UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
For the quarterly period ended
For the transition period from ____________ to____________
Commission File Number:
(Exact name of registrant as specified in its charter)
| (State or other jurisdiction of incorporation or organization) |
(IRS Employer Identification No.) |
Registrant’s Principal Executive Offices
(Registrant’s telephone number, including area code)
7901 4th St N STE 300
St. Petersburg, FL 33702
Agent for Service
(850) 807-4500
(Agent’s telephone number, including area code)
Securities registered under Section 12(b) of the Exchange Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
| N/A | N/A | N/A |
Securities registered pursuant to section 12(g) of the Act:
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. ☐ Yes ☒ No
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. ☐ Yes ☒ No
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☒
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer | ☐ | Accelerated filer | ☐ |
| ☒ | Smaller reporting company | ||
| Emerging growth company | |||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transaction period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). ☐ Yes
As of August 19, 2026, there were
MEDICAL EXERCISE INC.
Quarterly Report on Form 10-Q
For the Quarter ended June 30, 2026
TABLE OF CONTENTS
i
PART I – FINANCIAL INFORMATION
Item 1. Financial Statements
1
MEDICAL EXERCISE INC.
BALANCE SHEETS
| June 30, | March 31, | |||||||
| 2026 | 2026 | |||||||
| (Unaudited) | ||||||||
| Assets | ||||||||
| Current assets: | ||||||||
| Cash | $ | $ | ||||||
| Accounts receivable - related party | ||||||||
| Other receivable | ||||||||
| Total current assets | ||||||||
| Property and equipment, net - held for sale | ||||||||
| Intangible assets, net | ||||||||
| Total assets | $ | $ | ||||||
| Liabilities and Stockholders’ Deficit | ||||||||
| Current liabilities: | ||||||||
| Accounts payable and accrued expenses | $ | $ | ||||||
| Advances payable - related parties | ||||||||
| Contract liabilities | ||||||||
| Sales tax payable | ||||||||
| Total current liabilities | ||||||||
| Commitments and contingencies - See Note 7 | ||||||||
| Stockholders’ deficit: | ||||||||
| Common stock, par value; | ||||||||
| Subscription receivable ( | ( | ) | ( | ) | ||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Total stockholders’ deficit | ( | ) | ( | ) | ||||
| Total liabilities and stockholders’ deficit | $ | $ | ||||||
The accompanying condensed notes are an integral part of the unaudited financial statements.
F-1
MEDICAL EXERCISE INC.
STATEMENTS OF OPERATIONS
(Unaudited)
| For the Three Months |
For the Three Months |
|||||||
| Ended | Ended | |||||||
| June 30, | June 30, | |||||||
| 2026 | 2025 | |||||||
| Revenues - related party | $ | $ | ||||||
| Cost of revenues | ||||||||
| Operating profit | ||||||||
| Operating expenses: | ||||||||
| Compensation expense | ||||||||
| Advertising | ||||||||
| Depreciation and amortization | ||||||||
| Selling, general and administrative expenses | ||||||||
| Total operating expenses | ||||||||
| Loss from operations | ( | ) | ( | ) | ||||
| Other income (expense): | ||||||||
| Gain on disposal of property and equipment | ||||||||
| Total other income, net | ||||||||
| Net loss before income taxes | ( | ) | ( | ) | ||||
| Provision for income taxes | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Net loss per share: | ||||||||
| Basic and diluted | $ | ( | ) | $ | ( | ) | ||
| Weighted average number of common shares outstanding: | ||||||||
| Basic and diluted | ||||||||
The accompanying condensed notes are an integral part of the unaudited financial statements.
F-2
MEDICAL EXERCISE INC.
