VADP Vado Corporation (PK)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2024

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                          to                           

COMMISSION FILE NO. 000-56616

Vado Corp.

(Exact name of registrant as specified in its charter)

Nevada

(State or other jurisdiction of incorporation)

30-0968244

(IRS Employer Identification No.)

212 S. Gale Drive, Beverly Hills, CA 90211

Tel: (888) 545-0009

(Address and telephone number of registrant's executive office)

73 Market St., Venice, CA 90291

(Former address)

Securities registered pursuant to Section 12(b) of the Act:

Indicate by checkmark whether the issuer: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filed, an accelerated filer, a non-accelerated filer, or a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by checkmark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the most practicable date:

Vado Corp.

Table of Contents

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

Vado Corp.

Condensed Consolidated Balance Sheets

The accompanying notes are an integral part of these unaudited financial statements.

Vado Corp.

Condensed Consolidated Statements of Operations

(unaudited)

The accompanying notes are an integral part of these unaudited financial statements.

Vado Corp.

Condensed Consolidated Statements of Cash Flows

(unaudited)

The accompanying notes are an integral part of these unaudited financial statements.

Vado Corp.

Condensed Consolidated Statements of Stockholders’ Equity

For the Three and Nine Months Ended September 30, 2024 and 2023

The accompanying notes are an integral part of these unaudited financial statements.

VADO CORP.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2024 AND 2023

(UNAUDITED)

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION

Company Overview and Business Update

This report contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements regarding our business and operations following our acquisition of Socialcom, a digital marketing and services company, future trends and operating results of such business, the planned expansion of those operations into new markets and applications, characteristics and trends in the digital marketing industry and the demand for products and services we offer, our belief that internal measures we have taken to strengthen our  workforce and operational practices will be successful, our exploration of potential business opportunities and strategic transactions, the need for and use of proceeds from one or more financings for ongoing operations and strategic arrangements and partnerships, our capital needs and ability to obtain financings and liquidity including extending the due date of a $4 million loan due December 13, 2024. All statements other than statements of historical facts contained in this report, including statements regarding our future financial position, liquidity, working capital sources, business strategy and plans and objectives of management for future operations, are forward-looking statements. The words “believe,” “may,” “estimate,” “continue,” “anticipate,” “intend,” “should,” “plan,” “could,” “target,” “potential,” “is likely,” “will,” “expect” and similar expressions, as they relate to us, are intended to identify forward-looking statements. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our financial condition, results of operations, business strategy and financial needs.

The results anticipated by any or all of these forward-looking statements might not occur. Important factors, uncertainties and risks that may cause actual results to differ materially from these forward-looking statements include the potential impact of the geopolitical conflicts such as those in Israel and Ukraine, inflation, future interest rates, the impact of the recent U.S. presidential election on the economy and the capital markets, any   resulting reduction in demand for our services, declines in expenditures for digital marketing campaigns and a trend towards in-housing those functions, our limited operating history and revenue, our ability to effectively navigate challenges posed by the complex industries we serve including the potential for rapid and unpredictable technological change, regulatory burdens and an intense competitive environment, and our need to solve our pressing liquidity problems including whether we can re-finance and extend a $4 million loan due December 13, 2024. Further information on the risk factors affecting our business is contained in “Risk Factors” of our filings with the Securities and Exchange Commission (the “SEC”), including our Annual Report on Form 10-K for the fiscal year ended December 31, 2023, as may be amended or supplemented from time-to-time. We undertake no obligation to publicly update or revise any forward-looking statements, whether as the result of new information, future events or otherwise.

Background of the Company

Vado, through Socialcom, operates as a digital marketing and services company focused on delivering integrated advertising and technology performance solutions to independent agencies and brands through its omnichannel trading desk platform.

