Quarterly Report for Quarter Ending March 31, 2026 (Form 10-Q)

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

Introduction

You should read the matters described in, and incorporated by reference in, "Risk Factors", below, and "Cautionary Statement Regarding Forward-Looking Statements", above, and the other cautionary statements made in this Report, and incorporated by reference herein, as being applicable to all related forward-looking statements wherever they appear in this Report. We cannot assure you that the forward-looking statements in this Report will prove to be accurate and therefore prospective investors are encouraged not to place undue reliance on forward-looking statements. Other than as required by law, we undertake no obligation to update or revise these forward-looking statements, even though our situation may change in the future.

This information should be read in conjunction with the interim unaudited financial statements and the notes thereto included in this Quarterly Report on Form 10-Q, and the audited financial statements and notes thereto and "Management's Discussion and Analysis of Financial Condition and Results of Operations" contained in our Annual Report on Form 10-K for the year ended December 31, 2025, filed with the Securities and Exchange Commission on March 31, 2026 (the "2025 Annual Report").

Certain capitalized terms used below and otherwise defined below, have the meanings given to such terms in the footnotes to our consolidated financial statements included above under "Part I - Financial Information" - "Item 1. Financial Statements".

In this Quarterly Report on Form 10-Q, we may rely on and refer to information regarding the industries in which we operate in general from market research reports, analyst reports and other publicly available information. Although we believe that this information is reliable, we cannot guarantee the accuracy and completeness of this information, we have not independently verified any of it, and we have not commissioned any such information.

Unless the context requires otherwise, references to the "Company," "we," "us," "our," and "Agassi Sports Entertainment Corp." refer specifically to Agassi Sports Entertainment Corp.

In addition, unless the context otherwise requires and for the purposes of this Report only:

	●	"Exchange Act" refers to the Securities Exchange Act of 1934, as amended;
	●	"SEC" or the "Commission" refers to the United States Securities and Exchange Commission; and
	●	"Securities Act" refers to the Securities Act of 1933, as amended.

Where You Can Find Other Information

We file annual, quarterly, and current reports, proxy statements and other information with the SEC. The SEC maintains an Internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC like us at http://www.sec.gov (our filings can be found at https://www.sec.gov/cgi-bin/browse-edgar?action=getcompany&CIK=0000930245). Copies of documents filed by us with the SEC are also available from us without charge, upon oral or written request to our Secretary, who can be contacted at the address and telephone number set forth on the cover page of this Report. Our website address is https://www.agassisports.com. The information on, or that may be accessed through, our website is not incorporated by reference into this Report and should not be considered a part of this Report.

The Company plans to use press releases and various social media channels, including its Instagram account (agassisportsentertainment), as additional means of disclosing public information to investors, the media and others interested in the Company. It is possible that certain information that the Company disseminates in press releases and on social media could be deemed to be material information, and the Company encourages investors, the media and others interested in the Company to review the business and financial information that the Company disseminates in press releases and on the social media channels identified above, as such information could be deemed to be material information. The contents on the Company's website and its social media channels are not incorporated by reference in this Report.

18

Summary of The Information Contained in Management's Discussion and Analysis of Financial Condition and Results of Operations

Our Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) is provided in addition to the accompanying consolidated financial statements and notes to assist readers in understanding our results of operations, financial condition, and cash flows. MD&A is organized as follows:

	●	Overview. Summary of our operations.
	●	Plan of Operations. A description of our plan of operations for the next 12 months including required funding.
	●	Results of Operations. An analysis of our financial results comparing the three months ended March 31, 2026 and 2025.
	●	Liquidity and Capital Resources. An analysis of changes in our consolidated balance sheets and cash flows and discussion of our financial condition.
	●	Critical Accounting Policies and Estimates. Accounting estimates that we believe are important to understanding the assumptions and judgments incorporated in our reported financial results and forecasts.

