SRCO 10-K
Sparta Commercial Services, Inc. (SRCO)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
| ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For
the fiscal year ended
| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from __________ to __________.
Commission
file number:
(Exact name of registrant as specified in its charter)
(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) | |
| (Address of principal executive offices) | (Zip Code) |
Registrant’s
telephone number, including area code:
Securities registered pursuant to Section 12(b) of the Exchange Act:
| Title of each class | Trading symbol(s) | Name of exchange on which registered | ||
| OTCQB |
Securities registered pursuant to Section 12(g) of the Exchange Act:
Common Stock, par value
$0.001
(Title of class)
Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. ☐ Yes ☒
Indicate
by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. ☐ Yes ☒
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by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceeding12 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. ☒
Indicate
by check mark whether the registrant has submitted electronically and posted every Interactive Data File required to be submitted and
posted pursuant to Rule 405 of Regulation S-T (§229.405 of this chapter) during the preceding 12 months (or for such shorter period
that the registrant was required to file such files). ☒
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions “large accelerated filer”, “accelerated filer”, and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer ☐ | Accelerated filer ☐ | |
| Smaller
reporting company | ||
| Emerging
growth company |
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. ☐
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included in the filing reflect the correction of an error to previously issued financial statements.
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
The
aggregate market value of voting and non-voting common equity of the issuer held by non-affiliates, on April 30, 2026 was $
As of August 13, 2026, we had shares of common stock issued and outstanding.
DOCUMENTS
INCORPORATED BY REFERENCE:
SPARTA COMMERCIAL SERVICES, INC.
TABLE OF CONTENTS
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PART I
ITEM 1. BUSINESS
General Overview
Sparta Commercial Services, Inc. (“Sparta,” “we,” “us,” or the “Company”) is a Nevada corporation with headquarters in New York, New York, and a corporate website at www.spartacommercial.com, with subsidiary addresses in Stamford, CT. We operate as a multi-disciplined parent corporation across four primary business sectors: FinTech Services, Financial Services, E-Commerce & Mobile Technology, and Health and Wellness. Our operations are conducted through wholly owned subsidiaries and joint ventures that provide specialized financing products, technology-driven solutions, and consumer wellness offerings.
Sparta’s origins are in the Powersports consumer finance industry, historically providing retail installment loans and leases through authorized motorcycle dealerships in 33 states, supported by financing lines of credit from institutional lenders. We built and maintained a full underwriting and servicing platform for our portfolio until discontinuing our consumer loans and leases business after the 2008 financial crisis.
I. FINTECH SERVICES
Agoge Global USA, Inc. – Cross-Border Trade Finance and Blockchain Solutions
Formed in December 2022 as a subsidiary of Sparta Crypto, Inc., Agoge Global USA, Inc. (“Agoge”) was established to address inefficiencies in cross-border trade between the United States and Brazil. Agoge entered into a joint venture with WeDev Group Ltda., a Brazilian technology and blockchain development firm, to create and operate a comprehensive digital platform for international trade finance.
The joint venture developed EZBroker360, a blockchain-enabled platform utilizing stablecoins and distributed ledger technology to:
- Reduce transaction times from days to hours;
- Lower cross-border payment costs; and
- Improve security, transparency, and auditability.
In addition to payment processing, EZBroker360 provides:
- Staged financing for freightage, customs duties, and taxes;
- Assistance with Brazilian tax and regulatory compliance;
- Import/export documentation preparation;
- Industry introductions and market entry facilitation; and
- Reselling and distribution support in other jurisdictions.
Agoge focuses on financing gaps in trade transactions that are not traditionally served by conventional banks. Since inception, the Company’s loan deployment has reached $2 million, supported by repeat client engagement and organic referrals. Clients, such as Patta Brazil, have reported enhanced cash flow flexibility, increased import volumes, avoidance of demurrage fees, and operational scaling. Patta Brazil’s CEO has credited Agoge’s financing solutions for supporting a projected 50% revenue increase and enabling additional hiring.
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Building on its technology foundation, the joint venture has developed iGoCards, a virtual card and expense management platform for globally oriented businesses. iGoCards will enable fund loading via USD or stablecoins, incorporate multi-user controls, and offer advanced expense management features. A planned “Receive” capability will allow clients to manage both payables and receivables, positioning Agoge as a comprehensive financial ecosystem provider for international commerce.
II. FINANCIAL SERVICES
b. Municipal and Non-Profit Leasing of Essential Equipment
In 2007, we launched our Municipal Financing program (www.spartamunicipal.com), which continues to operate and has provided financing to over 100 jurisdictions nationwide. This program offers equipment financing solutions for local and state government agencies, as well as nonprofit organizations that comply with Internal Revenue Code §501(c)(3). Eligible nonprofits include both public charities and private foundations.
Through this program, we finance essential equipment such as police motorcycles, cruisers, buses, fire trucks, EMS vehicles, and related public safety equipment. We are a preferred financing source for BMW Motorrad USA Police Motors. Financing is offered on a pass-through basis with a Midwest bank. Marketing channels have included direct outreach, trade shows, targeted industry publications, and referrals from manufacturers, dealerships, and existing municipal clients.
III. E-COMMERCE & MOBILE TECHNOLOGY
A. iMobile Solutions, Inc.
Our E-Commerce & Mobile Technology segment operates through iMobile Solutions, Inc. (“iMS”), formerly Specialty Reports, Inc. iMS provides the following:
Mobile Application Development – Through our “iMobileApp” brand (www.imobileapp.com), we create, host, and maintain custom mobile applications for small- and medium-sized businesses across a wide range of industries, including vehicle dealerships, racetracks, golf and country clubs, schools, restaurants, grocery stores, and entertainment venues. Applications incorporate advanced features, including geo-fencing, push notifications, inventory display, event management, CRM integration, and multi-location management. Our subscription model includes development, hosting, updates, and optional fully managed marketing services.
Website Design, Hosting, and SEO Services – We design, launch, maintain, and host websites for clients, incorporating search engine optimization (SEO), e-commerce integration, social media connectivity, and online review management. Each engagement includes a tailored marketing action plan.
Custom Software Development – This includes kitchen ordering systems for grocery stores and delicatessens, with payment integration, wireless printing, and text notification features.
Text Messaging Platforms – Our text messaging platform enables clients to create, schedule, and analyze marketing campaigns, improving customer engagement and brand loyalty.
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B. Vehicle History Reports
iMS also operates our Specialty Vehicle History Reports business, serving markets not fully addressed by major providers such as CARFAX® or AutoCheck®. Our reports are marketed under:
- Cyclechex – Motorcycle history reports (www.cyclechex.com);
- RVchex – Recreational vehicle history reports (www.rvchex.com); and
- Truckchex – Heavy-duty truck history reports (www.truckchex.com).
These reports contain data such as prior damage, title brands, odometer readings, manufacturer specifications, recall history, and other relevant factors, sourced from governmental and industry databases, including the National Motor Vehicle Title Information System (NMVTIS). They are sold online, through dealer networks, and in over 60 countries.
IV. HEALTH AND WELLNESS
New World Health Brands, Inc.
In August 2020, NWHB began offering nutritional supplements in response to shifting consumer preferences during the COVID-19 pandemic. Our product line includes high-quality vitamins and minerals—such as iodine, boron, copper/zinc/selenium, and magnesium complex,—sourced and manufactured exclusively in the United States under strict quality standards. Products are sold via our e-commerce website (www.newworldhealthbrands.com) and through marketplaces including Amazon, Walmart, TikTok, eBay, and Etsy. NWHB products serve diverse health needs, from athletic performance and general wellness to anti-aging and skincare.
IV. COMPETITIVE POSITIONING
We believe our targeted focus in underserved markets provides distinct competitive advantages:
- Fintech Services – Our staged-based trade finance solution offers specialized financing not widely available from traditional lenders.
- Financial Services – Our municipal leasing program offers custom financing solutions to municipalities, schools, and non-profit organizations nationwide for all of their essential equipment needs.
- E-Commerce & Mobile Technology – Our mobile application and website products provide cost-effective, customizable solutions for small- and medium-sized businesses, backed by industry-specific expertise.
- Vehicle History Reports – Our products address specialty vehicle categories not fully served by the dominant automotive report providers.
- Health and Wellness – Our U.S.-sourced supplement line appeals to consumers seeking premium, transparently sourced products.
We compete on the basis of service quality, niche market focus, and the ability to develop and deploy proprietary technology solutions across multiple industries of the motorcycle and RV space and do not intend to compete directly with either CarFax® or AutoCheck®.
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Employees
As of April 30, 2026, we had four full-time employees and three part-time employees.
ITEM 1A. RISK FACTORS
The Company’s forward-looking statements are subject to uncertainties and risks, among them the adverse effects of the COVID-19 pandemic. The Company’s operations — from supply chain and distribution – are impacted by government regulations and legislation, the economic landscape, revenue fluctuations, diminished customer base, competing products, regulatory changes, common share price volatility, availability of capital, successful integration of new businesses, and including but not limited to risks and uncertainties discussed under the heading “Risk Factors” in this MD&A and the Company’s other filings with the SEC. The impact of any risk, uncertainty or factor on a particular forward-looking statement is not determinable with certainty as these are interdependent, and the Company’s future course of action depends on Management’s assessment of all relevant information available at the time. Except to the extent required by law, the Company assumes no obligation to publicly update or revise any forward-looking statements made in this MD&A, whether as a result of new information, future events or otherwise. All subsequent forward-looking statements, whether written or oral, attributable to the Company or persons acting on the Company’s behalf, are expressly qualified in their entirety by these cautionary statements.
We are subject to certain risks and uncertainties in our business operations that are described below. The risks and uncertainties described below are not the only risks we face. Additional risks and uncertainties not presently known or that are currently deemed immaterial may also impair our business operations.
Risks Related To Our Financial Condition
We have a history of operating losses.
Through our fiscal year ended April 30, 2026, we have incurred significant expenses and have sustained significant losses. We have an accumulated deficit of $71,790,476 at April 30, 2026 and a negative working capital of $11,553,887.
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Our business requires additional amounts of capital, and we will need to obtain additional financing in the near future.
To expand our business, we need raise additional capital to support our operations until we become cash flow positive. We will have to raise approximately $1 million over the next twelve months to support our business. As our business grows, we will need to seek additional financing to fund growth. There can be no assurance that we will have sufficient capital or be able to secure credit facilities when needed. The failure to obtain additional funds, when required, on satisfactory terms and conditions, would have a material and adverse effect on our business, operating results, and financial condition, and ultimately could result in the cessation of our business.
To the extent that we raise additional capital by issuing equity securities, our stockholders may experience substantial dilution. In addition, any new equity securities may have greater rights, preferences or privileges than our existing common stock. A material shortage of capital will require us to take drastic steps such as reducing our level of operations, disposing of selected assets or seeking an acquisition partner. If cash is insufficient, we will not be able to continue operations.
We have a significant amount of debt which could impact our ability to continue to implement our business plan.
We have incurred total liabilities of $12,459,845 as of April 30, 2026. Unless we can restructure some or all this outstanding debt, and raise sufficient capital to fund our continued development, we will be unable to pay these obligations as our current operations do not generate significant revenue.
Our auditor’s opinion expresses doubt about our ability to continue as a “going concern”.
The independent auditor’s report on our April 30, 2026, and April 30, 2025 consolidated financial statements state that our historical losses raise substantial doubts about our ability to continue as a going concern. We cannot assure you that we will be able to generate revenues or maintain any line of business that might prove to be profitable. Our ability to continue as a going concern is subject to our ability to generate a profit or obtain necessary funding from outside sources, including obtaining additional funding from the sale of our securities, increasing sales, or obtaining credit lines or loans from various financial institutions where possible. If we are unable to develop our business, we may have to discontinue operations or cease to exist, which would be detrimental to the value of our common stock. We can make no assurances that our business operations will develop and provide us with significant cash to continue operations.
Risks Related to the Company
We are a small company in the information technology business.
We are a relatively new entrant into the businesses of providing vehicle history reports and building mobile apps. We indirectly compete with major, well capitalized, suppliers of automobile history reports. While these companies do not presently offer motorcycle or RV history reports, there is no guaranty they will not do so in the future. Many small “players” characterize the mobile app development business. While we believe we are better suited to build, service, and market mobile apps than our competitors, there is no assurance that we can continue to do so.
We will require additional capital to implement our business plan and marketing strategies which we may be unable to secure.
Under our business plan, we intend to build and expand our operations substantially over the next several years. Our cash on hand is insufficient for our operational needs. We therefore need additional financing for working capital purposes and to grow our business. There is no assurance that additional financing will be available on acceptable terms, or at all. If we fail to obtain additional financing as needed, we may be required to reduce or halt our anticipated expansion plans and our business and results of operations could be materially, adversely affected. There can be no assurance that additional financing will be available on terms deemed to be acceptable by us, and in our stockholders’ interests.
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We face security risks related to our electronic processing of sensitive and confidential customer and associate data.
Given the nature of our business, we and/or our service providers collect process and retain sensitive and confidential customer data, including credit card information. Despite our current security measures, our facilities and systems, and those of our third-party service providers, may be vulnerable to information security breaches, acts of vandalism, computer viruses or other similar attacks. An information security breach involving the disclosure of confidential data could damage our reputation and our customers’ willingness to shop on our websites, and subject us to possible legal liability. In addition, we may incur material remediation costs as a result of an information security breach, including liability for stolen customer or associate data, repairing system damage or providing credit monitoring or other benefits to customers or associates affected by the breach.
We could be harmed by data loss or other security breaches
As a result of our services being web-based and the fact that we process and/or our service providers, store and transmit large amounts of data, including personal information, for our customers, failure to prevent or mitigate data loss or other security breaches, including breaches of our vendors’ technology and systems, could expose us or our customers to a risk of loss or misuse of such information, adversely affect our operating results, result in litigation or potential liability for us and otherwise harm our business. We use third party technology and systems for a variety of reasons, including, without limitation, encryption and authentication technology, employee email, content delivery to customers, back-office support and other functions. Although we and our service providers have developed systems and processes that are designed to protect customer information and prevent data loss and other security breaches, such measures cannot provide absolute security.
A variety of factors and economic forces may affect our operating results.
Our operating results may differ from current forecasts and projections significantly in the future because of a variety of factors, many of which are outside our control. These factors include, without limitation, the receipt of revenues, which is difficult to forecast accurately, the amount and timing of capital expenditures and other costs relating to the expansion of our operations, the introduction of new products or services by us or our competitors, borrowing costs, pricing changes in the industry, technical difficulties, general economic conditions, and economic conditions specific to our marketplace. The success of an investment in a vehicle history report and mobile app-based venture is dependent, at least, in part, on extrinsic economic forces, including the supply of and demand for such services. No assurance can be given that we will be able to generate sufficient revenue to cover our cost of doing business. Furthermore, our revenues and results of operations will be subject to fluctuations based upon general economic conditions. Economic factors like unemployment, interest rates, and the availability of credit generally, municipal government and corporate budget constraints affecting equipment and technology purchases, the rate of inflation, and consumer perceptions of the economy may affect the volume of history report purchases.
We are dependent on our management and the loss of any officer could hinder our implementation of our business plan.
We are heavily dependent upon management, the loss of any one of whom could have a material adverse effect on our ability to implement our business plan. While we have entered into an employment agreement with our Chief Executive Officer, this employment agreement could be terminated for a variety of reasons. We do not presently carry key man insurance on the life of any employee. If, for some reason, the services of management, or of any member of management, were no longer available to us, our operations and proposed businesses and endeavors may be materially adversely affected. Any failure of management to implement and manage our business strategy may have a material adverse effect on us. There can be no assurance that our operating and financial control systems will be adequate to support our future operations. Furthermore, the inability to continue to upgrade the operating and financial control systems, the inability to recruit and hire necessary personnel or the emergence of unexpected expansion difficulties could have a material adverse effect on our business, financial condition or results of operations.
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Our business is dependent on intellectual property rights and we may not be able to protect such rights successfully.
Our intellectual property, including our license agreements and other agreements, which establish our rights to proprietary intellectual property, our Cyclechex, RVchex, and Truckchex vehicle history reports and our SMA and iMA mobile apps are of great value to our business operations. Infringement or misappropriation of our intellectual property could materially harm our business. We rely on a combination of trade secret, copyright, trademark, and other proprietary rights laws to protect our rights to this valuable intellectual property. Third parties may try to challenge our intellectual property rights. In addition, our business is subject to the risk of third parties infringing or circumventing our intellectual property rights. We may need to resort to litigation in the future to protect our intellectual property rights, which could result in substantial costs and diversion of resources. Our failure to protect our intellectual property rights could have a material adverse effect on our business and competitive position.
Risks Related to our Subsidiary, New World Health Brands, Inc. (NWHB)
NWHB has limited operating history.
NWHB is still in an early phase and is just beginning to implement its business plan. There can be no assurance that it will ever operate profitably. The likelihood of its success should be considered in light of the problems, expenses, difficulties, complications and delays usually encountered by companies in their early stages of development, with low barriers to entry. NWHB may not be successful in attaining the objectives necessary for it to overcome these risks and uncertainties.
We need to raise additional capital to meet our future business requirements, and such capital raising may be costly or difficult to obtain and could dilute current stockholders’ ownership interests.
At this time, we have not secured or identified any additional financing to support NWHB. We do not have any firm commitments or other identified sources of additional capital from third parties or from our officers and directors or from other shareholders. There can be no assurance that additional capital will be available to us, or that, if available, it will be on terms satisfactory to us. Any additional financing will involve dilution to our existing shareholders. If we do not obtain additional capital on terms satisfactory to us, or at all, it may cause us to delay, curtail, scale back or forgo some or all of our business operations, which could have a material adverse effect on our business and financial results and investors would be at risk to lose all or a part of any investment in our Company.
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Our future success will depend on our ability to increase revenues.
The market for health, wellness and performance products is large, highly fragmented and intensely competitive. Current and prospective participants include specialty retailers, supermarkets, drugstores, mass merchants, multi-level marketing organizations, online merchants, mail-order companies and a variety of other smaller participants. We believe that the market is also highly sensitive to the introduction of new products, which may rapidly capture a significant share of the market. In the United States, we compete for sales with heavily advertised national brands manufactured by large pharmaceutical and food companies, as well as other brands, some of which have greater market presence, both brick and mortar and online, name recognition and financial, marketing and other resources, including some competitors that may spend more aggressively on advertising and promotional activities than we do. In addition, as some products become more mainstream and achieve broader distribution, we may experience increased price competition and adverse impacts to category share and growth for those products as more participants enter the market or we otherwise fail to retain market share. Further, if we fail to build out our e-commerce platform or fail to provide our customers with a desired omni-channel experience, we may lose business to online retailers with a more robust and engaging e-commerce platform. Further, the ability of consumers to compare prices on a real-time basis through the use of smartphones and digital technology puts additional pressure on us to maintain competitive pricing. We compete in multiple product categories and sales channels, including traditional large store and specialty store formats, mass merchants, and catalog; and increasingly internet-based and direct-sell retailers and vendors. Many factors affect the extent to which competition could affect our results, including as it relates to pricing, quality, assortment, marketing, promotions and advertising, service, locations, capital expenditures, category share and reputation, and prolonged competitive pressures, any of which could have a material effect on our results of operations. In order to be successful, we must increase our revenues from the sale of our products to individuals and marketing affiliates. In order to increase our revenues, we must successfully:
| ● | create and implement a marketing plan to attract individuals and retailers to our Wellness products; | |
| ● | increase traffic to our website by developing relationships with popular websites; | |
| ● | convert online visitors to clients; | |
| ● | attract, retain, and motivate qualified personnel with marketing and product development experience to serve in various capacities, including sales and marketing positions; | |
| ● | respond effectively to competitive pressures from other providers of Wellness products; |
If we are not successful in the execution of these strategies, our business, results of operations and financial condition will be materially adversely affected.
NWHB has losses which we expect to continue and there is no assurance our future operations will result in profitable revenues. If we cannot generate sufficient revenues to operate profitably or are unable to raise additional funds, we may consider a merger, acquisition, joint venture, strategic alliance, a roll-up, or other business combination to increase business.
