Quarterly Report for Quarter Ending September 30, 2026 (Form 10-Q)

Management's Discussion and Analysis of Financial Condition and Results of Operations.

The following discussion should be read together with our unaudited condensed consolidated financial statements and related notes in Part I, Item 1 of this Quarterly Report on Form 10-Q (this "Quarterly Report"), and with our audited financial statements and notes for the year ended December 31, 2025 included in our Annual Report on Form 10-K.

Introduction

Stark Focus Group, Inc. ("we", "us", "our", the "Company" or "Stark") is a Nevada corporation, incorporated on July 3, 2018.

Initially, we were engaged in the apparel trading business through our wholly owned subsidiary, Common Design Limited of Hong Kong. We subsequently sold that business and entered into the Drone / Unmanned Aerial Vehicles market with the launch of a new brand, RevoluDrones, including purchasing licenses for four patents to assist in this business.

On June 25, 2026, we underwent a change of control when MJG Polo LLC acquired approximately 83.43% of our then-outstanding shares of common stock from our prior controlling shareholder (the "Change of Control"). In connection with this transaction, our then-existing sole officer and director (Cao Zhi Fen) resigned, and David I. Rosenberg was appointed to be our Chairman and a director and John Lipman was appointed to be our Chief Executive Officer, Chief Financial Officer and a director, each to be effective at the closing of the Change of Control. Mr. Rosenberg and Mr. Lipman are the managers of MJG Polo LLC. On October 8, 2026, Matthew Szot was appointed Chief Financial Officer, taking over the position from Mr. Lipman, who remains our Chief Executive Officer.

In connection with the Change of Control, we changed our business strategy and now plan to develop, own, and operate data centers globally to support artificial intelligence ("AI") infrastructure and related computing needs (the "New Strategy"). We have taken several steps to further this New Strategy.

In July 2026, we entered into a non-binding memorandum of understanding (the "MOU") with a data center operator and a third party to explore the joint development of a data center in South Asia through a jointly owned entity. Other than customary provisions regarding exclusivity, confidentiality, and expenses, the MOU is non-binding. As of the date of this Quarterly Report, discussions among the parties are ongoing, and no definitive agreements have been executed. There can be no assurance that the parties will enter into definitive agreements or that the proposed project will be completed on the terms contemplated, or at all.

On July 20, 2026, we sold 8,400,000 shares of common stock in a private placement for gross proceeds of $400,000. See the discussion in Note 11 for additional information.

In addition to our data center initiative in South Asia, we began conducting an active site search for additional data center locations beginning in late June 2026, assessing several opportunities in the United States, including one in South Dakota (15 MW available on a 400 MW line), a 34-site portfolio, two 75 MW Texas power studies, and sites in Mississippi, Kansas, and Iowa, a second site in South Dakota (approximately 50 MW) and a 160-acre site in Texas (with a prior 140 MW power study and a 750 MW colocation proposal). In August 2026, we began discussions regarding the acquisition of additional data center land sites. In September 2026, we formed subsidiaries in Asia-Pacific ("APAC") region in connection with our evaluation of data center opportunities there.

INFORMATION ABOUT THE COMPANY

Overview

We are an early-stage company focused on developing, owning, and operating data centers globally to support artificial intelligence ("AI") infrastructure and related computing needs.

Data Center Development

Our planned data center development business will focus on developing powered-shell data centers for leasing to enterprise customers who operate their own hardware inside the data center. Powered-shell data centers are facilities with completed exterior construction, available power and fiber connectivity, but with the interior space to be developed and utilized by the customer. We are focused on acquiring sites that either have access to power or are suitable for the construction and operation of power generation equipment to supply electricity to the data center. Our plan is to custom develop sites for specific customers once we have acquired the land and the applicable entitlements and permits. We may also sell the electricity to other large power consumers or sell a site or development at any stage in the process.

We have entered into a non-binding memorandum of understanding to explore the joint development of a data center in South Asia. We are also conducting an active site search for data center locations in the United States and APAC. We are continuing to work toward identifying and partnering to build data center sites in different locations globally.

Factors Affecting Profitability

The main factors affecting our profitability are (in no particular order):

While we take steps to mitigate these risks, they cannot be avoided altogether. In particular:

Industry Overview

Data centers are used to host the compute and storage servers, providing security, electricity, cooling and network connectivity. According to a research report by CBRE, the rise of AI compute is driving demand for power-intensive infrastructure, including a premium on energy-efficiency capabilities such as liquid cooling over air cooling. In addition, tertiary and rural markets have seen increased deal activity for powered land. The previously announced Project Stargate highlights the strategic importance of data center infrastructure, and in January 2025, President Trump announced plans by the government and private industry to invest up to $500 billion over the next four years in the United States as part of that project. The demand for data center infrastructure has also created challenges around the supply chain and the procurement of critical components, including on the power generation side.

