Quarterly Report for Quarter Ending September 30, 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 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 for download, free of charge, soon after such reports are filed with or furnished to the SEC, on the "Investors Relations" page of our website at https://www.agassisports.com and are 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. 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.

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 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 and nine months ended September 30, 2026, and 2025.
	●	Liquidity and Capital Resources. An analysis of changes in our 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 ("IBM") and International Business Machines Corporation ("International Business", and together with IBM, 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 contemplated as a digital ecosystem including both a functioning website with e-commerce (at agassisports.com), which is currently operational, and a mobile application (the "App"), which is in development and beta testing and expected to be available for both iOS and android, powered by proprietary artificial intelligence (AI) models. The second beta launch is scheduled for the week of November 16, 2026. The App launch is now scheduled for January 2027.

Website

The website is a landing page that showcases everything that the Company endeavors to achieve and the mission behind the Company. It will act as an information layer for fans, investors and others who would like to know more about what the Company does. It also includes an e-commerce store, launched in July 2026, where customers can purchase curated products which form a part of our brand partnership strategy. Currently available products include Agassi and Graf branded pickleball paddles and backpacks, clothing and pickleball accessories. We act as a reseller of products and do not own any product lines or hold any inventory. One sale has been recorded on the website in October 2026.

App

The App 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. The AI models used in the App were developed by IBM, but are owned solely by the Company and are expected to be branded as "Agassi Intelligence". The AI models have been designed to support player development, community engagement, and personalized experiences across racket sports.

Platform

The Platform is currently also expected to allow users to chat with an AI agent that has been trained using thousands of hours of proprietary content by both Darren Cahill (former professional tennis player and elite tennis coach who guided Andre Agassi, Lleyton Hewitt, Simona Halep, and Jannik Sinner to Grand Slam titles and world #1 rankings) and Andre Agassi (former professional tennis player, 8x Grand Slam Champion, and Olympic Gold Medalist). The AI agent is being programmed to think, answer and sound like Darren Cahill, Andre Agassi's former coach and Andre himself.

Our planned freemium subscription-based App will aim to foster a holistic approach to racket sports participation, emphasizing not only performance tracking using multiple data points, but also provides access to high quality coaching, learning content and an e-commerce platform.

Key features of the Platform at launch are expected to include:

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Performance logging and analytics, enabling users to record practice sessions focused on technique analysis. The Platform is also expected to include media content including improvement drills, and cross-training activities.

	●	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.
	●	Ability to discuss improvement and feedback with the digital versions of Darren Cahill and Andre Agassi both in the form of text message and phone calls. All the tennis knowledge from match preparation, to training ideas, strategy and general knowledge will be available in one place.

Key post-launch features which are planned include:

	●	Player 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.
	●	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 beneficial stockholder and Brand Partner, respectively.

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 (Large Language Model).

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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.

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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 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 in the beginning of the first quarter of 2027, with a staggered roll-out of e-commerce (tennis rackets, paddles, sports nutrition, etc.), which e-commerce site launched in July 2026, a personalized racket/paddle recommender and an AI coaching model.

The App launch is anticipated to occur in January 2027, 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 racket sports.

The estimated cost for the digital platform is approximately $2,700,000 to implement. The digital platform is expected to include AI-agents based on the digital minds of Andre Agassi and Darren Cahill, exclusive content, instructional videos and ecommerce. Currently, IBM is in the final development of the Platform.

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

World Series of Pickleball

As discussed in greater detail in "Note 5. Intangible Assets", to the footnotes to the unaudited financial statements included above, 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 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.

"Let's Play" Pickleball and Padel Facilities Initiative

On August 4, 2026, we announced the launch of our global "Let's Play" pickleball and padel platform initiative (the "Let's Play Initiative"), through which we intend to pursue the goal of creating one of the world's leading networks of pickleball and padel clubs. We intend to pursue this goal through a combination of potential acquisitions of existing facility operators, strategic partnerships, collaborations, and franchising arrangements, rather than through ground-up development alone. We believe this initiative represents a natural extension of our broader strategy of building an integrated global racket sports platform spanning technology, events, media, and, with destination-based physical facilities.

We intend to create "Let's Play" locations that we believe will function as more than conventional sports facilities. Our concept envisions destinations that combine recreation, wellness, hospitality, and community programming, and that integrate coaching, events, and technology-enabled experiences, including potentially over time, integration with our planned digital Platform and App, with the goal of creating a differentiated offering for players of all ages and skill levels. We intend to offer operators who join our network branding, programming, and operational support intended to provide consistency in member experience while allowing us to scale more capital-efficiently than through wholly-owned development alone.

We intend to pursue potential opportunities throughout North America, Europe, Asia Pacific, and other international markets. Our first international efforts are expected to focus on Germany and Australia, markets in which we believe participation in pickleball and padel is accelerating. Our initiative in Germany is expected to be led by Stefanie Graf, a former professional tennis player who won 22 Grand Slam singles titles and who is the Company's brand partner and the spouse of Andre Agassi, our co-founder and largest beneficial stockholder. Our initiative in Australia is expected to be led by Darren Cahill, a globally recognized tennis coach and broadcaster who has coached four world No. 1-ranked players, including Mr. Agassi, and who currently coaches world No. 1-ranked player Jannik Sinner. Both Ms. Graf and Mr. Cahill are expected to advise on facility design, programming, player development, and regional and local market strategy in connection with the Let's Play Initiative.