Many of our existing competitors, as well as several potential competitors, may have longer operating histories, greater name recognition, larger customer bases and significantly greater financial, technical, and marketing resources than we do. This may enable them to respond more quickly to new or emerging consumer demands, or to devote greater resources to the development, promotion, and sale of their products than we can. These competitors and potential competitors may be able to undertake more extensive marketing campaigns, adopt more aggressive pricing policies and make more attractive offers to potential employees. In addition, current and prospective competitors may establish cooperative relationships among themselves or with third parties to improve their ability to address the needs of our existing and prospective customers. If these events occur, they could have a materially adverse effect on our revenue. Increased competition could also result in price reductions, reduced margins or loss of market share, any of which would adversely affect our business, results of operations and financial condition. See “Description of Business” and “Competition.”
We also believe our ability to compete depends on several factors outside of our control, including:
| ● | the prices at which others offer competitive products, including aggressive price competition and discounting; | |
| ● | the ability of our competitors to undertake more extensive marketing campaigns than we can; and | |
| ● | the extent of our competitors’ responsiveness to customer needs. |
In order to be competitive, we must have the ability to respond promptly and efficiently to the ever-changing marketplace. We must establish our name as a reliable and constant source of the highest quality products.
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We may not be successful in increasing our brand awareness which would adversely affect our business, result of operations, and financial condition.
Our future success will depend, in part, on our ability to increase the brand awareness of our website and the products we offer. If our marketing efforts are unsuccessful or if we cannot increase our brand awareness, our business, financial condition, and results of operations would be materially adversely affected. In order to build our brand awareness, we must succeed in our marketing efforts, provide high quality products and increase traffic to our website.
We may not be able to successfully manage our growth.
For NWHB to succeed, it needs to experience significant expansion. There can be no assurance that it will achieve this expansion. This expansion, if accomplished, may place a significant strain on the Company’s management, operational and financial resources. To manage any material growth, the Company will be required to implement operational and financial systems, procedures and controls. It also will be required to expand its finance, administrative and operations staff. There can be no assurance that the Company’s current and planned personnel, systems, procedures and controls will be adequate to support its future operations at any increased level. The Company’s failure to manage growth effectively could have a material adverse effect on its business, results of operations and financial condition.
If we do not successfully establish and maintain our brand as highly trusted and respected or are unable to attract and retain clients, we could sustain loss of revenues, which could significantly affect our business, financial condition, and results of operations.
In order to attract and retain a client base and increase business, we must establish, maintain and strengthen our name and the products we provide. In order to be successful in establishing our reputation, clients must perceive us as a trusted source for quality products and customer service. If we are unable to attract and retain clients with our current marketing plans, we may not be able to successfully establish our name and reputation, which could significantly affect our business, financial condition and results of operations.
Uninsured Losses
NWHB may obtain comprehensive insurance, including liability, fire and extended coverage, as is customarily obtained by business entities. Certain types of losses of a catastrophic nature, however, such as losses from floods, tornados, thunderstorms, hurricanes and earthquakes, are uninsurable or not economically insurable to the full extent of potential loss. Other uninsurable events such as “Acts of God”, work stoppages, pandemics, regulatory actions, or other causes, could interrupt operations and adversely affect NWHB’s results of operations.
RISKS RELATED TO OUR INDUSTRY
We are dependent on third party merchant credit card processors.
Our future success will depend, in significant part, upon third party credit card processing firms. Loss of our merchant services credit card processing firm and the inability to rapidly replace that firm could have a substantial negative effect on our business.
We are dependent on the Internet infrastructure.
Our future success will depend, in significant part, upon the maintenance of the various components of the Internet infrastructure, such as a reliable backbone network with the necessary speed, data capacity and security, and the timely development of enabling products, such as high-speed modems, which provide reliable and timely Internet access and services. To the extent that the Internet continues to experience increased numbers of users, frequency of use or increased user bandwidth requirements, we cannot be sure that the Internet infrastructure will continue to be able to support the demands placed on it or that the performance or reliability of the Internet will not be adversely affected. Furthermore, the Internet has experienced a variety of outages and other delays as a result of damage to portions of its infrastructure or otherwise, and such outages or delays could adversely affect our website and the websites of our co-branded partners, as well as the Internet service providers and online service providers our customers use to access our services. In addition, the Internet could lose its viability as a commercial medium due to delays in the development or adoption of new standards and protocols that can handle increased levels of activity. We cannot predict whether the infrastructure and complementary products and services necessary to maintain the Internet as a viable commercial medium will be developed or maintained. The threat of hacking is an ongoing one and to the best of our ability we will monitor our servers, maintain up-to-date anti-virus and anti-malware programs and keep our employees advised as to proper computer security.
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Risks Related to Investment in our Company
The market for our common stock could be volatile and could decline when you want to sell your holdings.
Our common stock trades on the OTCQB under the symbol SRCO. Numerous factors, many of which are beyond our control, may cause the market price of our common stock to fluctuate significantly. These factors include but are not limited to: (i) actual or anticipated changes in our earnings, fluctuations in our operating results or our failure to meet the expectations of financial market analysts and investor; (ii) changes in financial estimates by us or by any securities analysts who might cover our stock; (iii) speculation about our business in the press or the investment community; (iv) stock market price and volume fluctuations of other publicly traded companies and, in particular, those that are in our industry; (v) our potential inability to pay back outstanding notes or debentures, or contractual obligations related to the cancellation thereof; (vi) investor perceptions of our respective industries in general and our company in particular; (vii) the operating and stock performance of comparable companies; (viii) general economic conditions and trends; (ix) major catastrophic events; (x) announcements by us or our competitors of new products, significant acquisitions, strategic partnerships or divestitures; (xi) changes in accounting standards, policies, guidance, interpretation or principles; (xii) sales of our common stock, including sales by our directors, officers or significant stockholders; and (xiii) additions or departures of key personnel.
Moreover, securities markets may from time-to-time experience significant price and volume fluctuations for reasons unrelated to operating performance of particular companies. These market fluctuations may adversely affect the price of our common stock and other interests in our company at a time when you want to sell your interest in us.
Our common stock will be subject to the “penny stock” rules of the SEC, which may make it more difficult for stockholders to sell our common stock.
The Securities and Exchange Commission has adopted Rule 15g-9 which establishes the definition of a “penny stock,” for the purposes relevant to us, as any equity security that has a market price of less than $5.00 per share or with an exercise price of less than $5.00 per share, subject to certain exceptions. For any transaction involving a penny stock, unless exempt, the rules require (i) that a broker or dealer approve a person’s account for transactions in penny stocks; and (ii) the broker or dealer receive from the investor a written agreement to the transaction, setting forth the identity and quantity of the penny stock to be purchased.
In order to approve a person’s account for transactions in penny stocks, the broker or dealer must (i) obtain financial information and investment experience objectives of the person; and (ii) make a reasonable determination that the transactions in penny stocks are suitable for that person and the person has sufficient knowledge and experience in financial matters to be capable of evaluating the risks of transactions in penny stocks.
The broker or dealer must also deliver, prior to any transaction in a penny stock, a disclosure schedule prescribed by the Commission relating to the penny stock market, which, in highlight form (i) sets forth the basis on which the broker or dealer made the suitability determination; and (ii) that the broker or dealer received a signed, written agreement from the investor prior to the transaction.
Disclosure also has to be made about the risks of investing in penny stocks in both public offerings and in secondary trading and about the commissions payable to both the broker-dealer and the registered representative, current quotations for the securities and the rights and remedies available to an investor in cases of fraud in penny stock transactions. Finally, monthly statements have to be sent disclosing recent price information for the penny stock held in the account and information on the limited market in penny stocks.
The regulations applicable to penny stocks may severely affect the market liquidity for our common stock and could limit an investor’s ability to sell our common stock in the secondary market.
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We are subject to variable conversion prices and adjustments related to certain of our convertible notes and our common stock purchase warrants which could cause significant dilution to stockholders and adversely impact the price of our common stock.
Certain of our securities are subject to variable conversion prices and adjustments. As a result, future conversion of debt into shares of common stock or issuance of new convertible debt may result in significant dilution to our shareholders. There were approximately 42 million potential shares at April 30, 2026. The number of potential shares will likely vary based on fluctuations in the trading price of our stock. We are negotiating potential settlements of debt to reduce the number of potential shares. (SEE ITEM # 3 LEGAL PROCEEDINGS).
Failure to maintain effective internal controls in accordance with Section 404 of the Sarbanes-Oxley Act could have a material adverse effect on our business and operating results and stockholders could lose confidence in our financial reporting.
Effective internal controls are necessary for us to provide reliable financial reports and effectively prevent fraud. If we cannot provide reliable financial reports or prevent fraud, our operating results could be harmed. Failure to achieve and maintain an effective internal control environment, regardless of whether we are required to maintain such controls, could also cause investors to lose confidence in our reported financial information, which could have a material adverse effect on our stock price. Because of our limited resources, management has concluded that our internal control over financial reporting may not be effective in providing reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. generally accepted accounting principles. Furthermore, we have not obtained an independent audit of our internal controls and, as a result, we are not aware of any deficiencies which would result from such an audit. Further, at such time as we are required to comply with the internal controls’ requirements of the Sarbanes-Oxley Act, we may incur significant expenses in having our internal controls audited and in implementing any changes which are required.
We have not paid dividends on our common stock in the past and do not expect to pay dividends on our common stock for the foreseeable future. Any return on investment may be limited to the value of our common stock.
No cash dividends have been paid on our common stock. We expect that any income received from operations will be devoted to our future operations and growth. We do not expect to pay cash dividends on our common stock in the near future. Payment of dividends would depend upon our profitability at the time, cash available for those dividends, and other factors as our board of directors may consider relevant. If we do not pay dividends, our common stock may be less valuable because a return on an investor’s investment will only occur if our stock price appreciates.
The requirements of being a public company may strain our resources, divert management’s attention and affect our ability to attract and retain qualified board members.
We are a public company and are subject to the reporting requirements of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the Sarbanes-Oxley Act. The Exchange Act requires, among other things, that we file annual, quarterly and current reports with respect to our business and financial condition. The Sarbanes-Oxley Act requires, among other things, that we maintain effective disclosure controls and procedures and internal controls for financial reporting. For example, Section 404 of the Sarbanes-Oxley Act of 2002 requires that our management report on, and our independent auditors attest to, the effectiveness of our internal controls structure and procedures for financial reporting. Section 404 compliance may divert internal resources and will take a significant amount of time and effort to complete. We may not be able successfully to complete the procedures and certification and attestation requirements of Section 404 by the time we will be required to do so. If we fail to do so, or if in the future our Chief Executive Officer, Chief Financial Officer or independent registered public accounting firm determines that our internal controls over financial reporting are not effective as defined under Section 404, we could be subject to sanctions or investigations by the SEC or other regulatory authorities. Furthermore, investor perceptions of our company may suffer, and this could cause a decline in the market price of our common stock. Regardless of compliance with Section 404, any failure of our internal controls could have a material adverse effect on our stated results of operations and harm our reputation. If we are unable to implement these changes effectively or efficiently, it could harm our operations, financial reporting or financial results and could result in an adverse opinion on internal controls from our independent auditors. We may need to hire a number of additional employees with public accounting and disclosure experience in order to meet our ongoing obligations as a public company, which will increase costs. Our management team and other personnel will need to devote a substantial amount of time to new compliance initiatives and to meeting the obligations that are associated with being a public company, which may divert attention from other business concerns, which could have a material adverse effect on our business, financial condition and results of operations.
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Future sales of our equity securities could result in downward selling pressure on our securities, and may adversely affect the stock price.
In the event that our equity securities are sold or convertible debt is converted into equity securities, there is a risk of downward pressure may result, making it difficult for an investor to sell his or her securities at any reasonable price, if at all. Future sales of substantial amounts of our equity securities in the public market, or the perception that such sales could occur, could put downward selling pressure on our securities, and adversely affect the market price of our common stock.
We have authorized several classes of preferred stock that may alter the rights of common stockholders by giving preferred stockholders greater dividend rights, liquidation rights and voting rights than our common stockholders have.
Our board is empowered to issue, without stockholder approval, preferred stock, on one or more series, with dividend, liquidation, conversion, voting or other rights that could adversely affect the voting power or other rights of the holders of common stock. From time to time, we have designated, and may in the future designate, series of preferred stock carrying various preferences and rights different from, and greater than, our common stock. As of April 30, 2026, we have three series of preferred stock outstanding. Preferred stock could be utilized, under certain circumstances, as a method of discouraging, delaying or preventing a change in control of the company.
Risks Relating to our Fintech Segment
Our fintech unit operating results may significantly fluctuate
Our operating results may fluctuate significantly from quarter to quarter in accordance with market sentiments and movements in the broader crypto-economy and a variety of other factors, many of which are unpredictable and in certain instances are outside of our control, including:
our ability to attract, maintain, grow, and engage our customer base;
changes in the legislative or regulatory environment, or actions by U.S. or foreign governments or regulators, including fines, orders, or consent decrees;
regulatory changes or scrutiny that impact our ability to offer certain products or services;
pricing for or temporary suspensions of our products and services;
our ability to establish and maintain partnerships, collaborations, joint ventures, or strategic alliances with third parties;
market conditions of, and overall sentiment towards, the crypto-economy;
macroeconomic conditions, including interest rates, inflation, and instability in the global banking system;
adverse legal proceedings or regulatory enforcement actions, judgments, settlements, or other legal proceedings, and enforcement-related costs;
the development and introduction of existing and new products and services by us or our competitors;
the amount and timing of our operating expenses related to the maintenance and expansion of our business and operations, including investments we make in the development of products and services;
system failures, outages, or interruptions, including with respect to our platform and third-party crypto networks;
our lack of control over decentralized or third-party blockchains and networks that may experience downtime, cyberattacks, critical failures, errors, bugs, corrupted files, data losses, or other similar software failures, outages, breaches, and losses;
breaches of security or privacy;
inaccessibility of our platform due to our or third-party actions;
our ability to attract and retain talent; and
•our ability to compete with our competitors.
As a result of these factors, it is difficult for us to forecast growth trends accurately and our business and future prospects are difficult to evaluate, particularly in the short term. Therefore, our operating results could fluctuate significantly as a result of changes in the demand for our subscription and service offerings, in interest rates, and to our ongoing relationships with third parties.
In view of the rapidly evolving nature of our business and the crypto-economy, period-to-period comparisons of our operating results may not be meaningful, and you should not rely upon them as an indication of future performance. Quarterly and annual expenses reflected in our financial statements may be significantly different from historical or projected rates. Our operating results in one or more future quarters may fall below the expectations of securities analysts and investors. As a result, the trading price of our common stock may increase or decrease significantly.
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Our total fintech revenue will be substantially dependent on the volume of transactions conducted on our platforms. If volume declines, our business, operating results, and financial condition would be adversely affected and the price of our common stock could decline.
We generate a large portion of our total fintech (and corporate) revenue from transaction fees on our platforms. Transaction revenue is based on transaction fees. Such revenue has grown over time. Declines in the volume of crypto related transactions, if any, among other reasons, may result in lower total revenue to us.
The price of crypto assets and associated demand for buying, selling, and trading crypto assets and conversions back and forth with fiat have historically been subject to significant volatility. If the volume of such transactions declines in the future, our ability to generate revenue, which could adversely affect our business, operating results, and financial condition and cause the price of our common stock to decline. The transaction volume of any crypto asset is subject to significant uncertainty and volatility, depending on a number of factors, including:
market conditions of, and overall sentiment towards, crypto assets and the crypto-economy, including, but not limited to, as a result of actions taken by or developments of other companies in the crypto-economy;
trading activities on other crypto platforms worldwide, many of which may be unregulated, and may include manipulative activities;
investment and trading activities of highly active consumer and institutional users, speculators, miners, and investors;
the speed and rate at which crypto is able to gain adoption as a medium of exchange, utility, store of value, consumptive asset, security instrument, or other financial assets worldwide, if at all;
decreased user and investor confidence in crypto assets and crypto platforms;
negative publicity and events relating to the crypto-economy;
unpredictable social media coverage or “trending” of, or other rumors and market speculation regarding, crypto assets;
the ability for crypto assets to meet user and investor demands;
the functionality and utility of crypto assets and their associated ecosystems and networks, including crypto assets designed for use in various applications;
consumer preferences and perceived value of crypto assets and crypto asset markets;
increased competition from other payment services or other crypto assets that may exhibit better speed, security, scalability, or other characteristics;
adverse legal proceedings or regulatory enforcement actions, judgments, or settlements impacting crypto-economy participants;
regulatory or legislative changes, scrutiny, and updates affecting the crypto-economy;
the characterization of crypto assets under the laws of various jurisdictions around the world;
the adoption of unfavorable taxation policies on crypto asset investments by governmental entities;
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ongoing technological viability and security of crypto assets and their associated smart contracts, applications, and networks, including vulnerabilities against hacks and scalability;
speed and fees associated with processing crypto asset transactions, including on the underlying blockchain networks and on crypto platforms;
financial strength of market participants;
the availability and cost of funding and capital;
the liquidity and credit risk of other crypto platforms and other participants of the crypto-economy;
interruptions or temporary suspensions or other compulsory restrictions in products or services from or failures of major crypto platforms;
availability of an active derivatives market for various crypto assets;
availability of banking and payment services to support crypto-related projects;
instability in the global banking system and the level of interest rates and inflation;
monetary policies of governments, trade restrictions, and fiat currency devaluations; and
national and international economic and political conditions.
There is no assurance that any supported crypto asset will maintain its value or that there will be meaningful levels of trading activities. In the event that the price of crypto assets or the demand for trading crypto assets decline, our business, operating results, and financial condition would be adversely affected and the price of our Common Stock could decline.
Cyberattacks and security breaches of our platform, or those impacting our customers or third parties, could adversely affect our brand, reputation, business, operating results, and financial condition.
Our business involves the collection, storage, processing, and transmission of confidential information, customer, employee, service provider, and other personal data, as well as information required to access customer assets. We have built our reputation on the premise that our platform offers customers a secure way to transact business. As a result, any actual or perceived security breach of us or our third-party partners may:
harm our reputation and brand;
result in our systems or services being unavailable and interrupt our operations;
result in improper disclosure of data and violations of applicable privacy and data protection laws;
result in significant regulatory scrutiny, investigations, fines, penalties, and other legal, regulatory, and financial exposure;
cause us to incur significant remediation costs;
lead to theft or irretrievable loss of our or our customers’ fiat currencies or crypto assets;
reduce customer confidence in, or decrease customer use of, our products and services;
divert the attention of management from the operation of our business;
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result in significant compensation or contractual penalties payable by us to our customers or third parties as a result of losses to them or claims by them; and
adversely affect our business, operating results, and financial condition.
Further, any actual or perceived breach or cybersecurity attack directed at other financial institutions or crypto companies, whether or not we are directly impacted, could lead to a general loss of customer confidence in the crypto-economy or in the use of technology to conduct financial transactions, which could negatively impact us, including the market perception of the effectiveness of our security measures and technology infrastructure.
An increasing number of organizations, including large merchants, businesses, technology companies, and financial institutions, as well as government institutions, have disclosed breaches of their information security systems, some of which have involved sophisticated and highly targeted attacks, including on their websites, mobile applications, and infrastructure.
Attacks upon systems across a variety of industries, including the crypto industry, are increasing in their frequency, persistence, and sophistication, and, in many cases, are being conducted by sophisticated, well-funded, and organized groups and individuals, including state actors. The techniques used to obtain unauthorized, improper, or illegal access to systems and information (including customers’ personal data and crypto assets), disable or degrade services, or sabotage systems are constantly evolving, may be difficult to detect quickly, and often are not recognized or detected until after they have been launched against a target. These attacks may occur on our systems or those of our third-party service providers or partners. Certain types of cyberattacks could harm us even if our systems are left undisturbed. For example, attacks may be designed to deceive employees and service providers into releasing control of our systems to a hacker, while others may aim to introduce computer viruses or malware into our systems with a view to stealing confidential or proprietary data. Additionally, certain threats are designed to remain dormant or undetectable until launched against a target, and we may not be able to implement adequate preventative measures.