Overview

Current Plan of Operations

We currently plan to create and manage unique content, building sports communities around entertainment, media, wellness, education, commerce, and charitable efforts, with the goal of becoming a leading media and entertainment company in the world of racket sports.

By identifying opportunities for co-branding, partnering, and acquisitions, we plan to develop trusted brands in sports entertainment and bring them together under the Company's brand.

Our planned business model is designed around proprietary and curated content supported by planned sponsorships, brand relationships, live event hosting, e-commerce and merchandising, and licensing and media rights.

We currently plan to undertake the following, funding permitting:

Digital Platform

The Company has entered into several agreements with IBM Norge AS and International Business Machines Corporation (collectively, the "IBM Parties"), pursuant to which such entities have agreed to help us create an artificial intelligence (AI)-powered comprehensive digital platform designed to serve as the premier online community and wellness hub for enthusiasts of racket sports, including tennis, padel, and pickleball (the "Platform"). The Platform is initially expected to be accessible through the Company's website and in the future to be accessible as a mobile application (the "App").

The Platform is expected to be called "Agassi Intelligence", and be structured as a digital ecosystem designed to support player development, community engagement, and personalized experiences across racquet sports. The Platform is expected to include AI-powered coaching, swing analysis, and tailored equipment recommendations, beginning with tennis and expanding into pickleball and padel through a phased release strategy.

19

The Platform is currently also expected to include what we are calling "Darren AI", which will allow users to change with an AI agent coded to think like Darren Cahill, Andre Agassi's former coach.

Our planned subscription-based Platform will aim to foster a holistic approach to racket sports participation, emphasizing not only performance tracking, but also physical, mental, and social well-being.

Key features of the platform are expected to include:

•

Performance logging and analytics, enabling users to record matches, practice sessions, drills, and cross-training activities, with integration capabilities for wearables such as Apple Watch and Garmin devices to capture detailed statistics including time on court, rally counts, heart rate, training load, and shot speed.

•

A robust community and social layer that is expected to allow users to follow friends, teammates, and local players; share match summaries, highlights, and achievements; and participate in challenges, leaderboards, and rankings at local club, city, and global levels, inspired by legendary figures such as Andre Agassi and Stefanie Graf, our largest stockholder and Brand Partner, respectively.

•

Premium coaching and educational content, featuring short-form instructional videos and masterclasses drawing from the philosophies of prominent racket sports icons, along with curated training plans tailored to various skill levels from beginner to advanced, live question-and-answer sessions, ask-me-anything events, and occasional virtual interactions with professional players and coaches.

•

Play and partner discovery functionality to connect users with compatible playing partners based on location, skill rating, and preferred racket sport, with planned future integrations (in later development phases) for direct booking with club facilities and event systems.

Through these integrated elements, the Platform will seek to position itself as the primary destination for racket sports health and wellness, extending beyond traditional scorekeeping or competition to support users' overall physical fitness, mental resilience, and social connections within the racket sports ecosystem.

Our platform has two main AI powered products, Swing Analysis AI and AI Coaching LLM.

	•	Our swing analysis is built using both open source and publicly available (licensable) computer vision models, and proprietary and internally developed models. The publicly available models power key point and object detection from video, where we can mitigate risk and try different models, or change licenses if needed. The proprietary models analyze the extracted data to provide personalized feedback to a user in a mobile app, these models have a carefully designed data pipeline which utilize the extracted key point data, which hence qualifies the utility of the open source models.
	•	The LLM experience is created in partnership with IBM & Delphi (proprietary technology from partners, respectively), handling the majority of the performance of the LLM experience for users. Our input to this model is carefully selected training data for text and voice, which helps us ensure the expected quality in coaching for users. We use a proprietary hierarchical coaching methodology on top of the extracted data to create a unique experience for the user. The methodology is not an AI model, but helps us mitigate both risk and hallucination from the LLM experience, by selecting and translating core coaching principles that we agree with.

