Data443 Narrows Q1 Loss Amidst Persistent Financial Challenges

TL;DR

**ATDS is still bleeding cash, making it a risky bet despite a slightly smaller Q1 loss.**

AI Summary

Data443 Risk Mitigation, Inc. (ATDS) reported a net loss of $1,000 for the three months ended March 31, 2025, a significant improvement from the $1,000 net loss reported for the same period in 2024. The company's total liabilities decreased from $1,000 as of December 31, 2024, to $1,000 as of March 31, 2025. Shareholder equity remained negative, with a deficit of $1,000 as of March 31, 2025, compared to a deficit of $1,000 at December 31, 2024. The company's strategic outlook appears focused on managing its existing capital structure, including Series A and Series B Preferred Stock, which remained constant at $1,000 and $1,000 respectively. Key business changes include the ongoing management of the Asset Purchase Agreement with Centurion Holdings, LLC, dated January 19, 2022, and a promissory note issued on the same date. Risks include the substantial accumulated deficit and the company's ability to generate sufficient revenue to cover operational costs, as evidenced by the continued net loss. The company's common stock outstanding increased from $1,000 at December 31, 2024, to $1,000 at March 31, 2025, indicating potential dilution.

Why It Matters

Data443's continued net loss, despite a slight improvement, signals ongoing operational challenges for investors. The company's substantial accumulated deficit and negative shareholder equity raise concerns about its long-term viability and ability to compete effectively in the prepackaged software services market against larger, more established players. For employees, this financial instability could imply job insecurity or limited growth opportunities. Customers might question the company's ability to sustain product development and support. The broader market will view ATDS as a micro-cap with significant financial hurdles, impacting its competitive positioning.

Risk Assessment

Risk Level: high — The risk level is high due to the company's persistent net loss of $1,000 for Q1 2025 and an accumulated deficit of $1,000 as of March 31, 2025. This indicates a fundamental inability to generate profit and sustain operations, evidenced by the negative shareholder equity of $1,000.

Analyst Insight

Investors should exercise extreme caution and consider avoiding ATDS given its consistent net losses and negative equity. Focus on companies with demonstrated profitability and stronger balance sheets in the competitive software sector.

Key Numbers

• $1,000 — Net Loss (Q1 2025) (Improved from $1,000 in Q1 2024, but still a loss.)
• $1,000 — Total Liabilities (March 31, 2025) (Decreased from $1,000 at Dec 31, 2024.)
• $1,000 — Shareholder Deficit (March 31, 2025) (Indicates negative equity, a persistent financial weakness.)
• $1,000 — Common Stock Outstanding (March 31, 2025) (Increased from $1,000 at Dec 31, 2024, suggesting potential dilution.)
• $1,000 — Series A Preferred Stock (Remained constant, part of the company's capital structure.)

Key Players & Entities

• Data443 Risk Mitigation, Inc. (company) — filer of the 10-Q
• Centurion Holdings, LLC (company) — party in an Asset Purchase Agreement
• $1,000 (dollar_amount) — net loss for Q1 2025
• $1,000 (dollar_amount) — net loss for Q1 2024
• $1,000 (dollar_amount) — total liabilities as of Dec 31, 2024
• $1,000 (dollar_amount) — total liabilities as of March 31, 2025
• $1,000 (dollar_amount) — shareholder deficit as of March 31, 2025
• $1,000 (dollar_amount) — shareholder deficit as of Dec 31, 2024
• $1,000 (dollar_amount) — Series A Preferred Stock value
• $1,000 (dollar_amount) — Series B Preferred Stock value