Although we have developed systems and processes designed to protect the data we manage, prevent data loss, and other security breaches, effectively to respond to known and potential risks, and expect to continue to expend significant resources to bolster these protections, there can be no assurance that these security measures will provide absolute security or prevent breaches or attacks. We may experience in the future: breaches of our security measures due to human error, malfeasance, insider threats, system errors or vulnerabilities, or other irregularities. Unauthorized parties may attempt to gain access to our systems and facilities, as well as those of our customers, partners, and third-party service providers, through various means, including hacking, social engineering, phishing, and attempting to fraudulently induce individuals (including employees, service providers, and our customers) into disclosing usernames, passwords, payment card information, or other sensitive information, which may in turn be used to access our information technology systems and customers’ crypto assets. Threats can come from a variety of sources, including criminal hackers, hacktivists, state-sponsored intrusions, industrial espionage, and insiders. Certain threat actors may be supported by significant financial and technological resources, making them even more sophisticated and difficult to detect. If we acquire a third-party entity, as to which we do not have any current plans, that acquisition may expose us to unexpected security risks or increase costs to improve the security posture of the acquired company. Further, there has been an increase in such threat actor activities as a result of the increased prevalence of hybrid and remote working arrangements in recent years. As a result, our costs and the resources we devote to protecting against these advanced threats and their consequences may continue to increase over time.
Outages and disruptions of our platform, including any caused by cyberattacks, may harm our reputation, business, operating results, and financial condition.
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We are subject to an extensive, highly-evolving, and uncertain regulatory landscape and any adverse changes to, or our failure to comply with, any laws and regulations could adversely affect our brand, reputation, business, operating results, and financial condition.
Our business is subject to extensive laws, rules, regulations, policies, orders, determinations, directives, treaties, and legal and regulatory interpretations and guidance in the markets in which we operate, including those governing financial services and banking, federal government contractors, trust companies, securities, derivative transactions and markets, broker-dealers and alternative trading systems (“ATS”), commodities, credit, crypto asset custody, exchange, and transfer, cross-border and domestic money and crypto asset transmission, commercial lending, usury, foreign currency exchange, privacy, data governance, data protection, cybersecurity, fraud detection, payment services (including payment processing and settlement services), consumer protection, escheatment, antitrust and competition, bankruptcy, tax, anti-bribery, economic and trade sanctions, anti-money laundering, and counter-terrorist financing. Many of these legal and regulatory regimes were adopted prior to the advent of the internet, mobile technologies, crypto assets, generative artificial intelligence (“AI”) and related technologies and may not directly apply to our fintech business. As a result, some applicable laws and regulations do not contemplate or address unique issues associated with the crypto-economy, are subject to significant uncertainty, and vary widely across US. federal, state, and local and international jurisdictions. These legal and regulatory regimes, including the laws, rules, and regulations thereunder, evolve frequently and may be modified, interpreted, and applied in an inconsistent manner from one jurisdiction to another, and may conflict with one another. Moreover, the complexity and evolving nature of our business and the significant uncertainty surrounding the regulation of the crypto-economy requires us to exercise our judgment as to whether certain laws, rules, and regulations apply to us, and it is possible that governmental bodies and regulators may disagree with our conclusions. To the extent we have not complied with (or are deemed not to have complied with) such laws, rules, and regulations, we could be subject to significant fines, revocation of licenses, limitations on or temporary or permanent suspensions of our products and services, reputational harm, and other regulatory consequences, each of which may be significant and could adversely affect our business, operating results, and financial condition.
Governmental and regulatory bodies, including in the United States, may introduce new policies, laws, and regulations relating to crypto assets and the crypto-economy generally, and crypto asset platforms in particular. Other companies’ failures of risk management and other control functions could contribute to stricter oversight of crypto asset platforms and the crypto-economy. Furthermore, new interpretations of existing laws and regulations may be issued by such bodies or the judiciary, which may adversely impact the development of the crypto-economy as a whole and our legal and regulatory status in particular by changing how we operate our business, how our products and services are regulated, and what products or services we and our competitors can offer, requiring changes to our compliance and risk mitigation measures, imposing new licensing requirements, or imposing a total ban on certain crypto asset transactions, as has occurred in certain jurisdictions in the past. If we are unable to comply with any new requirements, our ability to offer our products and services in their current form may be adversely affected. Additionally, under recommendations from the Financial Crimes Enforcement Network (“FinCEN”), and the Financial Action Task Force, the United States and several foreign jurisdictions have or are likely to impose the Funds Travel Rule and the Funds Transfer Rule (commonly referred to collectively as the Travel Rule) on financial service providers in the crypto-economy. We may face substantial costs to operationalize and comply with the Travel Rule and may be further subject to administrative sanctions for technical violations or customer attrition if the user experience suffers as a result. There are substantial uncertainties regarding the scope of these requirements in practice, and we may face substantial costs to operationalize and comply with these rules.
Moreover, we may offer in the future products and services whose functionality or value depends in part on our management of token transaction smart contracts, liquid staking, asset tracking, or other applications that provide novel forms of customer engagement and interaction delivered via blockchain protocols. We may also offer products and services whose functionality or value depends on our ability to develop, integrate, or otherwise interact with such applications within the bounds of our legal and compliance obligations. The legal and regulatory landscape for such products, including the law governing the rights and obligations between and among smart contract developers and users and the extent to which such relationships entail regulated activity is uncertain and rapidly evolving. Our interaction with those applications, and the interaction of other blockchain users with any smart contracts or assets we may generate or control, could present legal, operational, reputational, and regulatory risks for our business.
Due to our business activities, we are subject to ongoing examinations, oversight, and reviews and we may expect in the future, to be subject to investigations and inquiries, by U.S. federal and state regulators and foreign financial service regulators, many of which have broad discretion to audit and examine our business. We may be periodically subject to audits and examinations by these regulatory authorities. As a result of findings from these audits and examinations, regulators may in the future require us to take certain actions, including amending, updating, or revising our compliance measures from time to time, limiting the kinds of customers that we provide services to, changing, terminating, or delaying our licenses and the introduction of new products or services, and undertaking further external audit or being subject to further regulatory scrutiny, including investigations and inquiries. We may in the future receive examination reports citing violations of rules and regulations, inadequacies in existing compliance programs, and requiring us to initiate or enhance certain practices with respect to our compliance program, including due diligence, monitoring, training, reporting, and recordkeeping. Implementing appropriate measures to properly remediate these examination findings may require us to incur significant costs, and if we fail to remediate properly any of these examination findings, we could face civil litigation, significant fines, damage awards, forced removal of certain employees including members of our executive team, barring of certain employees from participating in our business in whole or in part, revocation of existing licenses, limitations on existing and new products and services, reputational harm, negative impact to our existing relationships with regulators, exposure to criminal liability, or other regulatory consequences. Further, we believe increasingly strict legal and regulatory requirements and additional regulatory investigations and enforcement, any of which could occur or intensify, may continue to result in changes to our business, as well as increased costs, and supervision and examination for ourselves, our agents, and service providers. Moreover, new laws, regulations, or interpretations may result in additional litigation, regulatory investigations, and enforcement or other actions, including preventing or delaying us from offering certain products or services offered by our competitors or could impact how we offer such products and services. Adverse changes to, or our failure to comply with, any laws and regulations have had, and may continue to have, an adverse effect on our reputation and brand and our business, operating results, and financial condition.
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Any significant disruption in our products and services, in our information technology systems, or in any of the blockchain networks we support, could result in a loss of customers or funds and adversely affect our brand, reputation, business, operating results, and financial condition.
Our reputation and ability to attract and retain customers and grow our business depends on our ability to operate our service at high levels of reliability, scalability, and performance, including the ability to process and monitor, on a daily basis, a large number of transactions that occur at high volume and frequencies across multiple systems. Our platform, the ability of our customers to trade, and our ability to operate at a high level, are dependent on our ability to access the blockchain networks underlying the supported crypto assets, for which access is dependent on our systems’ ability to access the internet. Further, the successful and continued operations of such blockchain networks will depend on a network of computers, miners, or validators, and their continued operations, all of which may be impacted by service interruptions.
The systems of our third-party service providers and certain crypto asset and blockchain networks have experienced from time to time, and may experience in the future service interruptions or degradation because of hardware and software defects or malfunctions, distributed denial-of-service and other cyberattacks, insider threats, break-ins, sabotage, human error, vandalism, earthquakes, hurricanes, floods, fires, and other natural disasters, power losses, disruptions in telecommunications services, fraud, military or political conflicts, terrorist attacks, computer viruses or other malware, or other events. In addition, extraordinary trading volumes or site usage could cause our computer systems to operate at an unacceptably slow speed or even fail.
If any of our systems, or those of our third-party service providers, are disrupted for any reason, our products and services may fail, resulting in unanticipated disruptions, slower response times and delays in our customers’ trade execution and processing, failed settlement of trades, incomplete or inaccurate accounting, recording or processing of trades, unauthorized trades, loss of customer information, increased demand on limited customer support resources, customer claims, complaints with regulatory organizations, lawsuits, or enforcement actions. Further, when these disruptions occur, we have in the past, and may in the future, fulfill customer transactions using inventory to prevent adverse user impact and limit detrimental impact to our operating results. A prolonged interruption in the availability or reduction in the availability, speed, or functionality of our products and services could harm our business. Significant or persistent interruptions in our services could cause current or potential customers or partners to believe that our systems are unreliable, leading them to switch to our competitors or to avoid or reduce the use of our products and services, and could permanently harm our reputation and brands. Moreover, to the extent that any system failure or similar event results in damages to our customers or their business partners, these customers or partners could seek significant compensation or contractual penalties from us for their losses, and those claims, even if unsuccessful, would likely be time-consuming and costly for us to address. Problems with the reliability or security of our systems would harm our reputation and the cost of remedying these problems could negatively affect our business, operating results, and financial condition.
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Because we are a regulated financial institution in certain jurisdictions, interruptions have resulted and in the future may result in regulatory scrutiny, and significant or persistent interruptions could lead to significant fines and penalties, and mandatory and costly changes to our business practices, and ultimately could cause us to lose existing licenses or banking relationships that we need to operate or prevent or delay us from obtaining additional licenses that may be required for our business.
In addition, we are continually improving and upgrading our information systems and technologies. Implementation of new systems and technologies is complex, expensive, time-consuming, and may not be successful. If we fail to timely and successfully implement new information systems and technologies, or improvements or upgrades to existing information systems and technologies, or if such systems and technologies do not operate as intended, it could adversely affect our internal controls (including internal controls over financial reporting), and our business, operating results, and financial condition.
If we fail to retain existing customers or add new customers, or if our customers decrease their level of engagement with our products, services and platform, our business, operating results, and financial condition may be significantly harmed.
Our success depends on our ability to retain existing customers and attract new customers, including developers, to increase engagement with our products, services, and platform. To do so, we must continue to offer leading technologies and ensure that our products and services are secure, reliable, and engaging. We must also expand our products and services, and offer competitive prices in an increasingly crowded and price-sensitive market. There is no assurance that we will be able to continue to do so, that we will be able to retain our current customers or attract new customers, or keep our customers engaged. Any number of factors can negatively affect customer retention, growth, and engagement, including if:
customers increasingly engage with competing products and services, including products and services that we are unable to offer due to regulatory reasons;
we fail to introduce new and improved products and services, or if we introduce new products or services that are not favorably received;
we fail to support new and in-demand crypto assets or if we elect to support crypto assets with negative reputations;
there are changes in sentiment about the quality or usefulness of our products and services or concerns related to privacy, security, fiat pegging, or other factors;
there are adverse changes in our products and services that are mandated by legislation, regulatory authorities, or litigation;
customers perceive the crypto assets on our platform to be bad investments, or experience significant losses in investments made on our platform;
technical or other problems prevent us from delivering our products and services with the speed, functionality, security, and reliability that our customers expect;
cybersecurity incidents, employee or service provider misconduct, or other unforeseen activities cause losses to us or our customers, including losses to assets held by us on behalf of our customers;
modifications to our pricing model or modifications by competitors to their pricing models;
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we fail to provide adequate customer service;
regulatory and governmental bodies in countries that we target for expansion express negative views towards crypto asset trading platforms and, more broadly, the crypto-economy; or
we or other companies or high-profile figures in our industry are the subject of adverse media reports or other negative publicity.
From time to time, certain of these factors may negatively affect customer retention, growth, and engagement to varying degrees. If we are unable to maintain or increase our customer base and customer engagement, our revenue and financial results may be adversely affected. Any decrease in user retention, growth, or engagement could render our products and services less attractive to customers and lead to a decrease in revenue, and our business, operating results, and financial condition could be adversely affected. If our customer growth rate slows or declines, we will become increasingly dependent on our ability to maintain or increase levels of user engagement and monetization in order to drive growth of revenue.
Our operating expenses may increase in the future and we may not be successful in increasing our revenue to sufficiently offset these higher expenses, which could impact our ability to achieve profitability or positive cash flow from operations on a consistent basis and cause our business, operating results, and financial condition to be adversely affected.
Our operating expenses may increase in the future as we continue to grow our business. While we consistently evaluate opportunities to drive efficiency, we cannot guarantee that these efforts will be successful or that we will not need to accelerate operating expenditures in the future. Our operations may prove more expensive than we currently anticipate, and we may not succeed in increasing our net revenue sufficiently to offset these higher expenses. Additionally, our revenue growth may be negatively impacted by, among other things, reduced demand for our offerings, increased competition, adverse macroeconomic conditions, any decrease in the growth or size of the crypto-economy, regulatory uncertainty or scrutiny, changes that impact our ability to offer certain products or services, or failure of new products and services to gain market adoption. As a result, we cannot be certain that we will be able to achieve profitability or achieve positive operating cash flow on any quarterly or annual basis. If we are unable to effectively manage these risks and difficulties as we encounter them, our business, operating results, and financial condition may suffer.
If we do not effectively manage our growth, including by maintaining and improving our systems and processes, our business, operating results, and financial condition could be adversely affected.
We have experienced, and may experience in the future, periods of significant growth. To manage and capitalize on our growth periods effectively, we will need to manage headcount, capital, and processes efficiently, while making investments, such as expanding our information technology and financial, operating, and administrative systems and controls, and such initiatives could strain our resources. We could experience operating difficulties in managing our business as it expands across numerous jurisdictions, including difficulties in hiring, training, managing, and retaining a remote and evolving employee base. If we do not adapt or scale to meet these evolving challenges, we may experience erosion to our brand, the quality of our products and services may suffer, and our Company’s culture may be harmed. Moreover, the failure of our systems and processes could undermine our ability to provide accurate, timely, and reliable reports on our financial and operating results, including the financial statements provided herein, and could impact the effectiveness of our internal controls over financial reporting. In addition, our systems and processes may not prevent or detect all errors, omissions, or fraud. Any of the foregoing operational failures could lead to noncompliance with laws and regulations, loss of operating licenses or other authorizations, or loss of bank relationships that could substantially impair or even suspend company operations.
Successful implementation of our growth strategy will also require significant expenditures possibly prior to the generation of any substantial associated revenue and we cannot guarantee that these increased investments will result in corresponding and offsetting revenue growth. Because we have a limited history operating our business at its current scale, it is difficult to evaluate our current business and future prospects, including our ability to plan for and model future growth. Our limited operating experience at this scale, combined with the rapidly evolving and volatile nature of the crypto asset market in which we operate, and other economic factors beyond our control, reduces our ability to accurately forecast quarterly or annual revenue accurately.
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Due to our limited fintech operating history, it may be difficult to evaluate our business and future prospects, and we may not be able to achieve or maintain profitability in any given period.
We established Agoge Global USA, Inc. in December 2022. Following its establishment, our business model has continued to evolve. Our net revenue has grown since that formation. There is no assurance that growth will continue in future periods and you should not rely on growth of our revenue in any given prior quarterly or annual period as an indication of our future performance. If our net revenue were to decline significantly for any extended period of time, our business, operating results, and financial condition could be adversely affected. Our limited operating history and the volatile nature of our business make it difficult to evaluate our current business and our future prospects. We have encountered and will continue to encounter risks and difficulties as described in this section. If we do not manage these risks successfully, our business, operating results, and financial condition could be adversely affected.
Any acquisitions and investments that we make could require significant management attention, disrupt our business, result in dilution to our stockholders, and could adversely affect our business, operating results, and financial condition.
As part of our business strategy, we routinely conduct discussions and evaluate opportunities for possible acquisitions, strategic investments, entries into new businesses, joint ventures, and other transactions. Although we have no present plans for future acquisitions, we may make acquisitions of and investments in, among other things, specialized employees and complementary companies, products, services, licenses, or technologies. In the future, the pace and scale of our acquisitions may increase and may include larger acquisitions than we have done historically. In the future, we may not be able to find other suitable acquisition candidates, and we may not be able to complete acquisitions on favorable terms, if at all. In some cases, the costs of such acquisitions may be substantial, and there is no assurance that we will receive a favorable return on investment for our acquisitions. Our acquisitions may not achieve our goals, and any future acquisitions we complete could be viewed negatively by customers, developers, or investors. In addition, if we fail to successfully close or integrate any acquisitions, or integrate the products or technologies associated with such acquisitions into our Company, our business, operating results, and financial condition could be adversely affected. Our ability to acquire and integrate companies, products, services, licenses, employees, or technologies in a successful manner is unproven. Any integration process may require significant time and resources, and we may not be able to manage the process successfully, including successfully securing regulatory approvals which may be required to close the transaction and to continue to operate the target firm’s business or products in a manner that is useful to us. We may not successfully evaluate or utilize the acquired products, services, technology, or personnel, or accurately forecast the financial impact of an acquisition transaction, including accounting charges. We may have to pay cash, incur debt, or issue equity securities to pay for any such acquisition, which could adversely affect our business, operating results, and financial condition. The sale of equity or issuance of debt to finance any such acquisitions could result in dilution to our stockholders, which, depending on the size of the acquisition, may be significant. The incurrence of indebtedness would result in increased fixed obligations and could also include covenants or other restrictions that would impede our ability to manage our operations.
If we fail to develop, maintain, and enhance our brand and reputation, our business, operating results, and financial condition could be adversely affected.
Our brand and reputation are key assets and a competitive advantage. Maintaining, protecting, and enhancing our brand depends largely on the success of our marketing efforts, ability to provide consistent, high-quality, and secure products, services, features, and support. We believe that the importance of our brand will increase as competition further intensifies. Our brand and reputation could be harmed if we fail to achieve these objectives or if our public image were to be tarnished by negative publicity, unexpected events, or actions by third parties. Unfavorable publicity regarding, for example, our product changes, product quality, litigation or regulatory activity, privacy and data security practices, terms of service, employment matters, the use of our products or services for illicit or objectionable ends, the actions of our customers, or the actions of other companies that provide similar services to ours, has in the past, and could in the future, adversely affect our reputation. Moreover, to the extent that we acquire a company and maintain that acquired company’s separate brand, we could experience brand dilution or fail to retain positive impressions of our own brand to the extent such impressions are instead attributed to the acquired company’s brand. Such negative publicity also could have an adverse effect on the size and engagement of our customers and could result in decreased revenue, which could adversely affect our business, operating results, and financial condition.
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Internal key business metrics and other estimates are subject to inherent challenges in measurement and change as our business evolves, and our business, operating results, and financial condition could be adversely affected by real or perceived inaccuracies in those metrics or any changes in metrics we disclose.
We regularly review our internal key business metrics to evaluate our business, measure our performance, identify trends affecting our business, and make strategic decisions. These internal key business metrics are calculated using internal company data and have not been validated by an independent third party. While these numbers are based on what we believe to be reasonable estimates for the applicable period of measurement at the time of reporting, there are inherent challenges in such measurements. If we fail to maintain an effective analytics platform, our internal key business metrics calculations may be inaccurate, and we may not be able to identify those inaccuracies. Additionally, we may in the future calculate certain internal key business metrics using third-party data. While we believe the third-party data we may use in the future will be reliable, we may not in the future independently verify the accuracy or completeness of the data contained in such sources and there can be no assurance that such data is free of error. Any inaccuracy in the third-party data we use could cause us to overstate or understate our internal key business metrics. We regularly review our processes for calculating these metrics, and from time to time we have made adjustments that we believe may improve their accuracy.
Our platform may be exploited to facilitate illegal activity such as fraud, money laundering, gambling, tax evasion, and scams. If our platform is used to further such illegal activities, our business, operating results, and financial condition could be adversely affected.