As of the date of this Report, the Let's Play Initiative is in the beginning stages of development. We are currently engaged in preliminary discussions with certain facility operators, developers, and strategic partners regarding potential future acquisitions, collaborations, and franchise opportunities. We have not acquired any facilities to date, have not entered into any definitive agreement to acquire any facility, and are not currently party to any strategic partnership, collaboration, or franchising agreement in connection with this initiative. There can be no assurance that any of these discussions will result in definitive agreements, that any resulting transactions will be completed on the terms or timeline we currently anticipate, or at all, or that any facilities we ultimately acquire, develop, partner with, or franchise will perform as we currently expect. See "Risk Factors", below for a further discussion of the risks associated with this initiative.

We expect that pursuing the Let's Play Initiative will require substantial additional capital beyond the funding we currently require to satisfy our existing obligations to the IBM Parties and to support our other planned initiatives, including the digital Platform, App, and World Series of Pickleball. We do not currently have committed financing specifically allocated to this initiative, and our ability to pursue it as currently contemplated, including the scale, timing, and geographic scope of any expansion, will depend on our ability to raise additional capital, on terms that may not be favorable to us, if at all.

Grateful Dead Licencing and Manufacturing

In addition to the above, we plan to develop, market and sell a line of Grateful Dead-branded products pursuant to our Grateful Dead License Agreement with Rhino, the master licensee of Grateful Dead Productions. The Grateful Dead License Agreement, discussed in greater detail below, grants us worldwide rights to use specified Grateful Dead trademarks, indicia and artwork in connection with certain pickleball and padel equipment and accessories, pickleball and padel apparel, and water bottles and tumblers. We intend to market the Licensed Products to pickleball and padel participants and consumers interested in the Grateful Dead brand. Although the license is non-exclusive, Rhino has agreed not to use, directly or through third parties, the Licensed Property in the pickleball and padel equipment and accessories category during the term, subject to certain pre-approved exceptions.

We intend to use a third-party manufacturing and distribution model under our Manufacturer Agreement (discussed in greater detail below), which has agreed to manufacture and distribute the Licensed Products for us. We plan to coordinate product development, design submissions and production schedules with the Manufacturer, subject to Rhino's approval of each Licensed Product design and applicable packaging, advertising and promotional materials. Under the Grateful Dead License Agreement, we are required to begin marketing Licensed Products no later than May 1, 2027, and begin shipments no later than July 1, 2027.

Our planned sales channels include direct-to-consumer sales through our ecommerce website and at pickleball and other racquet sporting events, together with wholesale sales through approved retailers, including department stores, online retailers and sporting goods stores. We also are required to make Licensed Products available for resale through designated channels controlled by Rhino. We intend to support product sales through advertising and promotional activities approved by Rhino, and the Grateful Dead License Agreement requires advertising expenditures of Net Sales, subject to its provisions for making up annual spending shortfalls. Our commercialization plans will take into account the agreement's royalty on Net Sales, guaranteed payments and minimum sales requirements, each discussed in greater detail below.

Both agreements have terms ending June 30, 2030, unless earlier terminated, and the Manufacturer Agreement terminates automatically upon termination of the Grateful Dead License Agreement, subject to certain extension rights we have under the Licence Agreement.

Plans for Expansion; Programs; Content and Facilities

While we expect the World Series of Pickleball, our planned digital platform, our "Let's Play" initiative, and our Grateful Dead licensing and manufacturing agreements, to take priority in the coming months, the following additional business plans are also in the early stages of development:

● Pursue best-in-class acquisition and partnership opportunities.

● Pursue a scalable, capital-efficient growth strategy through strategic partnerships.

● Acquire, build and/or create physical facilities, leagues, tournaments, events, social communities, and merchandisers (in addition to the "Let's Play" initiative.

● 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.

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

● IP development and collaboration.

Name and Likeness License Agreements; Brand Partner Agreement

As discussed in greater detail "Note 5. Intangible Assets", to the footnotes to the unaudited financial statements included above, and "Recent Agreements/Transactions-Name and Likeness Agreement with Andre Agassi", the Company has fifteen year (subject to extensions) Name and Likeness License Agreements in place with Darren Cahill, a former professional tennis player, former coach of Andre K. Agassi and current co-coach of Jannik Sinner, current world No. 1 ranked tennis player by the Association of Tennis Professionals (ATP), and Andre Agassi, former professional tennis player and 8-time tennis Grand Slam winner, co-founder of the Company's current business operations, and a significant stockholder of the Company. We are also party to a Brand Partner Agreement with Stefanie Graf, the spouse of Andre Agassi, and former professional tennis player (holding ATP No. 1 ranking for 377 consecutive weeks), with among her many accomplishments, winning 22 major singles titles, and being the only player to win the "Golden Grand Slam," capturing all four majors and an Olympic Gold Medal in the same year.

The license agreements provide the Company the non-exclusive (except as to certain specified uses, including as to Mr. Cahill our App and as to Mr. Agassi, our corporate name), to use the name and likeness of each of Mr. Cahill and Mr. Agassi in connection with the Company's business operations. Pursuant to the Brand Partner Agreement, Ms. Graf 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. Ms. Graf 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 her right to disapprove of any particular use. The Brand Partner Agreement has a five-year term, subject to extension by mutual agreement.

Competitive Advantage

We believe that the name and likeness license agreements with Darren Cahill and Andre Agassi, together with the brand partner agreement with Stefanie Graf, each discussed above, provide the Company with a meaningful strategic advantage in developing, marketing and commercializing its artificial intelligence-powered tennis and pickleball coaching platform and plans to compete in the pickleball industry. The Company's App is being designed to deliver AI-based swing analysis, coaching and player development tools, and the association with three of the most recognizable and accomplished figures in professional tennis is expected to enhance the credibility and visibility of our technology among players, coaches, clubs, academies and other participants in the racket sports industry. In particular, Mr. Cahill's reputation as one of the sport's leading coaches and his experience coaching elite players, including Andre Agassi and current ATP World No. 1 Jannik Sinner, together with Mr. Agassi's and Ms. Graf's global recognition and longstanding reputations for excellence in tennis, are expected to support customer acquisition, brand awareness, strategic partnerships and marketing initiatives as we seek to expand our presence in the tennis and rapidly growing pickleball and padel markets. We also believe these relationships will facilitate the creation of authentic coaching content, instructional materials, promotional campaigns and other product features that align with our business strategy. While the Company cannot assure investors that these agreements will result in increased revenues, user adoption or other measurable commercial benefits, we believe they enhance our ability to differentiate our products from competing offerings and strengthen our overall brand within the racket sports industry.