The Platform, which is currently in beta testing, is currently planned to launch by the end of the second quarter of 2026, with a staggered roll-out of e-commerce (tennis racquets, paddles, sports nutrition, etc.), a personalized racquet/paddle recommender and an AI coaching model.

20

The App launch is anticipated to occur in the third or fourth quarter of 2026, and is planned to include the same coaching AI feature, as well as swing analysis feedback, motivational challenges, progress tracking, and social sharing. While it is expected to initially focus on tennis, the Company's current goal is to expand all features of the app to pickleball and padel, in the future, with the goal of helping position the platform as a single hub for racquet sports.

The estimated cost for the digital platform is segmented into two elements. The first is the launch of "Darren AI". The costs associated with that launch are estimated to be $100,000. The second is the launch of "Agassi Intelligence", which we estimate to cost a total of approximately $2,400,000 to implement. Currently, IBM is in final development of the platform.

We hope that the Platform and App will create strong and recurring revenue streams, while also fostering a fun, thriving and informative racquet sports community on a global scale under the iconic Agassi brand.

World Series of Pickleball

On May 31, 2025, we acquired the rights to the trademark for "World Series of Pickleball" (the "Trademark"). Our current plans include launching the World Series of Pickleball, which is intended to be a new championship property owned and developed by the Company.

The Company hopes that the World Series of Pickleball, which is planned to feature a marquee open, a team-based championship week welcoming players of all skill levels from around the world, with prize purses and global celebrity participants, including involvement from Andre Agassi, alongside everyday competitors and professionals who choose to enter. The World Series of Pickleball is planned to be headquartered and launched in Las Vegas. The multi-day event is expected to bring together competitors from across the globe, supported by planned premium production, hospitality programming, and integrated media distribution which is expected to be designed to deliver a world-class experience for fans and partners.

The Company intends for the World Series of Pickleball to serve as a long-term commercial platform encompassing sponsorship, media rights, ticketing, hospitality, and strategic brand partnerships, and the Company is currently pursuing relationships with leading hospitality and media organizations to support distribution, audience growth, and sustained commercial expansion.

To date, the planning and production of the World Series of Pickleball is in its initial stages, and the Company does not currently have a timeline for the initial event, and has not entered into any material agreements in connection therewith, other than with service providers who are helping the Company plan the event, including TEAM Marketing AG, a Switzerland-based global leader in the development, sales and delivery of world-class sports events.

Costs associated with the World Series of Pickleball are expected to have a minimal impact on the Company's cash flow because of expected sponsorship agreements which we hope to enter into in connection with such planned event. As a result, we currently anticipate that substantially all expenses associated with the planned event will be covered by those agreements and associated sponsorship revenue sources.

Facilities; Programs and Content

The following are in the early stages of development, and we expect the World Series of Pickleball and our planned digital platform to take priority in the coming months:

• Acquire, build and/or create physical facilities, leagues, tournaments, events, social communities, and merchandisers.

21

• Develop strategic relationships with "Best of Class" operators and developers in key segments within the pickleball and padel communities through co-branding and acquisition opportunities.

• Develop our "ACE Program" of certifying facilities, social media communities, content creators, coaches, third-party leagues, and events under a planned marketing brand.

• Create and distribute proprietary and curated content through various media channels.

• IP development and collaboration.

We also plan to eventually launch a "Pickleball for All" charitable initiative to introduce, grow, and develop pickleball in underserved and disadvantaged communities across the United States. We expect to work with best of class brands to provide access to our "Fun for Free" courts and equipment in public parks, schools, and other locations that will serve as home courts to communities across the country for social wellness, practice, learning, and pickleball fun for all. We plan to work with select merchandisers and retailers to create quality equipment and offer merchandise at price points which will appeal to beginners and families, with a portion of the revenue to be reinvested into the Pickleball for All program.

Material Agreements/Transactions

Statement of Work

On July 2, 2025, the Company entered into a Statement of Work (the "SOW") with IBM Norge AS ("IBM"), pursuant to which IBM agreed to support, and provide services to the Company in connection with, the Company's goal of launching a state-of-the-art racquet sport experience, including design and digital product concept services.

