Vertical Data Inc. 10-Q

ITEM 1. FINANCIAL STATEMENTS VERTICAL DATA INC. CONSOLIDATED BALANCE SHEETS (UNAUDITED AS OF MARCH 31, 2026 AND AUDITED AS OF SEPTEMBER 30, 2025) As of March 31, As of September 30, 2026 2025 ASSETS Current assets: Cash $ 3,498,427 $ 372,718 Restricted cash 1,200,000 - Prepaid expenses 6,468,024 144,994 Total current assets 11,166,451 517,712 Property and equipment, net 1,276 1,457 Total assets $ 11,167,727 $ 519,169 LIABILITIES AND EQUITY Current liabilities: Accrued liabilities $ 138,449 $ 252,058 Contract liability 11,200,000 - Insurance premium financing payable 87,500 - Total current liabilities 11,425,949 252,058 Total liabilities 11,425,949 252,058 Equity: Common stock, $ 0.0001 par value, 100,000,000 shares authorized; 12,093,741 and 41,193,052 shares issued and outstanding at March 31, 2026 and September 30, 2025, respectively. 1,209 4,119 Additional paid in capital 5,893,882 4,433,669 Accumulated deficit ( 6,153,313 ) ( 4,170,677 ) Total equity (deficit) ( 258,222 ) 267,111 Total liabilities and equity $ 11,167,727 $ 519,169 The accompanying notes are an integral part of these financial statements. F- 1 VERTICAL DATA INC. UNAUDITED CONSOLIDATED STATEMENT OF OPERATIONS (UNAUDITED) 2026 2025 2026 2025 Three Months Ended March 31, Six Months Ended March 31, 2026 2025 2026 2025 Revenue $ 568,000 $ - $ 625,000 $ 3,666,000 Cost of goods sold 434,000 - 482,900 3,598,000 Gross margin $ 134,000 $ - 142,100 68,000 Operating expenses: General and administrative 1,464,001 1,404,996 2,124,736 2,310,454 Total operating expenses 1,464,001 1,404,996 2,124,736 2,310,454 Loss from operations ( 1,330,001 ) ( 1,404,996 ) ( 1,982,636 ) ( 2,242,454 ) Net loss $ ( 1,330,001 ) $ ( 1,404,996 ) $ ( 1,982,636 ) $ ( 2,242,454 ) Net loss per common share: Basic and diluted $ ( 0.12 ) $ ( 0.03 ) $ ( 0.17 ) $ ( 0.06 ) Weighted average common shares outstanding: Basic and diluted 11,415,281 40,948,719 11,812,693 39,974,129 The accompanying notes are an integral part of these financial statements. F- 2 VERTICAL DATA INC. UNAUDITED CONSOLIDATED STATEMENT OF SHAREHOLDERS’ EQUITY (UNAUDITED) # of Shares Amount APIC Deficit Total Common Stock Accumulated # of Shares Amount APIC Deficit Total September 30, 2024 38,397,052 3,839 1,102,685 ( 350,599 ) 755,925 Issuance of common stock 2,186,000 219 1,093,181 - 1,093,400 Stock-based compensation - - 464,118 - 464,118 Net loss - - - ( 837,458 ) ( 837,458 ) December 31, 2024 40,583,052 4,058 2,659,984 ( 1,188,057 ) 1,475,985 Issuance of common stock 610,000 61 304,939 - 305,000 Stock-based compensation - - 980,614 - 980,614 Net loss - - - ( 1,404,996 ) ( 1,404,996 ) March 31, 2025 41,193,052 4,119 3,945,537 ( 2,593,053 ) 1,356,603 September 30, 2025 41,193,052 4,119 4,433,669 ( 4,170,677 ) 267,111 Issuance of common stock 364,000 36 181,964 - 182,000 Common stock cancellation ( 31,752,690 ) ( 3,175 ) 3,175 - - Stock-based compensation - - 266,076 - 266,076 Net loss - - - ( 652,635 ) ( 652,635 ) December 31, 2025 9,804,362 980 4,884,884 ( 4,823,312 ) 62,552 Balance 9,804,362 980 4,884,884 ( 4,823,312 ) 62,552 Issuance of common stock 2,289,379 229 104,771 - 105,000 Employee stock-based compensation - - 852,694 - 852,694 Non-employee stock-based compensation - - 51,533 - 51,533 Net loss - - - ( 1,330,001 ) ( 1,330,001 ) March 31, 2026 12,093,741 1,209 5,893,882 ( 6,153,313 ) ( 258,222 ) Balance 12,093,741 1,209 5,893,882 ( 6,153,313 ) ( 258,222 ) The accompanying notes are an integral part of these unaudited financial statements. F- 3 VERTICAL DATA INC. UNAUDITED CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED) 2026 2025 Six Months Ended March 31, 2026 2025 Cash flows from operating activities: Net loss $ ( 1,982,636 ) $ ( 2,242,454 ) Adjustments to reconcile net (loss) income to net cash used in operating activities Employee stock-based compensation 1,118,770 1,444,732 Non-employee stock-based compensation 51,533 - Depreciation expense 181 150 Changes in operating assets and liabilities: Prepaid expenses ( 6,210,530 ) ( 96,885 ) Other current assets - 664,000 Accrued liabilities ( 113,609 ) ( 97,390 ) Contract liability 11,200,000 - Other current liabilities - ( 224,000 ) Net cash provided by (used in) operating activities $ 4,063,709 $ ( 551,847 ) Cash flows from investing activities: Purchase of property and equipment - ( 459 ) Net cash used in investing activities $ - $ ( 459 ) Cash flows from financing activities: Issuance of common stock 287,000 1,398,400 Payments on insurance