UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For
the fiscal quarter ended
| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
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) |
(I.R.S. Employer Identification No.) | |
| (Address of principal executive offices) | (Zip Code) |
Registrant’s
telephone number, including area code:
Securities registered pursuant to Section 12(b) of the Act: None.
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 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 transition 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 Exchange Act). ☐ Yes
The number of shares of common stock, $ par value, outstanding on November 12, 2026 was shares.
TABLE OF CONTENTS
| i |
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q (this “Report”) contains forward-looking statements. In some cases, you can identify forward-looking statements by the following words: “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “ongoing,” “plan,” “potential,” “predict,” “project,” “should,” or the negative of these terms or other comparable terminology, although not all forward-looking statements contain these words. Forward-looking statements are not a guarantee of future performance or results, and will not necessarily be accurate indications of the times at, or by, which such performance or results will be achieved. Forward-looking statements are based on information available at the time the statements are made and involve known and unknown risks, uncertainties and other factors that may cause our results, levels of activity, performance or achievements to be materially different from the information expressed or implied by the forward-looking statements in this Report. These factors include:
| ● | our limited operating history, history of losses and lack of experience in certain aspects of our business, including the court sports industry; | |
| ● | our ability to continue as a going concern and to generate sufficient revenues to achieve and sustain profitability; | |
| ● | our need for additional capital to fund operations and satisfy obligations, including under agreements with the IBM Parties (defined below), the availability and terms of such financing and potential dilution to existing stockholders; | |
| ● | our ability to execute our business plan, including the development, launch and commercialization of our planned platform and mobile application, the timing and costs associated therewith and the extent to which we generate revenues from such initiatives; | |
| ● | revenues we are able to generate and profitability from our e-commerce site, the ability to keep such site online, avoid security breaches, and obtain and retain customers; | |
| ● | our ability to execute our newly announced “Let’s Play” pickleball and padel facilities initiative, including our ability to identify, negotiate, and complete acquisitions, partnerships, collaborations, and franchise arrangements, on the timeline anticipated, on favorable terms, or at all; | |
| ● | the anticipated benefits of our arrangements with the IBM Parties (as defined below) and the extent to which such benefits are realized, as well as the demands such arrangements place on our management and resources; | |
| ● | the acceptance by consumers of our products and services and their willingness to adopt and pay for our offerings; | |
| ● | the size, growth and development of the markets in which we operate, including pickleball and padel, and for our planned platform and application; | |
| ● | our ability to compete effectively in a highly competitive and evolving industry and to respond to changes in market conditions and consumer preferences; | |
| ● | the impact of general economic, financial and business conditions, including inflation, interest rates, tariffs, trade policies, economic slowdowns or recessions and geopolitical events, on discretionary spending and demand for our products, services and events; | |
| ● | our ability to successfully plan, launch and operate events, including the planned World Series of Pickleball, including securing venues, obtaining permits, attracting sponsorships, partners and participants, and managing operational and logistical challenges; | |
| ● | risks related to injuries, accidents, security incidents or other liabilities arising from our operations or events and the adequacy of our insurance coverage; | |
| ● | disruptions to our information technology systems, cybersecurity threats and unauthorized access to data, and the resulting operational, legal and reputational risks; | |
| ● | risks associated with our use of artificial intelligence technologies, including regulatory, operational, reputational and competitive risks; | |
| ● | our ability to attract, retain and manage key personnel and to effectively manage our growth, including increased operational scale and complexity; | |
| ● | our ability to protect our intellectual property and avoid infringing on the intellectual property rights of others; | |
| ● | our ability to establish and maintain brand recognition and customer loyalty; | |
| ● | changes in laws, regulations and regulatory requirements applicable to our business; | |
| ● | corporate governance risks and risks related to being a public company, including increased costs and compliance obligations; | |
| ● | the concentration of ownership of our securities and its impact on corporate decision-making; | |
| ● | the market price and liquidity of our common stock; and | |
| ● | other risk factors discussed or incorporated by reference in “Risk Factors”, below. |
You should read the matters described in “Risk Factors” and the other cautionary statements made in this Report, as being applicable to all related forward-looking statements wherever they appear in this Report. We cannot assure you that the forward-looking statements in this Report will prove to be accurate and therefore prospective investors are encouraged not to place undue reliance on forward-looking statements. Other than as required by law, we undertake no obligation to update or revise these forward-looking statements, even though our situation may change in the future.
| 1 |
Part I – Financial Information
Item 1. Financial Statements
Agassi Sports Entertainment Corp.,
Condensed Balance Sheets
| September 30, | December 31, | |||||||
| 2026 | 2025 | |||||||
| (unaudited) | ||||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Prepaid expenses and other current assets | ||||||||
| Total current assets | ||||||||
| Property and equipment, net | ||||||||
| Intangible asset, net | ||||||||
| Software development in progress | ||||||||
| Total assets | $ | $ | ||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| Current liabilities: | ||||||||
| Accounts payable and accrued expenses | $ | $ | ||||||
| Accounts payable and accrued expenses – related party | ||||||||
| Convertible note payable | ||||||||
| Convertible note payable – related party | ||||||||
| Accrued interest – related party | ||||||||
| Total liabilities | ||||||||
| Commitments and contingencies (Note 9) | ||||||||
| Stockholders’ equity: | ||||||||
| Preferred stock, $ par value, shares authorized, shares issued and outstanding as of both September 30, 2026 and December 31, 2025 | ||||||||
| Common stock, $ par value, shares authorized, and shares issued and outstanding, and and shares issuable, as of September 30, 2026 and December 31, 2025, respectively, and shares unvested as of September 30, 2026 and December 31, 2025, respectively | ||||||||
| Additional paid-in capital | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Total stockholders’ equity | ||||||||
| Total liabilities and stockholders’ equity | $ | $ | ||||||
The accompanying notes are an integral part of these unaudited condensed financial statements.
| 2 |
Agassi Sports Entertainment Corp.,
Condensed Statements of Operations
(unaudited)
For the Three Months Ended September 30, | For the Nine Months Ended September 30, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Operating Expenses: | ||||||||||||||||
| General and administrative expenses | $ | $ | $ | $ | ||||||||||||
| Research and Development | ||||||||||||||||
| Total operating expenses | ||||||||||||||||
| Loss from operations | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Other Income | ||||||||||||||||
| Interest income | ||||||||||||||||
| Interest expense – related party | ( | ) | ( | ) | ||||||||||||
| Interest expense | ( | ) | ||||||||||||||
| Total other income (expense) | ||||||||||||||||
| Net Loss before income taxes | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Provision for income taxes | ||||||||||||||||
| Net Loss | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Deemed dividend- warrants issued to shareholders for lock-up agreements | $ | $ | $ | ( | ) | $ | ||||||||||
| Net loss attributable to common shareholders | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Weighted average common shares outstanding - basic and diluted | ||||||||||||||||
| Net loss per share- basic and diluted | $ | ) | $ | ) | $ | ) | $ | ) | ||||||||
The accompanying notes are an integral part of these unaudited condensed financial statements.
| 3 |
Agassi Sports Entertainment Corp.,
Condensed
Statements of Changes in Stockholders’ EQUITY
(Unaudited)
For the Three and Nine Months Ended September 30, 2026 and 2025
| Common Stock | Additional Paid in | Accumulated | Total Stockholders’ | |||||||||||||||||
| Shares | Amount | Capital | Deficit | Equity | ||||||||||||||||
| Balance, December 31, 2024 | $ | $ | $ | ( | ) | $ | ||||||||||||||
| Stock based compensation | ||||||||||||||||||||
| Net loss | ( | ) | ( | ) | ||||||||||||||||
| Balance, March 31, 2025 | ( | ) | ||||||||||||||||||
| Warrants issued in acquisition of intangibles | ||||||||||||||||||||
| Net loss | ( | ) | ( | ) | ||||||||||||||||
| Balance June 30, 2025 | $ | $ | $ | ( | ) | $ | ||||||||||||||
| Stock based compensation | - | |||||||||||||||||||
| Net Loss | - | ( | ) | ( | ) | |||||||||||||||
| Balance, September 30, 2025 | ( | ) | ||||||||||||||||||
| Common Stock | Additional Paid in | Accumulated | Total Stockholders’ | |||||||||||||||||
| Shares | Amount | Capital | Deficit | Equity | ||||||||||||||||
| Balance, December 31, 2025 | $ | $ | $ | ( | ) | $ | ||||||||||||||
| Shares issued for cash | ||||||||||||||||||||
| Conversion of note payable | ||||||||||||||||||||
| Exercise of warrants | ( | ) | ||||||||||||||||||
| Stock based compensation | ||||||||||||||||||||
| Net loss | ( | ) | ( | ) | ||||||||||||||||
| Balance, March 31, 2026 | ( | ) | ( | ) | ||||||||||||||||
| Shares issued for cash | ||||||||||||||||||||
| Restricted shares issued for services | ( | ) | ||||||||||||||||||
| Warrants issued in acquisition of intangibles | - | |||||||||||||||||||
| Stock based compensation | - | |||||||||||||||||||
| Net loss | - | ( | ) | ( | ) | |||||||||||||||
| Balance June 30, 2026 | $ | $ | $ | ( | ) | $ | ||||||||||||||
| Shares issued for cash | ||||||||||||||||||||
| Shares issued for services | ||||||||||||||||||||
| Stock-based compensation | - | |||||||||||||||||||
| Net Loss | - | ( | ) | ( | ) | |||||||||||||||
| Balance, September 30, 2026 | ( | ) | ||||||||||||||||||
The accompanying notes are an integral part of these unaudited condensed financial statements.
