Kinetic Seas Inc.
For the period ended Jun 30, 2026. Filed Aug 19, 2026.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2026 · Filed Aug 19, 2026
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What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2026-03-31; filed 2026-06-26.
0001683168-26-005121
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2026-06-30; filed 2026-08-19.
0001683168-26-006589
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 67 previous paragraphs and 78 current paragraphs.
42 unchanged; 16 reworded; 20 added; 9 removed; 0 previous and 0 current paragraphs rearranged.
Tables are not compared: 0 previous and 0 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (20)
Current report
The Company maintains a strategic commercial relationship with Sagtec Global Limited (“Sagtec”) relating to the development and commercialization of the Company’s software and artificial intelligence technologies. Under the arrangement, Sagtec has non-exclusive international rights to promote, market and sell MaluDb hosting services under the Skilliks brand, while the Company is responsible for development, hosting, maintenance and technical support of the Skilliks-branded platform. The Company is entitled to participate in revenues generated from hosting services, integration and consulting services, certain Company-originated international sales and, if developed, future Enterprise Editions of MaluDb.
Current report
During the six months ended June 30, 2026, the Company incurred commission expense associated with the Sagtec commercial arrangement, which is included in selling, general and administrative expenses. The arrangement is intended to provide additional commercialization channels for the Company’s technology; however, there can be no assurance as to the amount or timing of future revenues, if any, generated under the arrangement.
Current report
During the three months ended June 30, 2026 and 2025, the Company generated no consulting revenue. During the three months ended June 30, 2026, the Company recognized product sales revenue of $519,750, compared with no product sales during the corresponding 2025 period. Accordingly, total revenue was $519,750 and $0 for the three months ended June 30, 2026 and 2025, respectively.
Current report
As a result, the Company reported gross profit of $519,750 for the three months ended June 30, 2026, compared with a gross loss of $12,977 for the three months ended June 30, 2025 and the Company reported gross profit of $1,065,395 for the six months ended June 30, 2026, compared with a gross loss of $2,268 for the six months ended June 30, 2025.
Current report
During the three months ended June 30, 2026, the Company incurred total operating expenses of $242,334, compared with $965,044 during the three months ended June 30, 2025, a decrease of approximately $722,710, or 75%. The decrease was primarily attributable to substantially lower professional fees and payroll and benefit expenses, partially offset by higher selling, general and administrative expenses.
Current report
During the six months ended June 30, 2026, the Company incurred total operating expenses of $605,579 compared with $1,169,397 during the six months ended June 30, 2025, a decrease of approximately $563,818, or 48%. The decrease was primarily attributable to substantially lower professional fees and payroll and benefit expenses, partially offset by higher selling, general and administrative expenses.
Current report
Selling, general and administrative expenses increased to $148,565 for the three months ended June 30, 2026, from $89,320 for the comparable prior-year period, an increase of approximately $59,245, or 66%. The increase was primarily attributable to higher commission expenses associated with the Company's commercial activities, including its Sagtec-related arrangement, and software and technology-related expenditures.
Current report
Selling, general and administrative expenses increased to $359,378 for the six months ended June 30, 2026, from $171,890 for the comparable prior-year period, an increase of approximately $187,568, or 109%. The increase was primarily attributable to higher commission expenses associated with the Company's commercial activities, including its Sagtec-related arrangement, and software and technology-related expenditures.
Current report
Professional fees decreased to $82,964 for the three months ended June 30, 2026, from $717,141 for the three months ended June 30, 2025, a decrease of approximately $634,177, or 88%. The decrease was primarily attributable to the nonrecurrence of significant equity-based consulting expenses recognized during the prior-year period. Professional fees during the 2026 period consisted principally of consulting, accounting and financial reporting services, SEC compliance and filing costs, transfer-agent expenses and other professional services.
Current report
Professional fees decreased to $215,991 for the six months ended June 30, 2026, from $722,763 for the six months ended June 30, 2025, a decrease of approximately $506,572, or 70%. The decrease was primarily attributable to the nonrecurrence of significant equity-based consulting expenses recognized during the prior-year period. Professional fees during the 2026 period consisted principally of consulting, accounting and financial reporting services, SEC compliance and filing costs, transfer-agent expenses and other professional services.