premium financing payable ( 25,000 ) - Net cash provided by financing activities $ 262,000 $ 1,398,400 Net change in cash, cash equivalents and restricted cash $ 4,325,709 $ 846,094 Cash, cash equivalents and restricted cash, beginning of period 372,718 427,722 Cash, cash equivalents and restricted cash, end of period $ 4,698,427 $ 1,273,816 Cash, cash equivalents and restricted cash reconciliation: Cash and cash equivalents $ 3,498,427 $ 1,273,816 Restricted cash 1,200,000 - Total cash, cash equivalents and restricted cash $ 4,698,427 $ 1,273,816 Supplemental disclosures of cash flow information: Cash paid for interest $ 1,037 - Cash paid for taxes - - Supplemental disclosures of non-cash investing and financing activities: Insurance premiums financed with issuance of a liability $ 112,500 - The accompanying notes are an integral part of these unaudited financial statements. F- 4 VERTICAL DATA INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. NATURE OF OPERATIONS Vertical Data Inc. (the “Company”) was incorporated in Nevada on May 3, 2024 and has a fiscal year-end of September 30. The Company’s current service to its customers is comprised solely of the sale of artificial intelligence related hardware. The Company plans to expand its service offerings in the future to include technology consulting, design and engineering, project management, systems integration, system installation and facilities management. The Company’s corporate office is located in Las Vegas, Nevada. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND NEW ACCOUNTING STANDARDS The accompanying notes to the Company’s unaudited interim financial statements have been prepared in accordance with the requirements of ASC 270, Interim Reporting and Article 8 of Regulation S-X. To that extent, footnote disclosure which would substantially duplicate the disclosure contained in the Company’s latest audited financial statements has been omitted. In the opinion of management, these unaudited interim consolidated financial statements include all adjustments and accruals, consisting only of normal, recurring adjustments that are necessary for a fair statement of the results of all interim periods reported herein. The results of the interim periods are not necessarily indicative of the results expected for the full fiscal year or any other interim period or any future year or period. Basis of Presentation The accompanying financial statements have been prepared using the accrual basis of accounting in accordance with generally accepted accounting principles (“GAAP”) promulgated in the United States of America. The financial statements include Vertical Data Inc. and its subsidiaries Vertical Data Nordic and VDCA Inc. as of March 31, 2026. Vertical Data Nordic and VDCA Inc. were recently established in Sweden and Canada, respectively, for the purpose of conducting business operations in those countries. The entities did not commence principal operations as of March 31, 2026. The Company’s fiscal year-end is September 30. Use of Estimates The preparation of financial statements in conformity with U.S. GAAP requires the Company’s management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statement and the reported amounts of revenues and expenses during the reporting period. Making estimates requires management to exercise significant judgment. It is at least reasonably possible that the estimate of the effect of a condition, situation or set of circumstances that existed at the date of the financial statements, which management considered in formulating its estimate, could change in the near term due to one or more future confirming events. The Company bases its estimates on historical experience and on various assumptions that are believed to be reasonable, the results of which form the basis for the amounts recorded in the financial statements. Recognition of Revenue from Contracts with Customers The Company recognizes revenue from its contracts with customers in accordance with the core principle outlined in ASC 606 Revenue from Contracts with Customers . Specifically, the Company recognizes revenue “to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which we expect to be entitled in exchange for those goods or services”. To that extent, the Company recognizes revenue in accordance with the ASC Topic by applying the following five steps: ● Step 1-Identify the contract(s) with a customer ● Step 2-Identify the performance obligations in the contract ● Step 3-Determing the transaction price ● Step 4-Allocate the transaction price to the performance obligations in the contract ● Step 5-Recognize revenue when (or as) the Company satisfies a performance obligation F- 5 The Company’s contracts with its customers currently only contain a single performance obligation comprised solely of the sale of IT equipment. To that extent, the Company does not provide any installation or customization services at this time that might be considered a separate performance obligation. Further, as noted above, revenue is recognized at a point in time upon delivery of the equipment to the customer at the agreed upon location. The Company does not currently extend any form of payment terms to its customers and, as such, full payment for the equipment is received from the customer (via wire payment) immediately upon delivery of the equipment. The Company will recognize a contract liability to the extent it receives consideration from a customer prior to providing the equipment. During the interim period ended March 31, 2026, the Company received an $ 11.2 million customer prepayment primarily related to the future sale of computer equipment to the customer. The Company expects to recognize the amount to revenue during its interim period ended June 30, 2026. Restricted Cash The Company presents cash and cash items that are restricted as to withdrawal and usage as restricted cash on its consolidated balance sheet. As of March 31, 2026, the Company classified $ 1.2 . million in cash as restricted cash as the Company was legally obligated to use the amount to purchase computer equipment from a vendor for an existing customer. Segments The Company currently reports under a single operating segment, which constitutes all of the consolidated entity. Further, the Company’s CODM, which is its CEO, reviews the entity-wide operating results and performance. As such, the measure of profit or loss for the segment is net loss as presented in our consolidated statement of operations. Recent Accounting Pronouncements In November 2023, the FASB issued Accounting Standards Update (“ASU”) 2023-07, Segment Reporting—Improvements to Reportable Segment Disclosures (“ASU 2023-07”), which requires incremental disclosures related to a public entity’s reportable segments. Required disclosures include, on an annual and interim basis, significant segment expenses that are regularly provided to the CODM and included within each reported measure of segment profit or loss, an amount for other segment items (which is the difference between segment revenue less segment expenses and less segment profit or loss) and a description of its composition, the title and position of the CODM, and an explanation of how the CODM uses the reported measure(s) of segment profit or loss in assessing segment performance and deciding how to allocate resources. The standard also permits disclosure of more than one measure of segment profit. ASU 2023-07 is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. The Company adopted the new standard on September 30, 2025. The adoption of the new standard did not have a material impact to our financial statements. In November 2024, the FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40). The amendments in this update require disclosure, in the notes to financial statements, of specified information about certain costs and expenses at each interim and annual reporting period. The amendments are effective for annual periods beginning after December 15, 2026, and reporting periods beginning after December 15, 2027, with early adoption permitted. The Company is currently evaluating the impact of the new ASU to its financial statements. 3. PREPAID EXPENSES Prepaid expenses consisted of the following: SCHEDULE OF PREPAID EXPENSES March 31, 2026 September 30, 2025 Prepaid commissions $ 171,625 $ 132,625 Vendor deposits 6,170,718 - Prepaid insurance 125,000 - Other 681 12,369 Prepaid expenses $ 6,468,024 $ 144,994 As of March 31, 2026 and September 30, 2025, prepaid expenses totaled $ 6,468,024 and $ 144,994 , respectively. Vendor deposits of $ 6,170,718 as of March 31, 2026 represent payments made to the Company’s equipment vendor for the settlement of contract liabilities related to future purchase of equipment for its customers. The Company did not receive the equipment as of the March 31, 2026 balance sheet date. F- 6 4. PROPERTY AND EQUIPMENT Property and equipment consisted of the following: SCHEDULE OF PROPERTY AND EQUIPMENT Description March 31, 2026 September 30, 2025 Tools, machinery, and equipment $ 1,811 $ 1,811 Less – accumulated depreciation ( 535 ) ( 354 ) Total property and equipment, net $ 1,276 $ 1,457 Total depreciation expense was $ 91 and $ 181 for three and six months ended March 31, 2026, respectively, and $ 83 and $ 150 for the three and six months ended March 31, 2025, respectively. 