Sparta Commercial Services Revenue Surges 132% Amidst Reduced Net Loss

TL;DR

**SRCO's revenue exploded, but cash is draining fast, making it a high-risk bet despite the smaller loss.**

AI Summary

SPARTA COMMERCIAL SERVICES, INC. (SRCO) reported a significant increase in total revenue for the three months ended July 31, 2025, reaching $96,688, a 132.6% increase from $41,551 in the same period of 2024. This growth was primarily driven by merchant financing revenue, which surged from $2,145 in Q1 2024 to $52,590 in Q1 2025, and wellness products revenue, which increased by 123.8% to $11,330. Despite the revenue growth, the company's net loss decreased by 50.7% to $(474,391) from $(964,516) year-over-year, largely due to a substantial reduction in loss from changes in fair value of derivative liability, which fell from $378,292 to $36,686. Operating expenses remained relatively stable at $367,549 compared to $376,762 in the prior year. Cash and cash equivalents decreased significantly from $131,003 at April 30, 2025, to $45,332 at July 31, 2025, reflecting net cash used in operating activities of $(346,671). The company's total liabilities increased to $11,744,282 from $11,349,644, with current portion notes payable rising to $8,394,053.

Why It Matters

SRCO's substantial revenue growth, particularly in merchant financing and wellness products, signals potential for its diversified business model, which could attract investors looking for growth in niche markets. The significant reduction in net loss, driven by lower derivative liability losses, suggests improved financial management and reduced volatility, which is positive for investor confidence. However, the declining cash reserves and increasing total liabilities, especially current notes payable, indicate potential liquidity challenges that could impact future operations and competitive positioning against larger, more stable rivals. Employees and customers might see continued investment in the FinTech and Health & Wellness segments, but the overall financial health warrants close monitoring.

Risk Assessment

Risk Level: high — The company's cash and cash equivalents plummeted from $131,003 to $45,332 in three months, representing a 65.4% decrease. Concurrently, total current liabilities increased to $10,802,219, significantly outweighing total current assets of $841,246, indicating severe liquidity issues and a going concern risk. The accumulated deficit of $(69,401,313) further highlights long-standing financial instability.

Analyst Insight

Investors should exercise extreme caution and consider avoiding SRCO given its precarious liquidity position and substantial accumulated deficit. While revenue growth is positive, the rapid depletion of cash and high liabilities suggest significant operational and financial risks that could lead to further dilution or financial distress. Monitor future cash flow statements closely for any signs of improvement.

Financial Highlights

debt To Equity

N/A

revenue

$96,688

operating Margin

N/A

total Assets

N/A

total Debt

$11,744,282

net Income

$(474,391)

eps

N/A

gross Margin

N/A

cash Position

$45,332

revenue Growth

+132.6%

Revenue Breakdown

Key Numbers

• $96,688 — Total Revenue (Increased by 132.6% from $41,551 in Q1 2024)
• $52,590 — Merchant Financing Revenue (Increased from $2,145 in Q1 2024)
• $11,330 — Wellness Products Revenue (Increased by 123.8% from $5,062 in Q1 2024)
• $(474,391) — Net Loss (Decreased by 50.7% from $(964,516) in Q1 2024)
• $36,686 — Loss in changes in fair value of derivative liability (Decreased from $378,292 in Q1 2024)
• $45,332 — Cash and cash equivalents (Decreased from $131,003 at April 30, 2025)
• $10,802,219 — Total Current Liabilities (Increased from $10,316,797 at April 30, 2025)
• $8,394,053 — Current portion notes payable (Increased from $7,973,762 at April 30, 2025)
• $(69,401,313) — Accumulated Deficit (Increased from $(68,918,984) at April 30, 2025)
• 42,444,506 — Shares of common stock issued and outstanding (As of September 19, 2025)

Key Players & Entities

• SPARTA COMMERCIAL SERVICES, INC. (company) — registrant
• Agoge Global USA, Inc. (company) — subsidiary for FinTech Services
• WeDev Group Ltda. (company) — joint venture partner for EZBroker360
• Patta Brazil (company) — client of Agoge Global USA, Inc.
• iMobile Solutions, Inc. (company) — subsidiary for E-Commerce & Mobile Technology
• New World Health Brands, Inc. (company) — subsidiary for Health and Wellness
• BMW Motorrad USA Police Motors (company) — preferred financing source
• CARFAX (company) — competitor in vehicle history reports
• AutoCheck (company) — competitor in vehicle history reports
• Securities and Exchange Commission (regulator) — filing oversight

