Data443 Narrows Losses Amid Revenue Dip, Cash Concerns Mount

Ticker: ATDS · Form: 10-Q · Filed: Nov 14, 2025 · CIK: 1068689

Sentiment: mixed

Topics: Cybersecurity, Financial Performance, Liquidity Risk, Acquisition, SEC Filing, Small Cap, Net Loss

Related Tickers: ATDS

TL;DR

**ATDS is burning cash and revenue is shrinking, but they're cutting losses, so it's a speculative bet on a turnaround, but I'm staying away.**

AI Summary

Data443 Risk Mitigation, Inc. (ATDS) reported a net loss of $602,434 for the three months ended September 30, 2025, a significant improvement from the $1,281,999 net loss in the same period of 2024. For the nine months ended September 30, 2025, the net loss was $1,597,069, down from $4,421,955 in 2024. Revenue decreased to $899,132 for the three months ended September 30, 2025, from $1,146,937 in 2024, and for the nine months, revenue was $3,497,748, a decline from $3,807,080 in 2024. Gross profit for the nine months increased to $2,541,870 in 2025 from $2,014,400 in 2024, despite the revenue dip, indicating improved cost of revenue management. Operating expenses also saw a reduction, falling to $3,474,610 for the nine months ended September 30, 2025, from $4,143,145 in the prior year. The company's cash position significantly declined to $49,086 as of September 30, 2025, from $168,208 at December 31, 2024. A key strategic item is the ongoing Centurion SmartShield acquisition, with an advance payment of $2,726,188 remaining on the balance sheet, expected to be completed in 2025.

Why It Matters

For investors, the narrowing net loss is a positive signal, suggesting improved operational efficiency and cost control, with the nine-month loss decreasing by over 60% year-over-year. However, the declining revenue and critically low cash balance of $49,086 raise significant liquidity concerns, potentially impacting future growth and operational stability. Employees might face uncertainty given the financial constraints, while customers could see impacts on service or product development if the company's financial health deteriorates further. In the competitive cybersecurity market, Data443's struggle to grow revenue while managing substantial debt could hinder its ability to innovate and compete with larger, better-capitalized players like Microsoft Azure or Amazon Web Services.

Risk Assessment

Risk Level: high — The company's cash balance is critically low at $49,086 as of September 30, 2025, down from $168,208 at December 31, 2024, indicating severe liquidity issues. Furthermore, the accumulated deficit has grown to $63,341,087, and total current liabilities of $16,918,019 far exceed total current assets of $134,831, suggesting a high risk of financial distress and potential going concern issues.

Analyst Insight

Investors should exercise extreme caution and consider this a highly speculative investment. Given the critically low cash balance and substantial liabilities, a deep dive into the company's ability to secure additional financing or significantly improve cash flow is essential before any investment. Monitor future filings for signs of improved liquidity or successful completion of the Centurion acquisition.

Financial Highlights

debt To Equity
N/A
revenue
$3,497,748
operating Margin
N/A
total Assets
N/A
total Debt
N/A
net Income
-$1,597,069
eps
$0.001
gross Margin
72.7%
cash Position
$49,086
revenue Growth
-8.1%

Key Numbers

Key Players & Entities

FAQ

What were Data443 Risk Mitigation, Inc.'s revenues for the nine months ended September 30, 2025?

Data443 Risk Mitigation, Inc.'s revenues for the nine months ended September 30, 2025, were $3,497,748. This represents a decrease from $3,807,080 reported for the same period in 2024.

How did Data443's net loss change in the third quarter of 2025 compared to 2024?

Data443's net loss for the three months ended September 30, 2025, was $602,434, which is a significant improvement compared to the net loss of $1,281,999 reported for the three months ended September 30, 2024.

What is the current cash position of Data443 Risk Mitigation, Inc. as of September 30, 2025?

As of September 30, 2025, Data443 Risk Mitigation, Inc. reported a cash balance of $49,086. This is a substantial decrease from $168,208 at December 31, 2024.

What is the status of Data443's acquisition of Centurion SmartShield?

Data443 entered into an Asset Purchase Agreement with Centurion Holdings I, LLC on January 19, 2022, to acquire Centurion SmartShield. As of the filing date, the acquisition is still not completed, with an advance payment for acquisition of $2,726,188 remaining on the balance sheet, and is expected to be completed in 2025.

What are the primary risks facing Data443 Risk Mitigation, Inc. based on this 10-Q?

The primary risks include severe liquidity issues due to a critically low cash balance of $49,086 and total current liabilities of $16,918,019 significantly exceeding total current assets of $134,831. The company also has a growing accumulated deficit of $63,341,087.

How has Data443's stock-based compensation expense changed year-over-year?

Data443 recorded $595,351 in stock-based compensation expense for the nine months ended September 30, 2025, which is a decrease from $741,049 for the same period in 2024.

What is the total stockholders' deficit for Data443 as of September 30, 2025?

The total stockholders' deficit for Data443 Risk Mitigation, Inc. as of September 30, 2025, was $(13,478,885). This has worsened from $(13,088,633) at December 31, 2024.

What accounting guidance did Data443 recently adopt?

Data443 recently adopted ASU No. 2023-07, Segment Reporting, which improves reportable segment disclosures, effective for interim periods beginning January 1, 2025. The company also considered ASU 2023-09, Improvements to Income Tax Disclosures, effective for public business entities for annual periods beginning after December 15, 2024.

How many common shares of Data443 were outstanding as of November 14, 2025?

As of November 14, 2025, the outstanding number of shares of common stock for Data443 Risk Mitigation, Inc. was 629,956,531.

What kind of solutions does Data443 provide?