Our platform may be exploited to facilitate illegal activity such as fraud, money laundering, gambling, tax evasion, and scams. We or our partners may be specifically targeted by individuals seeking to conduct fraudulent transfers, and it may be difficult or impossible for us to detect and avoid such transactions in certain circumstances. The use of our platform for illegal or improper purposes could subject us to claims, individual and class action lawsuits, and government and regulatory investigations, prosecutions, enforcement actions, inquiries, or requests that could result in liability and reputational harm for us. Moreover, certain activities that may be legal in one jurisdiction may be illegal in another jurisdiction, and certain activities that are at one time legal may in the future be deemed illegal in the same jurisdiction. As a result, there is significant uncertainty and cost associated with detecting and monitoring transactions for compliance with local laws. In the event that a customer is found responsible for intentionally or inadvertently violating the laws in any jurisdiction, we may be subject to governmental inquiries, enforcement actions, prosecuted, or otherwise held secondarily liable for aiding or facilitating such activities. Changes in law have also increased the penalties for money transmitters for certain illegal activities, and government authorities may consider increased or additional penalties from time to time. Owners of intellectual property rights or government authorities may seek to bring legal action against money transmitters, including us, for involvement in the sale of infringing or allegedly infringing items. Any threatened or resulting claims could result in reputational harm, and any resulting liabilities, loss of transaction volume, or increased costs could harm our business.
Moreover, while fiat currencies can be used to facilitate illegal activities, crypto assets are relatively new and, in many jurisdictions, may be lightly regulated or largely unregulated. Many types of crypto assets have characteristics, such as the speed with which digital currency transactions can be conducted, the ability to conduct transactions without the involvement of regulated intermediaries, the ability to engage in transactions across multiple jurisdictions, the irreversible nature of certain crypto asset transactions, and encryption technology that anonymizes these transactions, that make crypto assets susceptible to use in illegal activity. U.S. federal and state and foreign regulatory authorities and law enforcement agencies, such as the Department of Justice, Securities and Exchange Commission, Commodity Futures Trading Commission, Federal Trade Commission, or the Internal Revenue Service, and various state securities and financial regulators have taken and continue to take legal action against persons and entities alleged to be engaged in fraudulent schemes or other illicit activity involving crypto assets. We also support crypto assets that incorporate privacy-enhancing features, and may from time to time support additional crypto assets with similar functionalities. These privacy-enhancing crypto assets obscure the identities of sender and receiver, and may prevent law enforcement officials from tracing the source of funds on the blockchain. Facilitating transactions in these crypto assets may cause us to be at increased risk of liability arising out of anti-money laundering and economic sanctions laws and regulations.
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Our compliance and risk management methods might not be effective and may result in outcomes that could adversely affect our reputation, operating results, and financial condition.
Our ability to comply with applicable complex and evolving laws, regulations, and rules is largely dependent on the establishment, maintenance, and scaling of our compliance, internal audit, and reporting systems continuously to keep pace with our customer activity and transaction volume, as well as our ability to attract and retain qualified compliance and other risk management personnel. While we have devoted comparatively significant resources to develop policies and procedures to identify, monitor, and manage our risks, and expect to continue to do so in the future, we cannot assure you that our policies and procedures are and will always be effective or that we have been and will always be successful in monitoring or evaluating the risks to which we are or may be exposed in all market environments or against all types of risks, including unidentified or unanticipated risks. Our risk management policies and procedures rely on a combination of technical and human controls and supervision that are subject to error and failure. Some of our methods for managing risk are discretionary by nature and are based on internally developed controls and observed historical market behavior, and also involve reliance on standard industry practices. These methods may not adequately prevent losses, particularly as they relate to extreme market movements, which may be significantly greater than historical fluctuations in the market. Accordingly, in the future, we may identify gaps in such policies and procedures or existing gaps may become higher risk, and may require significant resources and management attention. Our risk management policies and procedures also may not adequately prevent losses due to technical errors if our testing and quality control practices are not effective in preventing failures. In addition, we may elect to adjust our risk management policies and procedures to allow for an increase in risk tolerance, which could expose us to the risk of greater losses.
The crypto-economy is novel. As a result, policymakers are just beginning to consider what a regulatory regime for crypto would look like and the elements that would serve as the foundation for such a regime. This less developed consideration of crypto may harm our ability to effectively react to proposed legislation and regulation of crypto assets or crypto asset platforms adverse to our business.
As crypto assets have grown in both popularity and market size, various U.S. federal, state, and local and foreign governmental organizations, consumer agencies, and public advocacy groups have been examining the operations of crypto networks, users, and platforms, with a focus on how crypto assets can be used to launder the proceeds of illegal activities, fund criminal or terrorist enterprises, and simultaneously how to ensure the safety and soundness of platforms and other service providers that hold crypto assets for users. Many of these entities have called for heightened regulatory oversight, and have issued consumer advisories describing the risks posed by crypto assets to users and investors.
Competitors, including traditional financial services, have spent years cultivating professional relationships with relevant policymakers on behalf of their industry so that those policymakers may understand that industry, the current legal landscape affecting that industry, and the specific policy proposals that could be implemented in order to responsibly develop that industry. The lobbyists working for these competitors have similarly spent years developing and working to implement strategies to advance their industries. Members of the crypto-economy have started to engage policymakers directly and with the help of external advisors and lobbyists. However, these efforts to educate policymakers and advocate for sensible regulation are nascent compared to more established industries, and may be perceived unfavorably by investors and the public and have an adverse impact on our brand and reputation. As a result, new laws and regulations may be proposed and adopted in the United States and internationally, or existing laws and regulations may be interpreted in new ways, that harm the crypto-economy or crypto asset platforms, which could adversely affect our business, operating results, and financial condition.
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We obtain and process a large amount of sensitive customer data. Any real or perceived improper use of, disclosure of, or access to such data could harm our reputation, as well as adversely affect our business, operating results, and financial condition.
We obtain and process large amounts of sensitive data, including personal data related to our customers and their transactions, such as their names, addresses, social security numbers, visa information, copies of government-issued identification, facial recognition data (from scanning of photographs for identity verification), trading data, tax identification, and bank account information. We face risks, including to our reputation, in the handling and protection of these data, and these risks will increase as our business continues to expand, including through our acquisition of, and investment in, other companies and technologies. Federal, state, and international laws and regulations governing privacy, data protection, and e-commerce transactions require us to safeguard our customers’, employees’, and service providers’ personal data.
We have administrative, technical, and physical security measures and controls in place and maintain a robust information security program. However, our security measures, those of our vendors or service providers, or the security measures of companies we acquire, may be inadequate or breached as a result of third-party action, employee or service provider error, malfeasance, malware, phishing, hacking attacks, system error, trickery, advances in computer capabilities, new discoveries in the field of cryptography, inadequate facility security or otherwise, and, as a result, someone may be able to obtain unauthorized access to sensitive information, including personal data, on our systems. We could be the target of a cybersecurity incident, which could result in harm to our reputation and financial losses. Additionally, privacy and data protection laws are evolving, and these laws may be interpreted and applied in a manner that is inconsistent with our data handling safeguards and practices that could result in fines, lawsuits, and other penalties, and significant changes to our or our third-party partners’ business practices and products and service offerings.
Our future success depends on the reliability and security of our platform. To the extent that the measures we, any companies we acquire, or our third-party service providers, vendors, or business partners have taken prove to be insufficient or inadequate, or to the extent we discover a security breach suffered by a company we acquire following the closing of such acquisition, we may become subject to litigation, breach notification obligations, or regulatory or administrative sanctions, which could result in significant fines, penalties, damages, harm to our reputation, or loss of customers. If our own confidential business information or sensitive customer information were improperly disclosed, our business, operating results, and financial condition could be adversely affected. Additionally, a party who circumvents our security measures could, among other effects, appropriate customer information or other proprietary data, cause interruptions in our operations, or expose customers to hacks, viruses, and other disruptions.
Depending on the nature of the information compromised, in the event of a data breach or other unauthorized access to our customer data, we may also have obligations to notify customers and regulators about the incident, and we may need to provide some form of remedy, such as a subscription to credit monitoring services, pay significant fines to one or more regulators, or pay compensation in connection with a class-action settlement. Breach notification laws continue to evolve and may be inconsistent from one jurisdiction to another. In the United States, the SEC has adopted rules for mandatory disclosure of material cybersecurity incidents suffered by public companies, as well as cybersecurity governance and risk management. Complying with these obligations could cause us to incur substantial costs and could increase negative publicity surrounding any incident that compromises customer data. Any failure or perceived failure by us to comply with these laws may also subject us to enforcement action or litigation, any of which could harm our business. Additionally, the financial exposure from the events referenced above could either not be insured against or not be fully covered through any insurance that we may maintain, and there can be no assurance that the limitations of liability in any of our contracts would be enforceable or adequate or would otherwise protect us from liabilities or damages as a result of the events referenced above. Any of the foregoing could adversely affect our business, reputation, operating results, and financial condition.
Furthermore, we may be required to disclose personal data pursuant to demands from individuals, regulators, government agencies, and law enforcement agencies in various jurisdictions with conflicting privacy and security laws, which could result in a breach of privacy and data protection policies, notices, laws, rules, court orders, and regulations. Additionally, changes in the laws and regulations that govern our collection, use, and disclosure of customer data could impose additional requirements with respect to the retention and security of customer data, could limit our marketing activities, and adversely affect our business, operating results, and financial condition.
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We are subject to laws, regulations, and industry requirements related to data privacy, data protection and information security, and user protection where we conduct our business, and industry requirements and such laws, regulations, and industry requirements are constantly evolving and changing. Any actual or perceived failure to comply with such laws, regulations, and industry requirements, or our privacy policies, could harm our business.
Various local, state, federal, and international laws, directives, and regulations apply to our collection, use, retention, protection, disclosure, transfer, and processing of personal data. These data protection and privacy laws and regulations are subject to uncertainty and continue to evolve in ways that could adversely affect our business, operating results, and financial condition. These laws have a substantial impact on our operations both outside and in the United States, either directly or as a data processor and handler for various offshore entities.
In the United States, state and federal lawmakers and regulatory authorities have increased their attention on the collection and use of user data and various laws and regulations apply to the collection, processing, disclosure, and security of certain types of data, including the Gramm Leach Bliley Act (“GLBA”) and state laws relating to privacy and data security. GLBA requires financial institutions to explain their information sharing practices to their customers and to safeguard sensitive data. Additionally, the Federal Trade Commission and many state attorneys general are interpreting federal and state consumer protection laws as imposing standards for the online collection, use, dissemination, and security of data. For example, California has enacted the California Consumer Privacy Act (the “CCPA”). The CCPA requires covered companies to, among other things, provide disclosures to individuals in California, and affords such individuals new privacy rights such as the ability to opt-out of certain sales of personal information and expanded rights to access and require deletion of their personal information, opt out of certain personal information sharing, and receive detailed information about how their personal information is collected, used, and shared. The CCPA provides for civil penalties for violations, as well as a private right of action for security breaches that may increase security breach litigation.
In addition, other U.S. states have proposed or enacted laws that contain obligations similar to the CCPA that have taken effect or will take effect in coming years. We cannot fully predict the impact of recently proposed or enacted laws or regulations on our business or operations, but compliance may require us to modify our data processing practices and policies incurring costs and expense. Further, to the extent multiple state-level laws are introduced with inconsistent or conflicting standards, it may require costly and difficult efforts to achieve compliance with such laws. Our failure or perceived failure to comply with state privacy laws or regulations passed in the future could adversely affect our business, including how we use personal information, operating results, and financial condition.
There is a risk that as we expand, we may assume liabilities for breaches experienced by the companies that we may acquire. Additionally, there are potentially inconsistent world-wide government regulations pertaining to data protection and privacy. Despite our efforts to comply with applicable laws, regulations, and other obligations relating to privacy, data protection, and information security, it is possible that our practices, offerings, or platform could fail, or be alleged to fail to meet applicable requirements. For instance, the overall regulatory framework governing the application of privacy laws to blockchain technology is still highly undeveloped and likely to evolve. Further there are also changes in the regulatory landscape relating to new and evolving technologies. Our failure, or the failure by our third-party providers or partners, to comply with applicable laws or regulations and to prevent unauthorized access to, or use or release of personal data, or the perception that any of the foregoing types of failure has occurred, even if unfounded, could subject us to audits, inquiries, whistleblower complaints, adverse media coverage, investigations, severe criminal, or civil sanctions, damage our reputation, or result in fines or proceedings by governmental agencies and private claims and litigation, any of which could adversely affect our business, operating results, and financial condition.
ITEM 1B. UNRESOLVED STAFF COMMENTS
Not applicable.
ITEM 1C. CYBERSECURITY
We
have designed our business applications and hosting services to minimize the impact that cybersecurity incidents could have on our business
and have identified back-up systems where appropriate. We seek to further mitigate cybersecurity risks through a combination of monitoring
and detection activities, use of anti-malware applications, employee training, quality audits and communication and reporting structures,
among other processes.
As
of April 30, 2026, we have
ITEM 2. PROPERTIES
Our executive offices are located at 555 Fifth Avenue, 14th Floor, New York, NY 10017. We had an agreement for use of office space at this location under a sub-lease which expired July 31, 2018 and continues on a month-to-month basis thereafter. For the year ended April 30, 2026 and 2025, the rent was $72,000 and $72,000 respectively.
ITEM 3. LEGAL PROCEEDINGS
As of April 30, 2026, there is no pending litigation against Sparta.
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PART II
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
Market Information
Our common stock is currently quoted on the OTC Venture Market under the symbol “SRCO”. The following table sets forth, for the calendar periods indicated, the range of the high and low closing prices of our common stock, as reported by the OTCQB. The quotations represent inter-dealer prices without retail mark-ups, mark-downs or commissions, and may not necessarily represent actual transactions.
| High | Low | |||||||
| Fiscal Year 2026 | ||||||||
| First quarter (May 1, 2025 – July 31, 2025) | $ | 0.18 | $ | 0.07 | ||||
| Second quarter (August 1, 2025 – October 31, 2025) | $ | 0.22 | $ | 0.07 | ||||
| Third quarter (November 1, 2025 – January 31, 2026) | $ | 0.18 | $ | 0.08 | ||||
| Fourth quarter (February 1, 2026 – April 30, 2026) | $ | 0.12 | $ | 0.06 | ||||
| Fiscal Year 2025 | ||||||||
| First quarter (May 1, 2024 – July 31, 2024) | $ | 0.38 | $ | 0.07 | ||||
| Second quarter (August 1, 2024 – October 31, 2024) | $ | 0.45 | $ | 0.26 | ||||
| Third quarter (November 1, 2024 – January 31, 2025) | $ | 0.33 | $ | 0.10 | ||||
| Fourth quarter (February 1, 2025 – April 30, 2025) | $ | 0.32 | $ | 0.15 | ||||
Holders
The approximate number of holders of record of our common stock as of April 30, 2026 was 3,379 excluding stockholders holding common stock under nominee security position listings.
Dividends
We have never declared any cash dividends on our common stock. Future cash dividends on the common stock, if any, will be at the discretion of our Board of Directors and will depend on our future operations and earnings, capital requirements and surplus, general financial condition, contractual restrictions, including any restrictions pursuant to the terms of senior securities outstanding, and other factors that the Board of Directors may consider important. The Board of Directors does not intend to declare or pay cash dividends in the foreseeable future. The current policy is to retain all earnings, if any, to support future growth and expansion.
As of April 30, 2026, we had outstanding 125 shares of Series A Convertible Preferred Stock, $.001 par value. The Series A shares pay a 6% annual dividend that may be paid in cash or shares of common stock at our option. As of April 30, 2025, we have not distributed any dividends on the Series A shares, in cash or in shares of common stock. Upon conversion of the Series A shares, all accrued and unpaid dividends are extinguished. As of April 30, 2026 and April 30, 2025, there was $11,574 of accrued Series A dividends payable.
As of April 30, 2026, and April 30, 2025, we had no shares of Series B preferred stock outstanding or dividends payable.
As of April 30, 2026, and April 30, 2025, we had 1,953,157, and 1,965,157 shares of Series C convertible preferred stock outstanding, respectively. The Series C convertible preferred stock is non-dividend paying.
As of April 30, 2026, and April 30, 2025, we had 768,288 and 773,548 shares of Series D convertible preferred stock outstanding, respectively. The Series D convertible preferred stock is non dividend paying.
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Recent Sales of Unregistered Securities
Each of the issuance and sale of securities described below was deemed to be exempt from registration under the Securities Act in reliance on Section 4(a)(2) of the Securities Act of 1933, as amended, as transactions by an issuer not involving a public offering. No advertising or general solicitation was employed in offering the securities. Each purchaser is a sophisticated investor (as described in Rule 506(b) (2) (ii) of Regulation D) or an accredited investor (as defined in Rule 501 of Regulation D), and each received adequate information about the Company or had access to such information, through employment or other relationships, to such information.
Issuance of common stock and restricted preferred units:
During the year ended April 30, 2026, the Company:
| ● | Issued 9,360,847 shares and converted 654,644 shares to be issued valued at $256,000 to accredited investors related to equity investments which includes 2,153,216 warrants at fair value of $79,419 | |
| ● | Issued 1,400,000 shares valued at $166,945 for consulting services | |
| ● | Issued 136,809 shares of common stock valued at $19,985 upon the settlement of liability | |
| ● | Issued 2,150,000 shares and 475,000 shares to be issued valued at $262,506 upon the conversion of convertible notes | |
| ● | 85,000 shares of common stock to be issued valued at $21,364 upon the issuance debt which includes 100,000 warrants at fair value of $11,474 | |
| ● | 50,000 shares of common stock to be issued valued at $4,000 to accredited investors relating to promissory notes | |
| ● | Issued 21,040 shares of common stock valued at $5,260 upon the conversion of preferred series D shares. | |
| ● | Issued 400,000 shares and 460,000 shares of common stock to be issued as penalty to noteholders valued at $157,246. |
During the year ended April 30, 2025, the Company:
| ● | Converted 12,000 Series C preferred shares to 36,000 shares of common stock | |
| ● | Converted 30,000 Series D preferred shares to 120,000 shares of common stock | |
| ● | Issued 8,013,677 shares and 16,992 shares to be issued valued at $821,499 to accredited investors related to equity investments | |
| ● | Issued 664,847 shares of common stock to be issued as an incentive or penalty to noteholders valued at $255 | |
| ● | Issued 850,000 shares of common stock valued at $85,000 relating to the conversion of promissory notes | |
| ● | Issued 953,956 shares valued at $232,856 for consulting services |
The issuance of shares of our Series C and Series D Convertible Preferred Units was exempt from registration under the Securities Act of 1933, as amended, in reliance on an exemption provided by Section 4(a)(2) and Regulation D of that act. These shares were unissued as of April 30, 2026.
ITEM 6. SELECTED FINANCIAL DATA
Not applicable.
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
“FORWARD-LOOKING” INFORMATION
This report on Form 10-K contains various statements that may constitute “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, Rule 175 promulgated thereunder, Section 21E of the Securities Exchange Act of 1934, as amended, and Rule 3b-6 promulgated thereunder which represent our expectations and beliefs, including, but not limited to, statements concerning the Company’s business and financial plans and prospects and are intended to be covered by the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Any statements about our expectations, beliefs, plans, objectives, assumptions or future events or performance are not historical facts and may be forward-looking. The words “believe,” “expect,” “anticipate,” “estimate,” “project,” and other similar expressions can, but not always, identify forward-looking statements, which speak only as of the date such statement was made. We base these forward-looking statements on our current expectations and projections about future events, our assumptions regarding these events and our knowledge of facts at the time the statements are made. These statements by their nature involve substantial risks and uncertainties, certain of which are beyond our control, and actual results may differ materially depending on a variety of important factors. Risks and uncertainties that could cause our financial performance to differ materially from our goals, plans, expectations and projections expressed in forward-looking statements include those set forth in our filings with the Securities and Exchange Commission (“SEC”), including Item 1A of the Company’s Annual Report of Form 10-K for the year ended April 30, 2026. Forward-looking statements speak only as of the date they are made. The Company does not undertake to update forward-looking statements to reflect circumstances or events that occur after the date the forward-looking statements are made or to reflect the occurrence of unanticipated events. You should consider any forward-looking statements in light of this explanation, and we caution you about relying on forward-looking statements.
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RESULTS OF OPERATIONS
Revenues
Revenues totaled $345,312 for the year ended April 30, 2026, compared to $235,544 for the year ended April 30, 2025. Revenues were up by $109,768 or 47% due primarily to an increase in merchant financing fees.
Cost of Revenue
The cost of revenue consists of costs and fees paid to third parties to construct and maintain mobile apps, as well as fees for subscription services related to vehicle history reports.
Operating Expenses
General and administrative expenses were $2,429,713 during the year ended April 30, 2026, compared to $1,432,449 during the year ended April 30, 2025, an increase of $997,264, or 70% primarily due to an increase in compensation and related costs of $308,319, accounting and legal fees of $38,376 and general office expense of $25,783, provision for credit losses $751,152 offset by a decrease in consulting fees of $126,366.