The SOW sets forth project responsibilities, timelines and milestones. The project is expected to start on July 7, 2025, and to be completed on or before October 30, 2025, and the Company has agreed to pay IBM $75,000 in consideration for services rendered pursuant to the SOW, payable upon the completion of certain project milestones as described in greater detail in the SOW. The SOW may be terminated by either party with 30 days prior written notice. The SOW was completed and $75,000 was paid in 2025.

Collaboration and Licensing Agreement

On July 10, 2025, the Company entered into a Collaboration and Licensing Agreement (the "Collaboration Agreement") with Sport Squad, Inc., which entity owns JOOLA.

Pursuant to the Collaboration Agreement, the parties confirmed their intention to identify various ventures (collectively "Ventures", each a "Venture") which they might pursue together. Each party may suggest a Venture to the other, and if there is mutual interest, the parties agree to discuss in good faith how they might best collaborate and how such Venture can best be brought to fruition, including the preferred path of development, production and exploitation. Neither party shall be obligated to pursue any particular Venture, or any specific number of Ventures.

Ventures may include, without limitation, the development of products or product lines, live events, exhibitions, competitions and tournaments, wellness projects, and content for exploitation in and across various media. It is anticipated that certain Ventures will involve the use of iconic brands, logos, and related trademarks, and/or the name, image and likeness rights of various athletes and celebrities. The acquisition or licensing of the rights in and to any brands, logos, and/or trademarks, and the name, image, and likeness (NIL) rights of celebrities and athletes will be the sole responsibility of the Company to obtain.

The Collaboration Agreement continues in effect until terminated by either party thereto with written notice to the non-terminating party and includes customary confidentiality obligations of the parties.

22

No Ventures have been identified as of the date of this Report.

Partnership Agreement for Consulting Services

On October 31, 2025, the Company entered into a Partnership Agreement for Consulting Services (the "Services Agreement") and a Commitment Agreement (the "Commitment Agreement") with IBM. Pursuant to the Services Agreement, IBM will provide us certain consulting services to be described in one or more statements of work. The first statement of work, entered into simultaneously with the Services Agreement ("SoW 1"), provides for IBM to create a website, mobile application, e-commerce, and A.I.-powered video analysis model for the Company (the "A.I. Model") designed to serve the racquet sports community and create multiple revenue streams between November 1, 2025 and June 30, 2026, in exchange for a total payment of $2,134,716, payable in monthly installments in accordance with the terms of SoW 1, including $100,000 within 15 days after invoice from IBM, for each of November and December 2025, and January and February 2026, with $204,387 due before February 28, 2026 and $613,161 before March 20, 2026, and $229,292 due for each month of March through June 2026. We are also required to reimburse certain travel expenses, living expenses, and reasonable expenses incurred by IBM in connection with the services provided under SoW 1. To date, $604,387 has been paid under the Commitment Agreement.

We believe the partnership with IBM supports and will facilitate the acceleration of our mission to build a global commercial digital ecosystem around wellness, learning and entertainment. We expect the partnership, and the A.I. Model, to create strong and recurring revenue streams, while also fostering a fun, thriving and informative racquet sports community on a global scale under our iconic Agassi brand.

Brand Partner Agreement

On November 22, 2025, we entered into a Brand Partner Agreement with Stefanie Graf (the "Brand Partner Agreement"), who is the spouse of Andre Agassi, our largest shareholder, and who is a former professional tennis player who among numerous other accolades was ranked as the world No. 1 in women's singles by the Women's Tennis Association (WTA) for a record 377 weeks, and finished as the year-end No. 1 a record eight times, pursuant to which Ms. Graf (a "Brand Partner") has agreed to serve as a Company advisor, spokesperson, celebrity endorser and brand partner. Pursuant to the Brand Partner Agreement, the Brand Partner will (i) participate in certain Company projects and initiatives, subject to agreement as to scope and compensation in each instance; (ii) promote the Company's brand and content through public appearances, interviews, and social media activity, subject to mutual agreement as to each social media post; and (iii) provide advice and consultation upon Company request with respect to the Company's brand and content. The Brand Partner has also licensed her image, name and likeness to the Company for use in our public relations, advertising and marketing, on a worldwide basis, subject to the Brand Partner's right to disapprove of any particular use. The Brand Partner Agreement has a five-year term, subject to extension by mutual agreement.