STATEMENTS OF CHANGES IN STOCKHOLDERS’ DEFICIT
FOR THE THREE MONTHS ENDED JUNE 30, 2026 AND 2025
| Common Stock | Subscription | Accumulated | ||||||||||||||||||
| Shares | Amount | Receivable | Deficit | Total | ||||||||||||||||
| Balance - March 31, 2026 | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||||||||
| Net loss | - | ( | ) | ( | ) | |||||||||||||||
| Balance - June 30, 2026 (Unaudited) | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||||||||
| Balance - March 31, 2025 | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||||||||
| Common shares issued for cash | ||||||||||||||||||||
| Common shares issued for services rendered | ||||||||||||||||||||
| Net loss | - | ( | ) | ( | ) | |||||||||||||||
| Balance - June 30, 2025 (Unaudited) | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||||||||
The accompanying condensed notes are an integral part of the unaudited financial statements.
F-3
MEDICAL EXERCISE INC.
STATEMENTS OF CASH FLOWS
(Unaudited)
| For the Three Months |
For the Three Months |
|||||||
| Ended | Ended | |||||||
| June 30, | June 30, | |||||||
| 2026 | 2025 | |||||||
| Cash Flows From Operating Activities: | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Depreciation and amortization | ||||||||
| (Gain) on sale of property and equipment | ( | ) | ||||||
| Share-based compensation | ||||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | ( | ) | ||||||
| Accounts payable and accrued expenses | ( | ) | ||||||
| Net cash used in operating activities | ( | ) | ( | ) | ||||
| Cash Flows From Investing Activities: | ||||||||
| Proceeds from sale of property and equipment, net of disposal costs paid | ||||||||
| Purchases of intangible assets | ( | ) | ( | ) | ||||
| Net cash provided by (used in) investing activities | ( | ) | ||||||
| Cash Flows From Financing Activities: | ||||||||
| Proceeds from issuance of common shares | ||||||||
| Proceeds from related party advances | ||||||||
| Repayments of related party advances | ( | ) | ||||||
| Net cash provided by financing activities | ||||||||
| Net increase (decrease) in cash | ( | ) | ||||||
| Cash at beginning of period | ||||||||
| Cash at end of period | $ | $ | ||||||
| Supplemental Disclosure of Cash Flow Information: | ||||||||
| Cash paid for interest | $ | $ | ||||||
| Cash paid for taxes | $ | $ | ||||||
| Supplemental Disclosure of Non-Cash Investing and Financing Activities: | ||||||||
| Other receivable recognized as part of disposal of equipment | $ | $ | ||||||
| Accrued expenses recognized as part of disposal of equipment | $ | $ | ||||||
The accompanying condensed notes are an integral part of the unaudited financial statements.
F-4
MEDICAL EXERCISE INC.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2026 AND 2025
NOTE 1 — NATURE OF OPERATIONS
Overview
Medical Exercise Inc. (the “Company”) is a provider of health and wellness services focused on fitness, exercise, and longevity. The Company was originally incorporated as MedX Back Pain Clinics Inc. on
NOTE 2 — GOING CONCERN AND MANAGEMENT’S LIQUIDITY PLANS
As of June 30, 2026, the Company had cash of $
The Company has experienced net losses and negative cash flows from operations since inception. The Company’s ability to continue its operations is dependent upon its ability to obtain additional capital through public or private equity offerings, debt financings or other sources; however, financing may not be available to the Company on acceptable terms, or at all. The Company’s failure to raise capital as and when needed could have a negative impact on its financial condition and its ability to pursue its business strategy, and the Company may be forced to curtail or cease operations.
Management’s plans regarding these matters encompass the following actions: 1) obtain funding from new investors from a combination of debt and equity offerings in order to alleviate the Company’s working capital deficiency and 2) implement its business plan to increase revenues. The Company’s continued existence is dependent upon its ability to obtain additional funding sources and to develop profitable operations. However, the outcome of management’s plans cannot be determined with any degree of certainty.
Accordingly, the accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business for
NOTE 3 — ACCOUNTING POLICIES
Basis of Presentation
The accompanying financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for financial information and pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”). In the opinion of the Company’s management, all adjustments necessary to present fairly the results of operations for the three months ended June 30, 2026 and 2025, the cash flows for the three months ended June 30, 2026 and 2025, and the balance sheet at June 30, 2026 have been made. The Company’s results of operations for such interim periods are not necessarily indicative of the operating results to be expected for the full fiscal year ending March 31, 2027.