In response to a decline in customer ad purchasing which began in 2022, management has taken steps to (i) improve the employee experience and in turn improve employee retention; and (ii) enhance our product offerings and strengthen our core solutions to the middle market. More specifically, in order to drive increased customer acquisition, the Company is focused on improved market differentiation related to product development and innovation in the key three areas of: (i) predictive analytics, (ii) supply optimization, and (iii) creative automation. In 2023 we developed an industry leading, data-driven addition to our tech stack, successfully incorporating several layers of artificial intelligence (AI), predictive analytics, and automation in the application of data science, audience insights and tech-powered creative, an integrated and holistic system designed to optimize performance in real time for our brand and agency customers. We have successfully taken our new AI-powered data science solutions to market through various ongoing sales and marketing activities and are currently activating campaigns and delivering impact for both existing and new customers

In addition, in March 2024 we obtained 11 customer accounts and 14 employees from a very large company, which includes over $4 million in prepaid amounts (and thereby potential additional revenue), in addition to the continued good will, subject to our provision of services to the new customers and to that party’s right to offset for personnel expenses. See Note 3. “Transfer of Customers and Employees.”

Moving forward, we are actively assessing the mergers and acquisitions (M&A) landscape to identify potential acquisition targets, whether creative, media or technology companies, with stable customers and revenues, that can drive improved business outcomes through integrated access to the Socialcom media services solution.

Trends and Uncertainties

Our operations and industry are subject to the following trends and uncertainties:

Seasonality

In the advertising industry, companies commonly experience seasonal fluctuations in revenue. For example, some advertisers may allocate the largest portion of their budgets to the fourth quarter of the calendar year in order to coincide with increased holiday purchasing. Historically, the fourth quarter of the year reflects our highest level of advertising activity and the first quarter reflects the lowest level of such activity. We expect our revenue to continue to fluctuate based on seasonal factors that affect the advertising industry as a whole.

Developments in the Programmatic Advertising Market

Our operating results and prospects will be impacted by the overall adoption of programmatic advertising by inventory owners and content providers, as well as advertisers and the agencies and service providers that represent them. Programmatic advertising has grown rapidly in recent years, and any acceleration or slowing of this growth may affect our operating and financial performance. In addition, even if the programmatic advertising market continues to grow at its current rate, our ability to position ourselves within the market will impact the future growth of our business.

In addition, technological and other changes and developments in the digital ad space will also affect our operations and operating results. For example, many websites including Google are expected to update or alter their privacy settings and practices in the coming years, including by eliminating “cookies” and the collection of personal identifiable information about users, for which we and our industry will need to adjust in order to maintain and grow our operations.

Growth in and Retention of Customers

Our ability to generate and maintain revenue depends on retaining our existing customers and adding new customers. Our customers consist of small-to-medium sized businesses, with spending patterns that can be inconsistent or unpredictable. We also depend on a relatively small number of customers for a large proportion of our revenue streams. As a result, future revenue and growth depends upon our ability to retain our existing customers and to gain a larger amount of their advertising spend through our platform and related services.

Labor Shortages

Because of our focus on digital advertisements and the underlying technology and infrastructure involved in those processes, as well as providing a wide variety of businesses with their digital marketing needs, our operations depend on procuring, training and maintaining skilled personnel to assist us and our customers in fulfilling these demands. In recent periods, macroeconomic factors have contributed to labor shortages in the U.S. across industries. As a result of this and other factors, in fiscal year 2022 the loss of certain personnel, including members of our sales and customer support team, adversely impacted our operating results in that period. If the tightened labor market trend continues in general or for our business in particular, this trend could persist. In fiscal year 2023, we made significant strides in optimizing our operations, which not only reduced our operating expenses but also strategically positioned us for sustained incremental growth in the upcoming year. Through a combination of streamlining initiatives and technological advancements, we have enhanced our efficiency and productivity across all departments. Our team is now more agile, our cost structure more efficient, and our business model has been refined to capitalize on emerging opportunities in digital advertising and marketing services. We are confident that the measures taken to strengthen our workforce and operational practices will continue to yield beneficial results and drive growth in the remainder of fiscal year 2024.

Omnichannel Access

Because we assist in the selection and purchase of advertising inventory across a wide variety of formats for our customers, such as display, mobile, video, audio, social and native, our future growth will depend on our ability to maintain and grow the inventory of, and customer spend on, advertising channels. For instance, as we proceed further into the digital age, new channels can arise rapidly and gain popularity within relatively short periods, diverting attention from existing channels and forcing stakeholders in the industry, including us, to adapt quickly. Further, each channel we now or may in the future access to service our customers has its own policies in terms of content and use, and we must continually monitor and adhere to these requirements to continue to access those channels for our customers. We believe that our ability to integrate and offer access to new means of digital communication, such as Connected Television (CTV), digital out-of-home (DOOH), and digital radio advertising inventory and to manage the increased costs that will accompany these developments, will impact the operating results and future growth of our business.

