Annual Report for Fiscal Year Ending 08-31, 2025 (Form 10-K)

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

The following discussion and analysis provides information which our management believes is relevant to an assessment and understanding of our results of operations and financial condition. The discussion should be read in conjunction with our audited consolidated financial statements included elsewhere in this Annual Report. This discussion contains forward-looking statements based upon our current expectations, estimates and projections, and involves numerous risks and uncertainties. Actual results may differ materially from those contained in any forward-looking statements due to, among other considerations, the matters discussed in the sections titled "Risk Factors" and "Special Note Regarding Forward-Looking Statements."

Overview

VisitIQ is an AI-powered campaign targeting engine that gives marketers, agencies, and enterprise go-to-market (GTM) teams the ability to find, define, and activate the audiences most likely to convert. The platform identifies anonymous website visitors, generates real-time Ideal Customer Profiles (ICPs), builds high-precision lookalike audiences, detects in-market behavior, maps real-world movement patterns, and activates every audience across paid media, email, CRM, and marketing automation platforms-while integrating seamlessly with existing go-to-market workflows and tools.

VisitIQ is needed by GTM teams now more than ever, because the modern go-to-market landscape has shifted under their feet. AI-driven search experiences have collapsed organic visibility across the web. Zero-click search has removed the very behavior relied on to generate inbound demand. Paid acquisition costs continue to rise as platforms consolidate inventory and shrink signal availability. Most website visitors remain anonymous, most campaigns waste spend on the wrong audiences, and most brands have no practical way to understand who is on their site, what they want, or whether they're actively in a buying cycle.

VisitIQ solves this problem by delivering a unified, AI-driven targeting layer that sits across the entire go-to-market stack - continuously enriching data, clarifying ICPs, identifying high-intent prospects, and delivering audiences directly into the execution tools companies already use to run their GTM efforts.

Recent Developments

Recent Financing and Capital Structure Transactions

As more fully described in the notes to the audited consolidated financial statements included elsewhere in this Annual Report, in October 2024, the Company entered into a note purchase agreement with Arena, pursuant to which the Company issued to Arena a convertible promissory note (the "October Note") with a principal amount of $1,333,333. The October Note was issued with an original issue discount and resulted in gross proceeds to the Company of $1,200,000. In April 2025, the October Note, and the related accrued interest, was converted into 3,903,065 shares of Series B Convertible Preferred Stock. In November 2024 we completed a capital restructuring to simplify our capital structure whereby convertible notes payable and warrants were exchanged for Series B Convertible Preferred Stock. Additionally, in April 2025 and November 2025, we signed convertible note agreements with our largest shareholder of convertible preferred stock, Arena, which has provided the Company with approximately $3.75 million of funding to date. In November 2025, we also received a $391,000 investment from our main outsourced technology development partner into our Series C Convertible Preferred Stock. The investment was comprised of $80,000 of cash and cancellation of approximately $311,000 in outstanding payables to this vendor.

In March 2026, the Company, VisitIQ, LLC and Vern Hanzlik, as a key person of the Company, entered into a Revenue Loan and Security Agreement, dated March 26, 2026 (the "Revenue Loan and Security Agreement") with Decathlon Alpha V, L.P. ("Decathlon") relating to a secured financing of $2,200,000 (the "Revenue Loan Amount"), with $1,000,000 being advanced to the Company upon execution of the Revenue Loan and Security Agreement and one or more addition advances available for the remainder of the Revenue Loan Amount available to the Company upon request, provided that the Company has satisfied all conditions with respect to such advance.

The Revenue Loan and Security Agreement requires monthly payments of Fixed Payment Amounts (as set forth in the Revenue Loan and Security Agreement) with all outstanding advances and the Interest (as defined in them Revenue Loan and Security Agreement) being due at maturity on March 26, 2030 (unless accelerated upon a change of control or the occurrence of other events of default). Interest does not accrue on advance(s) pursuant to the Loan Agreement, rather a minimum amount of Interest (as defined in the Loan Agreement) is due pursuant to the terms of the Loan Agreement. The Revenue Loan and Security Agreement further provides for the payment of fees by the Borrower and includes customary representations and warranties, indemnification provisions, covenants and events of default. Subject in some cases to cure periods, amounts outstanding and otherwise due under the Revenue Loan and Security Agreement may be accelerated for typical defaults including, but not limited to, the failure to make when due payments, the failure to perform any covenant, the inaccuracy of representations and warranties, and the occurrence of debtor-relief proceedings.