We also believe that our license to use the Grateful Dead trademarks in Licensed Products will be a significant competitive advantage to the Company as we look to grow our revenues and name recognition.

Recent Agreements/Transactions

Lock-Up Agreements

On June 19 and June 24, 2026, the Company entered into lock-up agreements dated May 27, 2026, with twenty-three investors who had purchased shares of common stock in the Company's November 2024 private offering (the "November 2024 Investors" and the "Lock-Up Agreements"), pursuant to which such investors agreed not to transfer any of the shares of common stock sold to such investors by the Company in November 2024 (the "November 2024 Shares"), nor any of the New Warrants or New Warrant Shares (defined below), until December 15, 2026, except in connection with certain customary permitted transfers described in the Lock-Up Agreements. In consideration for agreeing to the terms of the Lock-Up Agreements, the Company agreed to grant each of the counterparties entering into the Lock-Up Agreements, warrants to purchase 25% of the total shares of common stock purchased by such investors in the November 2024 offering, exercisable only for cash, with a term of two years and an exercise price of $5.00 per share (the "New Warrants", and the shares of common stock issuable upon exercise thereof, the "New Warrant Shares"). The Lock-Up Agreements contain customary representations and warranties of the parties, and registration rights, pursuant to which we have agreed to include the registration of the resale of the November 2024 Shares held by such parties entering into the Lock-Up Agreements and the Warrant Shares in a registration statement filed under the Securities Act of 1933, as amended, which is required to be filed on or prior to December 15, 2026. In total, we granted Warrants to purchase 657,876 shares of common stock in connection with our entry into the Lock-Up Agreements.

USTA Commercial Agreement

On August 6, 2026, we entered into a Commercial Agreement with United States Tennis Association Incorporated, for itself and on behalf of USTA Coaching, Inc. (collectively, "USTA", and the Commercial Agreement, the "USTA Agreement"). Pursuant to the USTA Agreement, USTA agreed to provide us the use of certain proprietary training content, coaching materials, training methodologies, curricula, coaching philosophies (including the USTA American Development Model for Tennis (ADM)), educational resources, and related materials developed by or on behalf of USTA or licensed thereto (collectively, the "USTA Content"), for use in our planned App, sole in order to train and fine-tune the App's AI model solely to (i) direct users of the App in accordance with USTA's coaching philosophy, including the ADM, and (ii) surface available resources offered by USTA programs, learning management system, and the USTA certification pathway (collectively, the "Permitted Purpose").

USTA also agreed to promote the App four times to its members and platform users and to grant us a limited, non-transferable, revocable license to use the USTA Content, for the Permitted Purpose, subject to certain customary restrictions set forth in the USTA Agreement.

The USTA Agreement includes trademark and brand licensing rights from USTA to the Company, subject to the restrictions and requirements set forth in the USTA Agreement; requirements for USTA to make promotional communications regarding the App; and requires us to use commercially reasonable efforts to maintain the availability of the App for end-users.

In consideration for agreeing to enter into the USTA Agreement and agree to the terms thereof, we agreed to make Darren Cahill available to speak at USTA's Coaches Open event in August 2026, and Andre Agassi available to speak at a future event; agreed to provide USTA a fixed number of complementary subscriptions to the App, and to provide an agreed upon discount on yearly subscriptions to the App from USTA members and USTA coaches during the term of the agreement; and to share a fixed percentage of net revenues that we generate through the App from USTA members and USTA coaches, net of platform and application fees, and adjusted for chargebacks and refunds.

The agreement includes customary intellectual property ownership and prohibition provisions; audit rights for USTA; confidentiality obligations of the parties; representations and warranties of the parties; and mutual indemnification rights, subject to certain limitations of liabilities and caps on liabilities.

The USTA Agreement has a term of three years, and can be terminated prior to that by either party for cause, provided the non-breaching party provides the other 60 days after written notice of any such event relating to a for cause termination and the non-breaching party does not cure such breach within such 60 day period, and can also be terminated immediately by USTA in the event of (i) our unauthorized use of the USTA Content, (ii) the occurrence of a material security incident caused by our failure to comply with certain of our obligations under the agreement, (iii) our breach of the agreement's prohibitions on reverse engineering and secondary use of the USTA Content, or (iv) our breach of our agreement to use commercially reasonable efforts to make the App available to users. Additionally, either party may terminate the agreement upon the other party's insolvency or entry into bankruptcy.

Under the terms of the agreement, the license provided by USTA to use the USTA Content expires upon termination of the Agreement and the Company is required, within 30 days of termination of the USTA Agreement, to return to USTA or certify in writing the secure destruction of all copies of USTA's proprietary content in the Company's possession, including copies on backup media, development environments, and other systems. Separately, upon termination of the USTA Agreement, the Company must, within 180 days (subject to extension for technical complexity), use commercially reasonable efforts to implement technical measures intended to reduce the continued influence of USTA's content on any AI model it operates, selecting from options such as retraining, fine-tuning reversal, machine unlearning, or exclusion of the data from future training runs. However, the agreement expressly acknowledges that AI models may retain residual effects from previously ingested data and that complete removal or verification of such removal is not currently technically feasible.

