SRCO 10-K & 10-Q changes, risk factors and insider trading

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 transtransact act business..business. As a result, any actual or perceived security breach of us or our third-party partners may:

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,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.

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 cryptoassetcrypto asset market in which we operate, and other economic factors beyond our control, reduces our ability to accurately forecast quarterly or annual revenue accurately.

Revenues totaled $235,544$345,312 infor fiscalthe 2025year ended April 30, 2026, compared to revenues$235,544 offor $192,040the year ended April 30, 2025. Revenues were up by $109,768 inor fiscal 2024. The increase was47% due primarily to an increase in merchant financing revenue.fees.

OperatingGeneral and administrative expenses were $1,432,449 during the year ended April 30, 2025, compared to $1,019,762$2,429,713 during the year ended April 30, 2024,2026, compared to $1,432,449 during the year ended April 30, 2025, an increase of $412,687,$997,264, or 40%70% primarily due to increased an increase in compensation and related costcosts of $88,020$308,319, or 15%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 increasingof by $336,270 or 459%.$126,366.

Our net loss attributableattributed 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, wasprimarily $2,123,634, compareddue to a net loss of $644,490provision for credit losses offset by increase in revenue for the year ended April 30, 2024.2026, Theas net losscompared for the year was primarily due to the decrease of gain on the valuation of derivative liabilities, where the gain in value as ofended April 30, 2025, was $266,658 compared to the previous year’s gain in valuation of $634,827.2025.

As of April 30, 2025,2026, we had an accumulated deficit of $68,918,984$71,790,476 and a total stockholders’ deficit of $11,608,515.$13,331,435. OurThe net cash flow fromused by operations hadwas a$779,572 negative balance of $1,229,677 for the year ended April 30, 2025.2026. This deficit results primarily from our net loss of $2,853,618 $2,114,718,and which was increased further by noncash expenses from changeincreases in fairmerchant valueadvances related to Agoge Global USA, Inc. of derivative liabilities of $266,658 and$154,797, offset by an increaseincreases in Accountsnon-cash expenses payablesof $1,243,975 and increases in accounts payable and accrued expenses $831,552. of $999,250.

We met our cash requirements during the period through revenue of $235,544 $345,312 and proceedsproceed from the sale of common shares $764,571$265,000 and proceeds from promissoryconvertible notes of $525,000.$592,000.

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, 2025,2026, we had 6four full time employees, onethree part time time employee,employees, and 2consultants full-timeon consultants.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.

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.

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.

Stock-Based Compensation – Stock Options

Recently Adopted 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 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, 2024 and 2023April 30, 2025, the Company had one reporting segment, all revenue is reported under this segment Sparta Commercial Services, Inc.

This report on Form 10-K10-Q 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, 2025.2026. 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.

Below is a summary of the results of operations for the three months ended JanuaryJuly 31, 2026, and 2025.

Revenues totaled $92,162$47,698 for the three months ended JanuaryJuly 31, 2026, compared to $78,998$96,688 for the three months ended JanuaryJuly 31, 2025. Revenues decreased were up by $13,164$48,990 or 17%51% due primarily to ana increasedecrease in merchant financing fees.

Operating expenses were $294,889$496,870 during the three months ended JanuaryJuly 31, 2026, compared to $257,270$367,549 during the three months ended JanuaryJuly 31, 2025, 2025, an increase of $37,619,$129,321, or 15%35% primarily due to an increase in compensation and related costs of $59,780$63,058, general office expense of $6,904, and provision for credit losses $105,900 offset by a decrease in consulting fees of $16,483 and accounting and legal fees of $28,385 and decrease in consulting fees of $3,765.$18,156.

During the three months ended JanuaryJuly 31, 2026, other expense of $197,071$79,204 is comprised primarily of financing costs of $345,221$187,104 and loss on extinguishment of debt of $36,802 offset by a gain of the change in valuation of derivative liabilities of $146,598,$143,226, and other commission income of $1,803.$1,476.

During the three months ended JanuaryJuly 31, 2025, other expense of $220,421$195,058 is comprised primarily of financing costs of $40,347$167,796 and a loss of the the change in valuation of derivative liabilities of $188,916,$36,686, offset by other commission income of $8,842.$9,624.

Our net loss attributed to common stockholders for the three months ended JanuaryJuly 31, 2026, was $414,058$499,518 compared to a net loss of $411,012$482,329 for the three months ended JanuaryJuly 31, 2026,2025, primarily due to the change in valuation of derivative liabilities and change in financing costs for the three months ended JanuaryJuly 31, 2026, as compared for the three months ended JanuaryJuly 31, 2025.

As of JanuaryJuly 31, 2026, we had an accumulated deficit of $70,342,036$72,289,995 and a total stockholders’ deficit of $12,245,341.$13,589,446. The net cash flow flow used by operations was $725,087$233,393 for the ninethree months ended JanuaryJuly 31, 2026. This deficit results primarily from our net loss of $535,277 $1,399,213an and increasesincrease in loans receivable related to Agoge Global USA, Inc. of $237,179,$105,900, offset by decreasesincreases in non-cash expenses of $296,206 $101,537 and increases in accounts payable and accrued expenses of $614,830.$301,478.

We met our cash requirements during the period through revenue of $288,157$47,698 and proceed from the sale of common shares $215,000of $60,000 and proceed from convertible notes $492,000.$110,000.

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 JanuaryJuly 31, 2026, we had 4 full-time employees and three part-time part-time employee, and 2 full-time consultants.employees. 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 sufficient revenues to fund the potential increase in the number of employees. Our employees are not represented by a union.

Stock-Based Compensation – Stock Options