| 4 |
Agassi Sports Entertainment Corp.,
Condensed Statements of Cash Flows
(Unaudited)
| For the Nine Months Ended | ||||||||
| September 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 | ||||||||
| Stock-based compensation expense | ||||||||
| Shares issued for services | ||||||||
| Changes in operating assets and liabilities: | ||||||||
| Prepaid expenses and other current assets | ( | ) | ||||||
| Accounts payable and accrued expenses | ( | ) | ||||||
| Accounts payable and accrued expenses – related party | ||||||||
| Accrued Interest- related party | ||||||||
| Net cash used in operating activities | ( | ) | ( | ) | ||||
| Cash flows from investing activities: | ||||||||
| Purchase of property and equipment | ( | ) | ||||||
| Acquisition of intangible asset | ( | ) | ||||||
| Payments for software development in progress | ( | ) | ||||||
| Net cash used in investing activities | ( | ) | ( | ) | ||||
| Cash flows from financing activities: | ||||||||
| Proceeds from shares issued | ||||||||
| Proceeds from convertible note payable-related party | ||||||||
| Net cash provided by financing activities | ||||||||
| Net change in cash and cash equivalents | ( | ) | ||||||
| Cash and cash equivalents at beginning of period | ||||||||
| Cash and cash equivalents at end of period | $ | $ | ||||||
| Supplemental disclosure of cash flow information: | ||||||||
| Cash paid for interest | $ | $ | ||||||
| Cash paid for income taxes | $ | $ | ||||||
| Supplemental disclosure of non-cash investing and financing activities: | ||||||||
| Warrants issued in acquisition of intangibles | $ | $ | ||||||
| Conversion of note payable and accrued interest into common stock | $ | $ | ||||||
| Software development costs included in accounts payable and accrued expenses | $ | $ | ||||||
| Property and equipment included in accounts payable and accrued expenses | ||||||||
| Intangible licensed right accrued in accounts payable - related party | $ | $ | ||||||
| Deemed dividend- warrants issued to shareholders for lockup agreements | $ | $ | ||||||
The accompanying notes are an integral part of these unaudited condensed financial statements.
| 5 |
Agassi Sports Entertainment Corp.,
formerly Global Acquisitions Corporation
Notes to Condensed Financial Statements
(Unaudited)
NOTE 1. ORGANIZATIONAL STRUCTURE AND BASIS OF PRESENTATION
a. ORGANIZATION
Agassi
Sports Entertainment Corp. (the “Company”) was incorporated in Nevada on
On
June 10, 2016, the Company entered into a Transfer Agreement for the sale and transfer of the Company’s
In
connection with the closing of the Transfer Agreement, AAGC assumed the obligation of the Company to pay Ronald Boreta for deferred salary
of $
Also
in connection with the closing of the Transfer Agreement, entities controlled by the Boretas cancelled $
Also, as a result of the Transfer Agreement, on October 18, 2016, the Company derecognized the assets and liabilities of AAGC.
The
sale and transfer of the Company’s
b. BASIS OF PRESENTATION
The unaudited condensed interim financial statements included herein, presented in accordance with United States Generally Accepted Accounting Principles (GAAP) and stated in US dollars, have been prepared by the Company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations, although the Company believes that the disclosures are adequate to make the information presented not misleading.
| 6 |
These statements reflect all adjustments, consisting of normal recurring adjustments, which, in the opinion of management, are necessary for fair presentation of the information contained therein. It is suggested that these unaudited condensed interim financial statements be read in conjunction with the financial statements of the Company for the year ended December 31, 2025 and notes thereto included in the Company’s Annual Report on Form 10-K. The Company follows the same accounting policies in the preparation of interim reports.
Results of operations for interim periods may not be indicative of annual results.
c. BUSINESS ACTIVITIES
At this time, the Company’s plan is to create and manage unique content, building sports communities around entertainment, media, wellness, education, commerce, and charitable efforts, with the goal of becoming a leading media and entertainment company in the world of racket sports.
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
a. USE OF ESTIMATES
The preparation of these financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amount of revenues and expenses during the reporting period. Significant estimates and assumptions made by management include, but are not limited to, the determination of the provision for income taxes, the fair value of warrants, and the fair value of stock-based compensation. The Company bases the estimates on historical experience and on various other assumptions that are believed to be reasonable. Actual results could differ from those estimates.
b. CASH AND CASH EQUIVALENTS
The Company considers all highly liquid instruments with an original maturity of three months or less at the date of purchase to be cash equivalents.
c. CASH DEPOSITS
The
Company had
The Company monitors the creditworthiness of the financial institutions with which time deposits are placed and does not believe it is exposed to significant credit risk. The Company has not experienced any losses related to these instruments during the periods presented.
d. PROPERTY AND EQUIPMENT, NET
Property
and equipment are stated at cost less accumulated depreciation and amortization. Property and equipment consist of computer
equipment and buildings. Depreciation expense is recognized using the straight-line method over the estimated useful lives of the
assets, which are five years for computer and equipment. Buildings will be depreciated over their estimated useful lives, as
determined by management, once placed in service. Depreciation commences when an asset is placed in service. As of September 30,
2026, depreciation expense had been recognized on the buildings of $
When assets are retired or otherwise disposed of, the cost, accumulated depreciation and amortization are removed from the accounts and any resulting gain or loss is reflected in the statements of operations in the period realized. Maintenance and repairs that do not enhance or extend the asset’s useful life are charged to operating expenses as incurred.
| 7 |
The following is a summary of property and equipment as of:
| September 30, 2026 | December 31, 2025 | |||||||
| Computer and equipment | $ | $ | ||||||
| Buildings | ||||||||
| Total | ||||||||
| Accumulated depreciation | ( | ) | ( | ) | ||||
| Property and equipment, net | $ | $ | ||||||
Depreciation
expense was $
e. INTANGIBLE ASSETS
Intangible
assets are amortized over the respective estimated lives on a straight-line basis, unless the lives are determined to be indefinite and
reviewed for impairment whenever events or other changes in circumstances indicate that the carrying amount may not be recoverable. Impairment
testing compares carrying values to fair values and, when appropriate, the carrying value of these assets is reduced to fair value. Impairment
charges, if any, are recorded in the period in which the impairment is detected. As of September 30, 2026, intangible assets consist
of the trademark acquired from Patrick J. Rolfes and Ted Angelo (the “Sellers”), the owners of the trademark for “World
Series of Pickleball” (the “Trademark”). Pursuant to the Trademark Acquisition Agreement, we acquired
all rights to, and ownership of, the Trademark, in consideration for $
The following is a summary of intangible assets, net as of:
| September 30, 2026 | December 31, 2025 | |||||||
| Trademark | $ | $ | ||||||
| Licensed rights | ||||||||
| Licensed right - related party | ||||||||
| Total | ||||||||
| Accumulated Amortization | ( | ) | ( | ) | ||||
| Intangible asset, net | $ | $ | ||||||
Amortization
expense was $
f. SOFTWARE DEVELOPMENT IN PROGRESS
The Company capitalizes costs incurred to develop software for internal use in accordance with Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) 350-40, Intangibles—Goodwill and Other—Internal-Use Software. Costs incurred during the application development stage are capitalized, while costs incurred during the preliminary project stage and the post-implementation stage, including training and maintenance costs, are expensed as incurred. Capitalized software development costs will be amortized on a straight-line basis over the estimated useful life of the software, beginning when the software is substantially complete and ready for its intended use.
The
application development stage of the Company’s digital platform began on November 1, 2025, following the execution of SoW 1 and
the Commitment Agreement with the IBM Parties on October 31, 2025 (see Note 9), and the related costs were capitalized during the three
months ended June 30, 2026. As of September 30, 2026, the software remained in development and had not been placed in service,
and accordingly no amortization was recorded. Software development in progress was $
| 8 |
g. IMPAIRMENT OF LONG-LIVED ASSETS
The Company continually monitors events and changes in circumstances that could indicate carrying amounts of long-lived assets may not be recoverable. When such events or changes in circumstances are present, the Company assesses the recoverability of long-lived assets by determining whether the carrying value of such assets will be recovered through undiscounted expected future cash flows. If the total of the future cash flows is less than the carrying amount of those assets, the Company recognizes an impairment loss based on the excess of the carrying amount over the fair value of the assets. Assets to be disposed of are reported at the lower of the carrying amount or the fair value less costs to sell. The Company did not record any impairment losses on its long-lived assets during the three and nine months ended September 30, 2026.
h. INCOME TAXES
The Company accounts for income taxes under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the financial statement and tax bases of assets and liabilities, measured using enacted tax rates in effect for the years in which those differences are expected to reverse. A valuation allowance is established against deferred tax assets when the Company believes it is more likely than not that such assets will not be realized.
The Company recognizes the benefit of an uncertain tax position only if it is more likely than not that the position would be sustained upon examination based on its technical merits.