Current report
Payroll and benefits decreased to $10,805 for the three months ended June 30, 2026, from $158,584 for the three months ended June 30, 2025, a decrease of approximately $147,779, or 93%, primarily due to lower officer and employee compensation and related payroll costs during the current-year period.
Current report
Payroll and benefits decreased to $10,805 for the six months ended June 30, 2026, from $116,440 for the six months ended June 30, 2025, a decrease of approximately $244,814, or 89%, primarily due to lower officer and employee compensation and related payroll costs during the current-year period.
Current report
Although total operating expenses decreased significantly during the three months and six months ended June 30, 2026 compared with the prior-year period, the decrease was primarily attributable to lower professional fees and payroll and benefit expenses, including the nonrecurrence of significant equity-based consulting expenses incurred in the prior-year period. The Company expects operating expenses to continue to fluctuate from period to period based on the timing and level of professional services, technology development, public-company compliance costs, financing activities and personnel requirements. In addition, as the Company introduces and commercializes new products and services, it may incur increased marketing, sales, commission, business development and customer acquisition costs. Accordingly, the decrease in operating expenses during the current period may not be indicative of future operating expense levels.
Current report
The improvement in other income (expense) during the three months ended June 30, 2026 was primarily attributable to investment income recognized during the period and lower interest expense compared to the prior-year period. The Company did not recognize any material loss on debt extinguishment during the three months ended June 30, 2026.
Current report
Interest expense decreased to $23,585 during the three months ended June 30, 2026 from $40,757 during the three months ended June 30, 2025. The Company may continue to incur interest expense and other financing-related charges in connection with its outstanding indebtedness and future financing activities.
Current report
During the six months ended June 30, 2026, the Company recorded total other expense of $1,483,297,compared to total other income of $30,247 during the six months ended June 30, 2025.
Current report
The increase in other expenses was primarily attributable to a loss on debt extinguishment of $1,602,602, resulting from the settlement of debt through the issuance of Sagtec shares, as well as higher interest expenses driven by increased debt levels during the current period. These increases were partially offset by investment income earned from the Company's investment in Sagtec.
Current report
The decreased in net loss during the six months ended June 30, 2026 was primarily attributable by higher revenues recognized during the period which is majorly set off by the loss on the debt extinguishment incurred during the current year.
Current report
As of June 30, 2026, the Company's balance sheet reflected cash of approximately $0.
Current report
Cash flows used in operating activities were approximately $388,971 for the six months ended June 30, 2026. Operating cash flows reflected the Company's net loss, adjusted for non-cash items including stock-based compensation, depreciation, amortization of right-of-use assets, investment income, and charges related to the extinguishment of debt, as well as changes in working capital accounts. Changes in working capital included decreases in deferred revenue and accrued interest and changes in accounts payable, prepaid expenses and lease liabilities.
Removed paragraphs (9)
Previous report
The Company is also pursuing software development and artificial intelligence opportunities through its strategic relationship with Sagtec Global Limited. Pursuant to this relationship, the Company is collaborating on the development of software and AI solutions for deployment throughout Southeast Asia. Sagtec currently serves more than 13,000 food and beverage locations through its point-of-sale technology platform and has secured a five-year license to develop software and AI projects within the region. The Company believes this relationship provides a significant opportunity to expand the adoption of its AI-enabled solutions across a large and established customer base.
Previous report
During the three months ended March 31, 2026, the Company incurred operating expenses of $363,246, compared to $204,352 during the three months ended March 31, 2025. The increase in operating expenses was primarily attributable to higher professional fees, consulting expenses, public company compliance costs, commissions, investor relations activities, and other administrative expenses associated with the Company's growth initiatives, financing activities, and expansion of operations.
Previous report
Selling, general and administrative expenses increased to $210,813 during the three months ended March 31, 2026, compared to $82,490 during the comparable prior-year period. Professional fees increased to $133,027 from $5,422, reflecting increased legal, accounting, consulting, transfer agent, SEC reporting, and other public company compliance costs. Payroll and benefits were $19,405 for the three months ended March 31, 2026, compared to $116,440 for the three months ended March 31, 2025.