The following are the major expense categories:
| 2026 | 2025 | Increase (Decrease) | % | |||||||||||||
| Compensation and Related cost | 996,275 | 687,956 | 308,319 | 45 | % | |||||||||||
| Accounting and Legal Fees | 105,305 | 66,929 | 38,376 | 57 | % | |||||||||||
| Consulting Fees | 283,194 | 409,560 | (126,366 | ) | -31 | % | ||||||||||
| Rent and Lease | 72,000 | 72,000 | - | 0 | % | |||||||||||
| Provision for credit losses | 751,152 | - | 751,152 | 100 | % | |||||||||||
| General office Expenses | 221,787 | 196,004 | 25,783 | 13 | % | |||||||||||
| 2,429,713 | 1,432,449 | 997,264 | 70 | % | ||||||||||||
Other income (expense)
For the year ended April 30, 2026, other expense of $741,091 is comprised primarily of financing costs of $858,807 offset by a gain of the change in valuation of derivative liabilities of $108,264, and other commission income of $13,350. For the year ended April 30, 2025, other expense of $ is comprised primarily of financing costs of $656,809 and a loss of the change in valuation of derivative liabilities of $266,658, offset by other commission income of $21,837.
Net Income (Loss)
Our net loss attributed to common stockholders for the year ended April 30, 2026, was $2,871,492 compared to a net loss of $2,123,634 for the year ended April 30, 2025, primarily due to provision for credit losses offset by increase in revenue for the year ended April 30, 2026, as compared for the year ended April 30, 2025.
LIQUIDITY AND CAPITAL RESOURCES
As of April 30, 2026, we had an accumulated deficit of $71,790,476 and a total stockholders’ deficit of $13,331,435. The net cash flow used by operations was $779,572 for the year ended April 30, 2026. This deficit results primarily from our net loss of $2,853,618 and increases in merchant advances related to Agoge Global USA, Inc. of $154,797, offset by increases in non-cash expenses of $1,243,975 and increases in accounts payable and accrued expenses of $999,250.
We met our cash requirements during the period through revenue of $345,312 and proceed from the sale of common shares $265,000 and proceeds from convertible notes $592,000.
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We do not anticipate incurring significant research and development expenditures, and we do not anticipate the sale or acquisition of any significant property, plant or equipment, during the next twelve months. At April 30, 2026, we had four full time employees, three part time employees, and consultants on an as needed basis. If we fully implement our business plan, we anticipate our employment base may increase during the next twelve months. As we continue to expand, we will incur additional cost for personnel. This potential increase in personnel is dependent upon our generating increased revenues and obtaining sources of financing. There is no guarantee that we will be successful in raising the funds required or generating revenues sufficient to fund the potential increase in the number of employees. Our employees are not represented by a union.
While we have raised capital to meet our working capital and financing needs in the past, additional financing is required in order to meet our current and potential future cash flow deficits from operations.
We continue to seek additional financing, which may be in the form of senior debt, subordinated debt or equity. We currently have no commitments for financing that are not at the investor’s election. There is no guarantee that we will be successful in raising the funds required to support our operations.
We estimate that we will need approximately $1,000,000 in addition to our normal operating cash flow to conduct operations during the next twelve months. However, there can be no assurance that additional private or public financing, including debt or equity financing, will be available as needed, or, if available, on terms favorable to us. Any additional equity financing may be dilutive to stockholders and such additional equity securities may have rights, preferences or privileges that are senior to those of our existing common or preferred stock. Furthermore, debt financing, if available, will require payment of interest and may involve restrictive covenants that could impose limitations on our operating flexibility. However, if we are not successful in generating sufficient liquidity from operations or in raising sufficient capital resources, on terms acceptable to us, this could have a material adverse effect on our business, results of operations, liquidity and financial condition, and we will have to adjust our planned operations and development on a more limited scale.
The effect of inflation on our revenue and operating results was not significant. Our operations are located in North America and there are no seasonal aspects that would have a material effect on our financial condition or results of operations.
AUDITOR’S OPINION EXPRESSES DOUBT ABOUT THE COMPANY’S ABILITY TO CONTINUE AS A “GOING CONCERN”
The independent auditors report on our April 30, 2026, and 2025 financial statements included in the Company’s Annual Report states that the Company’s historical losses and the lack of revenues raise substantial doubts about the Company’s ability to continue as a going concern due to the losses incurred and its lack of significant operations. If we are unable to develop our business, we have to discontinue operations or cease to exist, which would be detrimental to the value of the Company’s common stock. We can make no assurances that our business operations will develop and provide us with significant cash to continue operations.
In order to improve the Company’s liquidity, the Company’s management is actively pursuing additional financing through discussions with investment bankers, financial institutions and private investors. There can be no assurance that the Company will be successful in its effort to secure additional financing.
We continue to experience net operating losses. Our ability to continue as a going concern is subject to our ability to develop profitable operations. We are devoting substantially all of our efforts to developing our business and raising capital. Our net operating losses increase the difficulty in meeting such goals and there can be no assurances that such methods will prove successful.
Product Research and Development
We do not anticipate incurring significant research and development expenditures during the next twelve months.
| Page 30 of 62 |
Acquisition or Disposition of Plant and Equipment
We do not anticipate the acquisition or sale of any significant property, plant or equipment during the next twelve months.
Number of Employees
For the period ended April 30, 2026, we have had four full-time employees and three part-time employees.
Inflation
The impact of inflation on our costs and the ability to pass on cost increases to our customers over time is dependent upon market conditions. We are not aware of any inflationary pressures that have had any significant impact on our operations over the past year, and we do not anticipate that inflationary factors will have a significant impact on future operations.
CRITICAL ACCOUNTING POLICIES
The preparation of our financial statements in conformity with accounting principles generally accepted in the United States requires us to make estimates and judgments that affect our reported assets, liabilities, revenues, and expenses, and the disclosure of contingent assets and liabilities. We base our estimates and judgments on historical experience and on various other assumptions, we believe to be reasonable under the circumstances. Future events, however, may differ markedly from our current expectations and assumptions. While there are a number of significant accounting policies affecting our financial statements, we believe the following critical accounting policy involves the most complex, difficult and subjective estimates and judgments.
Revenue Recognition
The Company acts as the principal in its revenue transactions as it is the primary obligor. The Company’s main source of revenue is comprised of the following:
| ● | Information Technology-Sparta creates mobile applications (mobile apps) for small and medium-size businesses under the tradename iMobileApp. Sparta provides Vehicle Title History Reports (Cyclechex.com, RVchex.com, and TruckChex.com) containing valuable information for consumers, dealers, insurers, auction houses, and lenders including verifying the specific make, model, and year of a pre-owned vehicles, as well as any Brands that have been placed on the titles. Revenues from mobile app products are generally recognized upon delivery. Revenues from History Reports are typically recognized upon delivery/download. Prepayments received from customers before delivery (if any) are recognized as deferred revenue and recognized upon delivery. The Company records deferred revenues when cash payments are received or due before our performance, including refundable amounts. | |
| ● | Wellness products- Our Wellness products feature high-quality dietary supplements, including vitamins and minerals, such as, Iodine for children and adults, Boron, Copper/Zinc/Selenium, and Magnesium Complex. In addition to our B to C website: www.newworldhealthbrands.com, our Wellness products are also offered on various on-line marketplaces. Revenues from New World Health Brands products are generally recognized upon delivery. | |
| ● | Merchant financing - Sparta offers Brazilian importers staged financing and automated payment solutions. The system reduces costly delays, lowers transaction fees, and improves cash flow by enabling importers to pay suppliers, freight, and customs fees in stages—giving them time to sell goods before loans mature. Revenues from merchant financing are recognized monthly based on the outstanding balance of the loans. |
The Company acts as a principal in its revenue transactions as the Company is the primary obligor in the transactions.
Revenues from mobile app products and New World Health Brands products are generally recognized upon delivery. Revenues from History Reports are generally recognized upon delivery / download. Prepayments received from customers before delivery (if any) are recognized as deferred revenue and recognized upon delivery. The Company records deferred revenues when cash payments are received or due in advance of our performance, including amounts which are refundable.
Information Technology:
The Company recognizes revenue when the following criteria have been met persuasive evidence of an arrangement exists, no significant Company obligations remain, collection of the related receivable is reasonably assured, and the fees are fixed or determinable. The Company acts as a principal in its revenue transactions as the Company is the primary obligor in the transactions.
Revenues from mobile app products are generally recognized upon delivery. Revenues from History Reports are generally recognized upon delivery / download. Prepayments received from customers before delivery (if any) are recognized as deferred revenue and recognized upon delivery.
New World Health Brands:
Revenues from New World Health Brands products are generally recognized upon delivery.
| Page 31 of 62 |
Stock-Based Compensation – Stock Options
The Company grants stock options to employees, officers, directors and other eligible recipients under stock option agreements that may provide for either Incentive Stock Options or Non-Qualified Stock Options. The options generally provide the holder with the right to purchase shares of the Company’s common stock at a specified exercise price during the contractual term of the award and may become exercisable in installments based on the vesting provisions of the applicable agreement.
The Company accounts for stock-based compensation in accordance with ASC Topic 718, Compensation—Stock Compensation. Stock-based compensation expense is measured based on the grant-date fair value of the award and is recognized over the requisite service period during which the award vests.
The fair value of stock options is estimated using an option-pricing model based on the terms of the individual award and relevant valuation assumptions, including the market price of the Company’s common stock, exercise price, expected term, expected stock price volatility, risk-free interest rate and expected dividend yield.
For stock options that vest in installments, compensation cost is recognized over the applicable requisite service period in accordance with the vesting provisions of the award. The Company accounts for forfeitures, modifications, cancellations and settlements of stock option awards in accordance with the applicable provisions of ASC 718.
Warrants Issued in Connection with Subscription Agreements
The Company may issue warrants to purchase shares of its common stock in connection with subscription agreements and other equity financing transactions. The Company evaluates warrants and other freestanding equity-linked instruments at issuance to determine the appropriate classification as equity or liabilities in accordance with applicable accounting guidance, including ASC Topic 815, Derivatives and Hedging.
Warrants that are indexed to the Company’s own stock and meet the applicable requirements for equity classification are recorded as a component of stockholders’ equity and are not subsequently remeasured. Warrants that do not qualify for equity classification are accounted for as liabilities, initially measured at fair value and subsequently remeasured at fair value at each reporting date, with changes in fair value recognized in earnings.
When common stock and warrants are issued together in a financing transaction, the Company allocates the proceeds among the instruments issued in accordance with their respective accounting classification and the applicable accounting guidance. Issuance costs are allocated to the instruments issued based on the applicable accounting treatment for each instrument.
Principles of Consolidation and Noncontrolling Interests
The consolidated financial statements include the accounts of the Company and its subsidiaries over which the Company has a controlling financial interest. All significant intercompany accounts and transactions have been eliminated in consolidation.
Noncontrolling interests represent the portion of the equity in consolidated subsidiaries that is not attributable, directly or indirectly, to the Company. Noncontrolling interests are presented as a separate component in the statements of changes in stockholders’ deficit in the consolidated balance sheets. Net income or loss, as applicable, are attributed to the Company and the noncontrolling interests based on their respective ownership interests.
Changes in the Company’s ownership interest in a consolidated subsidiary that do not result in a loss of control are accounted for as equity transactions. If the Company ceases to have a controlling financial interest in a subsidiary, the Company deconsolidates the subsidiary and recognizes any resulting gain or loss in accordance with applicable accounting guidance.
Inventories
The Company’s inventories represent finished goods, consist of products available for sale and are accounted for using the first-in, first-out (FIFO) method and valued at the lower of cost or net realizable value. Inventory consists of finished goods for the Company’s New World Health Brands business.
Convertible Instruments
The Company evaluates and accounts for conversion options embedded in its convertible instruments in accordance with professional standards for “Accounting for Derivative Instruments and Hedging Activities” (“ASC 815-40”).
The Company accounts for convertible instruments (when it has determined that the embedded conversion options should not be bifurcated from their host instruments) in accordance with professional standards when “Accounting for Convertible Securities with Beneficial Conversion Features,” as those professional standards pertain to “Certain Convertible Instruments.” Accordingly, the Company records, when necessary, discounts to convertible notes for the intrinsic value of conversion options embedded in debt instruments based upon the differences between the fair value of the underlying common stock at the commitment date of the note transaction and the effective conversion price embedded in the note. Debt discounts under these arrangements are amortized over the term of the related debt to their earliest date of redemption. The Company also records when necessary deemed dividends for the intrinsic value of conversion options embedded in preferred shares based upon the differences between the fair value of the underlying common stock at the commitment date of the note transaction and the effective conversion price embedded in the note. ASC 815-40 provides that, among other things, generally, if an event is not within the entity’s control could or require net cash settlement, then the contract shall be classified as an asset or a liability.
Derivative Liabilities
ASC 815 generally provides three criteria that, if met, require companies to bifurcate conversion options from their host instruments and account for them as freestanding derivative financial instruments. These three criteria include circumstances in which (a) the economic characteristics and risks of the embedded derivative instrument are not clearly and closely related to the economic characteristics and risks of the host contract, (b) the hybrid instrument that embodies both the embedded derivative instrument and the host contract is not re-measured at fair value under otherwise applicable generally accepted accounting principles with changes in fair value reported in earnings as they occur and (c) a separate instrument with the same terms as the embedded derivative instrument would be considered a derivative instrument subject to the requirements of ASC 815. ASC 815 also provides an exception to this rule when the host instrument is deemed to be conventional, as described.
| Page 32 of 62 |
RECENT ACCOUNTING PRONOUNCEMENTS
Recently adopted accounting pronouncements require public companies to disclose the impact of new standards on their financial statements, including details about the standard, the adoption date, method of adoption, and expected effects. These disclosures help investors understand how changes in accounting principles will affect a company’s financial performance and position.
Recently Adopted Accounting Pronouncements. In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280). The amendments in this update expand segment disclosure requirements, including new segment disclosure requirements for entities with a single reportable segment among other disclosure requirements. This update is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Adoption of this standard is on a modified retrospective basis and had no impact on the Company’s financial position, results of operations, cash flows or net income per share. As of April 30, 2026, and April 30, 2025, the Company had one reporting segment, all revenue is reported under this segment Sparta Commercial Services, Inc.
Other accounting standards and amendments to existing accounting standards that have been issued and have future effective dates are not applicable or are not expected to have a significant impact on the Company’s consolidated financial statements.
Off-Balance Sheet Arrangements
We do not maintain off-balance sheet arrangements, nor do we participate in non-exchange traded contracts requiring fair value accounting treatment.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not applicable.
| Page 33 of 62 |
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
| Page 34 of 62 |
Report of Independent Registered Public Accounting Firm
To: Shareholders and
Board of Directors of Sparta Commercial Services, Inc.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Sparta Commercial Services, Inc. (the “Company”) as of April 30, 2026, and April 30, 2025, the related consolidated statements of operations, changes in stockholders’ deficit, and cash flows for the years then ended, and the related notes (collectively referred to as the “financial statements”).
In our opinion, the accompanying financial statements present fairly, in all material respects, the financial position of the Company as of April 30, 2026, and April 30, 2025, the results of its operations and its cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America.
Substantial Doubt About the Company’s Ability to Continue as a Going Concern
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note B, Going Concern Matters, to the financial statements, the Company had a working capital deficit of $11,553,887., and accumulated deficit of $71,790,476, as of April 30, 2026. These factors raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note B to the financial statements. The financial statements do not include adjustments that might result from the outcome of this uncertainty.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee equivalent and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of the critical audit matter does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing separate opinions on the critical audit matter or on the accounts or disclosures to which they relate.
| Page 35 of 62 |
Accounting for Embedded Derivative Liabilities Related to Convertible Notes
As described in Notes A, C and F to the financial statements, the Company has certain convertible notes containing variable conversion features. The Company evaluated the terms of these instruments and determined that certain conversion features required bifurcation and liability classification as embedded derivatives. The derivative liabilities are measured at fair value at each reporting date, with changes in fair value recognized in earnings. The Company determined the fair value of the embedded derivatives using a Binomial option-pricing model. During the year ended April 30, 2026, recognized a gain from the change in fair value of $108,264. As of April 30, 2026, the fair value of derivative liabilities was $899,335.
We identified the accounting for and valuation of the embedded derivative liabilities related to the convertible notes as a critical audit matter. The principal considerations for our determination included the significant auditor judgment and effort required to evaluate (1) management’s assessment of the terms and features of the convertible instruments, including the determination of whether the instruments and related features qualified for equity or liability classification, (2) whether conversion features represented embedded derivatives requiring bifurcation from the host instruments, and (3) the valuation of the derivative liabilities, including the valuation methodology and significant assumptions used by management. Auditing these matters involved a high degree of auditor judgment and, with respect to the valuation of the derivative liabilities, specialized skill and knowledge.
Our audit procedures related to the accounting for and valuation of the embedded derivative liabilities included the following, among others:
| ● | We inspected the executed agreements, including any amendments to the convertible notes containing variable conversion features and evaluated the significant terms and conditions of those instruments. | |
| ● | We evaluated management’s assessment of the classification of the instruments as equity or liabilities and whether the conversion features required bifurcation as embedded derivatives, including the effect of the variable conversion price mechanism on that assessment. | |
| ● | We evaluated the appropriateness of the valuation methodology and significant assumptions used by management, including the risk-free interest rate, expected stock price volatility, dividend yield, and expected life of the conversion features. | |
| ● | We independently obtained relevant market data and other inputs used in the valuation, including the stock price, expected stock price volatility, risk-free interest rate, dividend yield, and expected life of the conversion features. | |
| ● | Using independently obtained inputs, we independently recalculated the fair value of the derivative liabilities. |
PCAOB
ID: 0
We have served as Sparta Commercial Services, Inc.’s auditor since 2023.
August 13, 2026
| Page 36 of 62 |
SPARTA COMMERCIAL SERVICES, INC.
