FRQN's Net Income Soars on Asset Disposal Amidst Revenue Decline

TL;DR

**FRQN's net income is a mirage, fueled by asset sales while core revenue crumbles and cash reserves dwindle; proceed with extreme caution.**

AI Summary

Frequency Holdings, Inc. (FRQN) reported a net income of $9,479,927 for the nine months ended September 30, 2025, a significant increase from $2,722,956 in the same period of 2024. However, revenue decreased substantially to $1,582,935 for the nine months ended September 30, 2025, down from $4,447,273 in 2024. The company's cash position declined from $275,292 at December 31, 2024, to $30,155 at September 30, 2025. Total current liabilities saw a dramatic reduction from $13,471,255 at December 31, 2024, to $4,672,836 at September 30, 2025, primarily due to a decrease in derivative liability from $5,786,478 to $2,010,092 and accounts payable from $2,062,746 to $557,241. A key business change was the disposal of ice cream assets to Mid Penn Bank in return for debt cancellation and the cessation of Aureus Micro Markets operations following the November 2023 acquisition of ReachOut Technology Corp. The company also recognized a substantial gain on disposal of $11,233,944 for the nine months ended September 30, 2025, which significantly contributed to the net income despite declining revenue. The company remains an 'emerging growth company' and 'smaller reporting company,' utilizing reduced disclosure requirements.

Why It Matters

This filing reveals a company in transition, with a significant net income driven by a one-time asset disposal rather than core operational growth. For investors, the 64% drop in revenue for the nine months ended September 30, 2025, from $4.45 million to $1.58 million, is a red flag, despite the impressive net income. The substantial reduction in liabilities, particularly derivative liabilities, could signal a cleaner balance sheet, but the dwindling cash balance of $30,155 raises liquidity concerns. Competitively, the shift away from ice cream and micro markets to focus on ReachOut Digital Intelligence (RDI) in the MSP and cybersecurity space indicates a strategic pivot, but its success is yet to be proven against established players.

Risk Assessment

Risk Level: high — The company's cash balance plummeted from $275,292 to $30,155, a 89% decrease, indicating severe liquidity issues. Revenue for the nine months ended September 30, 2025, dropped by 64% to $1,582,935 from $4,447,273 in the prior year, suggesting significant operational challenges. While net income is positive, it's largely due to an $11,233,944 gain on disposal, not sustainable core business performance.

Analyst Insight

Investors should exercise extreme caution and conduct thorough due diligence. The significant revenue decline and critically low cash balance suggest operational instability. Focus on future filings to see if the ReachOut acquisition can generate sustainable revenue and positive operating cash flow, rather than relying on one-time gains.

Financial Highlights

revenue

$1,582,935

total Assets

$102,291

total Debt

$5,709,550

net Income

$9,479,927

cash Position

$30,155

revenue Growth

-64%

Revenue Breakdown

Key Numbers

• $9.48M — Net Income (Increased from $2.72M in 2024 to $9.48M in 2025 for the nine-month period, largely due to a one-time gain.)
• $1.58M — Revenue (Decreased significantly from $4.45M in 2024 to $1.58M in 2025 for the nine-month period, a 64% drop.)
• $30.16K — Cash (Declined by 89% from $275.29K at Dec 31, 2024, to $30.16K at Sep 30, 2025, indicating severe liquidity issues.)
• $11.23M — Gain on Disposal (A non-recurring gain that significantly boosted net income for the nine months ended September 30, 2025.)
• $4.67M — Total Current Liabilities (Reduced from $13.47M at Dec 31, 2024, to $4.67M at Sep 30, 2025, primarily due to derivative liability reduction.)
• 1,899,869,698 — Common Shares Outstanding (As of November 19, 2025, indicating significant share dilution.)
• 64% — Revenue Decrease (Percentage decrease in revenue for the nine months ended September 30, 2025, compared to the same period in 2024.)
• 89% — Cash Decrease (Percentage decrease in cash from December 31, 2024, to September 30, 2025.)

Key Players & Entities

• Frequency Holdings, Inc. (company) — Registrant and legal acquirer
• ReachOut Technology Corp. (company) — Accounting acquirer and subsidiary
• Mid Penn Bank (company) — Recipient of ice cream assets for debt cancellation
• Richard "Rick" Jordan (person) — CEO of Frequency Holdings, Inc.
• $9,479,927 (dollar_amount) — Net income for nine months ended September 30, 2025
• $1,582,935 (dollar_amount) — Revenue for nine months ended September 30, 2025
• $30,155 (dollar_amount) — Cash balance as of September 30, 2025
• $11,233,944 (dollar_amount) — Gain on disposal for nine months ended September 30, 2025
• $4,672,836 (dollar_amount) — Total Current Liabilities as of September 30, 2025
• Nevada (regulator) — State of incorporation for Frequency Holdings, Inc.