Data443 provides solutions and capabilities that businesses can use with established cloud vendors like Microsoft Azure, Google Cloud Platform (GCP), and Amazon Web Services (AWS), as well as with on-premises databases and virtualization platforms such as VMWare, Citrix, and Oracle clouds/products.

Risk Factors

Industry Context

Data443 operates in the cybersecurity and risk mitigation sector, a rapidly growing but highly competitive market. Key trends include increasing data privacy regulations, the rise of sophisticated cyber threats, and the demand for integrated compliance and security solutions. Companies in this space often rely on strategic acquisitions to expand their service offerings and market reach.

Regulatory Implications

The company faces significant regulatory scrutiny related to data privacy and security. Compliance with evolving global regulations like GDPR and CCPA is paramount. Failure to adhere to these standards can result in substantial fines and legal challenges, impacting financial stability and market reputation.

What Investors Should Do

  1. Monitor acquisition progress
  2. Assess liquidity and cash burn
  3. Evaluate revenue trends and gross margin sustainability
  4. Review going concern disclosures

Key Dates

Glossary

Accumulated deficit
The total net losses of a company since its inception that have not been offset by net income. (Indicates the company has historically operated at a loss, with the deficit increasing to $63,341,087 as of September 30, 2025.)
Current Liabilities
Obligations that a company expects to liquidate or pay off within one year or one operating cycle, whichever is longer. (Data443 has $16,918,019 in current liabilities, which significantly exceeds its current assets, highlighting a liquidity concern.)
Current Assets
Assets that a company can reasonably expect to convert into cash, sell, or consume within one year or its operating cycle. (The company's current assets are only $134,831, which is insufficient to cover its current liabilities.)
Basic and diluted loss per common share
The portion of a company's profit or loss allocated to each outstanding share of common stock. (For Q3 2025, this was $0.001, an improvement from $3.98 in Q3 2024, largely due to an increased share count.)

Year-Over-Year Comparison

Compared to the prior year, Data443 has significantly reduced its net loss for both the three-month period (from $1,281,999 to $602,434) and the nine-month period (from $4,421,955 to $1,597,069). This improvement is driven by better cost of revenue management, leading to a higher gross profit margin, and reduced operating expenses. However, revenue has declined in both periods, and the company's cash position has deteriorated substantially, raising concerns about liquidity.

Filing Stats: 4,390 words · 18 min read · ~15 pages · Grade level 18.2 · Accepted 2025-11-14 16:16:15

Filing Documents

FINANCIAL INFORMATION

PART I. FINANCIAL INFORMATION ITEM 1.

Financial Statements

Financial Statements 2 Condensed Consolidated Balance Sheets as of September 30, 2025 and December 31, 2024 (unaudited) 2 Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2025 and 2024 (unaudited) 3 Condensed Consolidated Statements of Stockholders' Deficit for the three and nine months ended September 30, 2025 and 2024 (unaudited) 4 Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2025 and 2024 (unaudited) 5 Notes to the Unaudited Condensed Consolidated Financial Statements 6 ITEM 2.

Management's Discussion and Analysis of Financial Condition and Results of Operations

Management's Discussion and Analysis of Financial Condition and Results of Operations 20 ITEM 3.

Quantitative and Qualitative Disclosures About Market Risk

Quantitative and Qualitative Disclosures About Market Risk 30 ITEM 4.

Controls and Procedures

Controls and Procedures 30

OTHER INFORMATION

PART II. OTHER INFORMATION 32 ITEM 1.

Legal Proceedings

Legal Proceedings 32 ITEM 1A.

Risk Factors

Risk Factors 32 ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds 32 ITEM 3. Defaults Upon Senior Securities 33 ITEM 4. Mine Safety Disclosures 33 ITEM 5. Other Information 33 ITEM 6. Exhibits 33

SIGNATURES

SIGNATURES 34 1 PART I FINANCIAL INFORMATION ITEM 1. FINANCIAL DATA443 RISK MITIGATION, INC. CONDENSED CONSOLIDATED BALANCE SHEETS September 30, December 31, 2025 2024 (Unaudited) (Audited) Assets Current assets Cash $ 49,086 $ 168,208 Accounts receivable, net 85,745 31,776 Total current assets 134,831 199,984 Property and equipment, net 165,166 252,903 Advance payment for acquisition 2,726,188 2,726,188 Intellectual property, net of accumulated amortization 2,262,444 2,798,816 Deposits 1,792 36,062 Total Assets $ 5,290,421 $ 6,013,953 Liabilities and Stockholders' Deficit Current Liabilities Accounts payable and accrued liabilities 6,422,710 5,919,988 Deferred revenue 1,252,791 1,591,326 Interest payable 2,094,900 2,097,216 Notes payable, net of unamortized discount 3,060,082 3,340,492 Convertible notes payable, net of unamortized discount 4,004,053 3,877,944 Due to a related party 73,142 144,303 Finance lease liability 10,341 10,341 Total Current Liabilities 16,918,019 16,981,610 Notes payable, net of unamortized discount - non-current 1,038,322 1,406,849 Deferred revenues - non-current 812,965 714,127 Total Liabilities 18,769,306 19,102,586 Commitments and Contingencies - - Stockholders' Deficit Preferred stock: 443,443,443 authorized; $ 0.001 par value Series A 149,492 and 149,492 shares issued and outstanding, respectively 149 149 Series B Preferred Stock, 80,000 shares designated; $ 0.001 par value; Stated value $ 10.00 , 0 and 0 shares issued and outstanding, net of discount, respectively - - Preferred Stock, value - - Common stock: 4,443,443,443 authorized; $ 0.001 par value 497,561,331 and 1,150,223 shares issued and outstanding as of September 30, 2025 and December 31, 2024, respectively 558,882 62,472 Additional paid in capital 49,303,171 48,592,764 Accum

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