For
the three and nine months ended September 30, 2026 and 2025, the Company recorded no provision for or benefit from income taxes. Under
the estimated annual effective tax rate method of ASC 740-270, the Company’s effective rate is
i. FAIR VALUE OF FINANCIAL INSTRUMENTS
The Company adopted ASC 820 “Fair Value Measurement” related to fair value measurement at inception. The standard defines fair value, establishes a framework for measuring fair value and expands disclosure of fair value measurements. The standard applies under other accounting pronouncements that require or permit fair value measurements and, accordingly, does not require any new fair value measurements. The standard clarifies that fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. As a basis for considering such assumptions, the standard established a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows:
| ● | Level 1: Observable inputs such as quoted prices in active markets; |
| ● | Level 2: Inputs, other than quoted prices in active markets, that are observable either directly or indirectly; and |
| ● | Level 3: Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions. |
At September 30, 2026, and December 31, 2025, the carrying amount of accounts payable and accrued liabilities approximate fair value because of the short maturity of these instruments.
| 9 |
Basic
earnings (loss) per share exclude any dilutive effects of options, warrants, and convertible securities. Basic earnings per share are
computed using the weighted average number of shares of common stock outstanding during the period. Common stock equivalent shares are
excluded from the computation if their effect is antidilutive. The following potentially dilutive securities were excluded from the computation
of diluted loss per share because their effect would have been antidilutive: warrants, restricted stock units, and
restricted stock awards, totaling , as of September 30, 2026. Shares issuable upon conversion of the $
Loss per share is computed by dividing net loss attributable to common stockholders, which reflects the net loss adjusted for the deemed dividend on warrants issued to stockholders in consideration for lock-up agreements (see Note 7), by the weighted average number of common shares outstanding during the period. The weighted-average number of common shares used in the calculation of basic loss per share was and for the three months ended September 30, 2026, and 2025, respectively. The weighted-average number of common shares used in the calculation of basic loss per share was and for the nine months ended September 30, 2026, and 2025, respectively.
k. RELATED PARTIES
Parties are considered to be related to the Company if the parties, directly or indirectly, through one or more intermediaries, control, are controlled by, or are under common control with the Company. Related parties also include principal owners of the Company, its management, members of the immediate families of principal owners of the Company and its management and other parties with which the Company may deal if one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests.
l. STOCK-BASED COMPENSATION
The Company accounts for stock-based compensation to employees and non-employees in accordance with FASB ASC 718, “Compensation-Stock Compensation”. ASC 718 requires companies to measure the cost of services received in exchange for an award of equity instruments, including stock options, based on the grant date fair value of the award and to recognize it as compensation expense over the period the grantee is required to provide service in exchange for the award, usually the vesting period. Following its adoption of ASU 2018-07, “Improvements to Nonemployee Share-Based Payment Accounting”, the Company measures awards granted to non-employees in exchange for goods or services at the grant-date fair value of the equity instruments the Company is obligated to issue, and equity-classified non-employee awards are not remeasured after the grant date. For non-employee awards containing a performance condition, compensation cost is recognized when achievement of the performance condition is probable; for awards subject only to service conditions, compensation cost is recognized over the requisite service (vesting) period. The Company has elected, as permitted by ASC 718-10-35-3, to account for forfeitures as they occur; previously recognized compensation cost for an unvested award is reversed in the period the award is forfeited, including upon termination of a grantee’s service.
The Company estimates the fair value of stock options and warrants granted as compensation using the Black-Scholes option-pricing model, which requires assumptions for the expected volatility of the Company’s common stock, the risk-free interest rate, the expected term of the award and expected dividends. The fair value of restricted stock awards and restricted stock units is measured by reference to the quoted market price of the Company’s common stock on the grant date.
| 10 |
m. WARRANTS
The Company accounts for warrants issued to non-employees, investors and other counterparties as equity-classified instruments when the warrants are indexed to the Company’s own stock and satisfy the conditions for equity classification in ASC 815-40, “Derivatives and Hedging—Contracts in Entity’s Own Equity”. The Company has evaluated the terms of its outstanding warrants and concluded that they meet the requirements for equity classification: cashless (net share) exercise provisions, where present, are settled solely in shares of common stock; beneficial ownership limitations of 4.999% (which a holder may increase to 9.999% upon at least 61 days’ prior written notice to the Company) limit the timing of certain exercises but do not create an obligation for the Company to settle in cash; and the registration rights granted to certain holders do not require net cash settlement, as the Company is permitted to deliver unregistered shares upon exercise. Accordingly, the warrants are recorded within stockholders’ equity at issuance and are not subsequently remeasured.
n. CONVERTIBLE NOTES
The Company accounts for convertible notes in accordance with ASC 470-20, “Debt—Debt with Conversion and Other Options”, as amended by ASU 2020-06. Convertible notes that do not contain embedded features requiring bifurcation under ASC 815 are accounted for as a single liability measured at amortized cost, with no portion of the proceeds separately allocated to the conversion feature. When a note is converted in accordance with its original terms, the carrying amount of the note, including accrued but unpaid interest, is credited to common stock and additional paid-in capital and no gain or loss is recognized.
o. REGISTRATION PAYMENT ARRANGEMENTS
The Company accounts for registration payment arrangements in accordance with ASC 825-20, “Financial Instruments—Registration Payment Arrangements”. A contingent obligation to make future payments or otherwise transfer consideration under a registration payment arrangement is recognized as a liability when the transfer of consideration is probable and the amount can be reasonably estimated. No liability under registration payment arrangements was recognized at September 30, 2026, or December 31, 2025.
p. SEGMENT INFORMATION
In accordance with ASC 280, Segment Reporting (“ASC 280”), we identify our operating segments according to how our business activities are managed and evaluated. ASC 280 establishes standards for companies to report financial statement information about operating segments, products, services, geographic areas, and major customers. Operating segments are defined as components of an enterprise for which separate financial information is available that is regularly evaluated by the Company’s chief operating decision maker (“CODM”), which is Ronald S. Boreta, its President and CEO, in deciding how to allocate resources and assess performance.
q. RECENT ACCOUNTING PRONOUNCEMENTS
In November 2023, the FASB issued ASU 2023-07, “Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures”, which requires enhanced disclosures about significant segment expenses and other segment items regularly provided to the chief operating decision maker, and requires that entities with a single reportable segment provide all of the disclosures required by ASC 280, as amended. The guidance is effective for fiscal years beginning after December 15, 2023, and for interim periods within fiscal years beginning after December 15, 2024. The Company has adopted ASU 2023-07, and the disclosures required by the standard, including the identification of the CODM and the measures of segment profit or loss regularly reviewed by the CODM, are reflected in Note 3 – Segment Reporting. The adoption of ASU 2023-07 affected disclosures only and did not have a material impact on the Company’s financial position or results of operations.
In December 2023, the FASB issued ASU 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures” which is intended to enhance the transparency and decision usefulness of income tax disclosures. The guidance addresses investor requests for enhanced income tax information primarily through changes to the rate reconciliation and income taxes paid information. The guidance is effective for annual periods beginning after December 15, 2024. The Company adopted ASU 2023-09 on January 1, 2025. The adoption of ASU 2023-09 has not had a material impact on the Company’s financial statements and disclosures.
In November 2024, the FASB issued ASU 2024-03, “Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses”, which requires disclosure, in the notes to the financial statements, of specified categories of expenses, including employee compensation, depreciation and intangible asset amortization, included in each relevant expense caption presented on the face of the income statement. The guidance is effective for annual reporting periods beginning after December 15, 2026, and for interim reporting periods beginning after December 15, 2027, with early adoption permitted. The Company is currently evaluating the effect of ASU 2024-03 on its disclosures, including the disaggregation of the expenses presented within its general and administrative expenses caption.
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In November 2024, the FASB issued ASU 2024-04, “Debt—Debt with Conversion and Other Options (Subtopic 470-20): Induced Conversions of Convertible Debt Instruments”, which clarifies the requirements for determining whether certain settlements of convertible debt instruments, including settlements made under terms that have been changed to induce conversion, should be accounted for as an induced conversion. The guidance is effective for annual reporting periods beginning after December 15, 2025, and interim reporting periods within those annual periods. The Company adopted ASU 2024-04 on January 1, 2026, on a prospective basis. The Company will apply the guidance in accounting for the October 2026 amendment and conversion of the Investments AKA Convertible Note (see Note 10).
In September 2025, the FASB issued ASU 2025-06, “Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software”, which removes all references to software development project stages and requires capitalization of software costs to begin when management has authorized and committed to funding the software project and it is probable that the project will be completed and the software will be used to perform the function intended. The guidance is effective for annual reporting periods beginning after December 15, 2027, and interim reporting periods within those annual periods, with early adoption permitted. The Company is currently evaluating the effect of ASU 2025-06 on its accounting for capitalized software development costs.
The Company believes there was no other new accounting guidance adopted but not yet effective that either has not already been disclosed in prior reporting periods or is relevant to the readers of the Company’s financial statements.
The Company continually assesses any new accounting pronouncements to determine their applicability to the Company. Where it is determined that a new accounting pronouncement affects the Company’s financial reporting, the Company undertakes a study to determine the consequence of the change to its financial statements and assures that there are proper controls in place to ascertain that the Company’s financials properly reflect the change.
NOTE 3 – SEGMENT REPORTING
The
CODM has been identified as the Chief Executive Officer, who reviews the operating results for the Company as a whole to make decisions
about allocating resources and assessing financial performance. Accordingly, management has determined that the Company only has
When evaluating the Company’s performance and making key decisions regarding resource allocation, the CODM reviews several key metrics, which include the following:
| For the Three Months Ended | For the Nine Months Ended | |||||||||||||||
| September 30, | September 30, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Significant segment expenses: | ||||||||||||||||
| Payroll and related expenses | $ | $ | $ | $ | ||||||||||||
| Legal and professional fees | ||||||||||||||||
| Marketing, promotion and investor relations | ||||||||||||||||
| Stock-based compensation | ||||||||||||||||
| Research and development | ||||||||||||||||
| Depreciation and amortization | ||||||||||||||||
| Other segment items (a) | ||||||||||||||||
| Total operating expenses | ||||||||||||||||
| Other income (expense), net | ||||||||||||||||
| Net loss | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| (a) |
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The measure of segment profit or loss reviewed by our CODM is net loss. The significant segment expenses regularly provided to the CODM are presented in the table above. Operating costs are reviewed and monitored by the CODM to manage and forecast cash. The CODM also reviews operating costs to manage, maintain and enforce all contractual agreements to ensure costs are aligned with all agreements and budget.