FAQ

Risk Factors

• Severe Liquidity Constraints [high — financial]: Cash position has plummeted by 89% from $275,292 at December 31, 2024, to $30,155 at September 30, 2025. This drastic reduction in available cash poses a significant risk to the company's ability to meet its short-term obligations and fund ongoing operations.
• Business Model Transformation and Asset Disposals [medium — operational]: The company has undergone significant operational changes, including the disposal of ice cream assets and the cessation of Aureus Micro Markets operations. While these actions may have reduced liabilities, they also represent a fundamental shift in the business, creating uncertainty about future revenue streams and operational stability.
• Dependence on Non-Recurring Gains [high — financial]: The reported net income of $9,479,927 for the nine months ended September 30, 2025, is heavily influenced by a $11,233,944 gain on disposal. This indicates that the company's profitability is not sustainable from core operations, making it vulnerable to future performance without such one-time events.
• Significant Reduction in Current Liabilities [medium — financial]: Total current liabilities decreased from $13,471,255 to $4,672,836, largely due to a reduction in derivative liability and accounts payable. While this improves the balance sheet, the underlying reasons for such a dramatic decrease (e.g., debt cancellation) need careful scrutiny for long-term implications.
• Substantial Share Dilution [medium — financial]: The company has 1,899,869,698 common shares outstanding as of November 19, 2025. This high number of shares, especially if issued at low valuations, can significantly dilute the value of existing shares and impact future earnings per share.

Industry Context

Frequency Holdings, Inc. operates in a dynamic market, with its past focus on ice cream and current pivot towards technology services (via ReachOut Technology Corp. acquisition). The broader technology and services sectors are characterized by rapid innovation, intense competition, and evolving consumer demands. Companies in this space often face challenges related to scaling operations, managing technological obsolescence, and securing consistent revenue streams.

Regulatory Implications

As an 'emerging growth company' and 'smaller reporting company,' Frequency Holdings, Inc. benefits from reduced disclosure requirements under the JOBS Act. While this lowers compliance burdens, it also means investors have less detailed financial and operational information, potentially increasing information asymmetry and risk.

What Investors Should Do

1. Scrutinize the sustainability of profitability: Given the significant reliance on a one-time gain on disposal, investors should assess the core operational business's ability to generate profits without such events.
2. Investigate liquidity concerns: The drastic decline in cash reserves to $30,155 requires immediate attention. Investors should seek clarity on the company's short-term funding plans and ability to meet ongoing operational expenses.
3. Understand the strategic shift: The disposal of ice cream assets and cessation of Aureus Micro Markets operations, coupled with the acquisition of ReachOut Technology Corp., represent a major strategic pivot. Investors need to understand the rationale, execution plan, and potential risks associated with this new direction.
4. Analyze the impact of share dilution: With nearly 1.9 billion shares outstanding, investors should evaluate the potential for further dilution and its impact on future earnings per share and shareholder value.

Key Dates

• 2025-09-30: Nine months ended September 30, 2025 — Reported net income of $9,479,927, driven by a $11,233,944 gain on disposal, despite a significant revenue decline to $1,582,935.
• 2024-09-30: Nine months ended September 30, 2024 — Reported net income of $2,722,956 on revenue of $4,447,273, indicating a substantial operational downturn in the current period.
• 2024-12-31: As of December 31, 2024 — Company held $275,292 in cash and had total current liabilities of $13,471,255.
• 2025-11-19: Common Shares Outstanding — Reported 1,899,869,698 common shares outstanding, highlighting significant potential dilution.

Glossary

Derivative Liability

An obligation arising from a financial derivative contract, which can fluctuate in value based on underlying assets or rates. (A significant reduction in this liability ($5,786,478 to $2,010,092) contributed to the decrease in total current liabilities, but its nature and the reasons for the reduction warrant further investigation.)

Gain on Disposal

Profit recognized when an asset is sold for more than its book value. (The $11,233,944 gain on disposal was the primary driver of the company's net income, masking the severe decline in operational revenue.)

Emerging Growth Company

A company that has total annual gross revenues of less than $1.235 billion (as of 2023) and is allowed to take advantage of certain regulatory and disclosure exemptions. (Frequency Holdings, Inc. utilizes these reduced disclosure requirements, potentially limiting the depth of information available to investors.)

Smaller Reporting Company

A company that meets certain revenue and public float thresholds, allowing for scaled-back financial reporting requirements. (Similar to an EGC, this status means Frequency Holdings, Inc. has fewer disclosure obligations, which could impact investor analysis.)

Year-Over-Year Comparison

Compared to the prior year period, Frequency Holdings, Inc. has experienced a dramatic 64% decrease in revenue, falling from $4.45 million to $1.58 million for the nine months ended September 30, 2025. Despite this revenue decline, net income has surged from $2.72 million to $9.48 million, primarily due to a substantial $11.23 million gain on the disposal of assets. The company's financial health indicators show significant deterioration in liquidity, with cash reserves plummeting by 89% from $275,292 to $30,155, while total current liabilities have been reduced by over $8.79 million, largely from a decrease in derivative liability and accounts payable.

