Data443 Risk Mitigation, Inc. (ATDS)·Q1 2018 Earnings Summary

Executive Summary

• ATDS did not issue a conventional Q1 2018 earnings press release or hold an earnings call; instead, it filed an 8-K with Exhibit 99.1 containing restated, unaudited financial statements as of December 31, 2017 and narrative disclosures, indicating the company had no operations, substantial doubts about going concern, and was pursuing a merger/acquisition strategy .
• The restatement highlighted previously unrecorded long-term debt totaling $1,000,000 at a 12% interest rate, convertible notes of $125,000, and an accumulated deficit of $(6,360,479), underscoring capital constraints and balance sheet risk .
• No revenue, EPS, margin, or formal guidance metrics were disclosed for Q1 2018; the 8-K Item 2.02 contained no quantitative operating results, limiting comparison to estimates or prior quarters .
• Consensus estimates via S&P Global for Q1 2018 were unavailable; as such, estimate comparison cannot be performed for this period.

What Went Well and What Went Wrong

What Went Well

• Management articulated a strategic direction focused on identifying “product & solution whitespace,” acquiring and integrating roll-up candidates in cybersecurity, privacy, data governance, and related areas, signaling an M&A-led growth plan .
• Emphasis on customer experience and adoption into existing cybersecurity/data protection investments suggests intent to build a cohesive platform spanning cyber response, identity governance, blockchain ledgers, and distributed big-data capabilities .
• Corporate reorganization steps (name change to Data443 Risk Mitigation, Inc.) reflect alignment of branding with planned “All Things Data Security” positioning .

What Went Wrong

• The company disclosed “substantial doubt” about its ability to continue as a going concern due to no operations, stockholders’ deficit, and accumulated losses, raising significant solvency concerns for investors .
• Restatement revealed previously unrecognized long-term obligations (two notes totaling $594,000 plus accrued interest, now $1,000,000 at 12%), increasing leverage and financial fragility .
• Convertible debt ($125,000) with restrictive non-dilution clauses and change-in-control complexities (including declaratory judgment matters) add legal and financing constraints that could impede capital raising and strategic execution .

Financial Results

ATDS did not disclose Q1 2018 revenue, EPS, or margin metrics in the 8-K; Exhibit 99.1 contained restated year-end 2017 financials and narrative disclosures, with Item 2.02 providing no quantitative results for Q1 2018 .

Income Statement Metrics vs Prior Periods and Estimates

Balance Sheet Snapshot (Context from Restated Exhibit 99.1)

Segment Breakdown and KPIs

Guidance Changes

Earnings Call Themes & Trends

ATDS did not hold or disclose a Q1 2018 earnings call or transcript in the filing set; Item 2.02 contained no call-related content .

Management Commentary

• “Identify product & solution whitespace existing in the market, identify acquisition target products/companies… Build/Integrate the rollup candidate organizations into a larger operating umbrella – focusing heavily on customer experience and adoption… Leverage existing and new skillsets… encompass cyber response, data and identity governance, blockchain ledgers and other distributed big-data oriented capabilities.”
• “The Company currently has no operations and has a stockholders’ deficit of $125,000 with an accumulated deficit of $6,360,479… These factors… raise substantial doubt about the Company’s ability to continue as a going concern.”
• “The convertible note payable… consisted of two interest bearing notes… convertible at the option of the holder into common shares at the conversion price of $0.0001 per share… includes a non-dilution provision.”
• “Together with interest [pre-2008 loans], it now amounts to $1,000,000 being interest rate of 12% per annum.”

Q&A Highlights

No Q&A available; the filing did not include an earnings call transcript or analyst Q&A content for Q1 2018 .

Estimates Context

• Wall Street consensus estimates via S&P Global for Q1 2018 were unavailable; no EPS or revenue consensus could be compared to reported results.
• Given absence of disclosed operating results (revenue/EPS/margins) and no guidance, there is no basis for an estimate beat/miss assessment for Q1 2018 .

Key Takeaways for Investors

• ATDS functioned effectively as a pre-revenue, non-operating entity in Q1 2018, using the 8-K to restate prior financials and outline an M&A-led strategy rather than report quarterly operations .
• Balance sheet risk is acute: long-term debt of $1,000,000 at 12% and $125,000 of convertible debt with restrictive non-dilution provisions constrain financing flexibility and dilute equity value potential .
• Going concern language and accumulated deficit $(6,360,479) highlight solvency concerns; capital formation and successful acquisition/integration execution are prerequisites for the strategic plan to progress .
• Legal and control changes (declaratory judgment, claim bar date, changes in control) add governance complexity and could impact corporate actions and access to capital markets .
• With no Q1 operating metrics or guidance, near-term stock narrative is likely driven by corporate developments (capital raises, acquisitions, governance changes) rather than fundamentals .
• Monitoring subsequent filings and press releases for the first disclosed revenue, backlog/billings, customer adds, and guidance will be critical to reassessing risk/reward as the strategy transitions from narrative to execution .
• Until operating traction and a cleaner capital structure emerge, position sizing should reflect binary outcomes tied to successful acquisitions and financing terms .