Quarterly Report for Quarter Ending May 31, 2025 (Form 10-Q)

MANAGEMENT' DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

FORWARD LOOKING STATEMENT NOTICE

Statements made in this Form 10-Q that are not historical or current facts are "forward-looking statements" made pursuant to the safe harbor provisions of Section 27A of the Securities Act of 1933 (the "Act") and Section 21E of the Securities Exchange Act of 1934. These statements often can be identified by the use of terms such as "may," "will," "expect," "believe," "anticipate," "estimate," "approximate" or "continue," or the negative thereof. We intend that such forward-looking statements be subject to the safe harbors for such statements. We wish to caution readers not to place undue reliance on any such forward-looking statements, which speak only as of the date made. Any forward-looking statements represent management's best judgment as to what may occur in the future. However, forward-looking statements are subject to risks, uncertainties and important factors beyond our control that could cause actual results and events to differ materially from historical results of operations and events and those presently anticipated or projected. We disclaim any obligation subsequently to revise any forward-looking statements to reflect events or circumstances after the date of such statement or to reflect the occurrence of anticipated or unanticipated events.

Financial information contained in this quarterly report and in our unaudited interim financial statements is stated in United States dollars and are prepared in accordance with United States generally accepted accounting principles.

IN GENERAL

E-Smart Corp.("Company") was incorporated on June 06, 2023 under the laws of Nevada. We are a Nevada-incorporated Company focused on creating a platform that facilitates interaction between tattoo artists and enthusiasts. Our product serves as a combined professional profile and artistic showcase for tattoo artists, enabling them to present their expertise and history in an aesthetically pleasing format. This platform simplifies the process for employers to identify and locate skilled artists within their vicinity. Moreover, our service offers users the capability to generate preliminary tattoo sketches through an AI-driven tattoo design tool.

E-Smart is a dynamic and forward-thinking digital platform that connects tattoo artists and clients seamlessly. By leveraging advanced technologies, offering comprehensive services, and prioritizing user convenience, we provide an unparalleled experience for all stakeholders in the tattoo industry.

INITIAL FOCUS OF OUR BUSINESS

We are an emerging growth company, as defined in the Jumpstart Our Business Startups Act of 2012, as amended, and therefore we intend to take advantage of certain exemptions from various public Company reporting requirements, including not being required to have our internal control over financial reporting audited by our independent registered public accounting firm pursuant to Section 404(b) of the Sarbanes-Oxley Act of 2002, reduced disclosure obligations regarding executive compensation in this prospectus, our periodic reports and our proxy statements and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and any golden parachute payments not previously approved. We will remain an emerging growth company until the earliest of (i) the last day of the fiscal year in which the market value of our Common Stock that is held by non-affiliates equals or exceeds $700 million as of the end of that year's second fiscal quarter, (ii) the last day of the fiscal year in which we have total annual gross revenue of $1.235 billion or more during such fiscal year (as indexed for inflation), (iii) the date on which we have issued more than $1.00 billion in non-convertible debt in the prior three-year period.

We are not a "shell Company" within the meaning of Rule 405, promulgated pursuant to the Securities Act, because we have developed business plan and real business operations.

MONETIZATION STRATEGY

Our monetization strategy includes offering an API - AI textual tattoo idea generator, enabling businesses and developers to leverage our technology to enhance their own products and services.

Businesses and developers can integrate this technology into their products and services by subscribing to the API. This API is provided on a subscription basis, offering different tiers such as a 14-day pass and a 30-day pass. To obtain an AI key for API access, users can choose a pricing plan on our website and initiate contact by using the designated button, submitting their request. Additionally, we are exploring other revenue avenues, including premium features, and strategic partnerships with tattoo-related businesses.

Exploring collaborations with tattoo supply companies, tattoo equipment manufacturers, and other industry partners is essential for long-term growth and revenue diversification.

Continuous assessment of market trends and customer feedback will guide us in refining and expanding the functionality of our platform to unlock additional monetization opportunities.

