Brag House Holdings Inc(TBH) - 2025 Q1 - Quarterly Report

PART I - FINANCIAL INFORMATION This section presents the unaudited condensed consolidated financial statements and related disclosures for the company Item 1. Condensed Consolidated Financial Statements (Unaudited) Q1 2025: zero revenue, $1.07 million net loss; post-IPO financial improvement, but going concern risk persists Condensed Consolidated Balance Sheets Post-IPO, balance sheet improved: cash to $3.46 million, liabilities reduced to $2.10 million Condensed Consolidated Balance Sheet Highlights (Unaudited) | Metric | March 31, 2025 (USD) | December 31, 2024 (USD) | | :--- | :--- | :--- | | Assets | | | | Cash | $3,458,017 | $29,228 | | Total Current Assets | $3,548,604 | $82,227 | | Total Assets | $3,708,944 | $1,301,528 | | Liabilities & Equity | | | | Total Current Liabilities | $2,102,249 | $9,757,813 | | Total Liabilities | $2,102,249 | $9,757,813 | | Total Stockholders' Equity (Deficit) | $1,606,695 | $(8,456,285) | Condensed Consolidated Statements of Operations and Comprehensive Loss Q1 2025: no revenue, $1.07 million net loss, primarily due to increased operating expenses Statement of Operations Summary (Unaudited) | Metric | Three Months Ended Mar 31, 2025 (USD) | Three Months Ended Mar 31, 2024 (USD) | | :--- | :--- | :--- | | Total Revenues | $0 | $55 | | Total Operating Expenses | $584,470 | $232,014 | | Interest Expense | $438,709 | $802,153 | | Net Loss | $(1,067,673) | $(1,034,161) | | Net Loss per Share | $(0.14) | $(0.18) | Condensed Consolidated Statements of Cash Flows Q1 2025: $1.77 million cash used in operations, offset by $5.20 million IPO financing, cash balance at $3.46 million Cash Flow Summary (Unaudited) | Metric | Three Months Ended Mar 31, 2025 (USD) | Three Months Ended Mar 31, 2024 (USD) | | :--- | :--- | :--- | | Net Cash (Used In) Provided By Operating Activities | $(1,767,013) | $56,348 | | Net Cash Provided By Financing Activities | $5,195,802 | $72,844 | | Net change in cash | $3,428,789 | $129,192 | | Cash at the end of the period | $3,458,017 | $163,081 | - The company completed its IPO, raising $6,785,000 in proceeds. After accounting for offering costs, this was the primary source of financing during the quarter[20] - A significant non-cash financing activity was the conversion of $6,611,405 in convertible debt and accrued interest into common stock upon the IPO[20] Notes to the Condensed Consolidated Financial Statements (Unaudited) Notes detail esports business, March 2025 IPO ($6.8 million raised), persistent going concern risk, and stock-based tech agreements - The company completed its IPO on March 7, 2025, selling 1,475,000 shares at $4.00 per share, with an additional 221,250 shares sold to cover over-allotments, raising total gross proceeds of approximately $6.79 million[27][30][94] - Management has identified substantial doubt about the company's ability to continue as a going concern due to its history of net losses and negative cash flows from operations. Future operations are dependent on generating sufficient revenue or raising additional capital[32][35] - The company entered into technology purchase agreements with Artemis and EVEMeta, issuing a combined 1,250,000 shares valued at $5 million as consideration for software development and licensing. These agreements include a minimum value guarantee, creating a stock-based compensation liability[80][81] - In connection with the IPO, the entire outstanding balance of convertible debt and accrued interest, totaling $6,611,405, was converted into 1,912,176 shares of common stock[125] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses college esports platform strategy, Learfield partnership, planned SaaS model, and reiterates going concern risks - The company's business strategy is to operate a vertically integrated platform for casual college gamers, creating community-driven experiences to attract the Gen Z audience and brand sponsors[162][163] - A strategic partnership with Learfield was secured for 2025 events, aiming to leverage its college network for sponsorship revenue and data insights. The first activation occurred in May 2025[167][185] - Post-IPO, the company is developing a scalable data insights monetization SaaS model, with a beta version anticipated in Q1 2026, intended to create a recurring revenue stream[168] - Management acknowledges that historical losses and minimal revenue raise substantial doubt about the company's ability to continue as a going concern for the next twelve months. If adequate funds are not available, the company may need to curtail or cease operations[189][206][208] Item 3. Quantitative and Qualitative Disclosures About Market Risk The company has minimal market risk exposure, holding no derivative instruments and engaging in no hedging activities - The company does not hold derivative instruments or engage in hedging activities[210] Item 4. Controls and Procedures Disclosure controls were ineffective as of March 31, 2025, due to material weaknesses in cash, tax, complex transactions, and cybersecurity - Disclosure controls and procedures were concluded to be ineffective as of March 31, 2025[211] - Material weaknesses were identified in several areas, including: review of cash disbursements, controls over income tax accounts, accounting for complex transactions, and lack of cybersecurity policies[211] PART II - OTHER INFORMATION This section covers legal proceedings, risk factors, equity sales, and other required disclosures Item 1. Legal Proceedings There are no material pending or threatened legal proceedings against the company or its officers - There are no material legal proceedings pending or threatened against the company[215] Item 1A. Risk Factors New risks: Nasdaq minimum bid deficiency, late 10-Q filing, and request for investigation into potential naked short selling - On May 15, 2025, the company received a deficiency letter from Nasdaq for its stock price falling below the $1.00 minimum bid requirement for 30 consecutive business days[216] - The company has a 180-day grace period, until November 11, 2025, to regain compliance by having its closing bid price meet or exceed $1.00 for at least ten consecutive business days[218] - On May 14, 2025, the company requested that the SEC, FINRA, and Nasdaq investigate potential illegal naked short selling of its stock[222] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds No unregistered sales of equity securities occurred during the reporting period - There were no unregistered sales of equity securities during the period covered by the report[223] Item 3. Defaults Upon Senior Securities This item is not applicable as the company has no defaults on senior securities to report Item 4. Mine Safety Disclosures This item is not applicable to the company's operations Item 5. Other Information This item is not applicable as the company has no other information to report Item 6. Exhibits This section indexes exhibits filed with or incorporated by reference into the Form 10-Q, including corporate governance and material agreements