NOTE 4 – GOING CONCERN
The
accompanying unaudited condensed financial statements have been prepared on a going concern basis, which contemplates the realization
of assets and the satisfaction of liabilities in the normal course of business. As shown in the accompanying unaudited financial statements,
for the nine months ended September 30, 2026, and 2025, the Company had a net loss of $
The
Company’s management believes that cash generated from its operations and raised through sales of equity will not be sufficient
to fund the Company’s operating cash needs, including its remaining scheduled payments to the IBM Parties, over at least the next
12 months, and that the Company will require additional funding. The Company plans to raise additional required funding when required
through the sale of debt or equity, which may not be available on favorable terms, if at all, and may, if sold, cause significant dilution
to existing stockholders. During the three months ended September 30, 2026, the Company received $
The unaudited condensed financial statements do not include any adjustments relating to the recoverability and classification of asset carrying amounts or the amount and classification of liabilities that might result should the Company be unable to continue as a going concern.
NOTE 5. INTANGIBLE ASSETS
Trademark Acquisition Agreement
On
May 31, 2025, the Company entered into a Trademark Acquisition Agreement with Patrick J. Rolfes and Ted Angelo, the owners of the trademark
for “World Series of Pickleball”. Pursuant to the Trademark Acquisition Agreement, the Company acquired all
rights to, and ownership of, the Trademark, in consideration for $
The Trademark Acquisition Agreement includes customary representations and indemnification obligations of the sellers, for a transaction of the size and type, as the Trademark acquisition. As additional consideration payable to each of the sellers, we agreed that during the lifetime of each of the sellers, we would furnish them an aggregate of six (6) VIP tickets to all World Series of Pickleball events produced by or on behalf of the Company. Such tickets are subject to all the rules and regulations, including standards of behavior, applicable to tickets generally.
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The
Sellers Warrants have an exercise price of $
Cahill Name and Likeness License Agreement
On
June 4, 2026, the Company entered into a Name and Likeness License Agreement (the “Grateful Dead License Agreement”)
with Darren Cahill (“Cahill”), a former professional tennis player and coach, pursuant to which Cahill granted the
Company a worldwide license to use his name, likeness and right of publicity in connection with the Company’s business,
including its planned digital coaching platform. The Grateful Dead License Agreement has an initial term of fifteen (
As
consideration for the license, the Company granted Cahill warrants to purchase
The
Trademark and the licensed right are each amortized over an estimated useful life of
| Remainder of 2026 | $ | |||
| 2027 | ||||
| 2028 | ||||
| 2029 | ||||
| 2030 | ||||
| Thereafter | ||||
| Total | $ |
NOTE 6. CONVERTIBLE NOTE PAYABLE – RELATED PARTY
On
July 28, 2026, the Company issued a $
The
note does not contain features requiring bifurcation and is accounted for as a single liability at amortized cost (see Note 2). The Company
recognized interest expense of $
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NOTE 7. CAPITAL STOCK AND SHARE-BASED COMPENSATION
PREFERRED STOCK
Preferred stock, $ par value, shares authorized, shares issued and outstanding as of September 30, 2026, and December 31, 2025. The Company’s Board of Directors shall determine the rights, preferences, privileges and restrictions of the preferred stock, including dividend rights, conversion rights, voting rights, terms of redemption, liquidation preferences, sinking fund terms and the number of shares constituting any series or the designation of any series.
COMMON STOCK
Effective February 15, 2022, the number of authorized shares of common stock, $ par value, was increased to shares.
In February 2026, the Company issued a net total of shares of common stock pursuant to the cashless exercise of warrants by a director and a significant beneficial owner. These transactions involved the exercise of warrants for and shares, respectively, resulting in the net issuance of and shares after the forfeiture of shares to satisfy the aggregate exercise price.
On
February 6, 2026, the Company issued shares of common stock upon the conversion of $
During
the nine months ended September 30, 2026, the Company issued restricted shares of common stock to its investor relations firm,
all of which shares were vested as of September 30, 2026 (see “RESTRICTED STOCK AWARDS” below). On July 28, 2026, the Company
also issued shares of restricted common stock to a second investor relations firm for strategic advisory and investor relations
services, with a fair value of $
Subscription Agreements
On
March 13, 2026, the Company issued shares of restricted common stock to two accredited investors (the “March 2026 investors”)
at $ per share for total proceeds of $
On
April 28, 2026, the Company entered into a Subscription Agreement with Investments AKA, LLC, a limited liability company indirectly controlled
by former professional tennis player Andre K. Agassi, 8-time Grand Slam winner, and the Company’s largest beneficial stockholder,
pursuant to which Investments AKA purchased an aggregate of shares of restricted common stock from the Company, for $ per
share, or a total of $
During
the three months ended June 30, 2026, the Company issued an additional shares of restricted common stock at $ per share for
gross proceeds of $
During
the three months ended September 30, 2026, the Company sold an additional shares of common stock at $ per share and a total
of
Private Placement Subscription
On
March 30, 2026, the Company issued shares of restricted common stock to an accredited investor at $ per share for aggregate
gross proceeds of $
There were shares of common stock issued and outstanding and shares issuable as of September 30, 2026, and shares of common stock issued and outstanding as of December 31, 2025.
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RESTRICTED STOCK AWARDS
In
May 2026, the Company issued restricted shares of common stock to Business Funding Group at $ per share, for an aggregate
fair value of $
In
April 2026, pursuant to a letter agreement with an investor relations firm, the Company issued restricted shares of common stock
to the investor relations firm at $ per share, for an aggregate fair value of $
In total, the Company recorded stock-based compensation expense of $ and $ related to restricted stock issuances in the statements of operations for the three and nine months ended September 30, 2026, respectively, and unrecognized stock compensation outstanding on these grants was $ as of September 30, 2026. As of September 30, 2026, restricted shares had been issued pursuant to these awards, of which shares remained unvested.
WARRANTS
| Warrants | Weighted Average Exercise Price | Intrinsic Value | ||||||||||
| Outstanding as of December 31, 2025 | $ | $ | ||||||||||
| Granted | - | |||||||||||
| Exercised | ) | - | ||||||||||
| Forfeited | ) | - | ||||||||||
| Outstanding as of September 30, 2026 | $ | $ | ||||||||||
| Exercisable as of December 31, 2025 | $ | $ | ||||||||||
| Exercisable as of September 30, 2026 | $ | $ | ||||||||||
The weighted-average remaining term of the warrants outstanding was years as of September 30, 2026.
During
the three months ended September 30, 2026, the Company granted warrants to purchase an aggregate of shares of common stock, consisting
of (i) warrants to purchase shares granted on July 23, 2026 to two consultants for services, with an exercise price of $
per share, which vested immediately and had an aggregate grant-date fair value of $ that was recognized as stock-based compensation
expense (see Note 9); (ii) warrants to purchase
In
connection with lock-up agreements entered into with certain of its stockholders, on June 19, 2026, the Company granted to such stockholders
warrants to purchase an aggregate of shares of the Company’s common stock, at an exercise price of $
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In
connection with the Name and Likeness License Agreement discussed in greater detail under Note 5, on June 4, 2026, the Company granted
Darren Cahill warrants to purchase shares of the Company’s common stock. The warrants have an exercise price of $
The
Company, in consideration for legal services provided to the Company, on May 29, 2026, granted to the Company’s outside legal counsel,
warrants to purchase up to shares of the Company’s common stock, at the exercise price of $
The
Company, in consideration for services agreed to be rendered, on April 27, 2026, granted a financial advisor to the Company, warrants
to purchase up to shares of the Company’s common stock, at the exercise price of $
The Company, for consulting services agreed to be rendered, on February 3, 2026, granted a consultant warrants to purchase up to shares of the Company’s common stock, at the exercise price of $ per share of common stock. The warrants expire on .
The Company, for consulting services agreed to be rendered, on March 6, 2025, granted to Darren Cahill, warrants to purchase up to shares of the Company’s common stock, at the exercise price of $ per share of common stock. The warrants expire on .
The Company, for consulting services agreed to be rendered, on March 6, 2025, granted a consultant warrants to purchase up to shares of the Company’s common stock, at the exercise price of $ per share of common stock. The warrants expire on .
The
Company, for services agreed to be rendered as the Company’s Chief Financial Officer, on March 6, 2025, granted to Shawn Cable,
warrants to purchase up to shares of the Company’s common stock, at the exercise price of $
In connection with the Trademark Purchase Agreement discussed in greater detail under Note 5, the Company granted the Sellers warrants to purchase shares of the Company’s common stock. The warrants have an exercise price of $ per share (the closing sales price of the Company’s common stock on the last trading day prior to the entry into the Trademark Acquisition Agreement) and a three-year term and are exercisable only on a cash basis.
The Company, for consulting services agreed to be rendered, on October 31, 2025, granted to Stefanie Graf, the spouse of Andre K. Agassi, a significant beneficial owner of the Company’s common stock, warrants to purchase shares of the Company’s common stock, at the exercise price of $ per share of common stock. The warrants expire on . The warrants are exercisable as to one half of the shares of common stock immediately, and exercisable as to the remaining half of the shares of common stock one year following the grant date of the warrants.