Convertible Note Conversion

On July 28, 2026, the Company entered into a Convertible Promissory Note (the "Convertible Note"), in the original principal amount of $1,000,000 with Investments AKA, LLC ("Investments AKA"), which entity is owned and controlled by Andre Agassi, former professional tennis player, 8x Grand Slam Champion, and Olympic Gold Medalist, and the Company's largest beneficial stockholder, and whose Chief Financial Officer is Shawn Cable, our Chief Financial Officer.

The Convertible Note accrued interest at a fixed rate per annum equal to 3.96%, which the Company determined represented not less than the applicable federal rate published by the U.S. Internal Revenue Service under Section 1274(d) of the Internal Revenue Code of 1986, as amended, compounded semi-annually.

Unless earlier converted, the outstanding principal balance of the Convertible Note, together with all accrued and unpaid interest, was due and payable in full on July 27, 2027 ("Maturity Date"). The Convertible Note was also subject to an automatic conversion, without any action required by holder, into the equity or equity-linked securities or units (the "New Securities") issued by the Company to arm's-length, new-money investors ("New Money Investors") in the next sale (or related series of sales) by the Company of New Securities that results in gross proceeds to the Company of not less than $3,000,000 (the "Next Equity Financing"). The conversion price was to equal the price per share, unit, or other applicable denomination of New Securities actually paid in cash by the New Money Investors in the Next Equity Financing. If no Next Equity Financing occurred prior to the Maturity Date, the Convertible Note was to not automatically convert and the outstanding principal and accrued interest was to instead be due and payable in full on the Maturity Date.

On October 16, 2026, the Company entered into a First Amendment to Convertible Promissory Note (the "First Amendment") dated October 15, 2026, with Investments AKA, which amended the Convertible Note to provide for the conversion, effective immediately upon the parties entry into the First Amendment, of the $1,000,000 principal balance of the Convertible Note into 200,000 shares of the Company's common stock (the "Note Shares"), and warrants to purchase 200,000 shares of common stock of the Company (the "Note Warrants"), based on a unit (one share of common stock and one warrant) price of $5.00 per share, the same unit price paid by recent investors in the Company's private placement (as discussed in greater detail below).

The First Amendment included customary representations of the parties, confirmed that the Convertible Note was satisfied in full upon conversion thereof, and clarified that it was the intention of the parties that interest would accrue under the Convertible Note semi-annually, that no interest had accrued as of the conversion date of the Convertible Note, and that to the extent that any interest had accrued, that such interest was forgiven by Investments AKA.

The Note Warrants have a term of three years (through October 15, 2029), cash only exercise rights, an exercise price of $7.00 per share, and customary adjustment provisions for stock splits, recapitalizations and similar transactions affecting the Company.

On October 16, 2026, the Company entered into a Subscription Agreement with Investments AKA, pursuant to which Investments AKA subscribed, in a private transaction, to purchase 300,000 units, each consisting of one share of common stock and one warrant to purchase one share of common stock of the Company, for $5.00 per unit, or $1,500,000 in aggregate. The Subscription Agreement warrants have identical terms as the Note Warrants, discussed above.

The Subscription Agreement included customary representations and warranties of Investments AKA and the Company. The Subscription Agreement also provided Investments AKA piggy-back registration rights for the Note Shares, Subscription Agreement shares and the shares of Company common stock issuable upon exercise of the Note Warrants and Subscription Agreement warrants, for a period of two years from the date of the Subscription Agreement, which applies to any secondary offering registration statement filed by the Company, subject to customary exceptions and carveouts, and subject to customary pre-requisites of Investments AKA.

Grateful Dead Licencing Agreement

On October 30, 2026, Agassi Sports Licensing LLC, a newly formed wholly-owned subsidiary of the Company, entered into a Merchandise License Agreement (the "Grateful Dead License Agreement"), with Rhino Entertainment LLC ("Rhino"). Rhino is the master licensee of Grateful Dead Productions, which in turn is the owner of Grateful Dead's records and performances and numerous Grateful Dead trademarks.

Pursuant to the Grateful Dead License Agreement, Rhino granted us a worldwide, non-exclusive, non-transferable, non-assignable right to use certain Grateful Dead Brand trademarks, indicia and artwork as described in the Grateful Dead License Agreement (collectively, the "Licensed Property"), solely in connection with the manufacture, distribution and sale of certain (a) pickleball and padel equipment and accessories specifically paddles (basic and premium), pickleball and padel sets (basic and premium), custom paddle covers, tie-dye balls, pickleball and padel bags, grips and grip tape, roll-out pickleball and padel courts, and pickleball and padel nets, (b) pickleball and padel apparel including bucket hats, caps, visors, beanies, wrist bands, socks, and t-shirts, and (c) hydration, specifically water bottles and tumblers (collectively, the "Licensed Products").

Approved channels of distribution under the Grateful Dead License Agreement include direct to consumer sales (including through our ecommerce website and at pickleball/racquet sporting events) and wholesale sales through department stores, online retailers, sporting good stores, and others.

In consideration for providing us rights under the Grateful Dead License Agreement, we agreed to pay Rhino a royalty on the net sales of Licensed Products ("Royalties").

We also agreed to pay Rhino certain "Guaranteed Payments" relating to the Royalties each contract year and to advance a portion of the Guaranteed Payments, including certain amounts required to be paid upon entry into the agreement. Advance payments are recoupable from Royalties due and are nonrefundable. In the event the actual Royalties are less than the Guaranteed Payments, we are required to pay Rhino the difference between such Guaranteed Payments and such actual Royalties at the end of the applicable contract year.

The Grateful Dead License Agreement has an initial term through June 30, 2030, subject to the right to extend the agreement under certain circumstances.

