition
We recognize revenue when services are performed, and at the time of shipment of products, provided that evidence of an arrangement exists, title and risk of loss have passed to the customer, fees are fixed or determinable, and collection of the related receivable is reasonably assured.
Revenues and related costs on construction contracts are recognized as the performance obligations for work are satisfied over time in accordance with Accounting Standards Codification (“ASC”) 606, Revenue from Contracts with Customers. Under ASC 606, revenue and associated profit, will be recognized as the customer obtains control of the goods and services promised in the contract (i.e., performance obligations). All un-allocable indirect costs and corporate general and administrative costs are charged to the periods as incurred. However, in the event a loss on a contract is foreseen, the Company will recognize the loss as it is determined. Revisions in cost and profit estimates during the course of the contract are reflected in the accounting period in which the facts for the revisions become known. Provisions for estimated losses on uncompleted contracts are made in the period in which such losses are determined. Changes in job performance, job conditions, and estimated profitability, including those arising from contract penalty provisions, and final contract settlements, may result in revisions to costs and income, which are recognized in the period the revisions are determined.
Use of Estimates
The preparation of the consolidated financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, and expenses, as well as the disclosure of contingent assets and liabilities. Actual results may differ from these estimates.
Significant estimates include evaluations of goodwill and long-lived asset impairments, revenue recognition for percentage-of-completion contracts, allowances for uncollectible accounts, inventory valuation, valuations of non-cash capital stock issuances, and valuation allowances on deferred tax assets. These estimates are based on historical experience and other assumptions deemed reasonable under the circumstances. They form the basis for management’s judgments regarding asset and liability carrying values. Changes in assumptions or conditions could result in materially different actual outcomes.
Fair Value of Financial Instruments
The fair value of financial instruments requires disclosure of fair value information, whether or not recognized in the balance sheet, when practicable to estimate.
As of December 31, 2025, the reported amounts for cash, prepaid expenses, accounts payable and accrued expenses approximate their fair value due to their short maturities.
Revenue and Cost of Sales
Revenue for the years ended December 31, 2025, and 2024 was $6,816,843 and $4,407,781 respectively. Cost of goods sold for the same periods was $5,195,767 and $2,903,053, respectively
Operating Expenses
Selling and Marketing Expenses
Selling and marketing expenses for the years ended December 31, 2025, and 2024 were $1,342,704 and $2,727,096, respectively. The increase was primarily due to higher marketing and promotional costs.
General and Administrative Expenses
General and administrative expenses for the years ended December 31, 2025, and 2024 were $3,601,418 and $4,973,454, respectively. The increase was due to higher personnel related expenses and outside services, including stock-based compensation.
Depreciation Expense
Depreciation expense for the years ended December 31, 2025, and 2024 was $22,363 and $81,037, respectively.
Other Income and Expense
Other (expense) decreased by $1,146,145 to $(10,698,835) for the year ended December 31, 2025, compared to $(11,844,980) for the year ended December 31, 2024. The change was driven by a $2,523,331 gain on remeasurement of derivative liabilities in 2025, compared to a $(6,908,567) loss in 2024, and a $(513,345 ) loss on extinguishment of payables in the current period versus a $30,646 gain in the prior year.
Net Loss
Our net loss decreased by $5,412,438 to $(13,558,351) for the year ended December 31, 2025, compared to a net loss of $(18,970,789) for the year ended December 31, 2024.
The reduction in net loss was largely due to lower total operating expenses and the swing in fair value adjustments to derivative liabilities, partially offset by higher cost of goods sold and interest expense.
These estimates are based on multiple inputs, including the market price of our stock, interest rates, stock price volatility, variable conversion prices defined in the respective agreements, and probabilities of certain outcomes based on management’s estimates. Because these inputs are subject to significant fluctuations, the estimated fair value of derivative liabilities will vary from period to period, and the impact may be material.
Liquidity and Capital Resources
Liquidity refers to the ability of a company to generate funds to support current and future operations, meet obligations, and maintain ongoing business operations. Key factors influencing liquidity include funds generated from operations, management of accounts receivable and payable, and capital expenditures.
The accompanying consolidated financial statements have been prepared assuming a going concern, which contemplates the continuity of operations and realization of assets and liabilities in the ordinary course of business. However, substantial doubt exists regarding our ability to continue as a going concern due to significant working capital and shareholders’ deficits.
As of December 31, 2025, we had cash of $828,007 compared to $371,515 as of December 31, 2024.
Our working capital deficit decreased to $(19,036,232) from $(45,437,508), primarily due to a decrease in convertible promissory notes and accrued expenses.
The shareholders’ deficit was $28,382,938 as of December 31, 2025.
Net cash used in operating activities was $(3,587,663) for the year ended December 31, 2025, compared to $(3,745,242) in 2024. The decrease was primarily due to changes in accrued expenses, contract liabilities, and working capital management.
Net cash used in investing activities was $(35,375) in 2025, compared to $(2,289,866) in 2024, primarily reflecting the purchase of SPAC notes payable.
Net cash provided by financing activities was $4,079,530 in 2025, compared to $5,917,792 in 2024, primarily from proceeds of secured promissory notes and preferred stock offerings.
Although proceeds from the issuance of convertible debt and revenue from operations are currently sufficient to fund near-term expenses, we will need to raise additional funds to expand our operations. Future financing may involve equity or debt securities, which could dilute existing stockholders or include senior rights. If we are unable to secure additional financing, we may need to reduce operations, curtail development plans, or cease operations entirely.
While management believes current resources, growing revenues, and the ability to raise funds will support operations in the immediate future, there is no assurance that these assumptions will materialize. Failure to obtain additional funding may limit our ability to sustain operations and meet obligations.
Recent Trends
Known trends, demands, commitments, events, or uncertainties that could reasonably affect the accuracy or reliability of reported financial information as an indicator of future operating results are discussed throughout this report.
Off-Balance Sheet Arrangements
We do not have any off-balance sheet arrangements that are reasonably likely to have a current or future effect on our financial condition, revenues, and results of operations, liquidity or capital expenditure.