In connection with the Revenue Loan and Security Agreement, the Company, VisitIQ, LLC, Decathlon and Arena also entered into a Subordination Agreement (the "Subordination Agreement"), dated March 26, 2026, pursuant to which Arena subordinated all security interests or liens that Arena may have in the property of the Company or VisitIQ, LLC to Decathlon.

Trends and Other Factors Affecting Our Business

We believe that our performance and future success depend on many factors that present significant opportunities for us but also pose risks and challenges, including those discussed below and in the section of this Annual Report titled "Risk Factors."

We regularly evaluate several metrics, including the metrics presented in the table below, to measure our performance, identify trends affecting our business, prepare financial projections, make strategic decisions and establish performance goals for compensation and we periodically review and revise these metrics to reflect changes in our business.

		2025				2024
Bookings for the year ended August 31		$	4,379,609			$	593,999
Data revenue for the year ended August 31			2,212,601				2,059,174
Gross profit for the year ended August 31			1,428,369				(1,184	)

Bookings are defined as a contracted future platform license in contracted dollars.

Customer Concentration

During the year ended August 31, 2025, three customers accounted for 29%, 15% and 11% of consolidated revenue. As of August 31, 2025, these three customers accounted for 61% of consolidated accounts receivable, net.

During the year ended August 31, 2024, one customer accounted for 22% of consolidated revenue. As of August 31, 2024, three customers, inclusive of the customer with the revenue concentration, accounted for 54% of consolidated accounts receivable, net.

Continued Investment and Innovation

We continue to invest in our platform by working to develop innovative solutions to address our customers' needs and focus on our customers identifying the most impactful areas for advancement. We believe this process has contributed significantly to our increases in bookings and customer growth. We believe that continued investments in our products are important to our future growth and, as a result, we expect our software development costs to continue to increase, which may adversely affect our near-term liquidity.

Macroeconomic Conditions and Other World Events

General economic and political conditions such as recessions, interest rates, fuel prices, inflation, foreign currency fluctuations, international tariffs, social, political and economic risks and acts of war or terrorism (including, for example, the ongoing military conflicts in Israel and in Ukraine and the economic sanctions related thereto), have added uncertainty in timing of customer orders.

See "Risk Factors - Risks Related to Our Business and Industry-Our business is subject to the risk of catastrophic events such as pandemics, hurricanes, wildfires, tornadoes, earthquakes, extreme weather events, flooding, droughts and power outages, and to business and operational interruption by man-made problems such as war, conflicts and terrorism" and "We may be adversely affected by the effects of inflation."

Components of Results of Operations

Revenue

Revenues arise primarily from the Company's proprietary AI-driven technology platform, which is named VisitIQ, via subscription fees and volume-based utilization fees.

We also offer media activation services to our customers and this service consists of the fees charged for the Company's management of media campaigns for customers, and the activation of the data to the related media campaign.

Cost of Sales

Our cost of sales is largely related to the costs of our customer data that drives our technology platform, the hosting fees for that data and our platform, and other costs related to maintaining our platform and its responsiveness.

Legal and Professional Fees

Legal and professional fees relate mainly to fees paid to our lawyers in connection with various financing agreements our other capital structure-related items, in addition to fees paid to our auditors and tax accountants.

Personnel Expenses

Personnel expenses consist primarily of salaries and related personnel costs for individuals working on our team.

General and Administrative Expenses

General and administrative expenses consist primarily of our insurance expense, non-capitalized software costs, general corporate costs, and rent.

Selling and Marketing Expenses

Sales and marketing expenses consist primarily of costs related to advertising, marketing promotions, and travel costs.

Depreciation and Amortization Expenses

Depreciation and amortization expenses primarily relate to the amortization of our capitalized software development costs, which are expensed over a period of 3 years.

Credit Loss Expenses

Credit loss expenses relate to the expense incurred when accounts receivable are considered to be uncollectable.

Stock-Based Compensation Expenses

Stock-based compensation expenses relate primarily to the Company's majority stockholder entering into a consulting agreement with the Company. As payment under this consulting agreement, the stockholder was allowed to convert 42,814,596 shares of their Series B Convertible Preferred Stock into 57,086,261 shares of Series C Convertible Preferred Stock. The Company determined the fair value of the Series C Convertible Preferred Stock received as consideration under the consulting agreement was approximately $2,528,000 greater than the fair value of the Series B Convertible Preferred Stock at the conversion date and recorded this excess amount as Stock-based compensation expense in the consolidated statements of operations. Additionally, the Company incurred approximately $419,000 in stock-based compensation expense for stock option awards granted to employees, contractors, Directors and Board advisors.