5. ACCRUED LIABILITIES Accrued liabilities consisted of the following: SCHEDULE OF ACCRUED LIABILITIES March 31, 2026 September 30, 2025 Wages accrual $ 48,000 $ 102,397 Expenses accrual 82,306 131,115 Credit card accrual 8,143 18,546 Total accrued liabilities $ 138,449 $ 252,058 6. INSURANCE PREMIUM FINANCING PAYABLE On January 30, 2026, the Company entered into a premium financing agreement to fund an annual Director and Officer (D&O) insurance policy. The agreement provided for a total financed amount of $ 112,500 , representing the premium balance after a down payment of $ 37,500 . The note carries a finance charge of $ 4,667 , resulting in total obligation of $ 117,167 . The note is payable in 9 equal monthly installments of $ 13,019 , maturing on October 30, 2026. The total finance charge of $ 4,667 is amortized as interest expense over the term of the agreement within general and administrative in the statement of operations. As of March 31, 2026, the outstanding principal balance of this note, net of unamortized discount, was $ 87,500 . 7. STOCKHOLDERS’ EQUITY Upon formation, the authorized capital of the Company was 100,000,000 shares consisting of 100,000,000 shares of common stock, par value $ 0.0001 . Common Stock The Company’s common shares do not include any dividend or liquidation preferences, participation rights, call prices or unusual voting rights. Common Stock Issuances During the three months ended March 31, 2026, the Company sold 280,000 shares of Company stock in an unregistered offering for net proceeds of $ 40,000 . During the six months ended March 31, 2026, the Company sold 644,000 shares of Company stock in an unregistered offering for net proceeds of $ 222,000 . Share Cancellation During October of 2025, certain founders and other Company shareholders voluntarily surrendered an aggregate of 31,752,690 shares of Common Stock to the Company for no consideration. The cancellation was not given retroactive effect on the balance sheet as, pursuant to SAB Topic 4.C, it was not a stock dividend, stock split or reverse split. Stock Option Cancellations During October of 2025, the Company cancelled 2,426,488 stock options that were issued to five individuals. The Company recorded an immaterial amount of incremental stock-based compensation expense related to these cancellations. F- 7 Stock Option Exercises During January of 2026, a total of 1,300,000 stock options were exercised at a weighted average exercise price of $ 0.05 , resulting in proceeds of $ 65,000 . During January of 2026, a total of 788,199 stock options were exercised. These stock options were exercised as a cashless exercise whereby the consideration provided for exercise was forfeiture of 78,820 shares, resulting in net shares issued of 709,379 . Common Stock to be Issued for Services Provided During the three months ended March 31, 2026, the Company entered into agreements with various service providers to settle existing obligations through the future issuance of 864,900 shares resulting in the settlement of liabilities totaling $ 432,450 . No gain or loss was recognized from recognition of the transaction. During the three months ended March 31, 2026, the Company entered into a agreements with two employees for the payment of bonuses through the future issuance of 360,000 shares resulting in the settlement of liabilities totaling $ 180,000 . No gain or loss was recognized from the transaction. During the three months ended March 31, 2026, the Company entered into an agreement with a service provider for to settle an existing obligation through the future issuance of 103,065 shares resulting in the settlement of liabilities totaling $ 51,533 . No gain or loss was recognized from recognition of the transaction. 8. SUBSEQUENT EVENTS In accordance with ASC 855 Subsequent Events , the Company has evaluated events and transactions subsequent to March 31, 2026 through the date these financial statements were issued. Management did not identify any subsequent events that would require disclosure in these consolidated financial statements. F- 8