Results of Operations for the Three Months Ended September 30, 2024 Compared with the Three Months Ended September 30, 2023

Revenue

Revenue was $5,106,087 for the three months ended September 30, 2024, an increase of $756,554 or 17.4% compared to revenue of $4,349,533 for the three months ended September 30, 2023. In addition to the ongoing organic growth, the primary reason for the increase was the Agreement for Transfer of Customers and Employees (the “Agreement”) entered into on March 15, 2024 which resulted in onboarding sales of $2,461,934 during the three months ended September 30, 2024.

Costs of Revenue

Cost of revenue was $4,499,584 for the three months ended September 30, 2024, an increase of $1,900,374 or 73.1% compared to $2,599,210 during the three months ended September 30, 2023. The increase was driven primarily by costs associated with revenue onboarded pursuant to the Agreement, which were $2,033,922 during the three months ended September 30, 2024.

Our gross profit margins were 12% during the three months ended September 30, 2024 compared to 40% during the three months ended September 30, 2023. The decrease was driven primarily by an increase in lower margin revenue, in part linked to the Agreement for Transfer of Customers and Employees (the “Agreement”) entered into on March 15, 2024 as costs incurred in connection with that Agreement, including the hiring of additional employees, outpaced the added revenue derived therefrom.

Selling, General, and Administrative Expenses

Selling, general, and administrative expenses (“SG&A”) were $2,127,198 for the three months ended September 30, 2024, a decrease of $94,821 or 4.3%, compared to $2,222,019 during the three months ended September 30, 2023. The decrease was driven primarily cost cutting measures introduced in the quarter ended September 30, 2024.

Interest Expense, Net of Interest Income

Interest expense, net of interest income was $98,734 during the three months ended September 30, 2024, a decrease of $1,067,407 or 91.6%, compared to interest expense of $1,165,641 during the three months ended September 30, 2023. The decrease was driven primarily by the amortization of the minimum interest due on the Decathlon loan in the prior period.

Interest Income, Restricted Investment

Interest income, restricted investment $6,752 during the three months ended September 30, 2024. There were no comparable transactions in the prior period. The increase is due to the cash held in connection with a vendor dispute.

Results of Operations for the Nine Months Ended September 30, 2024 Compared with the Nine Months Ended September 30, 2023

Revenue

Revenue was $16,056,652 for the nine months ended September 30, 2024, an increase of $4,391,570 or 37.6% compared to revenue of $11,665,082 for the nine months ended September 30, 2023. In addition to ongoing organic growth, the primary reason for the increase was the Agreement for Transfer of Customers which resulted in onboarding sales of $6,784,877 during the nine months ended September 30, 2024. See Note 3 in the financial statements contained in this report.

Costs of Revenue

Cost of revenue was $13,648,611 for the nine months ended September 30, 2024, an increase of $5,992,061 or 78.3% compared to $7,656,550 during the nine months ended September 30, 2023. The increase was driven primarily by costs associated with revenue from customers onboarded pursuant to the Agreement, which were $5,670,349 during the nine months ended September 30, 2024. See Note 3 in the financial statements contained in this report.

Our gross profit margins were 15% during the nine months ended September 30, 2024 compared to 34% during the nine months ended September 30, 2023. The decrease was driven primarily by an increase in lower margin revenue, in part linked to the Agreement for Transfer of Customers and Employees (the “Agreement”) entered into on March 15, 2024 as costs incurred in connection with that Agreement, including the hiring of additional employees, outpaced the added revenue derived therefrom.

Selling, General, and Administrative Expenses

Selling, general, and administrative expenses were $6,494,324 for the nine months ended September 30, 2024, a decrease of $586,886 or 8.3%, compared to $7,081,210 during the nine months ended September 30, 2023. SG&A expenses decreased primarily due to a decrease in headcount related expenses and stock-based compensation expenses during the period.