In consideration for her services under the Brand Partner Agreement, we granted Ms. Graf warrants to purchase 1,000,000 shares of the Company's common stock at an exercise price of $5.50 per share (the "Graf Warrants"). The Graf Warrants vested immediately and have a five-year term. The Graf Warrants are exercisable as to one half of the shares of common stock immediately, and exercisable as to the remaining half of the shares of common stock one year following the grant date. The Graf Warrants may be exercised either by cash payment or via cashless exercise based on a formula set forth in the Graf Warrants.

The Brand Partner Agreement may be terminated by either party at any time, with or without cause, upon written notice. The Brand Partner Agreement includes customary representations of the parties and confidentiality provisions. The Company may assign its rights under the Brand Partner Agreement to an affiliate or in connection with the bona fide sale of the Company's business, whether by way of sale, merger or acquisition, but the Brand Partner Agreement is otherwise non-assignable.

23

IBM Embedded Solution Agreement

On February 2, 2026, we and International Business Machines Corporation ("International Business") entered into an Embedded Solution Agreement - IBM Cloud Enterprise Savings PLAN ESA Transaction Document (the "Embedded Solution Agreement") and an Embedded Solution Agreement Attachment for Build Fund Cloud Credits (the "Cloud Credits Attachment").

Pursuant to the Embedded Solution Agreement, the Company plans to order and for International Business to integrate certain International Business cloud services in an AI-powered self-improvement mobile application for active tennis and pickleball players to be developed by the Company (the "App"), in exchange for a minimum payment commitment of $500,000 for the period between February 1, 2026 and January 31, 2027 (the "First Commitment Period") and $3,300,000 for the period between February 1, 2027 and January 31, 2031 (the "Second Commitment Period"). The initial $500,000 commitment is non-refundable and the subsequent $3,300,000 commitment will become non-refundable unless the Company terminates such commitment by written notice to International Business on or before December 31, 2026. The Embedded Solution Agreement has an initial term of one year and will automatically renew for an additional four years (unless the parties agree to a different renewal term), unless the Company terminates it by written notice to International Business on or before December 31, 2026. If International Business and the Company do not execute a renewal for the continued purchase of International Business cloud services after the initial renewal term, the Embedded Solution Agreement will continue on a month-to-month basis until terminated by either the Company or International Business upon 30 days' prior written notice. International Business will also provide technical support for its cloud services during the term.

Pursuant to the Cloud Credits Attachment, International Business will grant the Company up to $250,000 in cloud credits in three installments over the First Commitment Period, with each set of cloud credits expiring six months from the date the credits are applied. Cloud credits are to be used for development and testing of the Company's embedded solution as part of International Business's Build Fund Program. International Business may terminate the Company's cloud credits for any reason, in International Business's discretion, including if it determines that any information supporting the Company's eligibility for participation was untrue or if the Company breaches the terms of the Cloud Credits Attachment or the Embedded Solution Agreement.

Recent Funding Transactions

Between November 4, 2024 and November 7, 2024, the Company entered into a series of subscription agreements (the "Subscription Agreements"), in connection with a private placement offering to accredited investors (the "Investors"), which offering closed on November 7, 2024, and pursuant to which we raised aggregate gross proceeds of $2,500,000 (the "Offering"). Under the Subscription Agreements, the maximum amount of the Offering was $2,500,000, which amount was fully subscribed. In connection with the Offering, we sold to 23 Investors, an aggregate of 2,631,543 shares of our restricted common stock, par value $0.001 per share (the "Shares") for $0.95 per Share.