We also agreed to make certain advertising expenditures during each contract year of the Term and the Grateful Dead License Agreement includes certain minimum net sales requirements for each year of the term.

The initial marketing date for Licensed Products to be marketed under the agreement is no later than May 1, 2027 and the initial shipment date for Licensed Products to be sold by the Company is no later than July 1, 2027.

The Grateful Dead License Agreement includes the requirement for us to deliver customary statements of sales and royalties; provides for customary audit rights to Rhino, quality assurance and control requirements, Rhino's approval rights for packaging, advertising and promotional activities; intellectual property confirmations; and customary protective provisions, insurance requirements, representations and warranties of the parties, indemnification obligations of the parties, confidentiality obligations of the parties, termination and force majeure provisions.

Manufacturer Agreement

On October 30, 2026, we entered into a Manufacturer Agreement for Use of Licensed Property dated October 26, 2026 (the "Manufacturer Agreement"), with a manufacturer (the "Manufacturer"). Pursuant to the Manufacturer Agreement, the Manufacturer agreed to manufacture and distribute the Licensed Products for us. The Manufacturer Agreement has a term from October 26, 2026, through June 30, 2030, unless earlier terminated as provided therein, and also terminates automatically upon the termination of the Grateful Dead License Agreement.

The Manufacturer Agreement includes customary representations and warranties of the parties, including as to the Manufacturer's manufacturing and employment practices; requirements for us to indemnify the Manufacturer for losses relating to any alleged misuse or infringement of intellectual property rights; mutual indemnification obligations of the parties; inspection rights for the Company; and mutual confidentiality obligations.

We have the right to terminate the Manufacturer Agreement if (i) the Manufacturer breaches the agreement and the Manufacturer fails to cure the purported breach within 30 days after notice thereof; and (ii) promptly upon giving or receiving notice of termination of the Grateful Dead License Agreement.

We agreed to reimburse the Manufacturer for all costs and expenses incurred by the Manufacturer upon termination of the Manufacturer Agreement, including payment for finished goods, work in process, non-cancelable commitments, equipment used to manufacture products under the agreement, packaging, raw materials, and costs of destruction of inventory if requested, provided, no reimbursement shall be required if the Manufacturer or its subcontractor engaged in the unauthorized use of the Licensed Property.

Media Value Letter Agreement

On November 5, 2026, the Company entered into separate Media Value Letter Agreements (the "Media Value Agreements") with each of Sinclair Television Group, Inc. ("Sinclair") and The Tennis Channel, LLC (the "Tennis Channel", and together with Sinclair, the "Media Value Providers"). Pursuant to the Media Value Agreements, during the two year term of the Media Value Agreements, each of the Media Value Providers and the Company, agreed to work together and determine the appropriate procurement of inventory based on advertising availabilities (each an "Ad Buy") on Sinclair/Tennis Channel owned and/or operated properties which may include without limitation, its linear television, digital, or social media properties with a net media value of $1.5 million ($300,000 as to Sinclair and $1.2 million as to Tennis Channel), based on the Media Value Provider's then-current rate card ("Media Value").

In consideration for Sinclair and Tennis Channel providing an aggregate of $1.5 million of Media Value to the Company, we agreed to issue the Media Value Providers an aggregate of 300,000 shares of restricted common stock (60,000 shares to Sinclair and 240,000 shares to the Tennis Channel) (the "Media Value Shares"), with an agreed upon value of $5.00 per share, pursuant to separate Media Value Share Issuance Agreements entered into between each of the Media Value Providers and the Company on November 5, 2026 (the "Equity Agreement").

The Equity Agreements confirmed the $5.00 per share value of the Media Value Shares; provide that the Media Value Shares shall not be subject to forfeiture, cancellation, repurchase, redemption, set-off or clawback by the Company for any reason; include customary representations and warranties of the Company and the Media Value Providers; and provide for mutual indemnification rights for breaches of the Equity Agreements by either party.

The Media Value Shares are subject to lock-up restrictions prohibiting each Media Value Provider from transferring any Media Value Shares during the six months following the date of the Equity Agreements. Thereafter, half of the Media Value Shares issued to each Media Value Provider, subject to equitable adjustment for stock dividends, stock splits and similar transactions, remain subject to the lock-up until the first anniversary of the date of the agreements, while the remaining Media Value Shares are released from the lock-up. These restrictions also apply to certain securities issued in respect of the Media Value Shares and prohibit pledges, short sales, hedging and other transactions that transfer the economic consequences of ownership.

The lock-up permits customary transfers without consideration to affiliates and direct equity holders, subject to prior notice, the transferee's written agreement to the applicable restrictions and compliance with applicable securities laws. Exceptions also apply to transfers in board-approved tender offers, exchange offers, mergers or change of control transactions, registered offerings in which the Media Value Provider includes its securities pursuant to the applicable Equity Agreement, and transfers required by law or court order. The lock-up terminates automatically if the Company materially breaches the applicable agreement and fails to cure the breach within 30 days after receiving written notice from the Media Value Provider.

The Equity Agreements grant the Media Value Providers piggyback registration rights to include the resale of the Media Value Shares in certain registration statements filed by the Company for its own account or for other securityholders, subject to timely election, customary information requirements, specified exceptions and limitations, and customary underwriter, placement agent and Securities and Exchange Commission cutbacks. These piggyback rights expire on the earlier of five years after the date of the Equity Agreements and the date all Media Value Shares may be sold without restriction or limitation, and without a restrictive legend, under Rule 144. In addition, if, at any time after six months following the date of the Equity Agreements, the Media Value Shares cannot be sold without restriction or limitation under Rule 144, the Media Value Provider may request that the Company register their resale. Upon such request, the Company must file a resale registration statement within 45 days, or 30 days if the Company is eligible to use Form S-3 or another short-form registration statement, use commercially reasonable efforts to obtain effectiveness thereof within 90 days after the request, and maintain effectiveness thereof until all covered securities have been sold or may be sold without restriction or limitation under Rule 144. The Company will bear the registration expenses of such filing, subject to specified exclusions, and the parties have agreed to customary mutual indemnification provisions.