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The
aggregate fair value of the warrants was $
| For the Nine Months Ended September 30, | ||||||||
| 2026 | 2025 | |||||||
| Risk-free interest rate | % | % | ||||||
| Expected term (in years) | ||||||||
| Expected volatility | % | % | ||||||
| Expected dividend yield | % | % | ||||||
The
Company capitalized $
2026 Equity Incentive Plan
On March 23, 2026, the Board of Directors adopted the Agassi Sports Entertainment Corp. 2026 Equity Incentive Plan, which became effective on the same date (the “2026 Plan”).
The 2026 Plan provides an opportunity for any employee, officer, director or consultant of the Company, subject to limitations provided by federal or state securities laws, to receive (i) nonqualified stock options; (ii) stock appreciation rights; (iii) restricted stock awards; (iv) restricted stock units; (v) shares in performance of services; (vi) other awards of equity or equity based compensation; or (vii) any combination of the foregoing. In making such determinations, the Board or Compensation Committee may take into account the nature of the services rendered by such person, his or her present and potential contribution to the Company’s success, and such other factors as the Board or Compensation Committee, in its discretion shall deem relevant.
Subject to adjustment in connection with the payment of a stock dividend, a stock split or subdivision or combination of the shares of common stock, or a reorganization or reclassification of the Company’s common stock, the aggregate total number of shares of common stock which may be issued pursuant to awards under the 2026 Plan is .
RESTRICTED STOCK UNITS
In May 2026, the Company granted restricted stock units (“RSUs”) under the 2026 Plan to its Chief Executive Officer pursuant to the terms of his employment agreement. The RSUs vest in three equal annual installments on December 31, 2026, 2027 and 2028. On September 29, 2026, the Company granted RSUs under the 2026 Plan to a consultant, with a grant-date fair value of $ per unit, which vest in three equal annual installments on each of the first three anniversaries of the October 1, 2026 vesting commencement date. The Company recorded stock-based compensation expense related to RSUs of approximately $ and $ in the statements of operations for the three and nine months ended September 30, 2026, respectively. Total unrecognized compensation cost related to non-vested RSUs amounted to approximately $ as of September 30, 2026, which is expected to be recognized over years. As of September 30, 2026, RSUs remained unvested.
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| RSUs | Weighted Average Fair Value | |||||||
| Nonvested as of December 31, 2025 | $ | |||||||
| Granted | ||||||||
| Vested | ||||||||
| Forfeited | ||||||||
| Nonvested as of September 30, 2026 | $ | |||||||
NOTE 8 – RELATED PARTY TRANSACTIONS
In prior periods, AAGC advanced funds to pay certain expenses of the Company. The Company formerly owned a 51% interest in AAGC. No advances were received from AAGC during the nine months ended September 30, 2026 or 2025, and no amounts were due to or from AAGC as of September 30, 2026, or December 31, 2025.
On
July 3, 2024, the Company granted warrants to purchase
The Company also entered into a Consulting Agreement, dated July 3, 2024, with Askew with respect to his services and the issuance of his Warrants.
The Company’s corporate offices are located in a space shared with The Agassi Foundation, which is provided to the Company without charge.
License and Brand Partner Agreements
Effective
June 18, 2026,
On
October 31, 2025, the Company granted Stefanie Graf, the spouse of Mr. Agassi, warrants to purchase
On
March 6, 2025, the Company granted Shawn Cable, the Company’s Chief Financial Officer, warrants to purchase up to
The
Company is also party to a fifteen-year Name and Likeness License Agreement, dated June 4, 2026, with Darren Cahill, in consideration
of which the Company granted Mr. Cahill warrants to purchase shares of common stock with a grant-date fair value of $
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Subscription Agreements
One
of the March 2026 Investors was the Boreta Lifetime Trust, whose trustee is Ronald S. Boreta, the Company’s President, Chief Executive
Officer and director. The Boreta Trust purchased shares of restricted common stock for $ per share or $
On
April 28, 2026, the Company entered into a Subscription Agreement with Investments AKA, LLC (“Investments AKA”), a limited
liability company indirectly controlled by Andre K. Agassi, the Company’s largest beneficial stockholder, pursuant to which Investments
AKA purchased shares of restricted common stock for $ per share, or $
Employment Agreement
On
March 25, 2026, effective March 1, 2026, the Company entered into an Executive Employment Agreement with its Chief Executive Officer
and director, Ronald S. Boreta. Under the agreement, Mr. Boreta is entitled to an annual base salary of $
During
the nine months ended September 30, 2026, the Company recognized compensation expense of $
NOTE 9 – COMMITMENTS AND CONTINGENCIES
Other than as described below and elsewhere in these notes, the Company had no material commitments as of September 30, 2026.
IBM Parties
Under
the Services Agreement and SoW 1 with the IBM Parties (as defined in Note 4) relating to the development of the Company’s
digital platform and App, the Company agreed to make scheduled payments totaling $
Executive Employment Agreement
Under
the Executive Employment Agreement with the Company’s Chief Executive Officer, effective March 1, 2026, the Company is obligated
to pay an annual base salary of $
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License and Brand Agreements
The
Company is party to a fifteen-year Name and Likeness License Agreement with Darren Cahill (see Note 5) and, effective June 18, 2026,
a fifteen-year Name and Likeness License Agreement with AKA Licenses, LLC, a related party, under which the Company is obligated to pay
a one-time fee of $
Other Commitments
Under
the USTA Agreement (see below), the Company agreed to provide a fixed number of complimentary subscriptions to its mobile app
(“App”), discounted yearly subscriptions to USTA members and coaches, and a fixed percentage of certain net
revenues generated through the App during the agreement’s three-year term.
On
July 23, 2026, the Company granted two consultants warrants to purchase an aggregate of
On July 28, 2026, the Company issued an investor relations firm shares of restricted common stock for strategic advisory and investor relations services to be rendered over three months.
On
July 24, 2026, the Company issued warrants to purchase
On August 4, 2026, the Company announced the launch of its global “Let’s Play” pickleball and padel facilities initiative, through which the Company intends to pursue the acquisition, development and operation of pickleball and padel facilities. As of the date of this Report, the initiative is in the beginning stages of development, and the Company expects that pursuing the initiative will require substantial additional capital. No amounts relating to the initiative are recognized in the accompanying unaudited condensed financial statements.
On August 6, 2026, the Company entered into a Commercial Agreement with United States Tennis Association Incorporated, for itself and on behalf of USTA Coaching, Inc. (collectively, “USTA”, and the Commercial Agreement, the “USTA Agreement”). Pursuant to the USTA Agreement, USTA agreed to provide the Company the use of certain proprietary training content, coaching materials, training methodologies, curricula, coaching philosophies (including the USTA American Development Model for Tennis (ADM)), educational resources, and related materials developed by or on behalf of USTA or licensed thereto (collectively, the “USTA Content”), for use in the Company’s planned App, solely in order to train and fine-tune the App’s AI model solely to (i) direct users of the App in accordance with USTA’s coaching philosophy, including the ADM, and (ii) surface available resources offered by USTA programs, learning management system, and the USTA certification pathway (collectively, the “Permitted Purpose”).
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In consideration for agreeing to enter into the USTA Agreement and agreeing to the terms thereof, the Company agreed to make Darren Cahill available to speak at USTA’s Coaches Open event in August 2026, and for Andre Agassi to speak at another USTA Coaching event prior to August 31, 2027; agreed to provide USTA a fixed number of complementary subscriptions to the App, and to provide an agreed upon discount on yearly subscriptions to the App from USTA members and USTA coaches during the term of the agreement; and to share a fixed percentage of net revenues that the Company generates through the App from USTA members and USTA coaches, net of platform and application fees, and adjusted for chargebacks and refunds.
The USTA Agreement has a term of three years, and can be terminated prior to that by either party for cause, provided the non-breaching party provides the other 60 days after written notice of any such event relating to a for cause termination and the non-breaching party does not cure such breach within such 60 day period, and can also be terminated immediately by USTA in the event of (i) the Company’s unauthorized use of the USTA Content, (ii) the occurrence of a material security incident caused by the Company’s failure to comply with its obligations under the agreement; (iii) the Company’s breach of the agreement’s prohibitions on reverse engineering and secondary use of the USTA Content, or (iv) the Company’s breach of its agreement to use commercially reasonable efforts to make the App available to users. Additionally, either party may terminate the agreement upon the other party’s insolvency or entry into bankruptcy.
Registration Payment Arrangements
Under the Registration Rights Agreement entered into in July 2026, the Company may be required to issue additional shares of common stock equal to five percent (5%) of the shares sold to the applicable investors, as liquidated damages and not as a penalty, if specified registration deadlines are not met (see Note 2), as follows:
On July 13, 2026, in connection with the Subscription Agreement entered into in July 2026, the Company entered into a Registration Rights Agreement in favor of the investor (who executed a counterpart thereof in connection with his investment).
Pursuant to the Registration Rights Agreement, the Company agreed to file a registration statement to register the resale of the shares sold to such investor on or before the first business day following the date which falls 45 days after the last sale of securities in the offering in connection with the Registration Rights Agreement, and to use commercially reasonable efforts to cause such registration statement to be declared effective as promptly as possible thereafter. Once effective, the Company agreed to keep the registration statement effective until the earlier of (a) the date that all shares covered by such registration statement (i) have been sold, thereunder or pursuant to Rule 144, or (ii) may be sold without volume or manner-of-sale restrictions pursuant to Rule 144 and without the requirement for the Company to be in compliance with the current public information requirement under Rule 144, and (b) three years after the date of the Registration Rights Agreement.