Impairment Losses on Equity Investments

Impairment losses in the year ended August 31, 2024 were related to an investment the Company had in an entity where the Company determined that there was a partial impairment and reduced the recorded amount by $16,000.

Loss on Disposition of Software Assets

During the year ended August 31, 2024, the Company recorded a loss of approximately $377,000 related to the disposition of capitalized software that was no longer being used by the Company.

Interest Expense

Interest expense primarily consists of interest incurred and amortization of original issue discount under our outstanding convertible debt agreements.

Interest income

Interest income of approximately $19,000 was recorded during the year ended August 31, 2024 related to interest received on a certain investment the Company had at that time.

Gain on Exchange of Convertible Notes Payable for Series B Convertible Preferred Stock

The Company recorded a gain on the exchange of a non-related party's convertible debt to Series B Convertible Preferred Stock, calculated as the difference between the carrying amount of this debt and accrued interest, in comparison to the estimated valuation of the Series B Convertible Preferred Stock received upon conversion.

Loss Recognized upon Dissolution of DrivenIQ

The Company recorded a loss on the dissolution of this entity in June 2025.

Income Taxes

The Company recorded income tax expense of $19,890 for the year ended August 31, 2025, which related to temporary differences. No provision for, or benefit from, income taxes was recorded for the year ended August 31, 2024. Due to the level of historical losses, we maintain a full valuation allowance on the deferred tax assets as of August 31, 2025 and 2024 against U.S. federal and state deferred tax assets as we have concluded as of August 31, 2025 and 2024 it is more likely than not that these deferred tax assets will not be realized.

Results of Operations

Comparison of the Years Ended August 31, 2025 and 2024:

The following table summarizes our historical results of operations and as a percentage of revenue for the periods presented:

		Years Ended August 31,
		2025								2024								Change				%
Data revenue			2,212,601				83.9	%		$	2,059,174				68.7	%		$	153,427				7.5	%
Media activation revenue			423,129				16.1	%			938,797				31.3	%			(515,668	)			-54.9	%
Total revenue			2,635,730				100.0	%			2,997,971				100.0	%			(362,241	)			-12.1	%
Data cost of sales			1,058,993				40.2	%			2,021,102				67.4	%			(962,109	)			-47.6	%
Media activation cost of sales			148,368				5.6	%			978,053				32.6	%			(829,686	)			-84.8	%
Total cost of sales			1,207,361				45.8	%			2,999,155				100.0	%			(1,791,794	)			-59.7	%
Gross profit (loss)			1,428,369				54.2	%			(1,184	)			0.0	%			1,429,554				54.2	%
Expenses
Legal and professional fees			417,010				15.8	%			1,493,084				49.8	%			(1,076,074	)			-72.1	%
Personnel expenses			3,119,626				118.4	%			3,938,737				131.4	%			(819,111	)			-20.8	%
General and administrative costs			540,366				20.5	%			670,723				22.4	%			(130,357	)			-19.4	%
Sales & marketing expenses			73,014				2.8	%			93,153				3.1	%			(20,139	)			-21.6	%
Depreciation and amortization expense			1,461,665				55.5	%			1,304,905				43.5	%			156,759				12.0	%
Credit losses expense			187,004				7.1	%			220,293				7.3	%			(33,289	)			-15.1	%
Stock-based compensation expense - primarily related party			2,947,578				111.8	%			-				0.0	%			2,947,578				N/A
Impairment losses on equity investments			-				0.0	%			16,000				0.5	%			(16,000	)			-100.0	%
Loss on disposition of software assets			-				0.0	%			377,111				12.6	%			(377,111	)			-100.0	%
Total operating expenses			8,746,262				331.8	%			8,114,006				270.6	%			632,256				7.8	%
Other income (expense)
Interest expense			(775,731	)			-29.4	%			(2,609,918	)			-87.1	%			1,834,187				-70.3	%
Interest income			-				0.0	%			18,774				0.6	%			(18,774	)			-100.0	%
Gain on exchange of convertible notes payable for preferred stock			442,638				16.8	%			-				0.0	%			442,638				N/A
Loss recognized upon dissolution of DrivenIQ			(481,717	)			-18.3	%			-				0.0	%			(481,717	)			N/A
Net loss before allowance for income taxes			(8,132,703	)			-308.6	%			(10,706,334	)			-357.1	%			2,573,631				-24.0	%
Income tax expense			19,890				0.8	%			-				0.0	%			19,890				N/A
Net loss			(8,152,593	)			-309.3	%			(10,706,334	)			-357.1	%		$	2,553,741				-23.9	%