F-5
MEDICAL EXERCISE INC.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2026 AND 2025
Certain information and disclosures normally included in the notes to the Company’s annual audited financial statements have been condensed or omitted from the Company’s interim unaudited financial statements. Accordingly, these interim unaudited financial statements should be read in conjunction with the Company’s audited financial statements and notes thereto for the fiscal year ended March 31, 2026. The March 31, 2026 balance sheet is derived from those statements.
Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Significant estimates in the accompanying financial statements include the valuation of property and equipment, depreciable lives of property and equipment, valuation of stock-based compensation and the valuation allowance on deferred tax assets. Actual results may differ from these estimates.
Fair Value of Financial Instruments
The Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Subtopic 825-10, “Financial Instruments” (“ASC 825-10”) requires disclosure of the fair value of certain financial instruments. The estimated fair value of certain financial instruments, including cash, accounts receivable, other receivable, accounts payable and accrued expenses, contract liabilities, sales tax payable and advances payable to related parties are carried at historical cost basis, which approximates their fair value because of the short-term maturity of these instruments. All other significant financial assets, financial liabilities and equity instruments of the Company are either recognized or disclosed in the financial statements together with other information relevant for making a reasonable assessment of future cash flows, interest rate risk and credit risk.
Cash
The Company considers all highly liquid investments with an original maturity of three months or less when purchased to be cash equivalents. There were cash equivalents at June 30, 2026. The Company maintains its cash in banks insured by the Federal Deposit Insurance Corporation in accounts that at times may be in excess of the federally insured limit of $
Fair Value Measurements
Fair value is the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants. The Company classifies assets and liabilities recorded at fair value under the fair value hierarchy based upon the observability of inputs used in valuation techniques. Observable inputs (highest level) reflect market data obtained from independent sources, while unobservable inputs (lowest level) reflect internally developed market assumptions. The fair value measurements are classified under the following hierarchy:
| ● | Level 1 – Quoted prices in active markets for identical assets or liabilities. |
| ● | Level 2 – Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which all significant inputs are observable or can be derived principally from or corroborated by observable market data for substantially the full term of the assets or liabilities. |
| ● | Level 3 – Unobservable inputs to the valuation methodology that are significant to the measurement of fair value of assets or liabilities. |
Property and Equipment
Property and equipment consists of machinery and equipment and leasehold improvements and is recorded at cost. Repairs and maintenance costs are expensed as incurred. When property and equipment are retired or otherwise disposed of, the cost and accumulated depreciation are removed from the accounts and any resulting gain or loss is included in the results of operations for the respective period. Depreciation is recorded over the estimated useful lives of the related assets using the straight-line method, or, in the case of leasehold improvements, the lease term, if shorter. The estimated useful life for machinery and equipment is
F-6
MEDICAL EXERCISE INC.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2026 AND 2025
Long-Lived Assets
The Company reviews its property and equipment for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to the future undiscounted operating cash flow expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the asset exceeds the fair value of the asset. Long-lived assets to be disposed of are reported at the lower of carrying amount or fair value less costs to sell.
Intangible Assets
Intangible assets with finite useful lives include website costs and are amortized on a straight-line basis over their estimated useful life of three (
Income Taxes
The Company accounts for its income taxes in accordance with accounting principles generally accepted in the United States of America, which requires, among other things, recognition of future tax benefits and liabilities measured at enacted rates attributable to temporary differences between financial statement and income tax bases of assets and liabilities and to net tax operating loss carryforwards to the extent that realization of these benefits is more likely than not. The Company periodically evaluates the realizability of its net deferred tax assets. The Company’s policy is to account for interest and penalties relating to income taxes, if any, in “income tax expense” in its statements of operations and include accrued interest and penalties within “accrued liabilities” in its balance sheets, if applicable. For the three months ended June 30, 2026, income tax related interest or penalties were assessed or recorded.
Revenue Recognition and Contract Liabilities
The Company follows Accounting Standards Codification 606 (“ASC 606”), Revenue from Contracts with Customers. ASC 606 is based on the principle that revenue is recognized to depict the transfer of goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. ASC 606 also requires disclosure regarding the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers, including significant judgments made in applying the guidance.
