Brag House Holdings Inc(TBH) - 2025 Q2 - Quarterly Report

PART I Item 1. Condensed Consolidated Financial Statements (Unaudited) The unaudited condensed consolidated financial statements reflect improved equity, increased losses, and significant cash inflows post-IPO Condensed Consolidated Balance Sheets The balance sheets show a significant improvement in financial position, moving from a stockholders' deficit to a surplus post-IPO Condensed Consolidated Balance Sheets (Comparison) | Metric | June 30, 2025 (Unaudited) ($) | December 31, 2024 ($) | | :--- | :--- | :--- | | Assets | | | | Cash | $1,548,645 | $29,228 | | Total Current Assets | $1,864,989 | $82,227 | | Total Assets | $2,254,160 | $1,301,528 | | Liabilities & Stockholders' Equity | | | | Total Current Liabilities | $1,353,425 | $9,757,813 | | Total Liabilities | $1,353,425 | $9,757,813 | | Total Stockholders' Equity (Deficit) | $900,735 | ($8,456,285) | - The company's financial position improved significantly, moving from a stockholders' deficit of ($8.46 million) at the end of 2024 to a surplus of $0.90 million by June 30, 2025, driven by convertible debt conversion and IPO proceeds[14] - Total liabilities decreased dramatically from $9.76 million to $1.35 million, primarily due to the conversion of convertible debt into equity following the IPO[14] Condensed Consolidated Statements of Operations and Comprehensive Loss The statements of operations indicate no revenue and a higher net loss, primarily due to increased operating expenses post-IPO Statements of Operations Highlights (Six Months Ended June 30) | Metric | 2025 ($) | 2024 ($) | | :--- | :--- | :--- | | Total Revenues | $0 | $55 | | Total Operating Expenses | $2,226,205 | $640,417 | | Net Loss | ($2,772,890) | ($1,991,124) | | Net Loss per Share | ($0.30) | ($0.35) | Statements of Operations Highlights (Three Months Ended June 30) | Metric | 2025 ($) | 2024 ($) | | :--- | :--- | :--- | | Total Revenues | $0 | $0 | | Total Operating Expenses | $1,641,735 | $408,612 | | Net Loss | ($1,705,217) | ($956,963) | | Net Loss per Share | ($0.16) | ($0.17) | - Operating expenses for the six months ended June 30, 2025, increased significantly to $2.23 million from $0.64 million in the prior year period, driven by higher advertising, legal, professional, and SG&A costs following the company's IPO[15] Condensed Consolidated Statements of Cash Flows The cash flow statement highlights significant cash inflows from financing activities, primarily from the IPO, offsetting operational cash usage Cash Flow Summary (Six Months Ended June 30) | Metric | 2025 ($) | 2024 ($) | | :--- | :--- | :--- | | Net Cash Used In Operating Activities | ($3,226,885) | ($184,534) | | Net Cash Provided By Financing Activities | $4,746,302 | $158,818 | | Net change in cash | $1,519,417 | ($25,716) | | Cash at end of period | $1,548,645 | $8,173 | - Financing activities provided $4.75 million in cash, primarily from the $6.79 million gross proceeds from the IPO, net of offering costs[19] - A significant non-cash financing activity was the conversion of $6.77 million of convertible debt and accrued interest into common stock[19] Notes to Condensed Consolidated Financial Statements (Unaudited) The notes detail the IPO, 'going concern' warning, amended technology agreements, debt conversion, and a subsequent PIPE financing - Going Concern: The company has an accumulated deficit of $17.4 million as of June 30, 2025, and has incurred recurring net losses and negative cash flows, raising substantial doubt about its ability to continue as a going concern for the next twelve months[31][35] - Initial Public Offering (IPO): The company completed its IPO on March 7, 2025, raising gross proceeds of $5.9 million from the initial sale and an additional $0.89 million from the over-allotment option, for total net proceeds of approximately $5.6 million after underwriting discounts and expenses[26][29][102] - Technology Agreements: In May 2025, the company amended its agreements with Artemis and EVEMeta, paying $0.25 million in cash to eliminate a minimum share price guarantee, which settled a stock-based compensation liability and resulted in a $0.13 million other expense[60][95][96] - Debt Conversion: Upon the IPO in March 2025, the entire balance of convertible