FAQ

Risk Factors

• Liquidity and Going Concern [high — financial]: The company's cash and cash equivalents decreased significantly from $131,003 to $45,332 in the quarter, driven by net cash used in operating activities of $(346,671). This, coupled with an accumulated deficit of $(69,401,313), raises substantial doubt about the company's ability to continue as a going concern.
• Increasing Debt Load [high — financial]: Total liabilities increased to $11,744,282 from $11,349,644. Notably, the current portion of notes payable rose to $8,394,053, indicating a growing short-term debt obligation that could strain liquidity.
• Dependence on Key Revenue Drivers [medium — market]: The significant revenue growth of 132.6% is heavily reliant on merchant financing and wellness products. Any downturn in these specific segments could disproportionately impact overall revenue.
• FinTech Platform Development and Adoption [medium — operational]: The success of new ventures like Agoge Global USA, Inc. and its EZBroker360 platform depends on technological execution, market adoption, and regulatory compliance in cross-border trade finance, which can be complex.
• Fair Value of Derivative Liabilities [low — financial]: While the loss from changes in fair value of derivative liability decreased substantially from $378,292 to $36,686, this volatility can still impact net income and requires careful management.

Industry Context

Sparta Commercial Services operates across diverse sectors including FinTech, Financial Services, E-Commerce, and Health & Wellness. The FinTech and Financial Services segments, particularly merchant financing and cross-border trade finance via blockchain, are in dynamic growth areas. The Health & Wellness sector is also experiencing sustained consumer interest. However, the company's historical roots in Powersports consumer finance, which it exited after the 2008 crisis, suggest a history of navigating challenging market conditions.

Regulatory Implications

The company's involvement in FinTech, especially cross-border trade finance using blockchain and stablecoins, may subject it to evolving financial regulations in multiple jurisdictions (e.g., US and Brazil). Compliance with anti-money laundering (AML), know-your-customer (KYC), and data privacy laws will be critical.

What Investors Should Do

1. Monitor cash burn and liquidity closely.
2. Analyze the sustainability of revenue growth drivers.
3. Evaluate the long-term viability of FinTech initiatives.
4. Assess the company's debt management strategy.

Key Dates

• 2025-07-31: End of Q1 2025 — Reported significant revenue growth of 132.6% and a reduced net loss, but also a sharp decline in cash reserves.
• 2025-04-30: End of Q4 2025 — Previous reporting period, showing higher cash and cash equivalents ($131,003) compared to the current period.
• 2024-07-31: End of Q1 2024 — Prior year comparable period, showing lower total revenue ($41,551) and a larger net loss ($(964,516)).

Glossary

Derivative Liability

A financial contract whose value is derived from an underlying asset, group of assets, or benchmark. A liability indicates an obligation to pay. (Changes in the fair value of these liabilities significantly impacted the company's net loss in the prior year and continue to be a factor, though less so in the current period.)

Accumulated Deficit

The cumulative net losses of a company since its inception, minus any net profits. It represents a negative retained earnings balance. (The company has a substantial accumulated deficit of $(69,401,313), highlighting its history of unprofitability and raising concerns about its long-term financial health.)

Cash and Cash Equivalents

Includes cash on hand, bank deposits, and short-term, highly liquid investments with original maturities of three months or less. (A significant decrease in this metric to $45,332 raises immediate concerns about the company's ability to meet its short-term obligations.)

Merchant Financing

Providing loans or credit facilities to businesses that accept credit card payments, often to help them manage cash flow or fund operations. (This segment was the primary driver of revenue growth, increasing from $2,145 to $52,590, indicating a successful expansion in this area.)

Stablecoins

A type of cryptocurrency designed to maintain a stable value relative to a specified asset, such as a fiat currency (e.g., USD) or a commodity. (Mentioned as a component of the EZBroker360 platform for cross-border trade finance, suggesting an integration of blockchain technology into financial services.)

Year-Over-Year Comparison

Compared to the prior year's comparable quarter, SPARTA COMMERCIAL SERVICES, INC. (SRCO) has achieved a substantial 132.6% increase in total revenue, driven primarily by its merchant financing and wellness products segments. This top-line growth has been accompanied by a significant reduction in net loss, largely due to a decrease in losses from derivative liabilities. However, operating expenses remained stable, and the company's cash position has deteriorated significantly, alongside an increase in total liabilities and current notes payable, indicating ongoing financial pressures despite revenue improvements.

Filing Documents

• form10-q.htm (10-Q) — 929KB
• ex31-1.htm (EX-31.1) — 11KB
• ex31-2.htm (EX-31.2) — 11KB
• ex32-1.htm (EX-32.1) — 6KB
• 0001493152-25-014341.txt ( ) — 4077KB
• srco-20250731.xsd (EX-101.SCH) — 30KB
• srco-20250731_cal.xml (EX-101.CAL) — 42KB
• srco-20250731_def.xml (EX-101.DEF) — 134KB
• srco-20250731_lab.xml (EX-101.LAB) — 240KB
• srco-20250731_pre.xml (EX-101.PRE) — 191KB
• form10-q_htm.xml (XML) — 525KB

Financial Statements (Unaudited)

Financial Statements (Unaudited) 3 Condensed Consolidated Balance Sheets as of July 31, 2025 (unaudited) and April 30, 2025 3 Condensed Consolidated Statements of Operations for the Three Months ended July 31, 2025, and 2024 (unaudited) 4 Condensed Consolidated Statement of Changes in Stockholders' Deficit for the Three Months ended July 31, 2025 (unaudited) 5 Condensed Consolidated Statements of Cash Flows for the Three Months ended July 31, 2025, and 2024 (unaudited) 6 Notes to Unaudited Condensed Consolidated Financial Statements 7 Item 2.