The Company currently generates revenue from franchise operations. Initial franchise fees are recognized when, or as, the related performance obligations under the applicable franchise agreement are satisfied. Amounts billed or received before the related performance obligations are satisfied are recorded as contract liabilities and recognized as revenue when the related performance obligations are fulfilled. Royalty revenue is recognized as the related franchisee sales occur in accordance with the terms of the applicable franchise agreements.
Legacy Contract Liabilities
Legacy contract liabilities consist of advance payments received from customers under the Company’s former treatment services business for treatment services that had not been provided as of the date those operations were discontinued. In April 2026, the Company sold the remaining assets used in its treatment operations and no longer provides treatment services. Accordingly, the Company does not expect to recognize additional treatment service revenue related to these legacy contract liabilities. The liabilities will remain recorded until the related customer obligations are resolved or otherwise legally extinguished.
F-7
MEDICAL EXERCISE INC.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2026 AND 2025
Advertising
The Company charges the costs of advertising to expense as incurred. Advertising costs were $ and $
Stock-Based Compensation Expense
Stock-based compensation expense is measured at the grant date fair value of the award and is expensed over the requisite service period. For stock-based awards to employees, non-employees and directors, the Company calculates the fair value of the award on the date of grant using the Black-Scholes option pricing model, which includes variables such as the expected volatility of the Company’s share price, the exercise behavior of its grantees, interest rates, and dividend yields. These variables are projected based on the Company’s historical data, experience, and other factors. In the case of awards with multiple vesting periods, the Company has elected to use the graded vesting attribution method, which recognizes compensation cost on a straight-line basis over each separately vesting portion of the award as if the award was, in substance, multiple awards.
Net Loss per Common Share
Basic earnings (loss) per common share is calculated by dividing net income (loss) by the weighted average number of common shares outstanding during the period. Shares issued during the year are weighted for the portion of the year that they were outstanding. Except when the effect would be anti-dilutive, diluted earnings per share is computed in a manner consistent with that of basic earnings per share while giving effect to all potentially dilutive common shares that were outstanding during the period.
The computation of basic and diluted income (loss) per share excludes potentially dilutive securities when their inclusion would be anti-dilutive, or if their exercise prices were greater than the average market price of the common stock during the period.
There were no potentially dilutive securities outstanding during the periods presented.
Recent Accounting Pronouncements
In November 2024, the FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40). The standard requires entities to provide more detailed disaggregation of expenses in the income statement, focusing on the nature of the expenses rather than their function. The new disclosures will require entities to separately present expenses for significant line items, including but not limited to, depreciation, amortization, and employee compensation. Entities will also be required to provide a qualitative description of the amounts remaining in relevant expense captions that are not separately disaggregated quantitatively, disclose the total amount of selling expenses and, in annual reporting periods, provide a definition of what constitutes selling expenses. This pronouncement is effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027, with early adoption permitted. The Company is currently evaluating the impact the adoption of this new guidance will have on its financial statement disclosures.
In July 2025, the FASB issued Accounting Standards Update No. 2025-05, “Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets”. This update provides targeted improvements to the current expected credit loss (“CECL”) model by introducing a practical expedient that allows entities to assume that current conditions as of the balance sheet date remain unchanged when estimating expected credit losses for certain current accounts receivable and contract assets. The amendments are intended to reduce the cost and complexity associated with applying CECL to short-term receivables arising from revenue transactions. The amendments in ASU 2025-05 are effective for fiscal years, including interim periods within those fiscal years, beginning after December 15, 2025, with early adoption permitted, and are to be applied prospectively. The Company adopted ASU 2025-05 effective April 1, 2026. The adoption did not have a material impact on the Company’s financial statements or related disclosures.
There are other various updates recently issued, most of which represented technical corrections to the accounting literature or application to specific industries and are not expected to have a material impact on the Company’s financial position, results of operations or cash flows.