Previous report
The Company expects operating expenses, including selling, general and administrative expenses, software development expenditures, professional fees, payroll and benefits, investor relations costs, public company compliance expenses, and other administrative expenses, to remain significant as the Company continues to expand its operations, pursue strategic growth opportunities, develop proprietary technology, and satisfy its reporting obligations as a public company. The Company may also incur additional expenses related to financing activities, business development initiatives, strategic partnerships, and the hiring of additional personnel as operations expand.
Previous report
The increase in other expense during the three months ended March 31, 2026 was primarily attributable to transactions involving the settlement and restructuring of outstanding indebtedness, which resulted in a significant non-cash loss on debt extinguishment. These charges were partially offset by investment income earned during the period. The Company also continued to incur interest expense on its outstanding borrowings.
Previous report
Management believes that a substantial portion of the increase in other expense for the three months ended March 31, 2026 was attributable to non-cash debt extinguishment and financing-related transactions that are not representative of the Company's recurring operating activities.
Previous report
The increase in net loss during the three months ended March 31, 2026 was primarily attributable to a non-cash loss on debt extinguishment of $1,602,602, increased operating expenses associated with the Company's growth initiatives, public company compliance activities, professional fees, and administrative expenses. These increases were partially offset by higher revenues recognized during the period, including product sales revenue recognized from the satisfaction of performance obligations associated with previously deferred customer contracts, as well as investment income of $98,296 recognized during the period.
Previous report
As of March 31, 2026, the Company had cash of $205,667.
Previous report
Cash flows used in operating activities were $(254,064) for the three months ended March 31, 2026. Cash used in operating activities was primarily attributable to expenditures associated with operating activities, software development, professional fees, public company compliance costs, financing-related expenses, and changes in working capital accounts. Although the Company recognized revenue of $545,645 during the period, including $519,750 recognized from the satisfaction of performance obligations associated with previously deferred customer contracts, operating cash flows were impacted by ongoing business operations, technology development, and corporate infrastructure costs. Operating cash flows were partially offset by non-cash items, including a $1,602,602 loss on debt extinguishment, depreciation, amortization of right-of-use assets, stock-based compensation, and other non-cash adjustments reflected in the reconciliation of net loss to net cash used in operating activities.
Reworded paragraphs (16)
Previous wording
The Company secures clients through its proprietary Skilliks™ platform, which is designed to evaluate a client's software development and technology requirements and create comprehensive development strategies. Skilliks™ utilizes artificial intelligence to identify opportunities for automation, workflow optimization, software modernization, and the incorporation of AI-powered features that can enhance business operations and customer engagement.
Current wording
The Company secures clients through its proprietary Skilliks™ platform, which is designed to evaluate a client's software development and technology requirements and create comprehensive development strategies. Skilliks™ utilizes artificial intelligence to identify opportunities for automation, workflow optimization, software modernization, and the incorporation of AI-powered features intended to enhance business operations and customer engagement.
Previous wording
The Company's consulting and development services assist organizations in designing, developing, and deploying custom software applications and AI-enabled solutions. Through these engagements, the Company helps clients integrate emerging AI technologies into existing business processes while developing long-term technology roadmaps aligned with each client's strategic objectives.
Current wording
The Company's consulting and development services assist organizations in designing, developing, and deploying custom software applications and AI-enabled solutions. Through these engagements, the Company helps clients integrate emerging artificial intelligence technologies into existing business processes while developing technology roadmaps aligned with each client's strategic objectives.
Previous wording
In addition to its consulting activities, the Company is developing comprehensive AI-powered voice-agent solutions for the hospitality industry. These solutions are intended to automate customer interactions, streamline operations, and improve customer experiences for hospitality and food service businesses.
Current wording
In addition to its consulting activities, the Company is developing and commercializing AI-enabled technology products and platforms, including AI-powered voice-agent solutions for the hospitality and food service industries. The Company is also developing MaluDb, an open-source persistent AI memory database designed to provide a structured and governed memory infrastructure layer capable of supporting multiple applications and AI agents. The Company's commercialization strategy for MaluDb includes open-source adoption, managed hosting, enterprise support, integration services, consulting services, and other commercial applications designed to create multiple potential revenue streams from the Company's core technology.