NOTE 10 – SUBSEQUENT EVENTS
The Company has evaluated events through November XX, 2026, the filing date of this Form 10-Q, and determined that there have been no subsequent events that occurred that would require adjustments to our disclosures in these unaudited condensed interim financial statements, except as discussed below:
As
discussed in greater detail in Note 6, on July 28, 2026, the Company entered into the Investments AKA Convertible Note. On October 16,
2026, the Company entered into a First Amendment to Convertible Promissory Note (the “First Amendment”) dated October
15, 2026, with Investments AKA, which amended the AKA Convertible Note to provide for the conversion, effective immediately upon the
parties entry into the First Amendment, of the $
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The First Amendment included customary representations of the parties, confirmed that the Convertible Note was satisfied in full upon conversion thereof, and clarified that it was the intention of the parties that interest would accrue under the Convertible Note semi-annually, that no interest had accrued as of the conversion date of the AKA Convertible Note, and that to the extent that any interest had accrued, that such interest was forgiven by Investments AKA.
The
Note Warrants have a term of
On
October 16, 2026, the Company entered into a Subscription Agreement with Investments AKA, pursuant to which Investments AKA
subscribed, in a private transaction, to purchase
The Subscription Agreement included customary representations and warranties of Investments AKA and the Company. The Subscription Agreement also provided Investments AKA piggy-back registration rights for the Note Shares, Subscription Agreement shares and the shares of Company common stock issuable upon exercise of the Note Warrants and Subscription Agreement warrants, for a period of two years from the date of the Subscription Agreement, which applies to any secondary offering registration statement filed by the Company, subject to customary exceptions and carveouts, and subject to customary pre-requisites of Investments AKA.
On October 12, 2026, the Company issued an investor relations firm shares of restricted common stock in consideration for strategic advisory and investor relations consulting services to be rendered to the Company over a term of six months.
On October 30, 2026, Agassi Sports Licensing LLC, a newly formed wholly-owned subsidiary of the Company, entered into a Merchandise License Agreement (the “Grateful Dead License Agreement”), with Rhino Entertainment LLC (“Rhino”). Rhino is the master licensee of Grateful Dead Productions, which in turn is the owner of Grateful Dead’s records and performances and numerous Grateful Dead trademarks.
Pursuant to the Grateful Dead License Agreement, Rhino granted Agassi Sports Licensing LLC a worldwide, non-exclusive, non-transferable, non-assignable right to use certain Grateful Dead Brand trademarks, indicia and artwork as described in the Grateful Dead License Agreement (collectively, the “Licensed Property”), solely in connection with the manufacture, distribution and sale of certain (a) pickleball and padel equipment and accessories, (b) pickleball and padel apparel, and (c) water bottles and tumblers (collectively, the “Licensed Products”).
Approved channels of distribution under the agreement include direct to consumer sales (including through the Company’s ecommerce website and at pickleball/racquet sporting events and wholesale sales through department stores, online retails, sporting good stores, and others.
In consideration for providing us rights under the Grateful Dead License Agreement, we agreed to pay Rhino a royalty on the net sales of Licensed Products (“Royalties”).
| 23 |
We also agreed to pay Rhino certain “Guaranteed Payments” relating to the Royalties each contract year and to advance a portion of the Guaranteed Payments, including certain amounts required to be paid upon entry into the agreement. Advance payments are recoupable from Royalties due and are nonrefundable. In the event the actual Royalties are less than the Guaranteed Payments, we are required to pay Rhino the difference between such Guaranteed Payments and such actual Royalties at the end of the applicable contract year.
The Grateful Dead License Agreement has an initial term through June 30, 2030, subject to the right to extend the agreement under certain circumstances.
We also agreed to make certain advertising expenditures during each contract year of the Term and the Grateful Dead License Agreement includes certain minimum net sales requirements for each year of the term.
The initial marketing date for Licensed Products to be marketed under the agreement is no later than May 1, 2027 and the initial shipment date for Licensed Products to be sold by the Company is no later than July 1, 2027.
On October 30, 2026, we entered into a Manufacturer Agreement for Use of Licensed Property dated October 26, 2026 (the “Manufacturer Agreement”), with a manufacturer (the “Manufacturer”). Pursuant to the Manufacturer Agreement, the Manufacturer agreed to manufacture and distribute the Licensed Products for us. The Manufacturer Agreement has a term from October 26, 2026, through June 30, 2030, unless earlier terminated as provided therein, and also terminates automatically upon the termination of the Grateful Dead License Agreement.
The Manufacturer Agreement includes customary representations and warranties of the parties, including as to the Manufacturer’s manufacturing and employment practices; requirements for us to indemnify the Manufacturer for losses relating to any alleged misuse or infringement of intellectual property rights; mutual indemnification obligations of the parties; inspection rights for the Company; and mutual confidentiality obligations.
We have the right to terminate the Manufacturer Agreement if (i) the Manufacturer breaches the agreement and the Manufacturer fails to cure the purported breach within 30 days after notice thereof; and (ii) promptly upon giving or receiving notice of termination of the Grateful Dead License Agreement.
We agreed to reimburse the Manufacturer for all costs and expenses incurred by the Manufacturer upon termination of the Manufacturer Agreement, including payment for finished goods, work in process, non-cancelable commitments, equipment used to manufacture products under the agreement, packaging, raw materials, and costs of destruction of inventory if requested, provided, no reimbursement shall be required if the Manufacturer or its subcontractor engaged in the unauthorized use of the Licensed Property.
On
November 5, 2026, the Company entered into separate Media Value Letter Agreements (the “Media Value Agreements”) with
each of Sinclair Television Group, Inc. (“Sinclair”) and The Tennis Channel, LLC (the “Tennis Channel”,
and together with Sinclair, the “Media Value Providers”). Pursuant to the Media Value Agreements, during the two year
term of the Media Value Agreements, each of the Media Value Providers and the Company, agreed to work together and determine the appropriate
procurement of inventory based on advertising availabilities (each an “Ad Buy”) on Sinclair/Tennis Channel owned and/or
operated properties which may include without limitation, its linear television, digital, or social media properties with a net media
value of $
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In
consideration for Sinclair and Tennis Channel providing an aggregate of $
The Equity Agreements confirmed the $ per share value of the Media Value Shares; provide that the Media Value Shares shall not be subject to forfeiture, cancellation, repurchase, redemption, set-off or clawback by the Company for any reason; include customary representations and warranties of the Company and the Media Value Providers; and provide for mutual indemnification rights for breaches of the Equity Agreements by either party.
The Media Value Shares are subject to lock-up restrictions prohibiting each Media Value Provider from transferring any Media Value Shares during the six months following the date of the Equity Agreements. Thereafter, half of the Media Value Shares issued to each Media Value Provider, subject to equitable adjustment for stock dividends, stock splits and similar transactions, remain subject to the lock-up until the first anniversary of the date of the agreements, while the remaining Media Value Shares are released from the lock-up. These restrictions also apply to certain securities issued in respect of the Media Value Shares and prohibit pledges, short sales, hedging and other transactions that transfer the economic consequences of ownership.
The lock-up permits customary transfers without consideration to affiliates and direct equity holders, subject to prior notice, the transferee’s written agreement to the applicable restrictions and compliance with applicable securities laws. Exceptions also apply to transfers in board-approved tender offers, exchange offers, mergers or change of control transactions, registered offerings in which the Media Value Provider includes its securities pursuant to the applicable Equity Agreement, and transfers required by law or court order. The lock-up terminates automatically if the Company materially breaches the applicable agreement and fails to cure the breach within 30 days after receiving written notice from the Media Value Provider.
The Equity Agreements grant the Media Value Providers piggyback registration rights to include the resale of the Media Value Shares in certain registration statements filed by the Company for its own account or for other securityholders, subject to timely election, customary information requirements, specified exceptions and limitations, and customary underwriter, placement agent and Securities and Exchange Commission cutbacks. These piggyback rights expire on the earlier of five years after the date of the Equity Agreements and the date all Media Value Shares may be sold without restriction or limitation, and without a restrictive legend, under Rule 144. In addition, if, at any time after six months following the date of the Equity Agreements, the Media Value Shares cannot be sold without restriction or limitation under Rule 144, the Media Value Provider may request that the Company register their resale. Upon such request, the Company must file a resale registration statement within 45 days, or 30 days if the Company is eligible to use Form S-3 or another short-form registration statement, use commercially reasonable efforts to obtain effectiveness thereof within 90 days after the request, and maintain effectiveness thereof until all covered securities have been sold or may be sold without restriction or limitation under Rule 144. The Company will bear the registration expenses of such filing, subject to specified exclusions, and the parties have agreed to customary mutual indemnification provisions.
If the Company fails to include Media Value Shares required to be included in a registration statement or fails to meet the applicable filing or effectiveness deadlines, subject to the Equity Agreement’s exceptions and limitations, a Media Value Provider may, upon written notice, suspend its obligations under the Media Value Agreement, including providing Media Value and procuring, placing or fulfilling Ad Buys, without breaching either agreement. The suspension may continue until the affected shares are covered by an effective resale registration statement or the Company, at its expense, obtains an appropriate Rule 144 resale opinion. The Media Value Provider must immediately resume performance upon satisfaction of either condition, and any suspension will not extend the term of the Media Value Agreement.