F-8
MEDICAL EXERCISE INC.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2026 AND 2025
NOTE 4 — PROPERTY AND EQUIPMENT
During the year ended March 31, 2025, the Company recognized an additional impairment charge of $
During the year ended March 31, 2026, the Company disposed of certain treatment equipment and related assets, recognizing an aggregate loss on disposal of $
During the three months ended June 30, 2026, the Company sold its remaining treatment equipment and related assets as part of the disposition of its former treatment operations. The equipment and related items were sold for aggregate consideration of $
| Cash collected as of June 30, 2026 | $ | |||
| Other receivable as of June 30, 2026 | ||||
| Aggregates sales consideration | ||||
| Less: net book value of equipment sold | ( | ) | ||
| Less: disposal costs paid as of June 30, 2026 | ( | ) | ||
| Less: disposal costs included in accounts payable and accrued expenses at June 30, 2026 | ( | ) | ||
| Gain on disposal of property and equipment | $ |
Property and equipment and related accumulated depreciation are summarized in the table below:
| June 30, | March 31, | |||||||
| 2026 | 2026 | |||||||
| Machinery and equipment | $ | $ | ||||||
| Less: accumulated depreciation | ( | ) | ||||||
| Property and equipment, net | $ | $ | ||||||
Depreciation expense was $
F-9
MEDICAL EXERCISE INC.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2026 AND 2025
NOTE 5 — INTANGIBLE ASSETS
During the year ended March 31, 2026, the Company abandoned its legacy website in connection with its transition to a new business model and the development of a replacement website. As the legacy website was no longer expected to provide future economic benefit, the remaining carrying value of the asset was derecognized and a loss on disposal of intangible assets of $
Intangible assets and related accumulated amortization are summarized in the table below:
| June 30, | March 31, | |||||||
| 2026 | 2026 | |||||||
| Website | $ | $ | ||||||
| Less: accumulated amortization | ( | ) | ( | ) | ||||
| Website, net | $ | $ | ||||||
| Website | ||||
| Carrying value at March 31, 2026 | ||||
| Add: Additions | ||||
| Less: Amortization | ( | ) | ||
| Less: Impairments | ||||
| Carrying value at June 30, 2026 | $ | |||
Amortization expense was $
Estimated future amortization expense for intangible assets is as follows.
| Fiscal year | Amount | |||
| Remainder of 2027 | $ | |||
| 2028 | ||||
| 2029 | ||||
| Total | $ | |||
NOTE 6 — ADVANCES – RELATED PARTIES
During the three months ended June 30, 2026, there were no advances from or repayments to the Company’s Chief Executive Officer or directors. The advances are unsecured, non-interest bearing, and due on demand. Accordingly, no interest has been accrued or recognized.
As of June 30, 2026 and March 31, 2026, amounts due to related parties consisted of advances from the Company’s Chief Executive Officer of $
See also Note 8 for related party franchise agreement.
F-10
MEDICAL EXERCISE INC.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2026 AND 2025
NOTE 7 — COMMITMENTS AND CONTINGENCIES
Storage Lease
The Company maintained a month-to-month warehouse lease for the temporary storage of treatment equipment pending its disposition. The warehouse lease was terminated in April 2026. Rental expense was $
Legal Matters
From time to time, the Company may be involved in litigation relating to claims arising out of operations in the normal course of business. At June 30, 2026, there were no pending or threatened lawsuits that could reasonably be expected to have a material effect on the results of the Company’s operations and there are no proceedings in which any of the Company’s directors, officers or affiliates, or any registered or beneficial shareholder, is an adverse party or has a material interest adverse to the Company’s interest.
NOTE 8 — FRANCHISE AGREEMENT
In May 2026, the Company completed its franchise disclosure document for distribution to potential franchisees and for filing, as required, with applicable provinces in Canada and states in the United States. The Company owns the proprietary business formats and systems comprising the OnCore Longevity System and has applied to register certain related trademarks and service marks.
