1606 Corp. reported its financial results for the three months ended March 31, 2025, highlighting significant financial challenges. The company generated no revenue during Q1 2025, a decrease from $7,195 in consulting services revenue reported in Q1 2024. This indicates a lack of monetization from its new AI licensing model.
Operating expenses decreased to $174,232 in Q1 2025 from $397,921 in Q1 2024, primarily due to lower professional fees. This reduction contributed to a narrower net loss of $208,339 in Q1 2025, compared to a net loss of $286,437 in Q1 2024. Despite the reduced loss, the company's cash reserves remain minimal.
As of March 31, 2025, 1606 Corp. held only $285 in cash, a decline from $2,078 at December 31, 2024. Total current assets were $285, while total current liabilities stood at $2.35 million. This includes a significant note payable to a shareholder of $1.53 million, due in full on December 31, 2025, and other debts totaling $1.82 million in scheduled maturities.
These factors, combined with the minimal cash balance and substantial current liabilities, led management to conclude that there is substantial doubt about the company's ability to continue as a going concern for the next twelve months. The company estimates a cash need of approximately $1.00 million to sustain operations for this period. Management plans to pursue additional equity financing through private placements, acknowledging no guarantee of success.
Furthermore, management concluded that disclosure controls and procedures were not effective as of March 31, 2025, due to material weaknesses. These weaknesses include the lack of a functioning audit committee and inadequate segregation of duties, increasing the risk of material misstatements in financial reporting. The company's ability to secure necessary funding or complete its proposed acquisition remains critical for its future viability.
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