Key Financial Figures

• $1 billion — r total annual revenues equal or exceed $1 billion (subject to adjustment for inflation),
• $700 million — large accelerated filer" (with at least $700 million in public float) under the Securities a
• $250 million — ny and have a public float of less than $250 million and annual revenues of less than $100 m
• $100 million — illion and annual revenues of less than $100 million during the most recently completed fisc
• $3,025,249 — onsideration given for the purchase was $3,025,249 The purchase price was allocated to net
• $54,006 — was allocated to net tangible assets of $54,006 with the balance of $2,510,0291 allocat
• $2,510,0291 — e assets of $54,006 with the balance of $2,510,0291 allocated to goodwill, which is not amo
• $2,117,502 — e price adjustment reducing goodwill to $2,117,502. During the three months ended March 31

Filing Documents

• frequencyholdings_10q.htm (10-Q) — 1232KB
• frequencyholdings_ex31-1.htm (EX-31.1) — 8KB
• frequencyholdings_ex32-1.htm (EX-32.1) — 4KB
• 0001829126-25-009309.txt ( ) — 6752KB
• frqn-20250930.xsd (EX-101.SCH) — 76KB
• frqn-20250930_cal.xml (EX-101.CAL) — 68KB
• frqn-20250930_def.xml (EX-101.DEF) — 222KB
• frqn-20250930_lab.xml (EX-101.LAB) — 382KB
• frqn-20250930_pre.xml (EX-101.PRE) — 331KB
• frequencyholdings_10q_htm.xml (XML) — 952KB

Financial Statements

Financial Statements 1 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 31 Item 3.

Quantitative and Qualitative Disclosures About Market Risk

Quantitative and Qualitative Disclosures About Market Risk 37 Item 4.

Controls and Procedures

Controls and Procedures 37 PART II Item 1.

Legal Proceedings

Legal Proceedings 38 Item 1A.

Risk Factors

Risk Factors 38 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 38 Item 3. Defaults Upon Senior Securities 38 Item 4. Mine Safety Disclosures 38 Item 5. Other Information 38 Item 6 . Exhibits 39

SIGNATURES

SIGNATURES 40 i Emerging Growth Company We are and we will remain an "emerging growth company" as defined under The Jumpstart Our Business Startups Act (the "JOBS Act"), until the earliest to occur of (i) the last day of the fiscal year during which our total annual revenues equal or exceed $1 billion (subject to adjustment for inflation), (ii) the last day of the fiscal year following the fifth anniversary of our initial public offering, (iii) the date on which we have, during the previous three-year period, issued more than $1 billion in non-convertible debt securities, or (iv) the date on which we are deemed a "large accelerated filer" (with at least $700 million in public float) under the Securities and Exchange Act of 1934, as amended (the "Exchange Act"). As an "emerging growth company", we may take advantage of specified reduced disclosure and other requirements that are otherwise applicable generally to public companies. These provisions include: only two years of audited financial statements in addition to any required unaudited interim financial statements with correspondingly reduced "Management's Discussion and Analysis" disclosure; reduced disclosure about our executive compensation arrangements; no requirement that we hold non-binding advisory votes on executive compensation or golden parachute arrangements; and exemption from the auditor attestation requirement in the assessment of our internal control over financial reporting. We have taken advantage of some of these reduced burdens, and thus the information we provide stockholders may be different from what you might receive from other public companies in which you hold shares. In addition, Section 107 of the JOBS Act also provides that an emerging growth company can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. In other words, an emerging growth company can delay the ado

– FINANCIAL INFORMATION

PART I – FINANCIAL INFORMATION

FINANCIAL STATEMENTS

ITEM 1. FINANCIAL STATEMENTS FREQUENCY HOLDINGS INC. (formerly Yuengling's Ice Cream Corporation) Index to Financial Statements Condensed Consolidated Balance Sheets as of September 30, 2025 (Unaudited) and December 31, 2024 2 Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2025 and 2024 (Unaudited) 3 Condensed Consolidated Statement of Changes in 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) 6 Notes to Condensed Consolidated Financial Statements (Unaudited) 7 1 FREQUENCY HOLDINGS INC. (formerly Yuengling's Ice Cream Corporation) CONDENSED CONSOLIDATED BALANCE SHEETS September 30, 2025 December 31, 2024 (Unaudited) (Audited) ASSETS Current Assets: Cash $ 30,155 $ 275,292 Accounts receivable, net 38,050 164,549 Prepaid expenses 34,086 60,487 Total Current Assets 102,291 500,328 Other Assets: Furniture and fixed assets, net - 7,500 Right of use asset - 31,730 Total non-current assets - 39,230 Total Assets $ 102,291 $ 539,558 LIABILITIES AND STOCKHOLDERS' DEFICIT Current Liabilities: Accounts payable and accrued expenses $ 557,241 $ 2,062,746 Accrued interest 249,194 935,699 Due to officer 210,008 - Due to financial institutions - 917,405 Seller notes and loans payable, related parties current - 465,618 Term note payable, related parties - 1,175,000 Other loans and notes payable 263,166 240,160 Officer life insurance liability, current portion - 900,000 Convertible notes payable, net of debt discount 1,383,135 954,907 Derivative liability 2,010,092 5,786,478 Lease liability, current portion - 33,242 Total Current Liabilities 4,672,836 13,471,255 Non-Current Liabilities: Officer

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