PROMOTION AND MARKETING

We have budgeted funds to promote our platform to attract a diverse user base, including tattoo artists and clients. Our comprehensive advertising campaign aims to increase platform visibility and drive user acquisition. To effectively reach our target audience, we will leverage social media marketing, online advertising channels, and strategic partnerships with industry influencers. We plan to develop compelling promotional materials, including videos, to showcase the platform's features and benefits, generating excitement and engagement. Depending on the availability of funds, we may engage with promotional firms to accelerate our marketing efforts. Consideration will be given to investing in a year-long subscription for Google Adwords, providing a quality SEO campaign to improve our search engine visibility.

RESEARCH AND DEVELOPMENT EXPENDITURES

We have not incurred any research expenditures since our incorporation.

BANKRUPTCY OR SIMILAR PROCEEDINGS

There has been no bankruptcy, receivership or similar proceeding.

COMPLIANCE WITH GOVERNMENT REGULATION

We will be required to comply with all regulations, rules and directives of governmental authorities and agencies applicable to the construction and operation of any facility in any jurisdiction which we would conduct activities.

We do not believe that any existing or probable government regulation on our business, including any applicable export or import regulation or control imposed by China will have a material impact on the way we conduct our business.

PATENTS, TRADEMARKS AND COPYRIGHTS

We do not own, either legally or beneficially, any patents or trademarks. We intend to protect our website (https://e-smart.io/) with copyright laws. Beyond our trade name, we do not hold any other intellectual property.

SIGNIFICANT EMPLOYEES

We do not currently have any significant employees aside from Ms. Vasylenko.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

RESULTS OF OPERATIONS

Results of Operations for the three months ended May 31, 2025 as compared to the three months ended May 31, 2024

Revenue

For the three months ended May 31, 2025, the Company generated total revenue of $9,756 from selling services to its customers.

For the three months ended May 31, 2024, the Company generated total revenue of $4,006 from selling services to its customers.

Operating expenses

Total operating expenses for the three months ended May 31, 2025 ware $41,582. The operating expenses included bank service charges ($17), Amortization Expense ($8,690), Legal & Professional Fees ($846), Legal & Professional Services ($22,957), Postage and Delivery ($44), Exchange Gain or Loss ($178), Server leasing expense ($5,100) and Marketing services ($3,750).

Total operating expenses for the three months ended May 31, 2024 were $11,675. The operating expenses included Amortization Expense ($8,250), Legal & Professional Fees ($3,226), Legal & Professional Services ($159), Postage and Delivery ($40).

Net Loss

The net loss for the three months ended May 31, 2025 was $34,423.

The net loss for the three months ended May 31, 2024 was $7,668.

Results of Operations for the nine months ended May 31, 2025 as compared to the nine months ended May 31, 2024

Revenue

For the nine months ended May 31, 2025, the Company generated total revenue of $20,059 from selling services to its customers.

For the six months ended May 31, 2024, the Company generated total revenue of $6,906 from selling services to its customers.

Operating expenses

Total operating expenses for the nine months ended May 31, 2025 ware $84,770. The operating expenses included bank service charges ($104), Amortization Expense ($26,070), Legal & Professional Fees ($3,993), Legal & Professional Services ($38,287), Business Licenses and Permits ($220), Postage and Delivery ($137), Exchange Gain or Loss ($309), Server leasing expense ($11,900) and Marketing services ($3,750).

Total operating expenses for the nine months ended May 31, 2024 were $33,864. The operating expenses included Amortization Expense ($16,608), Business Licenses and Permits ($236), Legal & Professional Fees ($16,600), Legal & Professional Services ($280), Postage and Delivery ($140).

Net Loss

The net loss for the nine months ended May 31, 2025 was $71,952.

The net loss for the nine months ended May 31, 2024 was $26,929.

LIQUIDITY AND CAPITAL RESOURCES

Period ended May 31, 2025 compared to period ended August 31, 2024

As at May 31, 2025, our Assets were $149,101. Total Assets included Current Assets $26,229 and Intangible assets $122,872. As at May 31, 2025, our Liabilities were $215,377 and Equity was ($66,276).