We also agreed that, without the approval of the Media Value Providers, we would not grant any registration rights that conflict with, or rank senior to, the registration rights of the Media Value Providers, until such time as the Media Value Shares have been registered under the Securities Act, unless we provide the same rights to the Media Value Providers.
Effective on November 6, 2026, the Board of Directors appointed director James Askew as the Non-Executive Vice Chairman of the Board of Directors, to serve until his successor is appointed or his earlier resignation, removal by the Board of Directors or cessation of service as a director. In this non-executive Board role, he shall assist the Board of Directors, its Chairman, if any, and management with strategic planning; evaluating, structuring and negotiating transactions; reviewing and advising on agreement terms; attending counterparty meetings and negotiations; coordinating with the Company’s advisers; facilitating Board of Directors and management communications and follow-up; and reporting material developments and recommendations to the Board. He shall also perform other related duties assigned by the Board. The appointment does not make him an officer, employee or independent director, confer authority to bind the Company or direct employees, or authorize responsibilities reserved to independent directors.
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Introduction
You should read the matters described in, and incorporated by reference in, “Risk Factors”, below, and “Cautionary Statement Regarding Forward-Looking Statements”, above, and the other cautionary statements made in this Report, and incorporated by reference herein, as being applicable to all related forward-looking statements wherever they appear in this Report. We cannot assure you that the forward-looking statements in this Report will prove to be accurate and therefore prospective investors are encouraged not to place undue reliance on forward-looking statements. Other than as required by law, we undertake no obligation to update or revise these forward-looking statements, even though our situation may change in the future.
This information should be read in conjunction with the interim unaudited financial statements and the notes thereto included in this Quarterly Report on Form 10-Q, and the audited financial statements and notes thereto and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” contained in our Annual Report on Form 10-K for the year ended December 31, 2025, filed with the Securities and Exchange Commission on March 31, 2026 (the “2025 Annual Report”).
Certain capitalized terms used below and otherwise defined below, have the meanings given to such terms in the footnotes to our financial statements included above under “Part I - Financial Information” – “Item 1. Financial Statements”.
In this Quarterly Report on Form 10-Q, we may rely on and refer to information regarding the industries in which we operate in general from market research reports, analyst reports and other publicly available information. Although we believe that this information is reliable, we cannot guarantee the accuracy and completeness of this information, we have not independently verified any of it, and we have not commissioned any such information.
Unless the context requires otherwise, references to the “Company,” “we,” “us,” “our,” and “Agassi Sports Entertainment Corp.” refer specifically to Agassi Sports Entertainment Corp.
In addition, unless the context otherwise requires and for the purposes of this Report only:
| ● | “Exchange Act” refers to the Securities Exchange Act of 1934, as amended; | |
| ● | “SEC” or the “Commission” refers to the United States Securities and Exchange Commission; and | |
| ● | “Securities Act” refers to the Securities Act of 1933, as amended. |
Where You Can Find Other Information
We file annual, quarterly, and current reports, proxy statements and other information with the SEC. The SEC maintains an Internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC like us at http://www.sec.gov (our filings can be found at https://www.sec.gov/cgi-bin/browse edgar?action=getcompany&CIK=0000930245). Copies of documents filed by us with the SEC are also available for download, free of charge, soon after such reports are filed with or furnished to the SEC, on the “Investors Relations” page of our website at https://www.agassisports.com and are available from us without charge, upon oral or written request to our Secretary, who can be contacted at the address and telephone number set forth on the cover page of this Report. The information on, or that may be accessed through, our website is not incorporated by reference into this Report and should not be considered a part of this Report.
The Company plans to use press releases and various social media channels, including its Instagram account (agassisportsentertainment), as additional means of disclosing public information to investors, the media and others interested in the Company. It is possible that certain information that the Company disseminates in press releases and on social media could be deemed to be material information, and the Company encourages investors, the media and others interested in the Company to review the business and financial information that the Company disseminates in press releases and on the social media channels identified above, as such information could be deemed to be material information. The contents on the Company’s website and its social media channels are not incorporated by reference in this Report.
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Summary of The Information Contained in Management’s Discussion and Analysis of Financial Condition and Results of Operations
Our Management’s Discussion and Analysis of Financial Condition and Results of Operations (MD&A) is provided in addition to the accompanying financial statements and notes to assist readers in understanding our results of operations, financial condition, and cash flows. MD&A is organized as follows:
| ● | Overview. Summary of our operations. | |
| ● | Plan of Operations. A description of our plan of operations for the next 12 months including required funding. | |
| ● | Results of Operations. An analysis of our financial results comparing the three and nine months ended September 30, 2026, and 2025. | |
| ● | Liquidity and Capital Resources. An analysis of changes in our balance sheets and cash flows and discussion of our financial condition. | |
| ● | Critical Accounting Policies and Estimates. Accounting estimates that we believe are important to understanding the assumptions and judgments incorporated in our reported financial results and forecasts. |
Overview
Current Plan of Operations
We currently plan to create and manage unique content, building sports communities around entertainment, media, wellness, education, commerce, and charitable efforts, with the goal of becoming a leading media and entertainment company in the world of racket sports.
By identifying opportunities for co-branding, partnering, and acquisitions, we plan to develop trusted brands in sports entertainment and bring them together under the Company’s brand.
Our planned business model is designed around proprietary and curated content supported by planned sponsorships, brand relationships, live event hosting, e-commerce and merchandising, and licensing and media rights.
We currently plan to undertake the following, funding permitting:
Digital Platform
The Company has entered into several agreements with IBM Norge AS (“IBM”) and International Business Machines Corporation (“International Business”, and together with IBM, collectively, the “IBM Parties”), pursuant to which such entities have agreed to help us create an artificial intelligence (AI)-powered comprehensive digital platform designed to serve as the premier online community and wellness hub for enthusiasts of racket sports, including tennis, padel, and pickleball (the “Platform”). The Platform is contemplated as a digital ecosystem including both a functioning website with e-commerce (at agassisports.com), which is currently operational, and a mobile application (the “App”), which is in development and beta testing and expected to be available for both iOS and android, powered by proprietary artificial intelligence (AI) models. The second beta launch is scheduled for the week of November 16, 2026. The App launch is now scheduled for January 2027.
Website
The website is a landing page that showcases everything that the Company endeavors to achieve and the mission behind the Company. It will act as an information layer for fans, investors and others who would like to know more about what the Company does. It also includes an e-commerce store, launched in July 2026, where customers can purchase curated products which form a part of our brand partnership strategy. Currently available products include Agassi and Graf branded pickleball paddles and backpacks, clothing and pickleball accessories. We act as a reseller of products and do not own any product lines or hold any inventory. One sale has been recorded on the website in October 2026.
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App
The App is expected to include AI-powered coaching, swing analysis, and tailored equipment recommendations, beginning with tennis and expanding into pickleball and padel through a phased release strategy. The AI models used in the App were developed by IBM, but are owned solely by the Company and are expected to be branded as “Agassi Intelligence”. The AI models have been designed to support player development, community engagement, and personalized experiences across racket sports.
Platform
The Platform is currently also expected to allow users to chat with an AI agent that has been trained using thousands of hours of proprietary content by both Darren Cahill (former professional tennis player and elite tennis coach who guided Andre Agassi, Lleyton Hewitt, Simona Halep, and Jannik Sinner to Grand Slam titles and world #1 rankings) and Andre Agassi (former professional tennis player, 8x Grand Slam Champion, and Olympic Gold Medalist). The AI agent is being programmed to think, answer and sound like Darren Cahill, Andre Agassi’s former coach and Andre himself.
Our planned freemium subscription-based App will aim to foster a holistic approach to racket sports participation, emphasizing not only performance tracking using multiple data points, but also provides access to high quality coaching, learning content and an e-commerce platform.
Key features of the Platform at launch are expected to include:
| ● | Performance logging and analytics, enabling users to record practice sessions focused on technique analysis. The Platform is also expected to include media content including improvement drills, and cross-training activities. |
| ● | Premium coaching and educational content, featuring short-form instructional videos and masterclasses drawing from the philosophies of prominent racket sports icons, along with curated training plans tailored to various skill levels from beginner to advanced, live question-and-answer sessions, ask-me-anything events, and occasional virtual interactions with professional players and coaches. | |
| ● | Ability to discuss improvement and feedback with the digital versions of Darren Cahill and Andre Agassi both in the form of text message and phone calls. All the tennis knowledge from match preparation, to training ideas, strategy and general knowledge will be available in one place. |
Key post-launch features which are planned include:
| ● | Player and partner discovery functionality to connect users with compatible playing partners based on location, skill rating, and preferred racket sport, with planned future integrations (in later development phases) for direct booking with club facilities and event systems. | |
| ● | A robust community and social layer that is expected to allow users to follow friends, teammates, and local players; share match summaries, highlights, and achievements; and participate in challenges, leaderboards, and rankings at local club, city, and global levels, inspired by legendary figures such as Andre Agassi and Stefanie Graf, our largest beneficial stockholder and Brand Partner, respectively. |
Through these integrated elements, the Platform will seek to position itself as the primary destination for racket sports health and wellness, extending beyond traditional scorekeeping or competition to support users’ overall physical fitness, mental resilience, and social connections within the racket sports ecosystem.
