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

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

Overview

SUN (the "Company") was incorporated in the State of Wyoming on September 5, 2024. The Company is focused on the development and production of immersive virtual reality experiences and related digital media content. In addition, the Company provides platform implementation and configuration, audiovisual production, advertising, promotional, and consulting services.

The Company is currently in the early stage of development and continues to build its operational infrastructure, develop intellectual property, and expand revenue-generating activities.

Results of Operations

Nine Months Ended July 31, 2026 Compared to Nine Months Ended July 31, 2025

Revenue

Revenue for the nine months ended July 31, 2026 was $69,537, compared to $57,833 for the nine months ended July 31, 2025.

Revenue during the current period was derived primarily from platform implementation and configuration services, audiovisual production services, advertising and promotional services, and other consulting activities.

The increase in revenue compared with the prior-year period was primarily attributable to the timing and composition of services performed during the current period.

Cost of Revenue

Cost of revenue for the nine months ended July 31, 2026 was $4,500, compared to $0 during the comparable prior-year period.

Cost of revenue during the current period consisted primarily of editing, post-production, and other direct production costs associated with audiovisual production services.

Gross Profit

Gross profit for the nine months ended July 31, 2026 was $65,037, compared to $57,833 during the comparable prior-year period.

The increase in gross profit was primarily attributable to higher revenue during the current period, partially offset by direct production costs.

Operating Expenses

Operating expenses for the nine months ended July 31, 2026 were $45,974, compared to $25,953 for the nine months ended July 31, 2025.

The increase in operating expenses was primarily attributable to higher general and administrative expenses, professional service expenses, and interest expense during the current period.

Operating expenses consisted primarily of:

General and administrative expenses of $31,276, compared to $13,203 during the prior-year period, reflecting higher operational, administrative, and compensation-related costs.

Advertising and marketing expenses of $1,090, compared to $7,500 during the prior-year period.

Professional services expenses of $5,733, compared to $0 during the prior-year period, primarily related to legal, accounting, compliance, and consulting services.

Other operating expenses were $7,875, compared to $5,250 during the prior-year period, and primarily reflected interest associated with the Company's long-term business loan.

Net Income (Loss)

The Company reported net income of $19,063 for the nine months ended July 31, 2026, compared to net income of $31,880 during the comparable prior-year period.

Although revenue and gross profit increased during the current period, net income decreased primarily as a result of higher general and administrative expenses, professional service expenses, and interest expense.

Three Months Ended July 31, 2026 Compared to Three Months Ended July 31, 2025

Revenue

Revenue for the three months ended July 31, 2026 was $53,386, compared to $3,333 for the three months ended July 31, 2025.

The increase was primarily attributable to $50,000 of revenue recognized from initial implementation and configuration services performed under a technology platform service agreement entered into during the current quarter. The agreement provides for additional milestone-based and ongoing service fees as the applicable performance obligations are satisfied.

Cost of Revenue and Gross Profit

There was no cost of revenue during either three-month period. Accordingly, gross profit was $53,386 for the three months ended July 31, 2026, compared to $3,333 during the comparable prior-year period.

Operating Expenses

Operating expenses for the three months ended July 31, 2026 were $22,128, compared to $7,486 for the three months ended July 31, 2025.

Operating expenses consisted primarily of:

General and administrative expenses of $16,583, compared to $4,861 during the prior-year quarter;

Professional services expenses of $2,920, compared to $0 during the prior-year quarter; and

Other operating expenses of $2,625 during both periods, consisting of interest expense associated with the Company's long-term business loan.

The increase in operating expenses was primarily attributable to higher general and administrative expenses and professional service expenses during the current quarter.

Net Income (Loss)

The Company reported net income of $31,258 for the three months ended July 31, 2026, compared to a net loss of $4,153 during the comparable prior-year quarter.

The improvement in results of operations was primarily attributable to higher revenue during the current quarter, partially offset by higher operating expenses.

Liquidity and Capital Resources

As of July 31, 2026, the Company had cash and cash equivalents of $63, compared to $8,856 as of October 31, 2025.

Net cash provided by operating activities for the nine months ended July 31, 2026 was $10,507. The Company's operating cash flows during the period reflected its results of operations, changes in working capital, and related-party advances.

During the nine months ended July 31, 2026, the Company received additional cash advances from related parties to support its operations and working capital requirements. As of July 31, 2026, no short-term related-party advances were outstanding, and long-term related-party advances totaled $38,886.

As of July 31, 2026, the Company had a $70,000 long-term business loan and $15,750 in accrued interest payable.

The Company also had $50,000 in accounts receivable as of July 31, 2026. The Company continues to operate with limited cash resources and relies on a combination of operating revenues, collection of outstanding receivables, related-party advances, and external financing to support ongoing operations.

During the nine months ended July 31, 2026, the Company received $700 in proceeds from the issuance of 70,000 shares of common stock pursuant to its registered offering and paid $20,000 in offering-related costs, which were reflected in financing activities. Following the conclusion of the applicable offering period, qualifying offering costs previously deferred were charged against additional paid-in capital.

Plan of Operations and Funding

Over the next twelve months, the Company intends to continue developing immersive virtual reality experiences and related digital media projects while expanding its revenue-generating activities, including platform implementation and configuration, audiovisual production, promotional, advertising, and consulting services.

In July 2026, the Company entered into a service agreement with Phoenix Theatre Company for the implementation, configuration, integration, and ongoing support of a technology platform. The agreement provides for aggregate consideration of up to $350,000, consisting of a $50,000 initial implementation fee, milestone-based fees totaling $75,000, and ongoing service fees totaling $225,000 over the term of the agreement. The Company recognized the $50,000 initial implementation fee as revenue during the current quarter. The remaining consideration is expected to be recognized in future periods as the applicable performance obligations are satisfied.

The Company plans to continue focusing on the development of proprietary immersive media projects, virtual reality content, and related digital media assets, while pursuing additional revenue-generating service engagements.

The Company also maintains strategic investments related to immersive media development projects, which management believes may support future business opportunities.

The Company expects that working capital requirements will continue as it develops operations, supports public company compliance obligations, and expands business activities.

Management expects that working capital requirements will be funded through a combination of operating revenues, collection of outstanding receivables, related-party advances, equity financings, and debt financing arrangements, if available.

There can be no assurance that outstanding receivables will be collected when expected or that additional financing will be available on acceptable terms, or at all. If adequate liquidity is not available, the Company may be required to reduce operational activities, delay development projects, or limit expansion initiatives.

Off-Balance Sheet Arrangements

As of the date of this Quarterly Report, the Company does not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future material effect on its financial condition, results of operations, liquidity, capital expenditures, or capital resources.

Going Concern

The independent auditor's report accompanying the Company's financial statements for the fiscal year ended October 31, 2025 included an explanatory paragraph expressing substantial doubt about the Company's ability to continue as a going concern.

Although the Company reported net income for the nine months ended July 31, 2026, the Company continues to have limited cash resources and relies on operating revenues, collection of outstanding receivables, related-party financing, and third-party financing to meet its working capital requirements.

The financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business.

Management intends to address liquidity needs through a combination of operating revenues, collection of outstanding receivables, related-party advances, and potential equity or debt financing arrangements. However, there can be no assurance that sufficient liquidity or additional financing will be available when required.