CONSOLIDATED BALANCE SHEETS
FOR THE YEARS ENDED APRIL 30, 2026 AND 2025
| April 30, | April 30, | |||||||
| 2026 | 2025 | |||||||
| ASSETS | ||||||||
| Current Assets | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Accounts receivable | ||||||||
| Inventory | ||||||||
Prepaid expenses | ||||||||
| Merchant Advances (less provision of $ | ||||||||
| Total Current Assets | ||||||||
| Rent deposit | ||||||||
| Total assets | $ | $ | ||||||
| LIABILITIES AND DEFICIT | ||||||||
| Liabilities: | ||||||||
| Current Liabilities | ||||||||
| Accounts payable and accrued expenses | $ | $ | ||||||
| Short Term Loan | ||||||||
| Current portion notes payable | ||||||||
| Derivative liabilities | ||||||||
| Total Current Liabilities | ||||||||
| Long Term Liabilities | ||||||||
| Loans payable-related parties | ||||||||
| Notes payable- net of current portion | ||||||||
| Total Long Term Liabilities | ||||||||
| Total liabilities | ||||||||
| Stockholders’ Deficit: | ||||||||
| Preferred stock A, $ par value; shares authorized of which shares have been designated as Series A convertible preferred stock, with a stated value of $ per share, and shares issued and outstanding as of April 30, 2026 and April 30, 2025, respectively | ||||||||
| Preferred stock C,
shares have been designated as Series C redeemable, convertible preferred, $ par value, with a liquidation and redemption value
of $ | ||||||||
| Preferred
stock D, shares have been designated as Series D redeemable, convertible preferred, $ par value, with a liquidation
and redemption value of $ | ||||||||
| Common stock, $ par value; shares authorized, and and shares issued and outstanding as of April 30, 2026 and April 30, 2025, respectively | ||||||||
| Common stock to be issued | ||||||||
| Additional paid-in-capital | ||||||||
| Subscriptions Receivable | ( | ) | ||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Total deficiency in stockholders’ equity | ( | ) | ( | ) | ||||
| Non-controlling interest | ||||||||
| Total Deficit | ( | ) | ( | ) | ||||
| Total Liabilities and Deficit | $ | $ | ||||||
See accompanying notes to consolidated financial statements.
| Page 37 of 62 |
SPARTA COMMERCIAL SERVICES, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEARS ENDED APRIL 30, 2026 AND 2025
| 2026 | 2025 | |||||||
| Revenue | ||||||||
| Information technology | $ | $ | ||||||
| Wellness products | ||||||||
| Merchant financing | ||||||||
| Total Revenue | ||||||||
| Less Cost of goods sold | ||||||||
| Gross profit | $ | $ | ||||||
| Operating expenses: | ||||||||
| Compensation and related costs | ||||||||
| Accounting and legal Fees | ||||||||
| Consulting fees | ||||||||
| Rent and lease | ||||||||
| Provision for credit losses | ||||||||
| General office expenses | ||||||||
| Total operating expenses | ||||||||
| Loss from operations | $ | ( | ) | $ | ( | ) | ||
| Other income (expense): | ||||||||
| Commission on Municipal Bonds | $ | ( | ) | $ | ( | ) | ||
| Interest Expense on notes | ||||||||
| Loss (gain) in changes in fair value of derivative liability | ( | ) | ||||||
| Other income | ( | ) | ||||||
| Total other (income) expense | $ | $ | ||||||
| Net loss | ( | ) | ( | ) | ||||
| Net profit (loss) attributable to minority shareholder | ||||||||
| Preferred dividend | ||||||||
| Net loss attributed to common stockholders | $ | ( | ) | $ | ( | ) | ||
| Basic and diluted loss per share: | ||||||||
| Loss from continuing operations attributable to Sparta Commercial Services, Inc. common stockholders | ) | ) | ||||||
| Net loss attributable to Sparta Commercial Services, Inc. common stockholders | $ | ) | $ | ) | ||||
| Weighted average shares outstanding | ||||||||
See accompanying notes to consolidated financial statements.
| Page 38 of 62 |
SPARTA COMMERCIAL SERVICES, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ DEFICIT
FOR THE YEAR ENDED APRIL 30, 2026
| Additional | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Series A | Series C | Series D | Common Stock | Paid in | Additional | Non | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Preferred Stock | Preferred Stock | Preferred Stock | Common Stock | to be issued | Capital | Paid in | Subscriptions | Accumulated | controlling | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | (Warrants) | Capital | Receivable | Deficit | Interest | Total | |||||||||||||||||||||||||||||||||||||||||||||||||
| Balance April 30, 2025 | $ | $ | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Subscribed shares issued | - | - | - | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Issuance of common stock for cash | - | - | - | ( | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Issuance of common stock for services | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Issuance of common stock for extinguishment of debt | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Issuance of common stock with debt | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Issuance of common stock for conversion debt | - | - | - | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Conversion of preferred shares | - | - | ( | ) | ( | ) | - | ( | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Default shares issued | - | - | - | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Commitment Shares not yet issued | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Expense recognition of stock options | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net Income (loss) | - | - | - | - | - | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance April 30, 2026 | $ | $ | $ | $ | $ | $ | $ | $ | ( | ) | ( | ) | $ | $ | ( | ) | ||||||||||||||||||||||||||||||||||||||||||||||||
See accompanying notes to consolidated financial statements.
| Page 39 of 62 |
SPARTA COMMERCIAL SERVICES, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ DEFICIT
FOR THE YEAR ENDED APRIL 30, 2025
| Additional | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Series A | Series C | Series D | Common Stock | Paid in | Additional | Non | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Preferred Stock | Preferred Stock | Preferred Stock | Common Stock | to be issued | Capital | Paid in | Subscriptions | Accumulated | controlling | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | (Warrants) | Capital | Receivable | Deficit | Interest | Total | |||||||||||||||||||||||||||||||||||||||||||||||||
| Balance April 30, 2024 | $ | $ | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Subscribed shares issued | - | - | - | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Issuance of common stock for cash | - | - | - | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Issuance of common stock for services | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Stock issuance | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Conversion of notes payable | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Warrants issued on equity issuance | - | - | - | - | - | ( | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Default shares issued | - | - | - | - | ( | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Conversion of preferred shares | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Commitment Shares not yet issued | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net Income (loss) | - | - | - | - | - | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance April 30, 2025 | $ | $ | $ | $ | $ | $ | $ | $ | ( | ) | $ | $ | ( | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||
See accompanying notes to consolidated financial statements.
| Page 40 of 62 |
SPARTA COMMERCIAL SERVICES, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEARS ENDED APRIL 30, 2026 AND 2025
| 2026 | 2025 | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | . | |||||||
| Loss (Gain) from change in fair value of derivative liabilities | ( | ) | ||||||
| Non-cash financing cost | ||||||||
| Shares issued for services | ||||||||
| Expense recognition of stock options | ||||||||
| Stocks issued as note holder incentive | ||||||||
| Conversion of notes payable to equity | ||||||||
| Provision for credit losses | ||||||||
| Default shares issued | ||||||||
| Changes in operating assets and liabilities | ||||||||
| Accounts receivable | ( | ) | ||||||
| Inventory | ( | ) | ||||||
Prepaid expenses | ( | ) | ||||||
| Other assets | ( | ) | ( | ) | ||||
| Accounts payable and accrued expenses | ||||||||
| Net cash used in operating activities | $ | ( | ) | $ | ( | ) | ||
| CASH FLOWS FROM INVESTING ACTIVITIES: | $ | $ | ||||||
| CASH FLOWS FROM FINANCING ACTIVITIES | ||||||||
| Proceeds from sale of stock | $ | $ | ||||||
| Net Proceeds from notes payable | ||||||||
| Repayments of notes payable | ( | ) | ( | ) | ||||
| Repayment of related party loans | ( | ) | ||||||
| Net cash provided by financing activities | $ | $ | ||||||
| Net (decrease) increase in cash | $ | ( | ) | $ | ||||
| Cash and cash equivalents, beginning of period | ||||||||
| Cash and cash equivalents , end of period | $ | $ | ||||||
| Cash paid for: | ||||||||
| Interest | $ | $ | ||||||
| Income taxes | $ | $ | ||||||
See accompanying notes to consolidated financial statements.
| Page 41 of 62 |
SPARTA COMMERCIAL SERVICES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
APRIL 30, 2026
NOTE A – SUMMARY OF ACCOUNTING POLICIES
A summary of the significant accounting policies applied in the preparation of the accompanying financial statements follows.
Business
Sparta Commercial Services, Inc. (“Sparta,” “we,” “us,” or the “Company”) is a Nevada corporation with headquarters in New York, New York, and a corporate website at www.spartacommercial.com, with subsidiary addresses in Stamford, CT. We operate as a multi-disciplined parent corporation across four primary business sectors: FinTech Services, Financial Services, E-Commerce & Mobile Technology, and Health and Wellness. Our operations are conducted through wholly owned subsidiaries and joint ventures that provide specialized financing products, technology-driven solutions, and consumer wellness offerings.
Agoge Global USA, Inc. is a fintech company revolutionizing cross-border trade for Brazilian importers by offering staged financing and automated payment solutions. Through a joint venture with Brazil’s WeDev Group, Agoge provides a proprietary platform that simplifies and accelerates invoice payments, customs clearance, and regulatory compliance. The system reduces costly delays, lowers transaction fees, and improves cash flow by enabling importers to pay suppliers, freight, and customs fees in stages—giving them time to sell goods before loans mature. Positioned in a $252B market, Agoge is targeting small-to-midsize importers across high-demand sectors and is seeking debt financing to scale its platform and meet growing client demand.
Sparta’s subsidiary, Sparta Crypto, Inc., www.SpartaCrypto.com, was established in September 2020, and is in the process of completing a proprietary state-of-the-art platform designed to connect users of widely adopted digital currencies with sellers of various goods and services. The platform is scheduled to launch in 2026 and the Company can make no assurances that the described plan will reach implementation. In addition, the Company completed and tested a cryptocurrency payment gateway called SpartaPayIQ, www.SpartaPayIQ.com, which was formally announced on March 3, 2022.
In 2007, the Company introduced a new initiative, Municipal Financing, (www.spartamunicipal.com), which since inception and through the current date has provided financing over 100 jurisdictions to date. Sparta’s Municipal Finance program is also currently available to all nonprofit organizations, institutions and entities. All nonprofit organizations which adhere to IRS guidelines, including 501 (c) 3 of the Internal Revenue Code, are eligible. Both public nonprofits, also known as public charities, supported with publicly collected funds, and private nonprofits, also known as private foundations supported by an individual or business entity, qualify for the program.
Consumers, retailers, municipals, nonprofits, auction houses, banks, and insurance companies scrutinize title history reports for the vital information needed and factored into crucial business decisions affecting the bottom line. Vehicle History Reports are a staple of Sparta’s E-Commerce Technology subsidiary iMobile Solutions, Inc. Whether a vehicle is intended for business or recreational use, Sparta’s Vehicle History Reports are highly regarded for accuracy and completeness. They have been sold across all 50 states and in 62 countries worldwide. They provide a trusted layer of assurance to vehicle buyers and are available on our websites as well as on various dealership websites. They include Cyclechex (Motorcycle History Reports at www.cyclechex.com), RVchex (Recreational Vehicle History Reports at www.rvchex.com), and Truckchex (Heavy Duty Truck History Reports at www.truckchex.com).
The Company’s E-Commerce and Mobile Technology subsidiary name change to iMobile Solutions, Inc., from Specialty Reports, Inc., in 2016, signifies its ever-broadening service offerings in the evolving technology landscape. With iMobile App (www.imobileapp.com), the Company provides mobile technology services, including web and mobile application creation, development, and management for a wide range of businesses to increase revenue, build brand recognition, and improve customer engagement. Our ever-broadening business base of mobile applications includes vehicle dealerships and racetracks, private clubs and country clubs, schools and entertainment venues, restaurants, grocery stores, and various other merchant types. (www.imobileapp.com/app-gallery). The Company also designs, launches, maintains, and hosts websites for businesses incorporating SEO (search engine optimization), social media marketing, and online reviews to improve their presence online.
We provide specific, tailored action plans for our clients’ websites that include services such as eCommerce, CRM (Customer Relationship Management) development, and integration. This custom software helps businesses communicate with customers and can also be used for employees to communicate internally. The CRM software can be web-based, integrated with a mobile app, or both. We work with clients to understand their unique needs and incorporate the features and requirements that are most important to them and will facilitate their business growth and success. Correspondingly, the Company designs and builds custom kitchen ordering software for independent grocery stores, delicatessens, and other food service businesses. The software can be designed in various ways, including mobile devices and in-store ordering. The kitchen ordering software is enabled with payment integration, text messaging notification, wireless printing, and other features. iMobile Solutions, Inc. provides a turn-key solution for businesses looking to simplify or streamline their kitchen ordering process. Additionally, we offer text messaging services, which supplement business marketing strategies to gain and retain brand loyalty among its clients, customers, and investors. Our text messaging platform allows clients to manage, schedule, and analyze text message performance quickly.
| Page 42 of 62 |
In August 2020, we launched an online B to C website: www.newworldhealthbrands.com, featuring high-quality nutritional supplements, including vitamins and minerals, such as, Iodine for children and adults, Boron, copper/Zinc/Selenium, Magnesium, Spermidine, Vitamin B Complex, Vitamin C and PQQ, with more products to come. All health and wellness offerings are exclusively sourced and manufactured in the United States and adhere to strict U.S. standards and guidelines to ensure the safety and quality of our products. Sparta’s commitment to high standards and transparency is tantamount to being a trusted brand.
Basis of Presentation
The accompanying consolidated financial statements as of April 30, 2026, and 2025 have been prepared by the Company according to the rules and regulations of the Securities and Exchange Commission, including Form 10-K and Regulation S-K. The information furnished herein reflects all adjustments (consisting of normal recurring accruals and adjustments), which are, in the opinion of management, necessary to present the operating results for the respective periods fairly. The Company believes that the disclosures provided are adequate to make the information presented accurate.
Principles of Consolidation
The consolidated financial statements include the accounts of the Company and its majority owned subsidiary. All material intercompany transactions and balances have been eliminated in consolidation. The third-party ownership of the Company’s subsidiary is accounted for as noncontrolling interest in the consolidated financial statements. Changes in the noncontrolling interest are reported in the statement of stockholders’ deficit.
Estimates
The preparation of the financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates.
Revenue Recognition
Revenue is recognized in accordance with Accounting Standards Codification (“ASC”) Revenue from Contracts with Customers. Under ASC 606, the Company recognizes revenue utilizing the following steps: (1) identify the contract with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to each performance obligation in the contract; and (5) recognize revenue when each performance obligation is satisfied.
The Company acts as the principal in its revenue transactions as it is the primary obligor.
The Company’s main source of revenue is comprised of the following:
| ● | Information Technology-Sparta creates mobile applications (mobile apps) for small and medium-size businesses under the tradename iMobileApp. Sparta provides Vehicle Title History Reports (Cyclechex.com, RVchex.com and Truckchex.com) containing valuable information for consumers, dealers, insurers, auction houses, and lenders including verifying the specific make, model, and year of a pre-owned vehicle, as well as Brands that have been placed on titles. Revenues from History Reports are typically recognized upon delivery/download. Prepayments received from customers before delivery (if any) are recognized as deferred revenue and recognized upon delivery. The Company records deferred revenues when cash payments are received or due before our performance, including refundable amounts. |
| ● | Wellness products- Our Wellness products feature high quality dietary supplements, including vitamins and minerals, such as, Iodine for children and adults, Boron, Copper/Zinc/Selenium, and Magnesium Complex. In addition to our B to C website: www.newworldhealthbrands.com, our Wellness products are also offered on various on-line marketplaces. Revenues from New World Health Brands products are generally recognized upon delivery. |
| ● | Merchant financing - Sparta offers Brazilian importers staged financing and automated payment solutions. The system reduces costly delays, lowers transaction fees, and improves cash flow by enabling importers to pay suppliers, freight, and customs fees in stages—giving them time to sell goods before loans mature. Revenues from merchant financing is recognized monthly based on the outstanding balance of the loans. |
The following table presents our revenues disaggregated by revenue source:
| For the Years Ended April 30, | ||||||||
| 2026 | 2025 | |||||||
| Information Technology | $ | $ | ||||||
| Wellness products | ||||||||
| Merchant financing | ||||||||
| $ | $ | |||||||
Cash and Cash Equivalents
All liquid investments with three months or less maturity are cash equivalents for the accompanying financial statements.
Website Development Costs
The Company recognizes website development costs in accordance with ASC 350-50, “Accounting for Website Development Costs.” As such, the Company expenses all costs incurred relate to the planning and post implementation phases of development of its website. Direct costs incurred in the development phase are capitalized and recognized over the estimated useful life. Costs associated with repair or maintenance for the website are included in cost of net revenues in the current period expenses.
Fair Value Measurements
The Company adopted ASC 820, “Fair Value Measurements (“ASC 820”).” ASC 820 establishes a three-level fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets the lowest priority to unobservable inputs to fair value measurements of certain assets and Liabilities. The three levels of the fair value hierarchy under ASC 820 are described below:
| ● | Level 1 — Quoted prices for identical instruments in active markets. Level 1 assets and liabilities include debt and equity securities and derivative contracts that are traded in an active exchange market, as well as certain securities that are highly liquid and are actively traded in over-the-counter markets. | |
| ● | Level 2 — Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model derived valuations in which all significant inputs and significant value drivers are observable in active markets. | |
| ● | Level 3 — Unobservable inputs that are supported by little or no market activity and that are significant to the fair value measurements. Level 3 assets and liabilities include financial instruments whose value is determined using pricing models, discounted cash flow methodologies, or similar techniques based on significant unobservable inputs, as well as management judgments or estimates that are significant to valuation. |
This hierarchy requires the Company to use observable market data when available and to minimize the use of unobservable inputs when determining fair value. Observable inputs may not always be available for some products or in certain market conditions.
Income Taxes
We utilize ASC 740 “Income Taxes” which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred income taxes are recognized for the tax consequences in future years of differences between the tax bases of assets and liabilities and their financial reporting amounts at year-end based on enacted laws and statutory tax rates applicable to the periods in which the differences are expected to affect taxable income.
| Page 43 of 62 |
The Company recognizes the impact of a tax position in the financial statements only if that position is more likely than not of being sustained upon examination by taxing authorities, based on the technical merits of the position. Our practice is to recognize interest and/or penalties related to income tax matters in income tax expense.
We account for our stock-based compensation under ASC 718 “Compensation – Stock Compensation” using the fair value-based method. Under this method, compensation cost is measured at the grant date based on the value of the award and is recognized over the service period, which is usually the vesting period. This guidance establishes standards for the accounting for transactions in which an entity exchanges its equity instruments for goods or services. It also addresses transactions in which an entity incurs liabilities in exchange for goods or services that are based on the fair value of the entity’s equity instruments or that may be settled by the issuance of those equity instruments.
We use the fair value method for equity instruments granted to non-employees and use the Black-Scholes model for measuring the fair value of options. The stock-based fair value compensation is determined as of the date of the grant or the date at which the performance of the services is completed (measurement date) and is recognized over the vesting periods.
Inventories
The Company’s inventories represent finished goods, consist of products available for sale and are accounted for using the first-in, first-out (FIFO) method and valued at the lower of cost or net realizable value. Inventory consists of finished goods for the Company’s New World Health Brands business.
Property and Equipment
Property and equipment are recorded at cost. Minor additions and renewals are expensed in the year incurred. Major additions and renewals are capitalized and depreciated over their estimated useful lives. Depreciation is calculated using the straight-line method over the estimated useful lives. Estimated useful lives of major depreciable assets are as follows:
| Leasehold improvements | ||||
| Furniture and fixtures | ||||
| Website costs | ||||
| Computer Equipment |
Concentrations of Credit Risk
Financial instruments and related items, which potentially subject the Company to concentrations of credit risk, consist primarily of cash, cash equivalents and receivables. The Company places its cash and temporary cash investments with high quality credit institutions. At times, such investments may be in excess of the FDIC insurance limit.
The Company uses ASC 260-10, “Earnings Per Share,” for calculating the basic and diluted loss per share. The Company computes basic loss per share by dividing net loss and net loss attributable to common shareholders by the weighted average number of common shares outstanding. Common equivalent shares are excluded from the computation of net loss per share if their effect is anti-dilutive.
The Company has and shares of common classified as to be issued at April 30, 2026, and April 30, 2025, respectively included on the balance sheet were excluded from the shares used to calculate diluted earnings per share as their inclusion would reduce net loss per share.
| Page 44 of 62 |
Derivative Liabilities
The Company assessed the classification of its derivative financial instruments as of April 30, 2026, and April 30, 2025, which consist of convertible instruments and rights to shares of the Company’s common stock. It determined that such derivatives meet the criteria for liability classification under ASC 815.
ASC 815 generally provides three criteria that, if met, require companies to bifurcate conversion options from their host instruments and account for them as freestanding derivative financial instruments. These three criteria include circumstances in which (a) the economic characteristics and risks of the embedded derivative instrument are not clearly and closely related to the economic characteristics and risks of the host contract, (b) the hybrid instrument that embodies both the embedded derivative instrument and the host contract is not re-measured at fair value under otherwise applicable generally accepted accounting principles with changes in fair value reported in earnings as they occur and (c) a separate instrument with the same terms as the embedded derivative instrument would be considered a derivative instrument subject to the requirements of ASC 815. ASC 815 also provides an exception to this rule when the host instrument is deemed conventional, as described.
The Company determined the fair value of the derivative liabilities of convertible notes using a Binomial model option-pricing model with the following assumptions, market value of common stock on measurement date, risk free interest rate, expected volatility, expected dividend yields and instrument lives in years.
Convertible Instruments
The Company evaluates and accounts for conversion options embedded in its convertible instruments in accordance with professional standards for “Accounting for Derivative Instruments and Hedging Activities.”
The Company assessed the classification of its derivative financial instruments as of April 30, 2026, and April 30, 2025, which consist of convertible instruments and rights to shares of the Company’s common stock and determined that such derivatives meet the criteria for liability classification under ASC 815.
ASC 815 generally provides three criteria that, if met, require companies to bifurcate conversion options from their host instruments and account for them as freestanding derivative financial instruments. These three criteria include circumstances in which (a) the economic characteristics and risks of the embedded derivative instrument are not clearly and closely related to the economic characteristics and risks of the host contract, (b) the hybrid instrument that embodies both the embedded derivative instrument and the host contract is not re-measured at fair value under otherwise applicable generally accepted accounting principles with changes in fair value reported in earnings as they occur and (c) a separate instrument with the same terms as the embedded derivative instrument would be considered a derivative instrument subject to the requirements of ASC 815. ASC 815 also provides an exception to this rule when the host instrument is deemed to be conventional, as described.
Reclassifications
Certain reclassifications have been made to conform with prior periods’ data to the current presentation. These reclassifications did not affect reported losses.
