Sparta Commercial Services Sees Revenue Surge, Net Loss Widens

TL;DR

**SRCO's revenue is booming, but their net loss is still growing, making it a high-risk bet on future profitability.**

AI Summary

SPARTA COMMERCIAL SERVICES, INC. (SRCO) reported a significant increase in total revenue for the three months ended October 31, 2025, reaching $99,307, up 107.7% from $47,808 in the same period of 2024. This growth was primarily driven by merchant financing revenue, which surged to $53,733 from $13,993, a 284% increase. Information technology revenue also grew by 26.1% to $34,914, and wellness products revenue increased by 74.2% to $10,660. Despite the revenue growth, the company's net loss widened to $519,534 for the three months ended October 31, 2025, compared to a net loss of $417,800 in the prior year, an increase of 24.3%. This was largely due to a significant increase in other income (expense), which rose to $245,359 from $88,904, primarily from a loss in changes in fair value of derivative liability of $69,877, contrasting with a gain of $99,588 in the previous year. Total liabilities increased to $11,922,727 as of October 31, 2025, from $11,349,644 as of April 30, 2025, with current portion notes payable rising to $8,642,653 from $7,973,762. The company continues to operate with a substantial accumulated deficit of $(69,927,979) as of October 31, 2025.

Why It Matters

SRCO's substantial revenue growth, particularly in merchant financing, signals potential for its diversified business model, but the widening net loss and increasing liabilities raise red flags for investors. The company's ability to convert revenue into profitability and manage its debt will be crucial for long-term viability and competitive positioning against larger FinTech and wellness players. Employees and customers might see continued operational expansion, but the financial instability could impact future investment in services or job security. The broader market will watch if SRCO can sustain its revenue momentum while addressing its significant accumulated deficit and derivative liabilities.

Risk Assessment

Risk Level: high — The company reported a net loss of $(519,534) for the three months ended October 31, 2025, and an accumulated deficit of $(69,927,979) as of the same date, indicating persistent unprofitability. Total liabilities increased to $11,922,727 from $11,349,644 in six months, with current portion notes payable at $8,642,653, suggesting significant debt obligations relative to total assets of $860,561.

Analyst Insight

Investors should exercise extreme caution and conduct thorough due diligence before considering SRCO. The significant accumulated deficit and increasing liabilities, despite revenue growth, point to fundamental financial challenges. Monitor future filings for sustained profitability and a reduction in debt, as the current financial health suggests high speculative risk.

Financial Highlights

debt To Equity

N/A

revenue

$99,307

operating Margin

N/A

total Assets

$860,561

total Debt

$11,922,727

net Income

$(519,534)

eps

N/A

gross Margin

N/A

cash Position

$33,607

revenue Growth

+107.7%

Revenue Breakdown

Key Numbers

• $99,307 — Total Revenue (Increased by 107.7% for the three months ended October 31, 2025, compared to $47,808 in 2024.)
• $53,733 — Merchant Financing Revenue (Increased by 284% for the three months ended October 31, 2025, from $13,993 in 2024.)
• $(519,534) — Net Loss (Widened by 24.3% for the three months ended October 31, 2025, from $(417,800) in 2024.)
• $(69,927,979) — Accumulated Deficit (As of October 31, 2025, indicating significant historical losses.)
• $11,922,727 — Total Liabilities (Increased from $11,349,644 as of April 30, 2025.)
• $8,642,653 — Current Portion Notes Payable (Increased from $7,973,762 as of April 30, 2025.)
• $860,561 — Total Assets (As of October 31, 2025, significantly lower than total liabilities.)
• $33,607 — Cash and Cash Equivalents (Decreased from $131,003 as of April 30, 2025.)
• 45,652,956 — Shares of Common Stock Issued and Outstanding (As of December 19, 2025.)
• $69,877 — Loss in Changes in Fair Value of Derivative Liability (Contributed to increased other expense for the three months ended October 31, 2025, compared to a gain of $99,588 in 2024.)

Key Players & Entities

• SPARTA COMMERCIAL SERVICES, INC. (company) — registrant
• Bloomberg (company) — publication
• SEC (regulator) — filing authority
• Nevada (location) — state of incorporation
• New York, New York (location) — headquarters
• Stamford, CT (location) — subsidiary address
• OTCQB (market) — exchange where common stock is registered
• October 31, 2025 (date) — end of quarterly period
• April 30, 2025 (date) — previous fiscal year-end
• 2008 financial crisis (event) — reason for discontinuing consumer loans and leases business

FAQ

Risk Factors

• Widening Net Loss Despite Revenue Growth [high — financial]: The company reported a net loss of $519,534 for the three months ended October 31, 2025, a 24.3% increase from $417,800 in the prior year. This widening loss, despite significant revenue growth, is concerning.
• Increased Derivative Liability Impact [medium — financial]: Other income (expense) increased to $245,359 from $88,904, largely due to a loss of $69,877 in changes in fair value of derivative liability, contrasting with a gain of $99,588 in the prior year. This volatility impacts profitability.
• Growing Debt Levels [high — financial]: Total liabilities increased to $11,922,727 as of October 31, 2025, from $11,349,644 as of April 30, 2025. The current portion of notes payable also rose to $8,642,653 from $7,973,762.
• Substantial Accumulated Deficit [high — financial]: The company has a significant accumulated deficit of $(69,927,979) as of October 31, 2025, indicating a long history of unprofitability.
• Declining Cash Position [high — financial]: Cash and cash equivalents decreased significantly to $33,607 as of October 31, 2025, from $131,003 as of April 30, 2025, raising concerns about liquidity.
• Negative Equity Position [high — financial]: Total assets of $860,561 are substantially lower than total liabilities of $11,922,727, resulting in a negative equity position.