If the Company fails to include Media Value Shares required to be included in a registration statement or fails to meet the applicable filing or effectiveness deadlines, subject to the Equity Agreement's exceptions and limitations, a Media Value Provider may, upon written notice, suspend its obligations under the Media Value Agreement, including providing Media Value and procuring, placing or fulfilling Ad Buys, without breaching either agreement. The suspension may continue until the affected shares are covered by an effective resale registration statement or the Company, at its expense, obtains an appropriate Rule 144 resale opinion. The Media Value Provider must immediately resume performance upon satisfaction of either condition, and any suspension will not extend the term of the Media Value Agreement.

We also agreed that, without the approval of the Media Value Providers, we would not grant any registration rights that conflict with, or rank senior to, the registration rights of the Media Value Providers, until such time as the Media Value Shares have been registered under the Securities Act, unless we provide the same rights to the Media Value Providers.

Executive Vice Chairman

Effective on November 6, 2026, the Board of Directors appointed director James Askew as the Non-Executive Vice Chairman of the Board of Directors, to serve until his successor is appointed or his earlier resignation, removal by the Board of Directors or cessation of service as a director. In this non-executive Board role, he shall assist the Board of Directors, its Chairman, if any, and management with strategic planning; evaluating, structuring and negotiating transactions; reviewing and advising on agreement terms; attending counterparty meetings and negotiations; coordinating with the Company's advisers; facilitating Board of Directors and management communications and follow-up; and reporting material developments and recommendations to the Board. He shall also perform other related duties assigned by the Board. The appointment does not make him an officer, employee or independent director, confer authority to bind the Company or direct employees, or authorize responsibilities reserved to independent directors.

Recent Funding Transactions

On May 22^nd, June 1^st, 2^nd and 4^th, 2026, the Company entered into Subscription Agreements with certain accredited investors, pursuant to which such investors purchased an aggregate of 235,000 shares of restricted common stock of the Company, for $5.00 per share, or a total of $1,175,000. The Subscription Agreements included customary representations and warranties of the investors and the Company.

On June 19, 2026, the Company entered into Subscription Agreements with two accredited investors pursuant to which the Company sold the investors an aggregate of 14,000 shares of common stock for an aggregate of $70,000 ($5.00 per share). The Subscription Agreements included customary representations and warranties of the Investors and the Company.

On June 1, 2026, in connection with the Subscription Agreements entered into in May and June 2026, the Company entered into a Registration Rights Agreement (the "June Registration Rights Agreement") in favor of the investors (who executed a counterparty thereof in connection with their investments).

On July 13, 2026, the Company entered into a Subscription Agreement with an accredited investor pursuant to which the Company sold the investor 25,000 shares of common stock for $125,000 ($5.00 per share). The Subscription Agreement included customary representations and warranties of the Investor and the Company.

On July 13, 2026, in connection with the Subscription Agreement entered into in July 2026, the Company entered into a Registration Rights Agreement (the "July Registration Rights Agreement", and together with the June Registration Rights Agreement, the "Registration Rights Agreements") in favor of the investor (who executed a counterparty thereof in connection with his investment).

Pursuant to the Registration Rights Agreements, the Company agreed to file a registration statement to register the resale of the shares sold to such investors (a) on or before the first business day following 45 days after the first sale of shares (i.e., May 22, 2026), in the case of the June Registration Rights Agreement; and (b) on or before the first business day following the date which falls 45 days after the last sale of securities in the offering in connection with the July Registration Rights Agreement, and to use commercially reasonable efforts to cause such registration statement to be declared effective as promptly as possible thereafter. Once effective, the Company agreed to keep the registration statement effective until the earlier of (a) the date that all shares covered by such registration statement (i) have been sold, thereunder or pursuant to Rule 144, or (ii) may be sold without volume or manner-of-sale restrictions pursuant to Rule 144 and without the requirement for the Company to be in compliance with the current public information requirement under Rule 144, and (b) three years after the date of the Registration Rights Agreements.

If the Company fails to file the registration statement by the required dates as disclosed above, then the Company is required to promptly issue to each investor, as liquidated damages and not as a penalty, additional shares of common stock equal to five percent (5%) of the shares then held by such Investor subject to such failure to file. If such failure to file continues for a period of thirty (30) days following the initial occurrence thereof, the Company is required to promptly issue to each such investor additional shares of common stock equal to an additional five percent (5%) of the shares then held by such investor which remain subject to such failure for each additional thirty (30)-day period during which such event continues; provided, however, that the aggregate number of additional shares of common stock required to be issued to any investor will not exceed fifteen percent (15%) of the shares originally subject to such failure with respect to such investor.

The Registration Rights Agreements include customary representations, indemnification obligations of each party, and other provisions.

On and effective on June 29, 2026, the Company entered into a First Amendment to Registration Rights Agreement (the "First Amendment") with investors holding a majority in interest of the shares sold in the offering subject to the June Registration Rights Agreement, pursuant to which the parties amended the June Registration Rights Agreement to extend the Required Filing Date to July 31, 2026, which filing date was met by the Company.

The Company used, and plans to continue to use, the net proceeds from the offerings to advance business operations in the global racket sports entertainment business, with an initial focus on consolidating, building and growing pickleball and Padel related opportunities, to pay amounts owed to the IBM Parties, and for working capital and general corporate purposes.