On May 5, 2026, the Company entered into a franchise agreement with Degco Fitness Ventures Ltd. (“Degco”), a related party Saskatchewan, Canada corporation owned by the Company’s Chief Executive Officer, to establish and operate an OnCore Longevity Center in Regina, Saskatchewan, Canada. The franchise agreement has a term of
NOTE 9 — STOCKHOLDERS’ DEFICIT
Common Stock
During the year ended March 31, 2026, the Company sold an aggregate of
During the year ended March 31, 2026, the Company issued an aggregate of
There were no issuances, repurchases, retirements, or other transactions involving the Company’s common stock during the three months ended June 30, 2026.
F-11
MEDICAL EXERCISE INC.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2026 AND 2025
NOTE 10 — CONCENTRATIONS
Concentration of Revenues
For the three months ended June 30, 2026 and 2025, the following customers accounted for 10% or more of the Company’s revenues.
| For the Three Months | For the Three Months | |||||||
| Ended | Ended | |||||||
| June 30, 2026 | June 30, 2025 | |||||||
| Customer 1 | % | |||||||
| Totals | % | % | ||||||
Customer 1 is a company owned and controlled entirely by the Chief Executive Officer (See Note 8).
Concentration of Accounts Receivable
As of June 30, 2026 and March 31, 2026, the following customers accounted for more than 10% of the Company’s consolidated accounts receivable.
| June 30, 2026 | March 31, 2026 | |||||||
| Customer 1 | % | |||||||
| Totals | % | % | ||||||
Customer 1 is a company owned and controlled entirely by the Chief Executive Officer (See Note 8).
NOTE 11 — RELATED PARTY TRANSACTIONS
During the three months ended June 30, 2026 and 2025, the Company received advances of $
During the three months ended June 30, 2026 and 2025, the Company received advances of $
On May 5, 2026, the Company entered into a franchise agreement with Degco Fitness Ventures Ltd., a related party entity owned by the Company’s Chief Executive Officer (See Note 8). During the three months ended June 30, 2026, the Company recognized $
During each of the three months ended June 30, 2026 and 2025, the Company recognized $
F-12
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
The following discussion and analysis of the financial condition and results of our operations should be read in conjunction with the “Summary Statements of Operations Data” and our financial statements and the notes to those statements appearing elsewhere in this quarterly report. This discussion and analysis contains forward-looking statements reflecting our management’s current expectations that involve risks, uncertainties and assumptions. Our actual results and the timing of events may differ materially from those described in or implied by these forward-looking statements due to several factors, including those discussed below and elsewhere in this quarterly report.
Overview
Going Concern
We have financed operations primarily through the sale of equity securities and short-term debt. Until revenues are sufficient to meet our needs, we will continue to attempt to secure financing through equity and/or debt securities. We continue to incur negative cash flows from operating activities and net losses. We had minimal cash, negative working capital, and negative total equity as of June 30, 2026. These factors, among others, raise substantial doubt about our ability to continue as a going concern. The financial statements included in this quarterly report do not include any adjustments that might result from the outcome of this uncertainty.
For us to eliminate substantial doubt about our ability to continue as a going concern, we must achieve profitability, generate positive cash flows from operating activities and obtain the necessary debt or equity funding to meet our projected capital investment requirements. Our management’s plans with respect to this uncertainty consist of raising additional capital by issuing debt or equity securities and increasing the sales of our products and services. There can be no assurance, however, that we will be able to raise sufficient additional capital or that revenues will increase rapidly enough to offset operating losses. If we are unable to increase revenues or obtain additional financing, we will be unable to continue the development of our products and services and may have to cease operations.
Results of Operations
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our financial statements and related notes included elsewhere in this prospectus.
Three Months Ended June 30, 2026 and 2025.
Revenues for the three months ended June 30, 2026 and 2025 was $1,000 and $0, respectively. Revenue recognized during the three months ended June 30, 2026 consisted of a one-time franchise fee of $1,000 received pursuant to a franchise agreement entered into during the period with Degco Fitness Ventures Ltd., a related party entity controlled by the Company’s President and Chief Executive Officer.
Compensation expense for the three months ended June 30, 2026 and 2025 was $5,000 and $5,000, respectively. Compensation expense remained flat year-over-year as officer compensation terms remained unchanged during the periods.