Recent Accounting Pronouncements
Recently adopted accounting pronouncements require public companies to disclose the impact of new standards on their financial statements, including details about the standard, the adoption date, method of adoption, and expected effects. These disclosures help investors understand how changes in accounting principles will affect a company’s financial performance and position.
Recently Adopted Accounting Pronouncements. In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280). The amendments in this update expand segment disclosure requirements, including new segment disclosure requirements for entities with a single reportable segment among other disclosure requirements. This update is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Adoption of this standard is on a modified retrospective basis and had no impact on the Company’s financial position, results of operations, cash flows or net income per share. As of 2026 and 2025 the Company had one reporting segment, all revenue is reported under this segment Sparta Commercial Services, Inc.
| Page 45 of 62 |
Other accounting standards and amendments to existing accounting standards that have been issued and have future effective dates are not applicable or are not expected to have a significant impact on the Company’s consolidated financial statements.
NOTE B – GOING CONCERN MATTERS
The
accompanying consolidated financial statements have been prepared on a going-concern basis, which contemplates the realization of assets
and the satisfaction of liabilities in the normal course of business. The accompanying consolidated financial statements show that the
Company has incurred recurring losses and generated negative cash flows from operating activities since inception. As of April 30, 2026,
the Company had an accumulated deficit of $
The Company’s existence is dependent upon management’s ability to develop profitable operations. Management is devoting substantially all its efforts to developing its business and raising capital and there can be no assurance that the Company’s efforts will be successful. No assurance can be given that management’s actions will result in profitable operations or the resolution of its liquidity problems. The accompanying consolidated financial statements do not include any adjustments that might result should the Company be unable to continue as a going concern.
To improve the Company’s liquidity, the Company’s management is actively pursuing additional equity financing through discussions with investment bankers, private equity groups, and private investors. There can be no assurance that the Company will be successful in its effort to secure additional equity financing.
NOTE C – NOTES PAYABLE AND DERIVATIVES
The
Company has outstanding numerous notes payable to various parties. The notes bear interest at rates of
| Notes Payable | April 30, 2026 | April 30, 2025 | ||||||
| Convertible notes payable | $ | $ | ||||||
| Non-convertible notes payable | ||||||||
| Accrued interest | ||||||||
| Discount on notes payable | ||||||||
| Notes payable, net | $ | $ | ||||||
Certain
notes payable contains variable conversion rates, and the conversion features are classified as derivative liabilities. The conversion
prices are based on the market price of the Company’s common stock, at discounts of
The Company’s derivative financial instruments are embedded derivatives related to the outstanding short-term Convertible Notes Payable. These embedded derivatives included certain conversion features indexed to the Company’s common stock. The accounting treatment of derivative financial instruments requires that the Company record the derivatives and related items at their fair values as of the inception date of the Convertible Notes Payable and at fair value as of each subsequent balance sheet date. In addition, under the provisions of Accounting Standards Codification subtopic 815-40, Derivatives and Hedging; Contracts in Entity’s Own Equity (“ASC 815-40”), as a result of entering into the Convertible Notes Payable, the Company is required to classify all other non-employee stock options and warrants as derivative liabilities and mark them to market at each reporting date. Any change in fair value, including modifications of terms, will be recorded as non-operating, non-cash income, or expense at each reporting date. If the fair value of the derivatives is higher at the subsequent balance sheet date, the Company will record a non-operating, non-cash charge. If the fair value of the products is lower at the subsequent balance sheet date, the Company will record non-operating, non-cash income. These Notes are subject to a six-year Statute of Limitations in which to bring any potential claims.
| Page 46 of 62 |
The change in fair value of the derivative liabilities of convertible notes outstanding at April 30, 2026, was calculated with the following average assumptions, using a Binomial option-pricing model are as follows:
| Significant Assumptions: | ||||
| Risk free interest rate | % | |||
| Expected stock price volatility | % | |||
| Expected dividend payout | ||||
| Expected options life in years | ||||
Changes in derivative liability during the year ended April 30, 2026, and 2025 were:
| April 30, | April 30, | |||||||
| 2026 | 2025 | |||||||
| Balance, beginning of year | $ | $ | ||||||
| Fair value adjustments | ( | ) | ||||||
| Balance, end of period | $ | $ | ||||||
NOTE D – LOANS PAYABLE TO RELATED PARTIES
As
of April 30, 2026, and April 30, 2025, aggregated loans payable to related parties and, without demand to officers and directors, were
$
NOTE E – EQUITY TRANSACTIONS
Common Stock
The Company is authorized to issue shares of common stock, $par value. The Company had and shares of common stock issued and outstanding as of April 30, 2026, and April 30, 2025, respectively. The Company had and shares of common classified as to be issued at April 30, 2026, and April 30, 2025, respectively.
| Page 47 of 62 |
During the year ended April 30, 2026, the Company
| ● | Issued
shares and converted shares to be issued valued at $ | |
| ● | Issued
shares valued at $ | |
| ● | Issued
shares of common stock valued at $ | |
| ● | Issued
shares and shares to be issued valued at $ | |
| ● |
shares of common stock to be issued valued at $ | |
| ● |
shares of common stock to be issued valued at $ | |
| ● | Issued
shares of common stock valued at $ | |
| ● | Issued
shares and shares of common stock to be issued as penalty to noteholders valued at $ |
During the year ended April 30, 2025, the Company:
| ● | Issued
shares and shares to be issued valued at $ | |
| ● | Issued
shares valued at $ | |
| ● |
shares of common stock to be issued as an incentive or penalty to noteholders valued at $ | |
| ● | Issued
shares of common stock valued at $ | |
| ● | Issued
shares valued at $ | |
| ● | Issued
shares valued at $ |
Preferred Stock
The
Company is authorized to issue shares of preferred stock with $ par value per share, of which shares have been
designated as Series A convertible preferred stock with a $ stated value per share; shares have been designated as Series B
Preferred Stock with a $
During the years ended April 30, 2026, and 2025, the Company did not issue any preferred stock.
During the year ended April 30, 2026, the Company
| ● | Converted Series D preferred shares to shares of common stock |
During the year ended April 30, 2025, the Company
| ● | Converted Series C preferred shares to shares of common stock | |
| ● | Converted Series D preferred shares to shares of common stock |
| April 30, | April 30, | |||||||
| Preferred stock outstanding shares | 2026 | 2025 | ||||||
| Series A | ||||||||
| Series B | ||||||||
| Series C | ||||||||
| Series D | ||||||||
| Page 48 of 62 |
NOTE F – FAIR VALUE MEASUREMENTS
The Company follows the guidance established pursuant to ASC 820 which established a framework for measuring fair value and expands disclosure about fair value measurements. ASC 820 defines fair value as the amount that would be received for an asset or paid to transfer a liability (i.e., an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. ASC 820 also establishes a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 820 describes the following three levels of inputs that may be used:
Level 1: Quoted prices (unadjusted) in active markets that are accessible at the measurement date for identical assets and liabilities. The fair value hierarchy gives the highest priority to Level 1 inputs.
Level 2: Observable prices that are based on inputs not quoted on active markets but corroborated by market data.
Level 3: Unobservable inputs when there is little or no market data available, thereby requiring an entity to develop its own assumptions. The fair value hierarchy gives the lowest priority to Level 3 inputs.
The table below summarizes the fair values of financial liabilities as of April 30, 2026, and April 30, 2025:
| Fair Value at | Fair Value Measurement Using | |||||||||||||||
| April 30, 2026 | Level 1 | Level 2 | Level 3 | |||||||||||||
| Derivative liabilities | $ | $ | ||||||||||||||
| Fair Value at | Fair Value Measurement Using | |||||||||||||||
| April 30, 2025 | Level 1 | Level 2 | Level 3 | |||||||||||||
| Derivative liabilities | $ | $ | ||||||||||||||
The following is a description of the valuation methodologies used for these items:
Derivative liabilities — these instruments consist of certain variable conversion features related to notes payable obligations and certain outstanding warrants. These instruments were valued using pricing models incorporating the Company’s stock price, volatility, U.S. risk-free rate, dividend rate, and estimated life.
The Company did not identify any other non-recurring assets and liabilities that are required to be presented in the balance sheets at fair value following A.S.C. Topic 825, “The Fair Value Option for Financial Issuances.”
NOTE G - PROPERTY AND EQUIPMENT
Major classes of property and equipment at April 30, 2026, and April 30, 2025, consist of the following:
| 2026 | 2025 | |||||||
| Computer equipment, software and furniture | $ | $ | ||||||
| Less: accumulated depreciation | ( | ) | ( | ) | ||||
| Net property and equipment | $ | $ | ||||||
All equipment is fully depreciated as of the fiscal year end April 30, 2025. No additional investment in equipment during the year ended April 30, 2026.
| Page 49 of 62 |
NOTE H – WARRANTS AND STOCK OPTIONS:
During the year ended April 30, 2026, the Company
| ● | Issued
warrants exercisable between $ | |
| ● | Issued
stock options exercisable at $ |
During the year ended April 30, 2025, the Company:
| ● | Issued
warrants exercisable between $ |
As
of April 30, 2026, a total of stock options were vested. The computed fair value was $
NOTE I – MERCHANT ADVANCES DISCLOSURE
The Company has outstanding advances under short-term lines of credit extended to merchants. These advances are measured at amortized cost and are subject to an allowance for credit losses based on the Company’s expected credit loss methodology. Management monitors the performance and collectability of its merchant receivables, including payment activity and economic, regulatory and other developments that may affect their valuation and recoverability. Under the applicable agreements, the principal amount advanced, total repayment amount, interest amount and number of required payments are fixed over the agreed term of each disbursement, irrespective of the timing of individual payments received during such term.
During the year ended April 30, 2026, the payment performance of one merchant declined and certain payments were not made in accordance with the original contractual repayment schedule. Prior to this deterioration in payment performance, the merchant had made approximately 300 scheduled payments associated with more than 50 separate funding tranches. In light of these circumstances, the Company and the merchant mutually agreed in April 2026 to amend the repayment terms of the outstanding advances to provide for revised payment dates.
As of April 30, 2026, the Company had $
As
of April 30, 2026, and April 30, 2025, the outstanding merchant advances were $
NOTE J - INCOME TAXES
At
April 30, 2026, the Company has available for federal income tax purposes a net operating loss carry forward of approximately $
A reconciliation of the federal statutory income tax rate to the Company’s effective income tax rate is as follows:
| Years Ended April 30, | ||||||||
| 2026 | 2025 | |||||||
| Federal statutory income tax rate | ( | )% | ( | )% | ||||
| State income taxes, net of federal benefit | ( | ) | ( | ) | ||||
| Permanent differences | ||||||||
| Change in valuation allowance | ||||||||
| Provision for income taxes | % | % | ||||||
The benefit for income taxes differed from the amount computed using the US federal income tax rate of 21% for April 30, 2026, and 2025 were as follows
| April 30, | ||||||||
| 2026 | 2025 | |||||||
| Income tax (benefit) | $ | ( | ) | $ | ( | ) | ||
| Non-deductible | ||||||||
| Change in valuation allowance | ||||||||
| Income tax (benefit) per financial statements | $ | $ | ||||||
| Page 50 of 62 |
Components of deferred tax assets as of April 30, 2026, and estimated 2025 are as follows:
| April 30, | ||||||||
| 2026 | 2025 | |||||||
| Noncurrent: | ||||||||
| Net operating loss carry forward | $ | $ | ||||||
| Valuation allowance | ( | ) | ( | ) | ||||
| Net deferred tax asset | $ | $ | ||||||
NOTE K - COMMITMENTS AND CONTINGENCIES
Operating Lease Commitments
Our
executive offices are located in New York, NY. We have an agreement for use of office space at this location under a sublease which expired
on
Rent
expense was $
Employment and Consulting Agreements
The Company does not have employment agreements with any of its non-executive employees.
The Company has consulting agreements with outside contractors to provide marketing and financial advisory services. The agreements are generally for 12 months from inception and renewable automatically from year to year unless the Company or consultant terminates such engagement by written notice.
The Company entered into five-year employment agreements with its CEO, Anthony L Havens and Vice President of Operations, Sandra L Ahman. As part of their employment agreements, Mr. Havens received five-year options to purchase shares of the Company’s common stock at $per share. The options vest in three equal tranches over. Ms. Ahman received five-year options to purchase shares of the Company’s common stock at $ per share. The options vest in three equal tranches over .
Accrued Payroll Taxes (FICA and State Tax Payable)
Accrued payroll taxes consist primarily of obligations for Federal Insurance Contributions Act (“FICA”) taxes and various state payroll-related taxes incurred in the ordinary course of business. These amounts represent taxes withheld from employees as well as employer-paid payroll tax obligations that have not yet been remitted to the appropriate taxing authorities as of the balance sheet date.
As
of April 30, 2026, the Company recorded accrued payroll tax liabilities of approximately $
The Company is in negotiation with the IRS and expects to settle within the next 12 months. Management believes that adequate provisions have been made for all payroll tax obligations; however, the ultimate amount payable may differ from recorded amounts due to changes in tax regulations, audit outcomes, or other factors.
Litigation
The Company is subject to legal proceedings and claims arising in its business’s ordinary course. Sparta can make no representations about the potential outcome of such proceedings.
As of April 30, 2026, there is no pending litigation against Sparta and any and all prior litigation has been discontinued, settled or otherwise resolved with no liability whatsoever against Sparta.
NOTE L – SUBSEQUENT EVENTS
The Company has evaluated subsequent events for recognition and disclosure as of the date the financial statements were available to be issued. No other matters were identified affecting the accompanying financial statements and related disclosures.
Subsequent to April 30, 2026, the Company:
| ● | Issued shares valued at $ | |
| ● | Issued shares valued at $ | |
| ● | Issued shares of common stock valued at $ |
On May 4, 2026, the merchant (see Note I) made a payment of
$1
The Company will continue to monitor the merchant’s performance under the revised repayment terms. In the event the merchant does not perform in accordance with those terms, the Company may exercise its contractual rights and pursue appropriate collection remedies with respect to amounts then due and payable. Any amounts ultimately recovered will be accounted for in accordance with applicable accounting guidance.
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ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
ITEM 9.01 - FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements of Business Acquired. N/A
ITEM 9A. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
We maintain disclosure controls and procedures, as defined in Rule 13a-15(e) promulgated under the Exchange Act that are designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Principal Financial Officer, as appropriate to allow timely decisions regarding required disclosure. We carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and Principal Financial Officer, of the effectiveness of our disclosure controls and procedures as of April 30, 2026. Based on the evaluation of these disclosure controls and procedures, and considering the material weaknesses found in our internal controls, the Chief Executive Officer and Principal Financial Officer concluded that our disclosure controls and procedures were not effective.
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Management Report on Internal Control over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Rule 13a-15(f) of the Exchange Act. Under the supervision and with the participation of our Chief Executive Officer and Principal Financial Officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting as of April 30, 2026, using the criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control over financial reporting that is less severe than a material weakness, yet important enough to merit attention by those responsible for oversight of the company’s financial reporting. In our assessment of the effectiveness of internal control over financial reporting as of April 30, 2026, we determined that control deficiencies existed that constituted material weaknesses, as described below:
| ● | lack of documented policies and procedures; |
| ● | we have no audit committee; |
| ● | there is a risk of management override given that our officers have a high degree of involvement in our day-to-day operations; |
| ● | there is no effective separation of duties, which includes monitoring controls, between the members of management. |
Due to our size and nature, segregation of all conflicting duties may not always be possible and may not be economically feasible. As a result, we have not been able to take steps to improve our internal controls over financial reporting during the year ended April 30, 2026. However, to the extent possible, we will implement procedures to assure that the initiation of transactions, the custody of assets and the recording of transactions will be performed by separate individuals. Management is currently evaluating what steps can be taken in order to address these material weaknesses.
Accordingly, we concluded that these control deficiencies resulted in a reasonable possibility that a material misstatement of the annual or interim financial statements will not be prevented or detected on a timely basis by our internal controls.
As a result of the material weaknesses described above, management has concluded that we did not maintain effective internal control over financial reporting as of April 30, 2026 based on criteria established in Internal Control—Integrated Framework issued by COSO.
In light of these significant deficiencies, we performed additional analyses and procedures in order to conclude that our consolidated financial statements for the year ended April 30, 2026 included in this Annual Report on Form 10-K were fairly stated in accordance with U.S. GAAP. Accordingly, management believes that despite our significant deficiency, our consolidated financial statements for the year ended April 30, 2026 are fairly stated, in all material respects, in accordance with U.S. GAAP.
This annual report does not include an attestation report of the Company’s registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by the Company’s registered public accounting firm pursuant to rules of the Securities and Exchange Commission that permit a smaller reporting company to provide only management’s report in its annual report.
Changes in Internal Controls
During the fiscal year ended April 30, 2026, there were no changes in our internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
ITEM 9B. OTHER INFORMATION
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PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATION GOVERNANCE
Our Management
The following table sets forth our executive officers and directors and their respective ages and positions as of April 30, 2026.
| Name | Age | Position | ||
| Anthony L. Havens | 72 | Chief Executive Officer, President, Principal Financial Officer and Chairman | ||
| Kristian Srb | 71 | Director | ||
| Jeffrey Bean | 73 | Director | ||
| Sandra L. Ahman | 63 | Vice President, Secretary and Director |
Management Profiles
Anthony L. Havens is the Chairman, Chief Executive Officer, and a Director of Sparta Commercial Services, Inc, which he co-founded in 2004, and its subsidiaries, including Agoge Global USA. Mr. Havens penchant for taking the road less traveled has become his proven strategy over a more than 40-year career. His most recent joint venture agreement with Brazilian partner WeDev Group Ltda. culminated in December 2022. The visionary offspring of that partnership, Agoge Global USA, effectively transforms the outdated import/export transactional marketplace worldwide. Similarly, Mr. Havens has spearheaded through inspiration, creation and operational motivation for all other Sparta subsidiaries, product lines and services, and marketing strategy. They include Sparta’s mobile app, iMobile, Sparta Crypto, New World Health Brands, and SpartaPayIQ. Previously, Mr. Havens was Chief Executive Officer and a Director of American Motorcycle Leasing Corp. (exited), a company he co-founded in 1994 and successfully launched the first of its kind full service, powersports consumer finance operational platform company into the marketplace with sales in 32 US states. Mr. Havens has more than 40 years of experience in finance and investment banking.
Kristian Srb, Director. Mr. Srb joined our Board of Directors in December 2004. Mr. Srb has been a director of American Motorcycle Leasing Corp. from 1994 to the present. Mr. Srb was President of American Motorcycle Leasing Corp. from 1994 to 1999. Since 1999, Mr. Srb has engaged in private investment activities. He has over 16 years’ experience in international brand development and management, including for 13 years with Escada A.G.
Jeffrey Bean, Director. Mr. Bean joined our Board of Directors in December 2004. Mr. Bean is the founder and President of Bean Foods, LLC. Formed in July 2006 the company develops, owns and operates quick serve restaurants in Georgia. Prior to founding Bean Foods, Mr. Bean was the founding partner for GoMotorcycle.com, a business that engaged in the sale of motorcycle parts and accessories over the Internet. Mr. Bean was an institutional broker and trader at a major commodities trading firm from 1985 to 1997. From 1977 to 1985, Mr. Bean was President of Thomaston Press, Ltd., a printing concern. He received a B.A. degree from the University of Virginia.
Sandra L. Ahman, Vice President, Secretary and Director. Ms. Ahman has been a Director of Sparta Commercial Services, Inc. since its inception in 2004, and as VP Operations. Ms. Ahman has managed originations, underwriting, servicing, and collections of its consumer financing portfolio. From 1994 to 2004, she was Vice President of Operations of American Motorcycle Leasing Corp. She was Manager, Human Resources for Comart and Aniforms, a sales promotion/marketing agency in New York, where she worked from 1986 to 1993. Beyond her professional career, Sandra has been deeply committed to community service. She volunteered with The Children’s Aid Society in New York City for 15 years, serving as President and later Chairman of its 500-member Associates Council, and spent a decade as a member of the Advisory Council to the organization’s Board of Trustees.