debt and accrued interest, totaling approximately $6.7 million, was converted into 1,912,176 shares of common stock[137] - Subsequent Event - PIPE Financing: On July 24, 2025, the company entered into an agreement for a private placement (PIPE) to sell 15,000 units of Series B Convertible Preferred Stock and warrants for total gross proceeds of $15 million[33][167] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses its college gamer market strategy, post-IPO operational results, liquidity concerns, and acknowledged material weaknesses - The company's business strategy focuses on creating a community-driven gaming platform for casual college gamers, with a monetization plan based on brand partnerships and a scalable data insights SaaS model, with a beta version expected in Q1 2026[169][175] - A strategic partnership with Learfield was initiated in May 2025, aiming to leverage Learfield's college network to generate sponsorship revenue and access data for the company's evolving data insight model[174][201] Comparison of Operating Results (Six Months Ended June 30) | Metric | 2025 ($) | 2024 ($) | | :--- | :--- | :--- | | Revenue | $0 | $55 | | Operating Expenses | $2,226,205 | $640,417 | | Net Loss | ($2,772,890) | ($1,991,124) | - The increase in operating expenses in 2025 is attributed to higher spending on SG&A, legal, professional, marketing, and software development as the company scaled operations following its March 2025 IPO[189] - Management acknowledges material weaknesses in internal controls related to cash disbursements, income tax accounting, complex debt/equity transactions, and cybersecurity, and has initiated a remediation plan[211][229] - Despite raising funds through its IPO, the company's recurring losses and negative cash flows raise substantial doubt about its ability to continue as a going concern, with future operations dependent on generating revenue and potentially raising more capital[197][224][226] Item 3. Quantitative and Qualitative Disclosures About Market Risk The company does not hold derivative instruments or engage in hedging activities - The company does not hold derivative instruments or engage in hedging activities[228] Item 4. Controls and Procedures Management concluded disclosure controls were ineffective as of June 30, 2025, due to material weaknesses, with no material changes - As of June 30, 2025, the company's disclosure controls and procedures were determined to be ineffective[229] - The ineffectiveness is due to material weaknesses in several areas, including: review of cash disbursements, controls over income tax accounts, recording of complex debt/equity transactions, and lack of cybersecurity policies[229] - No material changes were made to the company's internal control over financial reporting during the quarter ended June 30, 2025[231] PART II Item 1. Legal Proceedings The company reports no pending or threatened legal proceedings that could materially affect the business - There are no material legal proceedings pending or threatened against the company[233] Item 1A. Risk Factors The company requested an investigation into potential illegal naked short selling of its stock, with the outcome pending - On May 14, 2025, the company requested an investigation by regulators (SEC, FINRA, Nasdaq) into potential illegal naked short selling of its stock[234] - The outcome of the investigation request is pending[234] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds The company reports no unregistered sales of equity securities during the period that were not previously reported - There were no unregistered sales of equity securities during the quarter that have not been previously reported[235] Item 3. Defaults Upon Senior Securities This item is not applicable - Not applicable[238] Item 4. Mine Safety Disclosures This item is not applicable - Not applicable[238] Item 5. Other Information This item is not applicable - Not applicable[239] Item 6. Exhibits This section lists the exhibits filed with the Form 10-Q, including CEO and CFO certifications and XBRL data files - The report includes required certifications from the CEO and CFO pursuant to Sarbanes-Oxley Sections 302 and 906[241] - Amendments to the Master Services Agreement and EVEMeta Agreement are referenced as exhibits[241]