Depreciation and amortization expense for the three months ended June 30, 2026 and 2025 was $542 and $2,881, respectively, a decrease of $2,339, or 81%. Depreciation decreased in the current year period primarily due to the sale of property and equipment in July 2025, March 2026 and April 2026. Amortization decreased in the current year period as a result of the derecognition of the legacy website in March 2026.
Selling, general and administrative expenses for the three months ended June 30, 2026 and 2025 was $48,227 and $61,378, respectively, a decrease of $13,151, or 21%. Selling, general and administrative expenses decreased in the current year period primarily due to decreased professional fees and legal fees during the current year period.
2
Gain on disposal of property and equipment for the three months ended June 30, 2026 and 2025 was $103 and $0, respectively, an increase of $103. Gain on disposal of property and equipment increased in the current year period due to the sale of property and equipment in the current year period.
The net loss for the three months ended June 30, 2026 and 2025 was ($52,666) and ($70,291), respectively, a decrease in the net loss of $17,625, or 25%. The net loss for the current year period decreased primarily due to lower selling, general and administrative expenses and depreciation and amortization during the current year period.
Capital Resources and Liquidity
Net cash used in operating activities for the three months ended June 30, 2026 and 2025 was ($46,722) and ($78,583), respectively, a decrease of $31,861, and resulted primarily from a decrease in the net loss of $17,625 and an increase in accounts payable and accrued expenses of $19,678.
Net cash provided by (used in) investing activities for the three months ended June 30, 2026 and 2025 was $6,362 and ($900), respectively, a change of $7,262, and resulted from an increase in proceeds from the sale of property and equipment of $7,462, partially offset by an increase in purchases of intangible assets of $200.
Net cash provided by financing activities for the three months ended June 30, 2026 and 2025 was $0 and $82,824, respectively, a decrease of $82,824, and resulted from a decrease in proceeds from the sale of common shares of $8,500, and a decrease in advances, net of repayments, received from the Company’s directors of $74,324.
As of June 30, 2026, we had $3,089 in cash and a working capital deficit of $238,799.
Off Balance Sheet Arrangements
None
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
As a smaller reporting company, we are not required to provide information required by this Item.
Item 4. Controls and Procedures.
Within 90 days prior to the end of the period covered by this report the registrant carried out an evaluation of the effectiveness of the design and operation of disclosure controls and procedures pursuant to Rule 13a-15 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). This evaluation was done under the supervision and with the participation of registrants President and Principal Financial Officer. Based on that Evaluation he concluded that the registrant’s disclosure controls and procedures are not effective in gathering, analyzing and disclosing information needed to satisfy the registrant’s disclosure obligations under the Exchange Act due to the material weaknesses disclosed below.
There were no significant changes in the registrant’s disclosure control and procedure, in factors that could significantly affect those controls and procedures since their most recent evaluation.
Item 4(T). Controls and Procedures
Our management is responsible for establishing and maintaining adequate internal control over financial report for the company. Internal control over financial reporting is to provide reasonable assurance regarding the reliability of our financial reporting for external purposes in accordance with accounting principles generally accepted in the United States of America. Internal control over financial reporting includes maintaining records that in reasonable detail accurately and fairly reflect our transactions; providing reasonable assurance that transactions are recorded as necessary for preparation of our financial statements; providing reasonable assurance that receipts and expenditures of company assets are made in accordance with management authorization; and providing reasonable assurance that unauthorized acquisition , use or disposition of company assets that could have a material effect on our financial statements would be prevented or detected.
3
As of June 30, 2026, management assessed the effectiveness of the Company’s internal control over financial reporting based on the criteria for effective internal control over financial reporting established in SEC guidance on conducting such assessments. Based on that evaluation, they concluded that, during the period covered by this report, such internal controls and procedures were not effective to detect the inappropriate application of US GAAP rules as more fully described below. This was due to deficiencies that existed in the design or operation of our internal control over financial reporting that adversely affected our internal controls and that may be considered to be material weaknesses.