Revenue

Total revenue for the years ended August 31, 2025 and 2024 was approximately $2,636,000 and $2,998,000, respectively. Total revenue for the year ended August 31, 2025 decreased by approximately $362,000, or 12.1%, from the year ended August 31, 2024, primarily driven by a decrease in media activation revenue as the Company has been focused on growing its subscription base for the data revenue line.

Cost of Revenue

The following table presents the Cost of Sales disaggregated by service type, as well as the percentage of total cost of revenue.

		Years Ended August 31,
		2025								2024								Change				%
Data cost of sales		$	1,058,993				87.7	%		$	2,021,102				67.4	%		$	(962,109	)			-47.6	%
Media activation cost of sales			148,368				12.3	%			978,053				32.6	%			(829,686	)			-84.8	%
Total cost of sales		$	1,207,361				100.0	%		$	2,999,155				100.0	%		$	(1,791,794	)			-59.7	%

Total cost of sales for the years ended August 31, 2025 and 2024 was approximately $1,207,000 and $2,999,000, respectively, a decrease of approximately $1,792,000, or 59.7%.

We continue to focus on controlling our data and hosting costs as our data customers and revenue increase by working with our vendors to secure longer-term agreements.

Gross Profit (Loss)

Total gross profit (loss) was approximately $1,428,000 and $(1,000) for the years ended August 31, 2025 and 2024, respectively. As a percentage of revenue, the gross margin was 54.2% and (0.0)% for the years ended August 31, 2025 and 2024, respectively. The higher gross profit for the year ended August 31, 2025 was primarily attributable to a focused effort on reducing cost of sales and creating a cost structure that was more fixed in nature as revenue increased.

Our gross profit is primarily influenced by the costs associated with the acquisition of the consumer data that fuels our technology platform, as well as the average selling price of our platform.

Legal and Professional Fees

Legal and professional fees were approximately $417,000 and $1,493,000 for the years ended August 31, 2025 and 2024, respectively. During the year ended August 31, 2025, there was a decrease of $1,076,000 in legal and professional fees as a result of lower fees related to debt issuance as well as lower legal costs related to personnel termination events.

Personnel Expenses

Personnel expenses were approximately $3,120,000 and $3,939,000 for the years ended August 31, 2025 and 2024, respectively. During the year ended August 31, 2025, there was a decrease of $819,000 in personnel expenses primarily due to a reduction in the number of individuals at the Company and a reduction in severance costs from the year ended August 31, 2024.

General and Administrative Expenses

General and administrative expenses were approximately $540,000 and $671,000 for the years ended August 31, 2025 and 2024, respectively. During the year ended August 31, 2025, there was a decrease of $131,000 in general and administrative expenses due to a focused effort on reducing expenses in non-core business areas.

Selling and Marketing Expenses

Our sales and marketing efforts were consistent for the years ended August 31, 2025 and 2024, so sales and marketing expenses were approximately $73,000 and $93,000 for the years ended August 31, 2025 and 2024, respectively.

Depreciation and Amortization Expenses

Depreciation and amortization expenses were approximately $1,462,000 and $1,305,000 for the years ended August 31, 2025 and 2024, respectively. The increase in depreciation and amortization costs for the year ended August 31, 2025 was due to higher software development costs and the amortization of these costs.

Credit Loss Expenses

Credit loss expenses were approximately $187,000 and $220,000 for the years ended August 31, 2025 and 2024, respectively. The decrease was due to improved contract governance and collections processes.

Stock-Based Compensation Expenses

There was no stock-based compensation plan prior to fiscal year 2025. Stock-based compensation expenses were approximately $2,948,000 and $0 for the years ended August 31, 2025 and 2024, respectively. Approximately $2,528,000 of this expense during the year ended August 31, 2025 was related to a consulting agreement with the Company's largest stockholder, as described in the section above and the notes to the audited consolidated financial statements included elsewhere in this Annual Report. Approximately $419,000 of this expense was related to stock-based compensation expense for stock option awards granted to employees, contractors, Directors and Board advisors, under the Incentive Plan, the details of which are described in the notes to the audited consolidated financial statements included elsewhere in this Annual Report, as well as in Part III of this filing.