FAQ

Risk Factors

• Substantial Accumulated Deficit [high — financial]: The company has a significant accumulated deficit, indicating a history of net losses. This raises concerns about its long-term financial viability and ability to achieve profitability.
• Negative Shareholder Equity [high — financial]: Shareholder equity remained negative at a deficit of $1,000 as of March 31, 2025, consistent with the deficit of $1,000 at December 31, 2024. This signifies that liabilities exceed assets, a precarious financial position.
• Continued Net Loss [medium — financial]: Data443 reported a net loss of $1,000 for the three months ended March 31, 2025. This indicates the company is not yet generating sufficient revenue to cover its operational costs.
• Potential Dilution from Common Stock Increase [medium — financial]: The number of common shares outstanding increased from $1,000 at December 31, 2024, to $1,000 at March 31, 2025. This increase, if not matched by a proportional increase in value, could dilute existing shareholders' ownership.
• Reliance on Asset Purchase Agreement and Promissory Note [medium — operational]: The company's operations are significantly tied to the Asset Purchase Agreement with Centurion Holdings, LLC, and a related promissory note, both dated January 19, 2022. Any issues or changes related to these agreements could materially impact the company.

Industry Context

Data443 operates in the software services sector, specifically focusing on risk mitigation. This industry is characterized by rapid technological advancements and evolving regulatory landscapes. Companies in this space often face intense competition and the need for continuous innovation to address cybersecurity and data privacy concerns.

Regulatory Implications

As a company involved in risk mitigation and data security, Data443 is subject to various data privacy regulations (e.g., GDPR, CCPA) and cybersecurity standards. Non-compliance can lead to significant fines and reputational damage. The company's financial instability could also impact its ability to invest in necessary compliance measures.

What Investors Should Do

1. Monitor revenue generation and path to profitability.
2. Analyze the impact of the Asset Purchase Agreement and Promissory Note.
3. Assess the implications of increased common stock outstanding.
4. Evaluate the company's ability to manage its liabilities and negative equity.

Key Dates

• 2022-01-19: Asset Purchase Agreement and Promissory Note with Centurion Holdings, LLC executed — These agreements form a core part of the company's financial structure and operational obligations.
• 2024-12-31: End of fiscal year 2024 — Provides a baseline for comparison of financial metrics in the current reporting period.
• 2025-03-31: End of Q1 2025 — The reporting period for the current 10-Q filing, showing financial performance and position.
• 2025-06-23: 10-Q Filing Date — The date the company officially submitted its quarterly report to the SEC.

Glossary

Accumulated Deficit

The total cumulative net losses of a company since its inception, minus any cumulative net income. (Indicates the company's historical inability to generate profits and its ongoing financial challenges.)

Shareholder Equity

The value of a company's assets minus its liabilities. A negative shareholder equity (deficit) means liabilities exceed assets. (A negative shareholder equity highlights a weak financial position and potential insolvency risk.)

Series A Preferred Stock

A class of preferred stock with specific rights and privileges, often senior to common stock. (Represents a component of the company's capital structure that remained constant, indicating no new issuance or redemption during the period.)

Series B Preferred Stock

Another class of preferred stock, potentially with different rights than Series A. (Similar to Series A, its constancy shows no changes in this part of the capital structure.)

Asset Purchase Agreement

A contract outlining the terms under which one party buys the assets of another party. (A key agreement that dictates significant operational and financial aspects for Data443.)

Promissory Note

A written promise by one party to pay a definite sum of money to another party on demand or at a specified future date. (Represents a debt obligation that is part of the company's financial commitments.)

Year-Over-Year Comparison

Compared to the prior year's comparable period, Data443 has shown an improvement in its net loss, reducing it to $1,000 for the three months ended March 31, 2025, from a loss in the same period of 2024. However, the company continues to grapple with significant financial challenges, including a persistent negative shareholder equity of $1,000 and a substantial accumulated deficit. Total liabilities have seen a decrease, but the overall financial picture remains weak, with no significant revenue growth or margin improvements evident from the provided data.

Filing Details

This Form 10-Q (Form 10-Q) was filed with the SEC on June 23, 2025 regarding Data443 Risk Mitigation, Inc. (ATDS).

View full filing on EDGAR

View Full Filing

View this 10-Q filing on SEC EDGAR