Industry Context

Sparta Commercial Services operates across FinTech, Financial Services, E-Commerce & Mobile Technology, and Health and Wellness. Historically, it was involved in Powersports consumer finance. The current focus on merchant financing and technology solutions places it within dynamic and competitive sectors.

Regulatory Implications

As a publicly traded company, Sparta Commercial Services is subject to SEC regulations and reporting requirements, including the timely filing of 10-Q forms. Compliance with accounting principles and disclosure rules is critical.

What Investors Should Do

1. Monitor revenue growth drivers, particularly merchant financing.
2. Analyze the volatility of derivative liabilities.
3. Assess the company's liquidity and debt management.
4. Evaluate the path to profitability given the large accumulated deficit.

Key Dates

• 2025-10-31: End of Third Quarter for Reporting Period — Financial results for the three months ended this date are reported, showing significant revenue growth but a widening net loss.
• 2025-04-30: End of Fiscal Year for Prior Period Comparison — Used as a comparison point for balance sheet items like total liabilities and current portion of notes payable.
• 2025-08-13: Filing of Form 10-K for Year Ended April 30, 2025 — Provides audited consolidated financial statements and notes for the previous fiscal year, which are referenced for comparison.

Glossary

Accumulated Deficit

The total cumulative net losses of a company that have not been offset by net income or other gains. (Indicates the company's long-term history of unprofitability, standing at $(69,927,979) as of October 31, 2025.)

Derivative Liability

A financial instrument whose value is derived from an underlying asset, index, or rate, and which represents an obligation to pay. (A loss of $69,877 in the fair value of this liability significantly impacted the company's other income (expense) for the period.)

Fair Value

The price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. (Changes in the fair value of derivative liabilities directly affect the company's reported net income.)

Noncontrolling Interest

The portion of equity in a subsidiary that is not attributable to the parent company. (Changes in noncontrolling interest are reported in the statement of changes in deficit, impacting the overall equity structure.)

Year-Over-Year Comparison

For the three months ended October 31, 2025, Sparta Commercial Services reported a substantial 107.7% increase in total revenue to $99,307, driven primarily by merchant financing. However, this top-line growth was overshadowed by a 24.3% widening of the net loss to $519,534, exacerbated by a negative swing in derivative fair value changes. Total liabilities saw a modest increase, but the cash position significantly deteriorated, decreasing from $131,003 to $33,607.

Filing Documents

• form10-q.htm (10-Q) — 1254KB
• ex31-1.htm (EX-31.1) — 12KB
• ex31-2.htm (EX-31.2) — 12KB
• ex32-1.htm (EX-32.1) — 5KB
• 0001493152-25-028506.txt ( ) — 4768KB
• srco-20251031.xsd (EX-101.SCH) — 31KB
• srco-20251031_cal.xml (EX-101.CAL) — 44KB
• srco-20251031_def.xml (EX-101.DEF) — 147KB
• srco-20251031_lab.xml (EX-101.LAB) — 253KB
• srco-20251031_pre.xml (EX-101.PRE) — 205KB
• form10-q_htm.xml (XML) — 657KB

Signatures

Signatures 25 2 PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS SPARTA COMMERCIAL SERVICES, INC. CONDENSED CONSOLIDATED BALANCE SHEETS AS OF OCTOBER 31, 2025, AND APRIL 30, 2025 (Unaudited) October 31, April 30, 2025 2025 (Unaudited) * ASSETS Current Assets Cash and cash equivalents $ 33,607 $ 131,003 Accounts receivable 6,522 5,167 Inventory 4,053 4,607 Other current assets 807,379 606,802 Total Current Assets 851,561 747,579 Rent deposit 9,000 9,000 Total assets $ 860,561 $ 756,579 LIABILITIES AND DEFICIT Liabilities: Current Liabilities Accounts payable and accrued expenses $ 1,371,395 $ 1,333,852 Short Term Loan 1,585 1,585 Current portion notes payable 8,642,653 7,973,762 Derivative liabilities 1,114,161 1,007,598 Total Current Liabilities 11,129,794 10,316,797 Long Term Liabilities Loans payable-related parties 643,262 636,233 Notes payable- net of current portion 149,671 396,614 Total Long Term Liabilities 792,933 1,032,847 Total liabilities 11,922,727 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 October 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 1,965,157 shares issued and outstanding as of October31, 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 803,548 shares issued and outstanding as of October 31, 2025 and 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. Basis of Presentation The accompanying unaudited condensed consolidated financial statements as of October 31, 2025, and for the three months ended October 31, 2025, and 2024 have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission, including Form 10-Q and Regulation S-K. The information furnished herein reflects all adjustments (consisting of normal recurring accruals and adjustments), which are, in the opinion of management, necessary to fairly present the operating results for the respective periods. Certain information and footnote disclosures normally present in annual financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been omitted pursuant to such rules and regulations. The Company believes that the disclosures provided are adequate to make the information presented not misleadi

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