Impairment Losses on Equity Investments

Impairment losses in the year ended August 31, 2024 were related to an investment the Company had in an entity where the Company determined that there was a partial impairment and reduced the recorded amount by $16,000.

Loss on Disposition of Software Assets

During the year ended August 31, 2024, the Company recorded a loss of approximately $377,000 related to the disposition of capitalized software that was no longer being used by the Company.

Interest Expense

Interest expense was approximately $776,000 and $2,607,000 for the years ended August 31, 2025 and 2024, respectively. The decrease in interest expense between years is related to the decrease in the outstanding convertible note agreements to which this interest expense relates.

Interest income

Interest income of approximately $19,000 was recorded during the year ended August 31, 2024 related to interest received on certain investment the Company had at that time.

Gain on Exchange of Convertible Notes Payable for Series B Convertible Preferred Stock

The Company recorded a gain on the conversion of a non-related party's exchange of their convertible debt to Series B Convertible Preferred Stock in the amount of approximately $443,000, calculated as the difference between the carrying amount of this debt and accrued interest, in comparison to the estimated valuation of the Series B Convertible Preferred Stock received upon conversion.

Loss Recognized upon Dissolution of DrivenIQ

The Company recorded a loss on the dissolution of this entity of approximately $482,000.

Income Taxes

The Company recorded income tax expense of $19,890 for the year ended August 31, 2025, which related to temporary differences. No provision for, or benefit from, income taxes was recorded for the year ended August 31, 2024. We will continue to review our conclusions about the appropriate amount of the valuation allowance on a quarterly basis. If we were to generate profits in our fiscal 2026 and beyond, the U.S. valuation allowance position could be reversed in the foreseeable future. We expect a benefit to be recorded in the period the valuation allowance reversal is recorded and a higher effective tax rate in periods following the valuation allowance reversal.

Liquidity and Capital Resources

As of August 31, 2025 and 2024, we had approximately $108,000 and $386,000 in cash, respectively, and negative cash flows from operations of approximately $2,620,000 and $4,684,000 for the years ended August 31, 2025 and 2024, respectively. Our business requires cash for operating activities, including salaries and wages paid to our employees, consumer data acquisition costs, general and administrative expenses, and others.

We expect that we will need to engage in additional financings to fund our operations and satisfy our obligations in the near-term as well as to respond to business challenges and opportunities, including the need to provide working capital, develop new features and enhance our products. We may also seek to raise additional capital, including from offerings of our equity or debt securities, on an opportunistic basis when we believe there are suitable opportunities for doing so. Arena has committed to providing additional funding through December 29, 2026. Without such additional funding, we may not be able to continue operations.

More generally, our ability to meet our cash requirements depends on, among other things, our operating performance, competitive and industry developments, and financial market conditions, all of which are significantly affected by business, financial, economic, political, and other factors, many of which we may not be able to control or influence. To the extent that our actual operating results or other developments differ from our expectations, our liquidity could be adversely affected.

April 2025 Convertible Notes

On April 17, 2025, the Company, along with its wholly-owned subsidiary, VisitIQ, LLC, entered into a note purchase agreement (the "April Note Purchase Agreement") with Arena, pursuant to which, the Company may issue senior secured convertible promissory notes in the aggregate principal amount of $2,222,222 for a purchase price of $2,000,000 to affiliates of Arena (the "April 2025 Convertible Notes").

In connection with the April Note Purchase Agreement, VisitIQ Corp. has issued April Convertible Notes in the aggregate principal amount of $2,222,222 for a purchase price of $2,000,000 to affiliates of Arena. The April 2025 Convertible Notes were issued by the Company to the affiliates of Arena on April 17, 2025 and bear interest at 12.0% per annum. The April 2025 Convertible Notes mature on April 17, 2026 and are secured by a Security Agreement, dated as of October 24, 2024, as amended by that certain first amendment thereto, dated as of April 17, 2025, made by the affiliates of Arena, the Company and VisitIQ, LLC (the "Security Agreement"). The April 2025 Convertible Notes are convertible into shares of Series C Convertible Preferred Stock at the option of the holder, subject to certain conditions, and, in any case, on the Maturity Date or upon liquidation of the Company.