Strategy

Our strategy is to identify, acquire, and develop land and powered-shell data centers for enterprise customers. We may alternatively sell land with access to power or sell part or all of our projects.

Results of Operations

Three months ended September 30, 2026 compared with three months ended September 30, 2025

General and administrative expenses

General and administrative expenses were $192,400 for the three months ended September 30, 2026, compared to $5,597 for the three months ended September 30, 2025. General and administrative expenses increased by $186,803, primarily due to legal fees following the Change of Control and New Strategy. Legal fees included corporate and SEC reporting matters and fees related to potential strategic transactions. We incurred no legal fees in the comparable 2025 period.

Dividend and interest income

Dividend and interest income was $2,442 for the three months ended September 30, 2026, compared with $0 in 2025. It was earned on the government money market fund in which we have held our cash since the July 2026 private placement.

Interest expense

We had no interest expense for the three months ended September 30, 2026, compared with $2,045 in 2025, because all of our outstanding notes were terminated on June 10, 2026.

Nine months ended September 30, 2026 compared with nine months ended September 30, 2025

General and administrative expenses

General and administrative expenses were $211,836 for the nine months ended September 30, 2026, compared to $26,131 for the nine months ended September 30, 2025. General and administrative expenses increased by $185,705, primarily due to legal fees following the Change of Control and New Strategy. Legal fees included corporate and SEC reporting matters and fees related to potential strategic transactions.

Dividend and interest income

Dividend and interest income was $2,442 for the nine months ended September 30, 2026, compared with $0 in 2025, earned on our government money market fund investment.

Interest expense

Non-cash interest expense was $4,172 for the nine months ended September 30, 2026, compared with $5,337 in 2025. The decrease reflects the termination of our promissory note and convertible notes on June 10, 2026.

Gain on extinguishment of debt

In connection with the Change of Control, we terminated convertible notes held by an unrelated party without payment and recognized a gain on extinguishment of debt of $88,612.

Liquidity and Capital Resources

Since inception, we have incurred recurring losses and utilized cash to fund our operations and overhead expenses. To date, we have funded our operations with proceeds from the sale of convertible and promissory notes, as well as our private placement offering completed in July 2026. At September 30, 2026, we had cash and cash equivalents of $339,155 and working capital of $190,422. At December 31, 2025, we had no cash and a working capital deficit of $81,794. Our current liabilities at September 30, 2026 were $189,048, consisting mainly of unpaid legal fees. We had no debt outstanding at September 30, 2026.

Going concern. Our cash is not sufficient to fund our current obligations and planned expenditures for the next twelve months. We will need to raise significant additional capital to pursue the New Strategy, through equity, debt or convertible securities. There can be no assurance that financing will be available on acceptable terms, or at all. These conditions raise substantial doubt about our ability to continue as a going concern. See Note 3 to the condensed consolidated financial statements.

If we enter into definitive agreements for the project contemplated by the MOU, we expect that our share of the required initial capital contributions would be significant relative to our current resources. We would need to obtain additional financing to fund those contributions, and such financing may not be available on acceptable terms, or at all.

Cash Flows

The following table summarizes our cash flows for the period presented:

Operating activities. Net cash used in operating activities was $70,607 for the nine months ended September 30, 2026, compared with $27,113 in 2025. The 2026 amount reflects our net loss of $124,954, adjusted for the non-cash gain on extinguishment of debt of $88,612 and non-cash interest expense of $4,172. Working capital changes included a $40,315 increase in prepaid expenses, primarily from the $45,000 premium paid in August 2026 for our directors' and officers' liability insurance policy. They also included a $179,102 increase in accounts payable and accrued liabilities, mainly legal fees incurred in the third quarter that were unpaid at September 30, 2026.

Financing activities. Cash provided by financing activities in 2026 consisted of net proceeds of $385,467 from the private placement, representing gross proceeds of $400,000 less issuance costs of $14,533, together with $2,500 of convertible note proceeds and $21,795 of costs paid on our behalf by our former controlling shareholder before the Change of Control. In 2025, financing activities consisted of $27,113 of convertible note proceeds.

Cash requirements. Our current liabilities of $189,048 at September 30, 2026, consisting primarily of legal fees, are payable from cash on hand. Beyond these liabilities, our principal near-term cash requirements are public company costs and the costs of pursuing the New Strategy. We had no commitments for capital expenditures at September 30, 2026.

Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements.

Critical Accounting Estimates

Our critical accounting estimates are described in our Annual Report on Form 10-K for the year ended December 31, 2025. During 2026, our significant judgments included the assessment of our ability to continue as a going concern.