Previous wording
Comparison of Results of Operations for the Three Months Ended March 31, 2026 and 2025.
Current wording
Comparison of Results of Operations for the Six months Ended June 30, 2026 and 2025.
Previous wording
During the three months ended March 31, 2026 and 2025, the Company generated consulting revenue of $25,895 and $67,871, respectively. In addition, during the three months ended March 31, 2026, the Company recognized product sales revenue of $519,750 related to the satisfaction of performance obligations associated with previously deferred customer contracts. Total revenue for the three months ended March 31, 2026 and 2025 was $545,645 and $67,871, respectively.
Current wording
During the six months ended June 30, 2026 and 2025, the Company generated consulting revenue of $25,895 and $67,871, respectively. During the six months ended June 30, 2026, the Company recognized product sales revenue of $1,039,500, compared with no product sales during the corresponding 2025 period. Accordingly, total revenue was $1,065,395 and $67,871 for the six months ended June 30, 2026 and 2025, respectively.
Previous wording
During the three months ended March 31, 2026 and 2025, the cost of consulting labor incurred to generate consulting revenue was $0 and $57,162, respectively. The Company did not record any direct costs of product sales during the three months ended March 31, 2026. Software development expenditures are included within Selling, General and Administrative expenses because the underlying software, artificial intelligence models, code base, and technology infrastructure are developed for use across multiple current and prospective customer engagements and future commercialization opportunities. Management does not allocate these costs to specific customer contracts or product sales because the technologies developed are utilized across numerous current and future projects and may support multiple revenue-generating activities. As a result, gross profit for the three months ended March 31, 2026 was $545,645, compared to $10,709 for the three months ended March 31, 2025.
Current wording
Cost of sales related to consulting labor was $0 and $12,977 for the three months ended June 30, 2026 and 2025, respectively. The Company did not record any direct costs of product sales during the three months ended June 30, 2026. Software development expenditures are included in selling, general and administrative expenses because the underlying software, artificial intelligence models, code base and technology infrastructure are developed for use across multiple current and prospective customer engagements and future commercialization opportunities. These costs are not allocated to specific customer contracts or product sales because the technologies developed may be utilized across multiple projects and revenue-generating activities.
Previous wording
The Company includes all software development expenditures within Selling, General and Administrative expenses. Management believes these costs are not directly attributable to any specific customer contract, product sale, or revenue stream because the Company's software platforms, artificial intelligence models, code libraries, applications, and related technology infrastructure are developed for use across multiple current and prospective customer engagements and future commercialization opportunities. Accordingly, no software development costs are classified as direct costs of revenue.
Current wording
The Company includes software development expenditures within selling, general and administrative expenses. Such expenditures relate to software platforms, artificial intelligence models, code libraries, applications and technology infrastructure developed for use across multiple current and prospective customer engagements and commercialization opportunities. Because these expenditures are not directly attributable to a specific customer contract or product sale, they are not classified as direct costs of revenue.
Previous wording
During the three months ended March 31, 2026, the Company recorded total other expense of $1,558,007, compared to $30,247 during the three months ended March 31, 2025. Other income (expense) during the 2026 period consisted primarily of a loss on debt extinguishment of $1,602,602, partially offset by investment income of $98,296, and interest expense of $53,702.
Current wording
During the three months ended June 30, 2026, the Company recorded total other income of $74,711, compared to total other expense of $40,757 during the three months ended June 30, 2025.
Previous wording
As a result of the foregoing, during the three months ended March 31, 2026, the Company incurred a net loss of $(1,375,608), or $(0.03) per basic and diluted share, compared to a net loss of $(223,891), or $(0.01) per basic and diluted share during the three months ended March 31, 2025.
Current wording
As a result of the foregoing, during the six months ended June 30, 2026, the Company incurred a net loss of $(1,023,481), or $(0.03) per basic and diluted share, compared to a net loss of $(1,242,668), or $(0.03) per basic and diluted share during the six months ended June 30, 2025.
Previous wording
During the three months ended March 31, 2026, the Company incurred a net loss of $(1,375,608).