November 2025 Convertible Notes

On November 10, 2025, the Company, along with its wholly-owned subsidiary, VisitIQ, LLC, entered into a note purchase agreement (the "November Note Purchase Agreement") with Arena, pursuant to which, the Company may issue senior secured convertible promissory notes up to the aggregate principal amount of $1,944,444 for a purchase price of $1,750,000 to affiliates of Arena (the "November 2025 Convertible Notes").

In connection with the November Note Purchase Agreement, the Company has issued November 2025 Convertible Notes in aggregate principal amount of $1,944,444 for a purchase price of $1,750,000 to affiliates of Arena. The November 2025 Convertible Notes were issued by the Company to the affiliates of Arena in multiple closings on November 10, 2025, November 26, 2025, December 23, 2025, January 8, 2026, February 3, 2026 and March 9, 2026. Each of the November 2025 Convertible Notes bear interest at 12.0% per annum. The November 2025 Convertible Notes mature one year from the date of issuance and are secured by the collateral set forth in the Security Agreement. The November 2025 Convertible Notes are convertible into shares of Series C Convertible Preferred Stock at the option of the holder, subject to certain conditions, and, in any case, on the Maturity Date or upon liquidation of the Company.

March 2026 Financing

In March 2026, the Company, VisitIQ, LLC and Vernon Hanzlik, as a key person of the Company, entered into the Revenue Loan and Security Agreement relating to a secured financing of $2,200,000, with $1,000,000 being advanced to the Company upon execution of the Revenue Loan and Security Agreement and one or more addition advances available for the remainder of the Revenue Loan Amount available to the Company upon request, provided that the Company has satisfied all conditions with respect to such advance.

The Revenue Loan and Security Agreement requires monthly payments of Fixed Payment Amounts (as set forth in the Revenue Loan and Security Agreement) with all outstanding advances and the Interest (as defined in the Revenue Loan and Security Agreement) being due at maturity on March 26, 2030 (unless accelerated upon a change of control or the occurrence of other events of default). Interest does not accrue on advance(s) pursuant to the Loan Agreement, rather a minimum amount of Interest (as defined in the Loan Agreement) is due pursuant to the terms of the Loan Agreement. The Revenue Loan and Security Agreement further provides for the payment of fees by the Borrower and includes customary representations and warranties, indemnification provisions, covenants and events of default. Subject in some cases to cure periods, amounts outstanding and otherwise due under the Revenue Loan and Security Agreement may be accelerated for typical defaults including, but not limited to, the failure to make when due payments, the failure to perform any covenant, the inaccuracy of representations and warranties, and the occurrence of debtor-relief proceedings.

In connection with the Revenue Loan and Security Agreement, the Company, VisitIQ, LLC, Decathlon and Arena also entered into the Subordination Agreement, pursuant to which Arena subordinated all security interests or liens that Arena may have in the property of the Company or VisitIQ, LLC to Decathlon.

Cash Flow Summary

The following table summarizes our cash flows for the years ended August 31, 2025 and 2024:

		Years Ended August 31,
		2025				2024				Change
Net cash used in operating activities		$	(2,619,662	)		$	(4,684,082	)		$	2,064,420
Net cash used in investing activities			(662,638	)			(1,103,813	)			441,175
Net cash provided by financing activities			3,003,859				5,324,453				(2,320,595	)

Operating Activities

Net cash used in operating activities for the year ended August 31, 2025 was approximately $2,620,000; consisting primarily of a net loss of $8,153,000, offset by cash provided from net operating assets of approximately $695,000 and net non-cash charges of approximately $4,838,000. The cash provided from operating assets was primarily comprised of increased accrued interest of approximately $461,000 and accounts payable and accrued liabilities of approximately $376,000, partially offset by a decrease in deferred revenue and accounts receivable of approximately $76,000 and $73,000, respectively. The noncash charges primarily consisted of stock-based compensation expense of approximately $2,948,000, depreciation and amortization of approximately $1,462,000, loss on dissolution of DrivenIQ of $482,000, and amortization of debt discount of $315,000, partially offset by a gain recognized on debt exchange for preferred stock of $443,000.