On May 7, 2026, the Company entered into an agreement with INTE Securities LLC, a FINRA registered broker-dealer ("INTE"), whereby the Company agreed to pay INTE a cash fee of 7% of the aggregate proceeds received by the Company from investors introduced by INTE. In addition to the cash compensation payable to INTE, the Company agreed to grant warrants to purchase shares of Company common stock equal to 3% of the amount of securities purchased from such introductions with an exercise price based on the price of securities sold. The warrants have a five year term and a cashless exercise feature.

A total of $150,000 has been invested by two investors that were introduced to the Company by INTE, resulting in a cash fee of $10,500 and warrants to purchase 4,500 shares at an exercise price of $5.00 per share, which were issued in the name of Nathan Low, a principal of INTE.

On July 28, 2026, the Company entered into the Convertible Note which was converted into shares of common stock and warrants on October 16, 2026, as discussed in greater detail above under Convertible Note Conversion.

On August 31, 2026, and September 18, 2026, the Company entered into two Subscription Agreements with two accredited investors, pursuant to which the investors purchased an aggregate of 65,000 units, each consisting of one share of restricted common stock and one warrant to purchase one share of common stock from the Company, for a purchase price of $5.00 per unit, or a total of $325,000. The Subscription Agreements included customary representations and warranties of the investors and the Company and piggy-back registration rights for two years from the date of sale, subject to customary cutbacks and exceptions. The warrants to purchase 65,000 shares of common stock granted to the two accredited investors, have substantially similar terms as the Note Warrants, discussed above, except that such Investor Warrants include an ownership blocker preventing any portion of the applicable Investor Warrant from being exercised if upon such exercise the applicable holder and its affiliates would own more than 4.999% of the Company's then outstanding common stock, which may be increased to 9.999% with 61 days written notice to the Company.

Plan of Operations

We had a working capital deficit of $2,545,343 as of September 30, 2026; mainly due to our current liabilities of $2,819,681. We expect to require funding in the future, including to complete payments due under our agreements with the IBM Parties, under which we had been invoiced $2,651,521 (including approved change orders and late-payment interest) and had paid $1,817,548 as of September 30, 2026, leaving approximately $834,000 unpaid. We paid $200,000 in October 2026, leaving approximately $634,000 unpaid as of the date of this Report, which we expect to pay from the proceeds of future financings (see Notes 4 and 9).

During the nine months ended September 30, 2026 and through the date of this Report, the Company raised $4,095,000 through the sale of 454,000 shares of common stock at $5.00 per share and 365,000 units at $5.00 per unit, each consisting of one share of common stock and one warrant to purchase one share of common stock with an exercise price of $7.00 per share and a term of three years, in private placements and $1,000,000 through the sale of a convertible promissory note to Investments AKA, LLC, which entity is affiliated with Andre Agassi, our largest beneficial stockholder (which has subsequently been converted into 200,000 shares of common stock and 200,000 warrants to purchase shares of common stock with an exercise price of $7.00 per share and a term of three years, as discussed above), and whose Chief Financial Officer is Shawn Cable, our Chief Financial Officer, as discussed in greater detail above under "Recent Funding Transactions".

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 private offerings. If we are successful in raising this additional capital, we anticipate that it will be sufficient to make the remaining scheduled payments to the IBM Parties under the Services Agreement; however, we have not yet secured commitments for this funding, and there can be no assurance that it will be available on acceptable terms, if at all. See Note 4 - Going Concern to the accompanying unaudited condensed financial statements.

We also hope to begin generating revenues in the first quarter of 2027, from our launch of the App, which will include AI-agents created based off the digital minds of Andre Agassi and Darren Cahill, exclusive content, instructional videos, and ecommerce, as well as from future expected sponsorship relations, and pickleball and padel facilities.

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 September 30, 2026 Compared to the Three Months Ended September 30, 2025.

We generated no revenues for the three months ended September 30, 2026, or 2025.

For the three months ended September 30, 2026, and 2025, we had general and administrative expenses, consisting of stock-based compensation, audit fees, IBM cloud services costs under our embedded solution agreement with the IBM Parties ($21,737 for the three months ended September 30, 2026) and miscellaneous administrative costs, that totaled $2,734,041 and $755,899, respectively, an increase of $1,978,142 from the prior period. This increase is mainly due to share based expenses of $1,705,503 (discussed below), compared to $309,893 in the prior period, and increases in SEC and legal fees of $294,587, marketing, promotion and investor relations costs of $113,546, salaries and payroll costs of $91,043 and other administrative costs of $104,638, partially offset by a $67,511 decrease in professional fees. We also had research and development expenses of $78,543 for the three months ended September 30, 2026, and no research and development expenses for the three months ended September 30, 2025. Share based compensation for the three months ended September 30, 2026 totaled $1,705,503, consisting of (i) $1,275,348 of expense relating to warrants granted to consultants, (ii) $135,155 of expense relating to restricted stock units, (iii) $165,000 of expense relating to restricted shares of common stock issued to a consultant, and (iv) $130,000 of expense relating to shares of common stock issued to an investor relations firm, in each case as discussed in greater detail in "Note 7. Capital Stock and Share-Based Compensation" to the financial statements included herein.

We had other income of $75,000 and interest expense - related party of $6,600 for the three months ended September 30, 2026, and no other income or expense for the three months ended September 30, 2025. The $75,00 in other income is to be passed on to Daren Cahill and Andre Agassi equally for speaking engagements, less a 10% commission fee. Daren Cahill has been paid for his engagement to date, and Andre Agassi has not.

We had a net loss of $2,744,184 and $755,899 for the three months ended September 30, 2026, and 2025, respectively, which net loss increased for the reasons described above.

Results of Operations for the Nine Months Ended September 30, 2026, Compared to the Nine Months Ended September 30, 2025.