As at August 31, 2024, our Assets were $149,488. Total Assets included Current Assets $546 and Intangible assets $148,942. As at August 31, 2024, our Liabilities were $180,297 and Equity was ($30,810).

CASH FLOWS FROM OPERATING ACTIVITIES

For the nine months ended May 31, 2025 net cash flows used in operating activities was $47,175.

For the nine months ended May 31, 2024 net cash flows used in operating activities was $11,514.

CASH FLOWS FROM INVESTING ACTIVITIES

We had no cash used in investing activities during the nine months ended May 31, 2025.

For the nine months ended May 31, 2024 we have generated $157,300 of cash used in investing activities.

CASH FLOWS FROM FINANCING ACTIVITIES

For the nine months ended May 31, 2025 net cash flows used in financing activities was $50,987.

For the nine months ended May 31, 2024 net cash flows used in financing activities was 168,594.

MANAGEMENT'S DISCUSSION AND ANALYSIS

You should read the following discussion and analysis of our financial condition and results of operations together with our consolidated financial statements and the related notes and other financial information. Some of the information contained in this discussion and analysis, including information with respect to our plans and strategy for our business and related financing.

We qualify as an "emerging growth company" under the JOBS Act. As a result, we are permitted to, and intend to, rely on exemptions from certain disclosure requirements. For so long as we are an emerging growth company, we will not be required to:

- Have an auditor report on our internal controls over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act;

- Provide an auditor attestation with respect to management's report on the effectiveness of our internal controls over financial reporting;

- Comply with any requirement that may be adopted by the Public Company Accounting Oversight Board regarding mandatory audit firm rotation or a supplement to the auditor's report providing additional information about the audit and the financial statements (i.e., an auditor discussion and analysis);

- Submit certain executive compensation matters to shareholder advisory votes, such as "say-on-pay" and "say-on-frequency;" and

- Disclose certain executive compensation related items such as the correlation between executive compensation and performance comparisons of the CEO's compensation to median employee compensation.

In addition, Section 107 of the JOBS Act also provides that an emerging growth company can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. In other words, an emerging growth company can delay the adoption of certain accounting standards

until those standards would otherwise apply to private companies. We have elected to take advantage of the benefits of this extended transition period. Our financial statements may therefore not be comparable to those of companies that comply with such new or revised accounting standards.

We will remain an "emerging growth company" for up to five years, or until the earliest of (i) the last day of the first fiscal year in which our total annual gross revenues exceed $1 billion, (ii) the date that we become a "large accelerated filer" as defined in Rule 12b-2 under the Securities Exchange Act of 1934, which would occur if the market value of our ordinary shares that is held by non-affiliates exceeds $700 million as of the last business day of our most recently completed second fiscal quarter or (iii) the date on which we have issued more than $1 billion in non-convertible debt during the preceding three year period. However, even if we no longer qualify for the exemptions for an emerging growth company, we may still be, in certain circumstances, subject to scaled disclosure requirements as a smaller reporting company. For example, smaller reporting companies, like emerging growth companies, are not required to provide a compensation discussion and analysis under Item 402(b) of Regulation S-K or the auditor attestation of internal controls over financial reporting.

We believe that we will be able to raise enough money through the offering to continue our proposed operations, but we cannot guarantee that once we continue operations we will stay in business after doing so. If we are unable to successfully find customers, we may quickly use up the proceeds from this offering and will need to find alternative sources.

OFF-BALANCE SHEET ARRANGEMENTS

We have no 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.

LIMITED OPERATING HISTORY; NEED FOR ADDITIONAL CAPITAL

There is no historical financial information about us upon which to base an evaluation of our performance. We are in start-up stage operations and have generated limited revenues. Our business is subject to risks inherent in the establishment of a new business enterprise, including limited capital resources and possible cost overruns due to price and cost increases in services and products.

We have no assurance that future financing will be available to us on acceptable terms. If financing is not available on satisfactory terms, we may be unable to continue, develop or expand our operations. Equity financing could result in additional dilution to existing shareholders.