Executive Summary / Key Takeaways

• Two Hands Corporation (OTC: TWOH) is undergoing a dramatic strategic pivot, having exited its legacy grocery distribution business in early 2025 and actively seeking a new, undefined business direction.
• The company faces severe financial distress, evidenced by zero revenue in Q1 2025 from its prior operations, a net loss of $330,432, negative operating cash flow of $198,079, a stockholders deficit of $3.90 million, and an accumulated deficit of $94.85 million as of March 31, 2025.
• A going concern warning highlights substantial doubt about TWOH's ability to continue operations for the next year, dependent on its ability to raise significant additional capital.
• Funding is currently reliant on cash advances from related parties and new, potentially dilutive financing arrangements, as a primary lender has ceased providing funds.
• The investment thesis is highly speculative, hinging entirely on the company's success in identifying a viable new business, securing substantial funding in a challenging financial state, and executing flawlessly on an as-yet-unknown plan, while navigating significant dilution risk and internal control weaknesses.

A History of Pivots and the Search for a Sustainable Model

Two Hands Corporation, initially founded in 2009, has a history marked by strategic shifts in pursuit of a viable business model. The company first ventured into mobile applications, launching co-parenting and 'Gone' apps between 2018 and 2019, but ceased work on these by 2021. A significant pivot then led TWOH into the burgeoning grocery market, focusing on online delivery (gocart.city), brick-and-mortar retail (Grocery Originals), and wholesale distribution (Cuore Food Services) starting in 2020-2021. This period saw the company generate revenue from these operations.

However, this grocery focus proved temporary. In May 2024, TWOH sold the assets of its gocart.city and Grocery Originals segments, including the e-commerce platform and physical store components. The company continued solely with its Cuore Food Services wholesale distribution branch. This, too, was short-lived. In January 2025, management announced a decision to strategically reposition the company outside of wholesale food distribution and began taking steps to transition away from this legacy business. This history of shifting focus underscores a fundamental challenge: finding and executing a business model capable of achieving sustained profitability and scale.

The Current State: A Business in Transition

As of the first quarter ended March 31, 2025, Two Hands Corporation was effectively a company without active revenue-generating operations from its historical segments. The financial statements for this period show zero sales, cost of goods sold, or gross profit, a stark contrast to the $163,477 in sales and $14,989 in gross profit generated in the same period of 2024 from the now-exited grocery businesses.

The company is currently in a phase of seeking its next direction. This search is not without cost; the Q1 2025 results show $99,000 in professional fees expended on due diligence related to a potential new business in artisan crafted denim and premium combed Pima cotton yarns. Notably, the company discontinued these plans after the quarter ended, illustrating the exploratory, and currently uncertain, nature of its strategic repositioning efforts.

Financial Performance: A Picture of Distress

The financial health of Two Hands Corporation presents a significant challenge. For the three months ended March 31, 2025, the company reported a net loss of $330,432. While this is an improvement from the $782,146 net loss in Q1 2024 (which included a large loss on debt settlement), it reflects ongoing operating expenses without corresponding revenue. Total operating expenses for Q1 2025 were $257,069, down from $305,190 in Q1 2024, primarily due to lower salaries, benefits, and consulting fees, but partially offset by the aforementioned increase in professional fees related to exploring new ventures.

Looking at the balance sheet as of March 31, 2025, the picture is one of severe constraint. The company held only $2,752 in cash. Total current assets were $30,222, dwarfed by total current liabilities of $3.94 million, resulting in a working capital deficiency of $3.91 million. The company's total liabilities stood at $3.94 million, against total assets of just $39,933. This has led to a stockholders deficit of $3.90 million and an accumulated deficit reaching $94.85 million. These figures underscore a precarious financial position built up over years of losses.

Operating cash flow remains negative, with $198,079 used in operating activities during Q1 2025. This negative cash flow, combined with the accumulated deficit and negative equity, forms the basis for the substantial doubt about the company's ability to continue as a going concern, as highlighted by the going concern warning.

Liquidity, Financing Challenges, and Dilution

The going concern warning is perhaps the most critical aspect of TWOH's current situation. The company is entirely dependent on raising additional capital to fund its operations and pursue any new business plan. Current funding relies on cash advances from the Chief Executive Officer, note holders, shareholders, and others. However, there are no oral or written agreements guaranteeing future advances from these parties. Compounding this, the lender for a significant Line of Credit (which stood at $850,972 including interest as of March 31, 2025) indicated they would no longer provide further advances commencing in 2025.

Subsequent events after the quarter highlight the ongoing financing efforts and their implications. On April 14, 2025, the Line of Credit lender converted the entire outstanding balance of $850,972 into 170.19 million shares of common stock at a conversion price of $0.0050 per share, fully settling the debt but causing significant dilution. Two days later, on April 16, 2025, the company entered into a new Convertible Note agreement for $75,000 in cash (from an original principal of $94,300), convertible into common stock at the holder's option after 180 days at a variable price based on market trading.