The Company currently plans to use the net proceeds from the Offering to advance business operations in the global racquet sports entertainment business, with an initial focus on consolidating, building and growing pickleball and Padel related opportunities, and for working capital and general corporate purposes.

On March 13, 2026, the Company entered into two Subscription Agreements with two accredited investors (the "2026 Investors"), pursuant to which the 2026 Investors purchased an aggregate of 80,000 shares of restricted common stock from the Company, for $5.00 per share, or a total of $400,000. The Subscription Agreements included customary representations and warranties of the Investors and the Company and provided piggyback registration rights for the investors.

One of the 2026 Investors was the Boreta Lifetime Trust, whose trustee is Ronald S. Boreta, the Company's President, Chief Executive Officer and director. The Boreta Trust purchased 50,000 shares of restricted common stock for $5.00 per share or $250,000 in aggregate.

24

On April 28, 2026, the Company entered into a Subscription Agreement with Investments AKA, LLC, a limited liability company indirectly controlled by former professional tennis player Andre K. Agassi, 8-time Grand Slam winner, and the Company's largest stockholder ("Investments AKA"), pursuant to which Investments AKA purchased an aggregate of 50,000 shares of restricted common stock from the Company, for $5.00 per share, or a total of $250,000. The Subscription Agreement included customary representations and warranties of AKA and the Company and piggyback registration rights.

Plan of Operations

We had a working capital deficit of $873,810 as of March 31, 2026; mainly due to our current liabilities of $1,191,997. We expect to require funding in the future, including to complete payments due under our agreements with the IBM Parties, which require us to make payments to the IBM Parties under the Services Agreement and SoW 1 totaling approximately $2.1 million, payable in monthly installments in accordance with the terms of SoW 1, including $100,000 within 15 days after invoice from IBM, for each of November and December 2025, and January and February 2026, with $204,387 due before February 28, 2026 and $613,161 before March 20, 2026, and $229,292 due for each of March through June 2026, as discussed above. To date, $454,387 has been paid.

We plan on raising additional required funding through the sale of equity in the future, which is expected to be on similar terms as our recent $1,000,000 raised through the sale of common stock in March and April 2026. We anticipate that this capital will be sufficient to make all monthly payments to the IBM Parties under the Services Agreement.

We also hope to begin generating revenues in April 2026 from our Agassi Intelligence software, website and future expected sponsorship relations.

Notwithstanding the above, we may sell additional equity in the future, which may not be available on favorable terms, if at all, and may, if sold, cause significant dilution to existing stockholders. If we are unable to access additional capital moving forward, it may hurt our ability to grow and to generate revenues.

Results of Operations

Results of Operations for the Three Months Ended March 31, 2026 Compared to the Three Months Ended March 31, 2025.

We generated no revenues for the three months ended March 31, 2026 or 2025.

For the three months ended March 31, 2026 and 2025, we had general and administrative expenses, consisting of stock-based compensation, audit fees, amounts paid under the embedded solution agreement with the IBM Parties (as discussed above)(for the three months ended March 31, 2026) and miscellaneous administrative costs, that totaled $2,510,314 and $1,665,246, respectively, an increase of $845,065 from the prior period, which increase was mainly the result of an increase in accounts paid under the agreements with the IBM Parties, discussed above.

We had a net loss of $2,510,314 and $1,665,246, for the three months ended March 31, 2026, and 2025, respectively, which net loss increased for the reason described above.

Liquidity and Capital Resources

The following table summarizes our current assets, liabilities, and working capital at March 31, 2026 and December 31, 2025.