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

Management's Discussion and Analysis of Financial Condition and Results of Operations 17 Item 3.

Quantitative and Qualitative Disclosures About Market Risk

Quantitative and Qualitative Disclosures About Market Risk 25 Item 4.

Controls and Procedures

Controls and Procedures 25 PART II. OTHER INFORMATION 25 Item 1.

Legal Proceedings

Legal Proceedings 27 Item 1A.

Risk Factors

Risk Factors 27 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 28 Item 3. Defaults Upon Senior Securities 28 Item 5. Other Information 28 Item 6. Exhibits 28

Signatures

Signatures 29 2 PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS SPARTA COMMERCIAL SERVICES, INC. CONDENSED CONSOLIDATED BALANCE SHEETS AS OF JULY 31, 2025, AND APRIL 30, 2025 (Unaudited) July 31, April 30, 2025 2025 (Unaudited) * ASSETS Current Assets Cash and cash equivalents $ 45,332 $ 131,003 Accounts receivable 4,993 5,167 Inventory 4,607 4,607 Other current assets 786,314 606,802 Total Current Assets 841,246 747,579 Rent deposit 9,000 9,000 Total assets $ 850,246 $ 756,579 LIABILITIES AND STOCKHOLDERS' DEFICIT Liabilities: Current Liabilities Accounts payable and accrued expenses $ 1,362,297 $ 1,333,852 Short Term Loan 1,585 1,585 Current portion notes payable 8,394,053 7,973,762 Derivative liabilities 1,044,284 1,007,598 Total Current Liabilities 10,802,219 10,316,797 Long Term Liabilities Loans payable-related parties 639,748 636,233 Notes payable- net of current portion 302,315 396,614 Total Long Term Liabilities 942,063 1,032,847 Total liabilities 11,744,282 11,349,644 Stockholders' Deficit: Preferred stock A, $ 0.001 par value; 10,000,000 shares authorized of which 35,850 shares have been designated as Series A convertible preferred stock, with a stated value of $ 100 per share, 125 and 125 shares issued and outstanding as of July 31, 2025, and April 30, 2025, respectively 12,500 12,500 Preferred stock C, 4,200,000 shares have been designated as Series C redeemable, convertible preferred, $ 0.001 par value, with a liquidation and redemption value of $ 1 per share, 1,953,157 and 1,953,157 shares issued and outstanding as of July 31, 2025, and April 30, 2025, respectively 1,953 1,953 Preferred stock D, 2,000,000 shares have been designated as Series D redeemable, convertible preferred, $ 0.001 par value, with a liquidation and redemption value of $ 1.00 per share, 773,548 and 773,548 shares issued and outstanding as of July 31, 2025, a

Business

Business General Overview Sparta Commercial Services, Inc. ("Sparta," "we," "us," or the "Company") is a Nevada corporation with headquarters in New York, New York, and a corporate website at www.spartacommercial.com, with subsidiary addresses in Stamford, CT. We operate as a multi-disciplined parent corporation across four primary business sectors: FinTech Services, Financial Services, E-Commerce & Mobile Technology, and Health and Wellness. Our operations are conducted through wholly owned subsidiaries and joint ventures that provide specialized financing products, technology-driven solutions, and consumer wellness offerings. Sparta's origins are in the Powersports consumer finance industry, historically providing retail installment loans and leases through authorized motorcycle dealerships in 33 states, supported by financing lines of credit from institutional lenders. We built and maintained a full underwriting and servicing platform for our portfolio until discontinuing our consumer loans and leases business after the 2008 financial crisis. I. FINTECH SERVICES Agoge Global USA, Inc. – Cross-Border Trade Finance and Blockchain Solutions Formed in December 2022 as a subsidiary of Sparta Crypto, Inc., Agoge Global USA, Inc. ("Agoge") was established to address inefficiencies in cross-border trade between the United States and Brazil. Agoge entered into a joint venture with WeDev Group Ltda., a Brazilian technology and blockchain development firm, to create and operate a comprehensive digital platform for international trade finance. The joint venture developed EZBroker360, a blockchain-enabled platform utilizing stablecoins and distributed ledger technology to: - Reduce transaction times from days to hours; - Lower cross-border payment costs; and - Improve security, transparency, and auditability. In addition to payment processing, EZBroker360 provides: - Staged financing for freightage, customs duties, and taxes; - Assistance with Brazil

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