We generated no revenues for the nine months ended September 30, 2026, or 2025.

For the nine months ended September 30, 2026 and 2025, we had general and administrative expenses, consisting of stock-based compensation, audit fees, IBM cloud services costs under the embedded solution agreement with the IBM Parties ($21,737 for the nine months ended September 30, 2026, with a further $33,553 incurred in the three months ended June 30, 2026 included in research and development expenses) and miscellaneous administrative costs, that totaled $5,443,468 and $2,757,059, respectively, an increase of $2,686,409 from the prior period, which increase was mainly the result of increased share based compensation and increases in SEC and legal fees of $626,831, salaries, bonus and payroll costs of $392,008 (including the $250,000 sign-on bonus to our Chief Executive Officer), marketing, promotion and investor relations costs of $322,400 and other administrative costs of $192,820, partially offset by an $83,714 decrease in professional fees. Share based compensation, which for the nine months ended September 30, 2026 totaled $2,922,757, compared to $1,750,670 of share based compensation for the nine months ended September 30, 2025. Share based compensation for the nine months ended September 30, 2026 consisted of (i) $2,256,803 of expense relating to warrants granted to consultants and service providers, including expense recognized during the period on warrants granted in prior periods which vest over time, (ii) $215,954 of expense relating to restricted stock units, (iii) $320,000 of expense relating to restricted shares of common stock issued to a consultant and our investor relations firm, and (iv) $130,000 of expense relating to shares of common stock issued to an investor relations firm, in each case as discussed in greater detail in "Note 7. Capital Stock and Share-Based Compensation" to the financial statements included herein. We also had research and development expenses of $169,564 for the nine months ended September 30, 2026, and no research and development expenses for the nine months ended September 30, 2025.

We had other income of $75,000, interest income of $6,473 and interest expense of $6,685 (including $6,600 on the related party note) for the nine months ended September 30, 2026, and no other income or expense for the nine months ended September 30, 2025. The $75,00 in other income is to be passed on to Daren Cahill and Andre Agassi equally for speaking engagements, less a 10% commission fee. Daren Cahill has been paid for his engagement to date, and Andre Agassi has not.

We had a net loss of $5,538,244 and $2,757,059, for the nine months ended September 30, 2026, and 2025, respectively, which net loss increased for the reasons described above. After giving effect to a deemed dividend of $3,548,508 relating to warrants issued to certain stockholders in consideration for lock-up agreements, net loss attributable to common stockholders was $9,086,752 for the nine months ended September 30, 2026 (see Note 2 and Note 7 to the financial statements included herein).

Liquidity and Capital Resources

The following table summarizes our current assets, liabilities, and working capital at September 30, 2026 and December 31, 2025.

		September 30,				December 31,				Increase/
		2026				2025				(Decrease) $				%
Current assets		$	274,338			$	496,375			$	(222,037	)			-44.7	%
Current liabilities		$	2,819,681			$	494,400			$	2,325,281				470.3	%
Working capital (deficit)		$	(2,545,343	)		$	1,975			$	(2,547,318	)			-128,978.1	%

The decrease of $2,547,318 in working capital was mainly due to an increase in accounts payable and accrued expenses, primarily from the agreements with the IBM Parties, discussed above, and the $1,000,000 Investments AKA Convertible Note, which is due on July 27, 2027, and has since been converted into common stock and warrants, as discussed above, and related accrued interest.

Cash Flows

We had $2,231,024 of net cash used in operating activities for the nine months ended September 30, 2026, which was due to $5,538,244 in net loss and a $331,731 decrease in accounts payable and accrued expenses, offset by a $250,000 increase in accounts payable and accrued expenses - related party, $2,792,757 of stock-based compensation expense, $130,000 of shares issued for services, $60,226 of depreciation and amortization expense, a $6,600 increase in accrued interest - related party, and a $399,368 decrease in prepaid expenses and other current assets. We had $1,778,618 of net cash used in operating activities for the nine months ended September 30, 2025, which was mainly due to $2,757,059 in net loss, offset by $1,750,670 of stock-based compensation expense and $8,354 of depreciation expense.

We had $1,186,645 of net cash used in investing activities for the nine months ended September 30, 2026, which was due to $1,167,548 of payments for software development in progress and $19,097 for the purchase of property and equipment. We had $25,000 of net cash used in investing activities for the nine months ended September 30, 2025, which was due to the acquisition of an intangible asset.

We had $3,595,000 of net cash provided by financing activities for the nine months ended September 30, 2026, which was due to $2,270,000 of proceeds from the sale of 454,000 shares of common stock sold in our private offerings for $5.00 per share and $325,000 of proceeds from the sale of 65,000 units, each consisting of one share of common stock and one three year warrant to purchase common stock for an exercise price of $7.00 per share in a private offering, and $1,000,000 of proceeds from the Investments AKA Convertible Note. We had no cash provided by financing activities for the nine months ended September 30, 2025.

On October 16, 2026, Investments AKA, a related party, subscribed for 300,000 units for $1,500,000 (see Note 10). We have relied significantly on funding from Investments AKA and other related parties, and other than this subscription, 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 September 30, 2026, we had cash of $273,079 and an accumulated deficit of $45,168,346, and we used $2,231,024 of cash in operating activities during the nine months ended September 30, 2026. In addition, the Company's current liabilities exceed its current assets by $2,545,343 as of September 30, 2026.

The Company has limited cash resources 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.

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 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

See Note 2 to the condensed financial statements included in this Report for a discussion of recent accounting pronouncements, including ASU 2023-07, which the Company has adopted and reflected in its segment disclosures, and ASU 2024-03, which is not yet effective and is expected to require disaggregated disclosure of the expenses included in the Company's general and administrative expenses caption.