Cost of Legal Settlement

Legal settlement expense was $894,274 for the nine months ended September 30, 2023 in the amount of liability claimed by a vendor in a legal dispute and to court costs. There was no comparable transaction during the current period.

Interest Expense, Net of Interest Income

Interest expense, net of interest income was $1,353,371 during the nine months ended September 30, 2024, a decrease of $257,899 or 16.0%, compared to interest expense of $1,611,270 during the nine months ended September 30, 2023. The increase was driven primarily by the amortization of the minimum interest due on the Decathlon loan during the prior period.

Interest Income, Restricted Investment

Interest income, restricted investment was $29,261 during the nine months ended September 30, 2024. There were no comparable transactions in the prior period. The increase is due to the cash held in connection with a vendor dispute.

Cash Flows from Operating Activities

Our cash flows from operating activities are primarily influenced by growth or decline in operations, increases or decreases in collections from our customers and related payments to suppliers for advertising media and data. Cash flows from operating activities are typically affected by changes in the components of working capital, particularly changes in accounts receivable, accounts payable, and accrued liabilities. Timing differences from cash receipts from customers and payments to suppliers have a significant impact on our cash flows from operating activities. We often pay suppliers in advance of collections from our customers. Our collection and payment cycles can vary from period to period, and we additionally expect seasonality to impact cash flows from operating activities on a quarterly basis during the year.

For the nine months ended September 30, 2024, cash provided by operating activities of $1,113,091 resulted primarily from a net loss of ($5,410,393) adjusted for non-cash items totaling $1,124,114 and a net increase of $5,399,370 resulting from changes in the components of working capital. The $1,113,091 in non-cash adjustments to net income are attributable to primarily to charges of $1,036,732 in connection with a minimum interest liability on the Decathlon Loan; $66,964 of depreciation and amortization; and $36,185 related to employee stock-based compensation, and bad debt expense of $3,977, partially offset by $19,744 of interest income on restricted investment. The change in the components of working capital of $5,399,370 was due primarily to a $2,752,947 increase in deferred revenue almost entirely due to the Agreement described in Note 3. “Transfer of Customers and Employees.”, $915,612 increase in accounts payable, $1,049,000 from the reclassification of restricted investment to restricted cash, and a $710,981 decrease in accounts receivable, with the remaining change attributable to normal operational fluctuations in current assets and current liabilities.

For the nine months ended September 30, 2023, cash used in operating activities of ($2,752,819) resulted primarily from a net loss of ($5,578,222) adjusted for non-cash items totaling $2,587,303 and a net increase of $237,600 in the components of working capital. The $2,587,303 in non-cash adjustments to net income are attributable to primarily to charges of $1,172,638 in connection with a minimum interest liability on the Decathlon Loan; $512,153 related to employee stock-based compensation, and $432,901 for amortization of our office lease. The change in the components of working capital of $237,600 was due primarily to a ($1,424,950) increase in accounts receivable and a $1,108,089 increase in accounts payable, with the remaining change attributable to normal operational fluctuations in current assets and current liabilities.

Cash Flows Used in Investing Activities

Our primary investing activities consist primarily of the purchase of fixed assets and costs paid for the development of software to improve our platform. As our business grows, we expect our capital expenditures and our investment activity to continue to increase.

For the nine months ended September 30, 2024, we used $15,700 of cash in investing activities, consisting of $8,207 invested in capitalized software and $7,493 to purchase fixed assets.

For the nine months ended September 30, 2023, we used $1,031,340 of cash in investing activities, consisting of $1,000,786 invested into securities related to the funding of the surety bond described in Notes 13 and 16, $21,848 invested in capitalized software and $8,706 to purchase fixed assets.

Cash Flows Provided by Financing Activities

Our financing activities consisted primarily of the sale of common and preferred stock, borrowings and repayments of our debt, proceeds from forgiveness on borrowings, proceeds from the exercise of options issued under our equity compensation plan.

For the nine months ended September 30, 2024, cash used in financing activities of $168,477 consisted of $464,477 of principal payments on loans, partially offset by proceeds of $200,000 from the issuance of convertible notes payable – related parties and $96,000 from the issuance of notes payable – related parties.