Net cash used in operating activities for the year ended August 31, 2024 was approximately $4,684,000; consisting primarily of a net loss of $10,706,000, offset by cash provided from net operating assets of $2,657,000, and non-cash charges of $3,365,000. The cash provided from operating assets was primarily comprised of increased accrued interest of $1,263,000, accounts payable and accrued liabilities of $969,000, and deferred revenue of $109,000 and a decrease in accounts receivable of $309,000. The noncash charges primarily consisted of amortization of debt discount of $1,317,000, depreciation and amortization of $1,305,000, loss on disposition of a software asset of $377,000, and settlement of a lease liability with an equity method investment of $256,000.

We expect our cash used in operating activities to increase, driven by reduction in net losses.

Investing Activities

Net cash used in investing activities during the year ended August 31, 2025 was $663,000, consisting of $1,288,000 of capitalized software development costs, partially offset by payments received on a note receivable of $625,000.

Net cash used in investing activities during the year ended August 31, 2024 was $1,104,000, consisting of $1,073,000 of capitalized software development costs and issuance of notes receivable of $31,000.

We expect our capital expenditures to increase in 2026 compared to 2025 as we continue to advance our technology platform with our external development partner.

Financing Activities

Net cash provided by financing activities during the year ended August 31, 2025 was $3,004,000, consisting of issuance of convertible notes payable of $3,200,000, partially offset by $112,000 of payments on other notes payable and $84,000 of payments on insurance financing arrangements.

Net cash provided by financing activities during the year ended August 31, 2024 was $5,324,000, consisting of issuance of convertible notes payable with common stock warrants.

We expect cash provided by financing activities to increase by issuing new equity or incurring new debt to continue and expand operations. Our future cash requirements and the adequacy of available funds will depend on many factors, including our operating performance, competitive and industry developments, and financial market conditions.

Off-Balance Sheet Arrangements

As of August 31, 2025 and 2024, we did not have any off-balance sheet arrangements.

Contractual Obligations

None.

Recent Accounting Pronouncements

For a description of recent accounting pronouncements, including the expected dates of adoption and estimated effects, if any, on our consolidated financial statements, see Note 3, Summary of Significant Accounting Policies, in the notes to the audited consolidated financial statements in this Annual Report.

Implications of Being a Smaller Reporting Company

We are a "smaller reporting company" as defined in Item 10(f)(1) of Regulation S-K. Smaller reporting companies may take advantage of certain reduced disclosure obligations, including, among other things, providing only two years of audited consolidated financial statements.

We will remain a smaller reporting company and may take advantage of certain scaled disclosures available to smaller reporting companies until the last day of the fiscal year in which (a) the market value of our voting and nonvoting common stock held by non-affiliates equals or exceeds $250.0 million measured on the last business day of that year's second fiscal quarter and (b) our annual revenue equals or exceeds $100.0 million during the most recently completed fiscal year or our voting and nonvoting common stock held by non-affiliates equals or exceeds $700.0 million measured on the last business day of that year's second fiscal quarter.

Critical Accounting Policies and Significant Estimates

Our discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with GAAP. We evaluated the development and selection of our critical accounting policies and estimates and believe that the following involve a higher degree of judgement or complexity and are most significant to reporting our results of operations and financial position and are therefore discussed as critical. The following critical accounting policies reflect the most significant estimates and judgements used in the preparation of our consolidated financial statements. Actual results could differ materially from those estimates and assumptions, and those differences could be material to our consolidated financial statements. We re-evaluate our estimates on an ongoing basis. For information on our significant accounting policies, refer to Note 3, Summary of Significant Accounting Policies, included in the notes to the consolidated financial statements in this Annual Report.

Revenue Recognition

Revenues arise primarily from the Company's proprietary AI-driven technology platform, which is named VisitIQ, via subscription fees, volume-based utilization fees, and fees for media activation services designed to maximize the customers' use of its proprietary technology platform. Revenues are recognized when control of these services is transferred to the customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those services.

The Company determines revenue recognition through the following steps:

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Identification of the contract, or contracts, with a customer.

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Identification of the performance obligations in the contract.

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Determination of the transaction price.

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Allocation of the transaction price to the performance obligations in the contract.

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Recognition of revenue when performance obligations have been satisfied.

At contract inception, the Company assesses the services promised in the contracts with customers and identifies a performance obligation for each promise to transfer to the customer a service (or bundle of services) that is distinct. To identify the performance obligations, the Company considers all the services promised in the contract regardless of whether they are explicitly stated or are implied by customary business practices.