The matters involving internal controls and procedures that the Company’s management considered to be material weaknesses under the standards of the Public Company Accounting Oversight Board were: (1) lack of a functioning audit committee and lack of a majority of outside directors on the Company’s board of directors, resulting in ineffective oversight in the establishment and monitoring of required internal controls and procedures; (2) inadequate segregation of duties consistent with control objectives; (3) insufficient written policies and procedures for accounting and financial reporting with respect to the requirements and application of US GAAP and SEC disclosure requirements; and (4) ineffective controls over period end financial disclosure and reporting processes. The aforementioned material weaknesses were identified by the Company’s Chief Financial Officer in connection with the audit of our financial statements as of March 31, 2026, and communicated to our management.
Management believes that the material weaknesses set forth in items (2), (3) and (4) above did not have an effect on the Company’s financial results. However, management believes that the lack of a functioning audit committee and lack of a majority of outside directors on the Company’s board of directors, resulting in ineffective oversight in the establishment and monitoring of required internal controls and procedures can result in the Company’s determination to its financial statements for the future years.
We are committed to improving our financial organization. As part of this commitment, we will create a position to segregate duties consistent with control objectives and will increase our personnel resources and technical accounting expertise within the accounting function when funds are available to the Company: i) Appointing one or more outside directors to our board of directors who shall be appointed to the audit committee of the Company resulting in a fully functioning audit committee who will undertake the oversight in the establishment and monitoring of required internal controls and procedures; and ii) Preparing and implementing sufficient written policies and checklists which will set forth procedures for accounting and financial reporting with respect to the requirements and application of US GAAP and SEC disclosure requirements.
Management believes that the appointment of more outside directors, who shall be appointed to a fully functioning audit committee, will remedy the lack of a functioning audit committee and a lack of a majority of outside directors on the Company’s Board. In addition, management believes that preparing and implementing sufficient written policies and checklists will remedy the following material weaknesses (i) insufficient written policies and procedures for accounting and financial reporting with respect to the requirements and application of US GAAP and SEC disclosure requirements; and (ii) ineffective controls over period end financial close and reporting processes. Further, management believes that the hiring of additional personnel who have the technical expertise and knowledge will result proper segregation of duties and provide more checks and balances within the department. Additional personnel will also provide the cross training needed to support the Company if personnel turn over issues within the department occur. This coupled with the appointment of additional outside directors will greatly decrease any control and procedure issues the company may encounter in the future.
We will continue to monitor and evaluate the effectiveness of our internal controls and procedures and our internal controls over financial reporting on an ongoing basis and are committed to taking further action and implementing additional enhancements or improvements, as necessary and as funds allow.
There have been no significant changes in our internal controls over financial reporting that occurred during the year ended March 31, 2026, that have materially affected or are reasonably likely to materially affect, our internal controls over financial reporting.
4
PART II – OTHER INFORMATION
Item 1. Legal Proceedings.
We know of no material, existing or pending legal proceedings against our company, nor are we involved as a plaintiff in any material proceeding or pending litigation. There are no proceedings in which any of our Directors, Officers or affiliates, or any registered or beneficial shareholder, is an adverse party or has a material interest adverse to our interest.
Item 1A. Risk Factors.
As a “smaller reporting company” (as defined in Exchange Act Rule 12B-2), we are not required to provide the information required by this Item.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
None. The Company did not issue or sell any unregistered equity securities or equity-linked securities during the quarterly period covered by this report.
Item 3. Defaults Upon Senior Securities.
Not applicable.
Item 4. Mine Safety Disclosures.
Not applicable.
Item 5. Other Information.
Item 6. Exhibits.
| Exhibit No. | Description | |
| 31.1 | Certification of the Chief Executive Officer and Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | |
| 32.1 | Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | |
| 101.INS | Inline XBRL Instance Document. | |
| 101.SCH | Inline XBRL Taxonomy Extension Schema Document. | |
| 101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document. | |
| 101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document. | |
| 101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document. | |
| 101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document. | |
| 104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101). |
5
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, there unto duly authorized.
| MEDICAL EXERCISE INC. | ||
| Date: August 19, 2026 | By: | /s/ Matthew Degelman |
| Matthew Degelman | ||
| Chief Executive Officer/Chief Financial Officer | ||
6