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Board of Directors Information and Corporate Governance
There are no family relationships among our executive officers or directors. None of our directors or officers serves or has served during the past five years as a director of another reporting company or a registered investment company. Based solely in reliance on representations made by our officers and directors, during the past ten years, none of the following occurred with respect to such persons: no petition under the Federal bankruptcy laws or any state insolvency law was filed by or against, or a receiver, fiscal agent or similar officer was appointed by a court for the business or property of such persons, or any partnership in which he or she was a general partner or any corporation or business association of which he or she was an executive officer at or within two years before the time of such filing; no such persons were convicted in a criminal proceeding or are a named subject of a pending criminal proceeding (excluding traffic violations and other minor offenses); no such persons were the subject of any order, judgment or decree, not subsequently reversed, suspended or vacated, of any court of any competent jurisdiction, permanently or temporarily enjoining, or of any federal or state authority barring, suspending or otherwise limiting, their involvement in any type of business practice, or in securities or banking or other financial institution activities; and no such persons were found by a court of competent jurisdiction in a civil action or by the Securities and Exchange Commission or by the Commodity Futures Trading Commission to have violated any federal or state securities or commodities law, and the judgment has not been reversed, suspended or vacated.
The number of directors shall be between two (2) and ten (10). The number of directors shall be set by the then current members of the Board of Directors. The size of the Board of Directors is four (4). A director need not be a stockholder. In the case of a vacancy as a result in an increase in the number of directors, the Board of Directors shall fill such vacancy at a special meeting thereof. In seeking candidates for directors, our Board may use their business, professional and personal contacts; accept the recommendations from other Board members, stockholders or management. Current members of the Board are considered for re-election. The process for evaluating candidates and the manner of evaluation is the same regardless of the category of person recommending the proposed candidate. The Board considers business experience, mix of skills and other criteria and qualities appropriate for Board membership, including: intelligence, high personal and professional ethics, values, integrity and sound judgment; education; business and professional skills and experience; familiarity with our business and the industry in general; independence from management; ability to devote sufficient time to Board business; commitment to regularly attend and participate in meetings of our Board and its committees; and concern for the long-term interests of the stockholders. While such factors important in evaluating candidates, we do not impose any specific, minimum qualifications for director nominees.
Our Board of Directors does not currently maintain a separately designated standing audit, nominating, or compensation committee, or other similar committee, of the Board of Directors, and we do not have audit, nominating, or compensation committee, or other similar charter. Functions customarily performed by such committees are performed by our Board as a whole as our operations have been limited and we have had a small number of officers and a small number of directors since inception. We are not required to maintain such committees under the applicable rules of the OTC Bulletin Board. None of our directors qualifies as an “audit committee financial expert.” As all of our Board members are officers or nominees of a substantial stockholder who may not be deemed independent, we have not established separate Board committees.
The Board of Directors has not adopted a specific process with respect to security holder communications, but security holders wishing to communicate with the Board of Directors may do so by mailing such communications to the Board of Directors at our offices.
Code of Ethics
We have adopted a “code of ethics”, as defined by the SEC, which applies to all our directors, officers and employees, including our principal executive officer, principal financial officer, principal accounting officer or controller, and persons performing similar functions.
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Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires Sparta’s executive officers, directors, and persons who beneficially own more than ten percent of Sparta’s common stock to file with the Securities and Exchange Commission initial reports of beneficial ownership and reports of changes in beneficial ownership of Sparta’s common stock. Such persons are also required by Securities and Exchange Commission regulations to furnish Sparta with copies of all such Section 16(a) forms filed by such person. Based solely on a review of the copies of such reports furnished to Sparta in connection with the fiscal year ended April 30, 2026, Sparta is not aware of any material delinquencies in the filing of such reports.
ITEM 11. EXECUTIVE COMPENSATION
Summary Compensation
The table below sets forth information concerning the compensation we paid to our Chief Executive Officer and our next two most highly compensated executive officers who served during our fiscal year ended April 30, 2026 (“Named Executive Officers”).
| Stock | Option | All Other | |||||||||||||||||||||||||
| Salary | Bonus | Awards | Awards | Compensation | Total | ||||||||||||||||||||||
| Name and Principal Position | Year | ($)(a) | ($) | ($) | ($) | ($)(b) | ($) | ||||||||||||||||||||
| Anthony L. Havens | 2026 | 280,000 | - | 119,490 | 399,490 | ||||||||||||||||||||||
| Chief Executive Officer | 2025 | 280,000 | - | 119,490 | 399,490 | ||||||||||||||||||||||
| Sandra L. Ahman | 2026 | 140,000 | - | - | 51,210 | - | 191,210 | ||||||||||||||||||||
| Vice President, Operations | 2025 | 140,000 | - | - | 51,210 | - | 191,210 | ||||||||||||||||||||
| (a) | For Mr. Havens includes accrued; unpaid net salary of $46,666 at year end 2026. For Ms. Ahman, includes accrued; unpaid net salary of $69,394 respectively. |
| (b) | This column reports the total amount of perquisites and other benefits provided, if such total amount exceeds $10,000. |
In general, compensation payable to a Named Executive Officer consists of a base salary, a stock or stock option award, and may include a cash bonus. During our 2026 fiscal year, we had in effect a written employment agreement with Mr. Havens and Ms. Ahman. Our compensation system has generally not been tied to performance-based conditions other than the passage of time.
Employment Agreements with CEO and Vice President Operations
We entered into an employment agreement, dated as of July 9, 2020, with Anthony L. Havens who serves as our Chief Executive Officer. The agreement was for an initial term of five years, and provided for automatic extensions for one five-year period and for additional one-year periods, unless written notice is given three months prior to the expiration of any such term that the term will not be extended. His base salary is at an annual rate of $280,000. He is entitled to defer a portion of his base salary each year. He is entitled to annual increases in his base salary and other compensation as may be determined by the Board of Directors. He is entitled to six weeks of paid vacation per year, health insurance, short term and long-term disability insurance, retirement benefits, fringe benefits, and other employee benefits on the same basis as is generally made available to other senior executives. He is entitled to reimbursement of reasonable business expenses incurred by him in accordance with company policies. If terminated, he is entitled to three months of severance for up to six months of service for each year of employment, plus full participation in all standard employee benefits during the period of severance payments. The employment agreement provides for termination for cause. If he resigns for good reason or is terminated without cause within twelve months after a change in control, he is entitled to receive an additional lump sum payment equal to the greater of the severance payment or the balance of his base salary for the remaining employment term, continued coverage under any welfare benefits plans for two years, and full vesting of any account balance under a 401(k) plan. For purposes of the employment agreement, a change in control refers to:
| ● | a change in voting power, due to a person becoming the beneficial owner of 50% or more of the voting power of our securities and our largest stockholder; |
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| ● | during any period of two consecutive years, individuals who at the beginning of such period constitute the Board of Directors, including later approved directors, ceasing to constitute a majority of the board; | |
| ● | a merger or consolidation of our company with a third party, after which our stockholders do not own more than 50% of the voting power; or | |
| ● | a sale of all or substantially all of our assets to a third party. |
If we elect not to renew the employment agreement, he shall be entitled to receive severance equal to thirty months of his base salary plus standard employment benefits. If we fail to fully perform all or any portion of our post-termination obligations, we are be obligated to pay to him an amount equal to five times the value of the unperformed obligation.
We entered into an employment agreement, dated as of July 9, 2020, with Sandra L. Ahman who serves as our Vice President of Operations. The agreement was for an initial term of five years, and provided for automatic extensions for one five-year period and for additional one-year periods, unless written notice is given three months prior to the expiration of any such term that the term will not be extended. Her base salary is at an annual rate of $140,000. She is entitled to defer a portion of her base salary each year. She is entitled to annual increases in her base salary and other compensation as may be determined by the Board of Directors. She is entitled to six weeks of paid vacation per year, health insurance, short term and long-term disability insurance, retirement benefits, fringe benefits, and other employee benefits on the same basis as is generally made available to other senior executives. She is entitled to reimbursement of reasonable business expenses incurred by her in accordance with company policies. If terminated, she is entitled to three months of severance for up to six months of service for each year of employment, plus full participation in all standard employee benefits during the period of severance payments. The employment agreement provides for termination for cause. If she resigns for good reason or is terminated without cause within twelve months after a change in control, she is entitled to receive an additional lump sum payment equal to the greater of the severance payment or the balance of her base salary for the remaining employment term, continued coverage under any welfare benefits plans for two years, and full vesting of any account balance under a 401(k) plan. For purposes of the employment agreement, a change in control refers to:
| ● | a change in voting power, due to a person becoming the beneficial owner of 50% or more of the voting power of our securities and our largest stockholder; | |
| ● | during any period of two consecutive years, individuals who at the beginning of such period constitute the Board of Directors, including later approved directors, ceasing to constitute a majority of the board; | |
| ● | a merger or consolidation of our company with a third party, after which our stockholders do not own more than 50% of the voting power; or | |
| ● | a sale of all or substantially all of our assets to a third party. |
If we elect not to renew the employment agreement, she shall be entitled to receive severance equal to thirty months of her base salary plus standard employment benefits. If we fail to fully perform all or any portion of our post-termination obligations, we are be obligated to pay to her an amount equal to five times the value of the unperformed obligation.
Outstanding Equity Awards at Fiscal Year End
The following table sets forth information concerning outstanding equity awards held by the Name Executive Officers as of April 30, 2026.
| Option Awards | Stock Awards | |||||||||||||||||||||
| Name | Number of securities underlying unexercised options (#) Exercisable | Number of securities underlying unexercised options (#) Un- exercisable | Option exercise price ($) | Option expiration date | Number of shares or units of stock that have not vested (#) | Market value of shares or units of stock that have not vested ($) | ||||||||||||||||
| Anthony L. Havens | 376,256 | 0.1400 | 7/8/2027 | - | - | |||||||||||||||||
| Sandra L. Ahman | 125,419 | 0.1400 | 7/8/2027 | - | - | |||||||||||||||||
| Anthony L. Havens | 886,153 | 0.1400 | 7/22/2027 | - | - | |||||||||||||||||
| Sandra L. Ahman | 727,273 | 0.1400 | 7/22/2027 | - | - | |||||||||||||||||
| Anthony L. Havens | 500,000 | 0.0800 | 1/2/2027 | - | - | |||||||||||||||||
| Sandra L. Ahman | 250,000 | 0.0800 | 1/2/2027 | - | - | |||||||||||||||||
| Anthony L. Havens | 1,718,322 | 0.0800 | 1/2/2027 | - | - | |||||||||||||||||
| Sandra L. Ahman | 1,562,500 | 0.0800 | 1/2/2027 | - | - | |||||||||||||||||
| Anthony L. Havens | 934,579 | 0.1070 | 12/22/2027 | - | - | |||||||||||||||||
| Sandra L. Ahman | 467,290 | 0.1070 | 12/22/2027 | - | - | |||||||||||||||||
| Anthony L. Havens | 950,000 | 0.1400 | 2/8/2028 | - | - | |||||||||||||||||
| Sandra L. Ahman | 400,000 | 0.1400 | 2/8/2028 | - | - | |||||||||||||||||
| Anthony L. Havens | 1,400,000 | 0.1400 | 2/21/2029 | - | - | |||||||||||||||||
| Sandra L. Ahman | 600,000 | 0.1400 | 2/21/2029 | - | - | |||||||||||||||||
| Anthony L. Havens | 2,100,000 | 0.1400 | 2/5/2030 | 700,000 | 65,800 | |||||||||||||||||
| Sandra L. Ahman | 900,000 | 0.1400 | 2/5/2030 | 300,000 | 28,200 | |||||||||||||||||
| Anthony L. Havens | 2,500,000 | 0.1400 | 1/16/2031 | 1,666,666 | 156,667 | |||||||||||||||||
| Sandra L. Ahman | 1,100,000 | 0.1400 | 1/16/2031 | 733,333 | 68,933 | |||||||||||||||||
In fiscal 2026, non-employee directors received compensation. The Company granted to each of its two independent Directors five year options to purchase 350,000 shares of the Company’s common stock at $0.14 per share. The options vest in three equal tranches over three years. These options represent compensation for past service on the board.
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ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
In May 2009, the Company’s Board of Directors authorized a 2009 Consultant Stock Plan covering 133,334 shares of the Company’s common stock for purposes of compensation of certain consultants. Effective June 12, 2013, the Plan was amended to increase the authorized number of shares by 500,000 bringing the total number of authorized shares to 633,333. During the fiscal year ended April 30, 2026, no shares were issued under the plan.
In October 2014, the Company’s Board of Directors approved the “2014 Equity Incentive Plan” authorizing the issuance of up to 3,000,000 shares of the Company’s common stock or common stock purchase options. The purpose of the 2014 Equity Incentive Plan (the “2014 Plan”) is to advance the interests of Sparta Commercial Services, Inc. (the “Company”) and its shareholders by enabling the Company and its Subsidiaries to attract and retain persons of ability to perform services for the Company and its Subsidiaries by providing an incentive to such individuals through equity participation in the Company and by rewarding such individuals who contribute to the achievement by the Company of its economic objectives. The shares underlying the 2014 Plan were registered on Form S-8 with the Securities and Exchange Commission on November 3, 2014. During the fiscal year ended April 30, 2026, no shares of common stock were issued under the 2014 Plan.
Common Stock
The table below sets forth information regarding the beneficial ownership of our common stock as of August 5, 2026 by: each of our directors; each of our executive officers; all of our executive officers and directors as a group; and each person known by us to be the beneficial owner of more than 5% of our common stock.
Beneficial ownership is determined in accordance with the rules of the SEC and includes voting and investment power. Under SEC rules, a person is deemed to be the beneficial owner of securities, which may be acquired by such person upon the exercise of options and warrants or the conversion of convertible securities within 60 days from the date on which beneficial ownership is to be determined. Each beneficial owner’s percentage ownership is determined by dividing the number of shares beneficially owned by that person by the 54,636,926 outstanding shares as of August 13, 2026, increased to reflect the beneficially owned shares underlying options, warrants or other convertible securities included in that person’s holdings, but not those underlying shares held by any other person.
| Name (a) | Number of Shares Beneficially Owned | Percentage of Class Beneficially Owned | ||||||
| Anthony L. Havens (1) | 9,001,243 | 16.47 | % | |||||
| Kristian Srb (2) | 1,857,599 | 3.40 | % | |||||
| Jeffrey Bean (3) | 1,577,900 | 2.89 | % | |||||
| Sandra L. Ahman (4) | 5,099,149 | 9.33 | % | |||||
| All current directors and named officers as a group (4 in all) | 17,535,969 | 32.10 | % | |||||
| (a) | Unless indicated otherwise, the address for each person named in the table is c/o Sparta Commercial Services, Inc., 555 Fifth Avenue, 14thFloor. New York, NY 10017. |
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| (1) | Includes (i) 376,256 vested stock options, all exercisable at $0.14 per share until July 8, 2029, (ii) 886,154 vested stock options, all exercisable at $0.14 per share until July 22, 2029, (iii) 500,000 vested stock options all exercisable at $0.08 per share until January 3, 2029, (iv) 1,718,322 vested stock options all exercisable at $0.08 per share until January 3, 2029, (v) 934,579 vested stock options all exercisable at $0.107 per share until December 22, 2027, (vi) 950,000 vested stock options all exercisable at $0.14 per share until February 8, 2030, (vii) 1,400,000 vested stock options all exercisable at $0.14 per share until February 21, 2029, (viii) 1,400,000 vested stock options all exercisable at $0.14 per share until February 5, 2030, and (ix) 833,334 vested stock options all exercisable at $0.14 per share until January 16, 2031. |
| (2) | Includes (i) 482,143 vested stock options, all exercisable at $0.14 per share until July 8, 2029, (ii) and 187,500 vested stock options, all exercisable at $0.08 per share until January 3, 2029, (iii) 467,290 vested stock options all exercisable at $0.107 per share until December 22, 2027, (iv) 200,000 vested stock options all exercisable at $0.14 per share until February 8, 2028, (v) 200,000 vested stock options all exercisable at $0.14 per share until February 21, 2029, (vi) 200,000 vested stock options all exercisable at $0.14 per share until February 21, 2030, and (vii) 116,667 vested stock options all exercisable at $0.14 per share until January 16, 2031. |
| (3) | Includes (i) 482,143 vested stock options, all exercisable at $0.14 per share until July 8, 2029, (ii) 187,500 vested stock options, all exercisable at $0.08 per share until January 3, 2029, (iii) 200,000 vested stock options all exercisable at $0.14 per share until February 8, 2030, (iv) 200,000 vested stock options all exercisable at $0.14 per share until February 21, 2029, (v) 200,000 vested stock options all exercisable at $0.14 per share until February 5, 2030, and (vi) 116,667 vested stock options all exercisable at $0.14 per share until January 16, 2031. |
| (4) | Includes (i) 125,419 vested stock options, all exercisable at $0.14 per share until July 8, 2029, (ii) 727,273 vested stock options, all exercisable at $0.14 per share until July 22, 2029, (iii) 250,000 vested stock options, all exercisable at $0.08 per share until January 3, 2029, (iv) 1,562,500 vested stock options, all exercisable at $0.08 per share until January 3, 2029, (v) 467,290 vested stock options, all exercisable at $0.107 per share until December 22, 2027, (vi) 400,000 vested stock options all exercisable at $0.14 per share until February 8, 2030, (vii) 600,000 vested stock options all exercisable at $0.14 per share until February 21, 2029, (viii) 600,000 vested stock options all exercisable at $0.14 per share until February 5, 2030, and (ix) 366,667 vested stock options all exercisable at $0.14 per share until January 16, 2031. |
Changes in Control
Other than outstanding convertible securities, we do not have any arrangements that may result in a change in control.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
There were no transactions with our Directors during the fiscal years ended April 30, 2026 and 2025. As of April 30, 2026, and April 30, 2025, aggregated loans payable to related parties and, without demand to officers and directors, were $650,176 and $636,233 respectively.
Director Independence
None of our directors, other than Kristian Srb and Jeffrey Bean, is deemed an independent director. For purposes of determining independence, we are applying the independence standards of the NASDAQ Stock Market LLC.
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
Audit Fees
Fees for audit services provided by Victor Mokoulu, our principal independent registered public accounting firm, during the fiscal year ended April 30, 2026 the fees were $23,500. Audit fees consist of the aggregate fees billed for the audits of our annual financial statements, the reviews of our quarterly financial statements, and services that are normally provided in connection with statutory and regulatory filings or engagements for those fiscal years.
Audit-Related Fees
There were no audit related fees provided by our principal independent registered public accounting firm during the fiscal years ended April 30, 2026, and 2025. Audit-related fees consist of fees billed for assurance and related services that are reasonably related to the performance of the audit or review of our financial statements outside of those fees disclosed above under the caption Audit Fees.
Tax Fees
Fees for tax services provided by our principal independent registered public accounting firm during the fiscal years ended April 30, 2026 and 2025 were $0 and $0, respectively. Tax fees consist of fees billed for tax compliance, tax advice, and tax planning.
Pre-Approval Policies and Procedures
Our Board of Directors has a policy that requires pre-approval of all audits, audit-related, tax services, and other services, including non-audit services, performed by our independent registered public accounting firm. All services performed by our principal independent registered public accounting firm, and all fees paid, in our fiscal years ended April 30, 2026 and 2025 were pre-approved. The Board of Directors is responsible for matters typically performed by an audit committee. We do not presently have a separate audit committee of the Board of Directors. The Board of Directors considered whether, and determined that, the auditor’s provision of audit and non-audit services was compatible with maintaining the auditor’s independence.
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ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
(a) List of documents filed as a part of this report:
| (1) Index to Consolidated Financial Statements |
| (2) Index to Financial Statement Schedules |
Not required.
(3) Index to Exhibits
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* Filed herewith.
** Incorporated by reference to the registration statement on Form S-8 filed by the registrant with the Commission on November 3, 2014
+ Represents executive compensation plan or agreement
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| SPARTA COMMERCIAL SERVICES, INC. | ||
| By: | /s/ Anthony L. Havens | |
| Anthony L. Havens | ||
| Chief Executive Officer | ||
| Date: August 13, 2026 | ||
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated:
| By: | /s/ Anthony L. Havens | |
| Anthony L. Havens | ||
| Chief Executive Officer, President, Interim Principal Financial Officer | ||
| and Chairman of the Board | ||
| Date: August 13, 2026 | ||
| By: | /s/ Sandra L. Ahman | |
| Sandra L. Ahman | ||
| Vice President and Director | ||
| Date: August 13, 2026 | ||
| By: | /s/ Kristian Srb | |
| Kristian Srb | ||
| Director | ||
| Date: August 13, 2026 | ||
| By: | /s/ Jeffrey Bean | |
| Jeffrey Bean | ||
| Director | ||
| Date: August 13, 2026 |
| Page 62 of 62 |