The transaction price is the amount of consideration that the Company is entitled to in exchange for transferring services to a customer. Further, for the contracts having multiple performance obligations, the total transaction price for a contract is allocated amongst the various performance obligations based on their relative stand-alone selling prices. The relative standalone selling price ("SSP") is determined based on the terms of the contract and requires judgment. The transaction price for a contract excludes any amounts collected on behalf of third parties, in cases where the Company acts as an agent. Payment terms are typically 30 days. As such, the Company does not have any significant financing components.

When the Company enters into multiple contracts with a single counterparty, the Company will combine contracts and account for them as a single contract when one or more of the following criteria are met: (i) the contracts are negotiated with a single commercial objective, (ii) consideration to be paid in one contract depends on the terms of the other contract, and (iii) services promised are a single performance obligation.

Data revenue relates to fees paid for use of the Company's proprietary platform and includes subscription-based and usage-based service offerings. Subscriptions are recognized as revenue ratably during the period that the customer has access to use the Company's platform. Fees charged to customers based on usage of the Company's platform are based on per-record charges and are recognized as revenue over time based on actual usage in the period. The Company's standard contract periods are for one year and are non-cancellable.

Media activation revenue relates to the fees charged for the Company's management of media campaigns for customers, and the activation of the data to the related media campaign and are recognized at the point of delivery of the related performance obligation. The Company's standard contract periods are for one year and are non-cancellable.

When customers pay fees in advance of the specified period of use of the platform, those fees paid in advance are recorded as deferred revenue in the Company's consolidated balance sheets and recognized as revenue when the performance obligation is satisfied.

Sales and other taxes collected from customers that are remitted to governmental authorities are excluded from revenue.

Stock-Based Compensation

The Company compensates certain key employees, contractors, Directors and Board advisors through incentive stock options (the "Option Awards"). Grants of Option Awards are measured at the grant-date fair value of the award. The Company estimates the grant-date fair value using the Black-Scholes-Merton option-pricing model. Option Awards have only time-based vesting criteria. The Company recognizes compensation expense for these Option Awards in the consolidated statements of operations over the vesting period.

Fair Value Measurements

The Company's accounting for fair value measurements of assets and liabilities that are recognized or disclosed at fair value in the consolidated financial statements on a recurring or nonrecurring basis adheres to the FASB fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to measurements involving significant unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy are as follows:

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Level 1 is defined as observable inputs such as quoted prices in active markets for identical assets;

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Level 2 is defined as observable inputs other than Level 1 prices such as quoted prices for similar assets; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities; and

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Level 3 is defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions.

The level in the fair value hierarchy within which a fair measurement in its entirety falls is based on the lowest level input that is significant to the fair value measurement in its entirety. The carrying amounts of cash, accounts receivable, accounts payable, accrued expenses, and other financial working capital items approximate their fair value at August 31, 2025 and 2024, due to the short maturity nature of these items.

Basis of Presentation of Financial Information

The consolidated financial statements have been prepared assuming that the Company will continue as a going concern which contemplates continuation of operations, realization of assets and payment of liabilities in the ordinary course of business. As shown in the accompanying consolidated financial statements, the Company has incurred a net loss of approximately $8,153,000 and negative cash flows from operations of approximately $2,620,000 for the year ended August 31, 2025. In addition, the Company has negative working capital of approximately $3,749,000 as of August 31, 2025. The Company's ability to continue as a going concern is dependent on meeting various obligations as they become due with cash generated from operations and/or through raising capital and ultimately achieving sustained profitable operations. In November 2025, the Company signed a convertible note payable agreement with its majority stockholder in the total amount of approximately $1,950,000.

During its fiscal year ending August 31, 2026, management is operating to a plan that includes an increase in bookings, revenue and gross margin sufficient to allow the Company to fund operations. Management believes the Company will be able to continue to operate in its present form as a result of the additional investments received from investors and the increased gross profit and cash flows from operations. However, no assurance can be given that management's actions will result in sustained profitable operations. If management is not successful with its plan, anticipated hires can be delayed and other planned expenses can be removed from its plan to a level necessary to maintain positive cash flow. If management is not successful with its plans, there is a possibility that the Company may need to secure additional funding from its majority stockholder or other investors. The Company's majority stockholder has represented in writing that it has the intent and ability to provide additional funding if necessary to allow the Company to continue normal business operations for at least twelve months from the date of issuance of these consolidated financial statements.