For the nine months ended September 30, 2023, cash provided by financing activities of $3,754,458 was due to $2,100,000 in proceeds from the issuance of convertible notes payable to related parties, $1,500,000 in proceeds from the sale of preferred stock, $500,000 in proceeds from the sale of common stock, and $5,071 from the exercise of stock options, partially offset by $350,613 in principal payments on loans.

Non-GAAP Measures

Adjusted EBITDA

Adjusted EBITDA is a non-GAAP financial measure that we define as net income (loss) before (a) certain stock-based compensation expense, (b) costs attributable to non-recurring settlement expense, legal activity, professional fees, and other transaction and offering costs, (c) interest, (d) tax, and (e) depreciation and amortization. We use Adjusted EBITDA to evaluate the performance of our core business operations. We believe that information about Adjusted EBITDA assists investors by allowing them to evaluate changes in the operating results of our business separate from non-operational factors that affect net income (loss), thus providing insights into both operations and the other factors that affect reported results. Adjusted EBITDA is not calculated or presented in accordance with GAAP. Accordingly, Adjusted EBITDA should be considered in addition to, and not as a substitute for, operating income (loss), net income (loss), and other measures of financial performance reported in accordance with GAAP. Furthermore, this measure may vary among other companies; thus, Adjusted EBITDA as presented herein may not be comparable to similarly titled measures of other companies.

The following table sets forth the reconciliation of Adjusted EBITDA to net loss, the most comparable GAAP financial measure for the three and nine months ended September 30, 2024 and 2023:

Liquidity and Capital Resources

As of November 1, 2024, we have a net unrestricted cash of $30,566. Management believes we do not have sufficient working capital to meet our operating needs for the next 12 months. We have a $4 million loan due December 13, 2024 that if not extended may mean we will cease operations.  In order to meet our working capital requirements, we will need to either raise sufficient capital or reduce our expenditures. We will rely on our ability to improve operating cash flow or raise additional capital through the sale of debt or equity securities and draw on our existing credit facility, in addition to our existing cash and cash equivalents to meet our working capital requirements for at least the next 12 months.

The Company’s ability to continue as a going concern is dependent upon its ability to improve cash flow and the ability to obtain additional financing. These and other factors substantial doubt about the Company’s ability to continue as a going concern in the following 12-month period.

We recently determined not to pursue our Regulation A offering which was qualified in November 2023, and will need to locate capital from other sources, which we may not be able to accomplish in a reasonable amount of time or on favorable terms, if at all.

Our recent and potential future financing transactions, outstanding indebtedness and other developments which will potentially impact our liquidity are summarized below.

During the year ended December 31, 2023, we recorded an increase in the minimum interest liability due on our Decathlon Loan in the amount of $900,000, and during the three months ended September 30, 2024, this amount was increased by an additional $150,000.

Financing Agreements

On June 13, 2019, Socialcom entered into an accounts receivable financing and security agreement (the “Financing Agreement”) with SLR Digital Finance, LLC as the secured lender which was amended on September 18, 2023, January 31, 2024 and April 1, 2024. The Financing Agreement as amended has a current maximum amount of $2,000,000 and an interest rate per annum equal to 5% plus the “prime rate”, which is defined as the higher of the highest rate as reported by the Wall Street Journal or 8.5%. The Financing Agreement provided for an initial financing fee equal to 1/12th of the facility interest rate and additional monthly financing fees of 1/12th of the facility interest rate. The Financing Agreement is subject to an early termination fee equal to 2% of the maximum amount available under the Financing Agreement. Further, the Financing Agreement provides that Socialcom shall at all times use at least 20% of the maximum amount. The revolving credit facility under the Financing Agreement is secured by the trade accounts receivable of Socialcom and guaranteed by its assets and the assets of Vado, including the Socialcom common stock Vado holds representing 100% of the outstanding Socialcom common stock. Upon any event of default, the lender may, among other things, immediately demand repayment of all advanced amounts thereunder. The Financing Agreement provides, among other things, that the lender can immediately terminate the Financing Agreement and demand payment. In addition, Jason Wulfsohn, our Chief Executive Officer and a principal stockholder, guaranteed the loan and pledged his shares of Vado common stock to secure payment. All amounts due under the Financing Agreement have been paid as of September 30, 2024.