Current wording
During the six months ended June 30, 2026, the Company incurred a net loss of approximately $1,023,482.
Previous wording
Cash flows used in investing activities were $0 for the three months ended March 31, 2026 and $0 for the three months ended March 31, 2025.
Current wording
Cash flows provided by or used in investing activities were $0 for the six months ended June 30, 2026.
Previous wording
Cash flows provided by financing activities were primarily attributable to proceeds received from financing arrangements and equity issuances during the three months ended March 31, 2026. During the period, the Company obtained additional funding through debt financing and capital raising transactions to support operations, working capital requirements, software development activities, commercialization efforts, and corporate growth initiatives.
Current wording
Cash flows provided by financing activities were approximately $381,204 for the six months ended June 30, 2026. Financing activities during the period included approximately $461,563 of proceeds from notes payable, offset by approximately $80,358 of activity associated with repayment of notes payable. The Company continues to utilize debt financing, equity transactions, strategic commercial relationships, and other available sources of capital to support its operations, working capital requirements, software development activities, and commercialization efforts.
Previous wording
Management intends to fund its working capital requirements through a combination of existing cash resources, revenues generated from operations, strategic commercial relationships, and future issuances of debt and equity securities. The Company's working capital requirements are expected to increase as it continues to expand its artificial intelligence, software development, cloud infrastructure, and commercialization activities.
Current wording
Management intends to fund its working capital requirements through a combination of available cash resources, revenues generated from operations, strategic commercial relationships, potential realization of value from strategic assets, and future issuances of debt and equity securities. The Company's working capital requirements are expected to continue as it develops and commercializes its artificial intelligence and software technologies, supports its technology infrastructure, and expands its commercial activities.
Previous wording
Potentially dilutive securities outstanding as of March 31, 2026 included 500 shares of Series A Convertible Preferred Stock, 4,917 shares of Series B Preferred Stock, and certain debt and financing instruments that may be convertible into or exercisable for shares of the Company's common stock. Because the effect of these securities would have been anti-dilutive, they were excluded from the calculation of diluted net loss per share for the three months ended March 31, 2026 and 2025.
Current wording
For the three months ended June 30, 2026, the Company reported net income and, accordingly, potentially dilutive securities were evaluated for inclusion in the calculation of diluted earnings per share. Potentially dilutive securities outstanding as of June 30, 2026 included 500 shares of Series A Convertible Preferred Stock and 4,917 shares of Series B Preferred Stock, together with any other outstanding instruments that may be convertible into or exercisable for shares of the Company's common stock. Such securities are included in diluted earnings per share only to the extent their effect is dilutive.
Previous wording
For the three months ended March 31, 2026 and 2025, diluted net loss per share was equal to basic net loss per share because the Company reported a net loss for each period and the inclusion of potentially dilutive securities would have been anti-dilutive. Accordingly, all potentially dilutive securities were excluded from the computation of diluted net loss per share.
Current wording
For the three months ended June 30, 2025, the Company reported a net loss. Accordingly, the effect of potentially dilutive securities was anti-dilutive and such securities were excluded from the calculation of diluted net loss per share.
Previous wording
We operate in a single operating segment and a single reportable segment focused on artificial intelligence consulting, software development, AI platform licensing, and related services. Operating segments are defined as components of an enterprise for which separate financial information is regularly reviewed by the chief operating decision maker (“CODM”) in deciding how to allocate resources and assess performance. The Company’s chief executive officer serves as the CODM and evaluates performance and allocates resources based on consolidated financial information. Because the Company operates as asingle operating and reportable segment, all financial segment information required by ASC 280 is included in the consolidated financial statements.
Current wording
We operate in a single operating segment and a single reportable segment focused on artificial intelligence consulting, software development, AI platform licensing, and related services. Operating segments are defined as components of an enterprise for which separate financial information is regularly reviewed by the chief operating decision maker (“CODM”) in deciding how to allocate resources and assess performance. The Company’s chief executive officer serves as the CODM and evaluates performance and allocates resources based on consolidated financial information. Because the Company operates as a single operating and reportable segment, all financial segment information required by ASC 280 is included in the consolidated financial statements.