25

		March 31,			December 31,			Increase/
		2026			2025			(Decrease) $		%
Current assets	$	318,187		$	496,375		$	(178,188)		-35.9%
Current liabilities	$	1,191,997		$	494,400		$	697,597		141.1%
Working capital (deficit)	$	873,810		$	(1,975	)	$	875,785		-44,343.5%

The decrease of $875,785 in working capital was mainly due to an increase in accounts payable from the agreements with the IBM Parties, discussed above.

Cash Flows

We had $417,620 of net cash used in operating activities for the three months ended March 31, 2026, which was mainly due to $2,510,314 in net loss, offset by $981,455 of stock-based compensation expense, $706,176 of accounts payable and accrued expenses and $399,429 of prepaid expenses and other current assets. We had $247,761 of net cash used in operating activities for the three months ended March 31, 2025, which was mainly due to $1,665,246 in net loss, offset by $1,440,777 of stock-based compensation expense and $496 of depreciation expense.

We had $11,139 of net cash used in investing activities for the three months ended March 31, 2026, which was due solely to the purchase of IT equipment.

We had $650,000 of net cash provided by financing activities for the three months ended March 31, 2026, which was solely due to proceeds from shares issued.

We do not currently have any additional commitments or identified sources of additional capital from third parties or from our officers, directors or majority stockholders. Additional financing may not be available on favorable terms, if at all.

In the future, we may be required to seek additional capital by selling additional debt or equity securities, or otherwise be required to bring cash flows in balance when we approach a condition of cash insufficiency. The sale of additional equity or debt securities, if accomplished, may result in dilution to our then stockholders. Financing may not be available in amounts or on terms acceptable to us, or at all. In the event we are unable to raise additional funding and/or obtain revenues sufficient to support our expenses, we may be forced to curtail or abandon our business operations, and any investment in the Company could become worthless.

Going Concern

The accompanying unaudited condensed 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. As of March 31, 2026, we had an accumulated deficit of $42,140,416. In addition, the Company's current liabilities exceed its current assets by $873,810 as of March 31, 2026.

The Company has no significant assets and continues to depend on equity raises to provide funds to pay its ongoing expenses. There can be no assurance however that the Company will be able to raise additional capital when needed, or at terms deemed acceptable, if at all. These factors raise substantial doubt about the Company's ability to continue as a going concern within one year after the date that the unaudited condensed financial statements are issued.

The unaudited condensed financial statements do not include any adjustments relating to the recoverability and classification of asset carrying amounts or the amount and classification of liabilities that might result should the Company be unable to continue as a going concern.

26

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.

Critical Accounting Policies and Estimates

The preparation of financial statements and related disclosures in conformity with U.S. generally accepted accounting principles and the Company's discussion and analysis of its financial condition and operating results require the Company's management to make judgments, assumptions and estimates that affect the amounts reported. Management bases its estimates on historical experience and on various other assumptions it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities. Actual results may differ from these estimates, and such differences may be material.

"Note 2. Summary of Significant Accounting Policies" in Part I, Item 1 of this Form 10-Q and "Note 2. Summary of Significant Accounting Policies" in the Notes to Financial Statements in Part II, Item 8, of the 2025 Annual Report, describe the significant accounting policies and methods used in the preparation of the Company's consolidated financial statements.

Related party transactions

Parties are considered to be related to the Company if the parties, directly or indirectly, through one or more intermediaries, control, are controlled by, or are under common control with the Company. Related parties also include principal owners of the Company, its management, members of the immediate families of principal owners of the Company and its management and other parties with which the Company may deal if one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests.

Stock-Based Compensation

The Company accounts for stock-based compensation to employees in accordance with Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) 718, "Compensation-Stock Compensation". ASC 718 requires companies to measure the cost of employee services received in exchange for an award of equity instruments, including stock options, based on the grant date fair value of the award and to recognize it as compensation expense over the period the employee is required to provide service in exchange for the award, usually the vesting period. Stock option forfeitures are recognized at the date of employee termination.

Recent Accounting Developments

The Company believes there are no new accounting standards adopted but not yet effective that are relevant to the readers of our financial statements.