On December 31, 2019, Socialcom borrowed $3,000,000 (the “Decathlon Loan”). The Decathlon Loan is due December 13, 2024 and is secured by all the assets of Socialcom. The Decathlon Loan accrues interest at a variable rate based upon internal rate of return targets, which interest multiple is subject to increase by 0.015 upon an event of default. The effective rate of interest for the years ended December 31, 2023 and 2022 was approximately 17%. Repayments are required based upon a fixed percentage of our earned revenue. If not repaid prior the final balance is due on December 13, 2024. The Decathlon Loan is subject to minimum interest that escalates over the term of the loan. At September 30, 2024 and December 31, 2023, the potential liability for unearned minimum interest was $116,837 and $886,733, respectively. During the nine months ended September 30, 2024, the Company made principal payments in the amount $464,476 on the Decathlon loan.

Related Party Indebtedness

The Company had a total of $4,791,014 in outstanding related party indebtedness, including accrued interest, payable to our officers and directors or affiliated entities at September 30, 2024. In October 2024, the Company borrowed an additional $500,000 from Jason Wulfsohn, our Chief Executive Officer, resulting in a total of $5,291,014 in related party indebtedness. For more information on this related party indebtedness, see footnotes 12, 13 and 20 to our financial statements contained in this report.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

Not applicable.

ITEM 4. CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

Our disclosure controls and procedures are designed to ensure that information required to be disclosed in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC. Mr. Jason Wulfsohn, our Chief Executive Officer (principal executive officer) and Ms. Amanda Edris, our Controller (principal financial officer), have reviewed the effectiveness of our “disclosure controls and procedures” (as defined in the Exchange Act Rules 13(a)-15(e) and 15(d)-15(e)) as of the end of the period covered by this Quarterly Report on Form 10-Q and have concluded that our disclosure controls and procedures were effective to ensure that material information relating to the Company is recorded, processed, summarized, and reported in a timely manner.

Changes in Internal Controls over Financial Reporting

There have been no changes in the Company's internal control over financial reporting during the period covered by this report that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

All material legal proceedings and material developments thereto have previously been disclosed.

ITEM 1A. RISK FACTORS

In addition to the risks and uncertainties described in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2023 under the section titled “Risk Factors”, the Company is subject to the following risks and uncertainties:

If we are unable to extend a $4 million loan due December 13, 2024, we lack the resources to pay it and as a result may cease operations.

We owe a third party creditor $4 million under a note which is due December 13, 2024. The Board is actively engaged in discussions to renegotiate the terms of our $4 million note. These efforts are focused on securing an extension or revised payment structure to alleviate immediate financial pressure. If we are unable to extend it or our directors and officers are unable to arrange for any financing to pay it, we likely will cease operations. See Note 11 – Loans Payable in this report, and the risk factor titled “The terms of Socialcom’s loan facility could result in the loss of the Socialcom business or result in a change of control of Vado were a default to occur, or cause other material adverse consequences” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023, for more information on this loan and the risks and uncertainties arising therefrom.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

During the period covered by this report, none of our directors or officers (as defined in Rule 16a-1(f) under the Exchange Act) adopted or terminated any contract, instruction or written plan for the purchase or sale of our securities that was intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) under the Exchange Act or any “non-Rule 10b5-1 arrangement” as defined in Item 408(c) of Regulation S-K.

On October 27, 2024, the Company entered into a convertible promissory note agreement in the amount of $250,000 with a related party (the “October 27 Note”). The October 27 Note bears interest at the rate of 8.5% per year, is convertible into shares of the Company’s common stock at a price of $0.32 per share, and is due on December 31, 2026.

On October 29, 2024, the Company entered into a convertible promissory note agreement in the amount of $250,000 with a related party (the “October 29 Note”). The October 29 Note bears interest at the rate of 8.5% per year, is convertible into shares of the Company’s common stock at a price of $0.32 per share, and is due on December 31, 2026.

A form of the foregoing notes is incorporated by reference in Exhibit 4.2 of this report.

ITEM 6. EXHIBITS

* Certain schedules and exhibits to this agreement have been omitted. A copy of any omitted schedule and/or exhibit will be furnished to the Securities and Exchange Commission upon request.

SIGNATURES

In accordance with the requirements of the Securities Exchange Act of 1934, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.