Management estimates needing approximately $300,000 in cash over the next 12 months for operations, legal, accounting, and to implement its business plan. While they hope to use stock-based compensation for some services to conserve cash, there is no assurance this will be successful. The inability to secure necessary funding could force the company to curtail or terminate operations. Any future capital raises, particularly through equity or convertible debt, are likely to result in further substantial dilution to existing stockholders, given the current low stock price and large number of shares already outstanding (5.64 billion as of May 13, 2025).

Competitive Landscape: A Giant's World

While Two Hands Corporation is currently transitioning away from its legacy operations, its recent history in the Canadian grocery market provides context for the challenges it faced and the potential difficulties in entering any competitive sector without significant scale or a clear, sustainable advantage. The Canadian grocery landscape is dominated by large, established players like Loblaw Companies (L), Empire Company Limited (EMP.A) (Sobeys' parent), Metro Inc. (MRU.TO), and Walmart Canada (WMT). These companies possess vast scale, deeply entrenched supply chains, significant purchasing power, and extensive retail footprints (both physical and increasingly digital).

In its prior form, TWOH's grocery segments attempted to compete through a combination of online delivery, a single physical store, and wholesale distribution. However, against giants with market shares ranging from 8-10% (Walmart Canada) to 28-30% (Loblaw), TWOH's estimated 1-2% aggregate share was negligible. These larger competitors benefit from significant economies of scale, leading to lower operating costs per unit and greater pricing power. While TWOH's app-based model might have offered some advantages in processing speed or localized service, these were insufficient to overcome the structural advantages of the incumbents. Indirect competitors like Amazon (AMZN) and delivery platforms further intensified pressure. The decision to exit this market suggests the company concluded it could not achieve sustainable success competing head-to-head with these formidable players.

Technology: A Former Differentiator?

In its grocery phase, technology, particularly the gocart.city online platform, was intended to be a key differentiator. The competitive analysis suggests that TWOH's app-based platform offered advantages like potentially faster processing speeds (estimated 15-20% faster than some competitors) and the potential for personalized user experiences. The integrated app-store model aimed for user personalization, potentially leading to higher repeat purchase rates.

However, with the sale of gocart.city and the exit from wholesale, the specific technology developed for these segments is no longer core to the company's operations. While the company's history shows an inclination towards leveraging technology (from its initial apps to the grocery platform), the nature and relevance of any proprietary technology to its future business direction are currently unknown. Technology could still be a differentiator in a new venture, but this is entirely dependent on what that new venture entails and the company's ability to develop or acquire relevant technological assets. The $99,000 spent on due diligence for the denim business, for example, suggests a potential pivot into a sector where technology might play a different, perhaps less central, role than in e-commerce or logistics.

Risks Beyond Financing

Beyond the critical financing and going concern risks, Two Hands Corporation faces additional challenges. The company's disclosure controls and procedures were deemed ineffective as of March 31, 2025, due to material weaknesses, including inadequate segregation of duties, ineffective risk assessment, and insufficient written policies and procedures. Remediation of these weaknesses is dependent on securing additional financing, highlighting how the funding issue permeates all aspects of the company's operations.

Furthermore, the company's dependence on its Chief Executive Officer and other related parties for funding creates potential conflicts of interest and adds uncertainty, as these arrangements lack formal agreements. The lack of a defined new business direction introduces significant execution risk; the company must not only identify a promising sector but also develop a viable strategy, build the necessary infrastructure and team, and successfully launch and scale operations, all while operating under severe financial constraints.

Outlook: The Search for a New Future

The outlook for Two Hands Corporation is characterized by uncertainty and the potential for a high-reward, high-risk outcome. The company's stated goal is to strategically reposition for future growth outside of wholesale food distribution. This implies a search for a new market opportunity where the company believes it can establish a sustainable and profitable presence, potentially leveraging its experience with technology or exploring entirely new sectors, as evidenced by the brief exploration of the denim business.

The success of this outlook hinges on two primary factors: the ability to identify a truly viable new business opportunity and, critically, the ability to secure the substantial funding required to pursue it. The expected cash spend of $300,000 over the next 12 months is minimal for launching a significant new venture, reinforcing the dependence on external capital. Without a clear path to profitability and sufficient funding, the going concern risk remains paramount.

Conclusion

Two Hands Corporation stands at a critical juncture, having shed its recent past in the competitive grocery market to embark on a search for a new identity. The company's financial state is distressed, marked by a lack of revenue from legacy operations, persistent losses, negative equity, and a stark going concern warning. Its ability to survive and pursue future growth is entirely contingent on successfully raising external capital in a challenging environment and identifying a profitable new business direction where it can establish a competitive foothold.

For investors, TWOH represents a highly speculative proposition. The investment thesis is not based on current operational performance or a defined growth trajectory, but rather on the potential for a successful strategic pivot and future financing events. The significant risks, including funding uncertainty, potential dilution, and the lack of a clear business plan, must be carefully weighed against the possibility, however remote, of the company finding a path to future value creation. The coming months will be crucial in determining whether TWOH can secure the necessary resources and define a new strategy to move beyond its current state of transition.