Our platform has two main AI powered products, Swing Analysis AI and AI Coaching LLM (Large Language Model).
| ● | Our swing analysis is built using both open source and publicly available (licensable) computer vision models, and proprietary and internally developed models. The publicly available models power key point and object detection from video, where we can mitigate risk and try different models, or change licenses if needed. The proprietary models analyze the extracted data to provide personalized feedback to a user in a mobile app. These models have a carefully designed data pipeline which utilize the extracted key point data, which hence qualifies the utility of the open source models. |
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| ● | The LLM experience is created in partnership with IBM & Delphi (proprietary technology from partners, respectively), handling the majority of the performance of the LLM experience for users. Our input to this model is carefully selected training data for text and voice, which helps us ensure the expected quality in coaching for users. We use a proprietary hierarchical coaching methodology to create a unique experience for the user. The methodology is not an AI model but helps us mitigate both risk and hallucination from the LLM experience, by selecting and translating core coaching principles that we agree with. |
The Platform, which is currently in beta testing, is currently planned to launch in the beginning of the first quarter of 2027, with a staggered roll-out of e-commerce (tennis rackets, paddles, sports nutrition, etc.), which e-commerce site launched in July 2026, a personalized racket/paddle recommender and an AI coaching model.
The App launch is anticipated to occur in January 2027, and is planned to include the same coaching AI feature, as well as swing analysis feedback, motivational challenges, progress tracking, and social sharing. While it is expected to initially focus on tennis, the Company’s current goal is to expand all features of the app to pickleball and padel, in the future, with the goal of helping position the platform as a single hub for racket sports.
The estimated cost for the digital platform is approximately $2,700,000 to implement. The digital platform is expected to include AI-agents based on the digital minds of Andre Agassi and Darren Cahill, exclusive content, instructional videos and ecommerce. Currently, IBM is in the final development of the Platform.
We anticipate that the Platform and App will create strong and recurring revenue streams, while also fostering a fun, thriving and informative racket sports community on a global scale under the iconic Agassi brand.
World Series of Pickleball
As discussed in greater detail in “Note 5. Intangible Assets”, to the footnotes to the unaudited financial statements included above, on May 31, 2025, we acquired the rights to the trademark for “World Series of Pickleball” (the “Trademark”).
Our current plans include launching the World Series of Pickleball, which is intended to be a new championship property owned and developed by the Company.
The Company hopes that the World Series of Pickleball, which is planned to feature a marquee open, a team-based championship week welcoming players of all skill levels from around the world, with prize purses and global celebrity participants, including involvement from Andre Agassi, alongside everyday competitors who choose to enter. The World Series of Pickleball is planned to be headquartered and launched in Las Vegas. The multi-day event is expected to bring together competitors from across the globe, supported by planned premium production, hospitality programming, and integrated media distribution which is expected to be designed to deliver a world-class experience for fans and partners.
The Company intends for the World Series of Pickleball to serve as a long-term commercial platform encompassing sponsorship, media rights, ticketing, hospitality, and strategic brand partnerships, and the Company is currently pursuing relationships with leading hospitality and media organizations to support distribution, audience growth, and sustained commercial expansion.
To date, the planning and production of the World Series of Pickleball is in its initial stages, and the Company does not currently have a timeline for the initial event, and has not entered into any material agreements in connection therewith, other than with service providers who are helping the Company plan the event, including TEAM Marketing AG, a Switzerland-based global leader in the development, sales and delivery of world-class sports events.
Costs associated with the World Series of Pickleball are expected to have a minimal impact on the Company’s cash flow because of expected sponsorship agreements which we hope to enter into in connection with such planned event. As a result, we currently anticipate that substantially all expenses associated with the planned event will be covered by those agreements and associated sponsorship revenue sources.
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“Let’s Play” Pickleball and Padel Facilities Initiative
On August 4, 2026, we announced the launch of our global “Let’s Play” pickleball and padel platform initiative (the “Let’s Play Initiative”), through which we intend to pursue the goal of creating one of the world’s leading networks of pickleball and padel clubs. We intend to pursue this goal through a combination of potential acquisitions of existing facility operators, strategic partnerships, collaborations, and franchising arrangements, rather than through ground-up development alone. We believe this initiative represents a natural extension of our broader strategy of building an integrated global racket sports platform spanning technology, events, media, and, with destination-based physical facilities.
We intend to create “Let’s Play” locations that we believe will function as more than conventional sports facilities. Our concept envisions destinations that combine recreation, wellness, hospitality, and community programming, and that integrate coaching, events, and technology-enabled experiences, including potentially over time, integration with our planned digital Platform and App, with the goal of creating a differentiated offering for players of all ages and skill levels. We intend to offer operators who join our network branding, programming, and operational support intended to provide consistency in member experience while allowing us to scale more capital-efficiently than through wholly-owned development alone.
We intend to pursue potential opportunities throughout North America, Europe, Asia Pacific, and other international markets. Our first international efforts are expected to focus on Germany and Australia, markets in which we believe participation in pickleball and padel is accelerating. Our initiative in Germany is expected to be led by Stefanie Graf, a former professional tennis player who won 22 Grand Slam singles titles and who is the Company’s brand partner and the spouse of Andre Agassi, our co-founder and largest beneficial stockholder. Our initiative in Australia is expected to be led by Darren Cahill, a globally recognized tennis coach and broadcaster who has coached four world No. 1-ranked players, including Mr. Agassi, and who currently coaches world No. 1-ranked player Jannik Sinner. Both Ms. Graf and Mr. Cahill are expected to advise on facility design, programming, player development, and regional and local market strategy in connection with the Let’s Play Initiative.
As of the date of this Report, the Let’s Play Initiative is in the beginning stages of development. We are currently engaged in preliminary discussions with certain facility operators, developers, and strategic partners regarding potential future acquisitions, collaborations, and franchise opportunities. We have not acquired any facilities to date, have not entered into any definitive agreement to acquire any facility, and are not currently party to any strategic partnership, collaboration, or franchising agreement in connection with this initiative. There can be no assurance that any of these discussions will result in definitive agreements, that any resulting transactions will be completed on the terms or timeline we currently anticipate, or at all, or that any facilities we ultimately acquire, develop, partner with, or franchise will perform as we currently expect. See “Risk Factors”, below for a further discussion of the risks associated with this initiative.
We expect that pursuing the Let’s Play Initiative will require substantial additional capital beyond the funding we currently require to satisfy our existing obligations to the IBM Parties and to support our other planned initiatives, including the digital Platform, App, and World Series of Pickleball. We do not currently have committed financing specifically allocated to this initiative, and our ability to pursue it as currently contemplated, including the scale, timing, and geographic scope of any expansion, will depend on our ability to raise additional capital, on terms that may not be favorable to us, if at all.
Grateful Dead Licencing and Manufacturing
In addition to the above, we plan to develop, market and sell a line of Grateful Dead-branded products pursuant to our Grateful Dead License Agreement with Rhino, the master licensee of Grateful Dead Productions. The Grateful Dead License Agreement, discussed in greater detail below, grants us worldwide rights to use specified Grateful Dead trademarks, indicia and artwork in connection with certain pickleball and padel equipment and accessories, pickleball and padel apparel, and water bottles and tumblers. We intend to market the Licensed Products to pickleball and padel participants and consumers interested in the Grateful Dead brand. Although the license is non-exclusive, Rhino has agreed not to use, directly or through third parties, the Licensed Property in the pickleball and padel equipment and accessories category during the term, subject to certain pre-approved exceptions.
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We intend to use a third-party manufacturing and distribution model under our Manufacturer Agreement (discussed in greater detail below), which has agreed to manufacture and distribute the Licensed Products for us. We plan to coordinate product development, design submissions and production schedules with the Manufacturer, subject to Rhino’s approval of each Licensed Product design and applicable packaging, advertising and promotional materials. Under the Grateful Dead License Agreement, we are required to begin marketing Licensed Products no later than May 1, 2027, and begin shipments no later than July 1, 2027.
Our planned sales channels include direct-to-consumer sales through our ecommerce website and at pickleball and other racquet sporting events, together with wholesale sales through approved retailers, including department stores, online retailers and sporting goods stores. We also are required to make Licensed Products available for resale through designated channels controlled by Rhino. We intend to support product sales through advertising and promotional activities approved by Rhino, and the Grateful Dead License Agreement requires advertising expenditures of Net Sales, subject to its provisions for making up annual spending shortfalls. Our commercialization plans will take into account the agreement’s royalty on Net Sales, guaranteed payments and minimum sales requirements, each discussed in greater detail below.
Both agreements have terms ending June 30, 2030, unless earlier terminated, and the Manufacturer Agreement terminates automatically upon termination of the Grateful Dead License Agreement, subject to certain extension rights we have under the Licence Agreement.
Plans for Expansion; Programs; Content and Facilities
While we expect the World Series of Pickleball, our planned digital platform, our “Let’s Play” initiative, and our Grateful Dead licensing and manufacturing agreements, to take priority in the coming months, the following additional business plans are also in the early stages of development:
● Pursue best-in-class acquisition and partnership opportunities.
● Pursue a scalable, capital-efficient growth strategy through strategic partnerships.
● Acquire, build and/or create physical facilities, leagues, tournaments, events, social communities, and merchandisers (in addition to the “Let’s Play” initiative.
● Develop strategic relationships with “Best of Class” operators and developers in key segments within the pickleball and padel communities through co-branding and acquisition opportunities.
● Create and distribute proprietary and curated content through various media channels.
● IP development and collaboration.
Name and Likeness License Agreements; Brand Partner Agreement
As discussed in greater detail “Note 5. Intangible Assets”, to the footnotes to the unaudited financial statements included above, and “Recent Agreements/Transactions—Name and Likeness Agreement with Andre Agassi”, the Company has fifteen year (subject to extensions) Name and Likeness License Agreements in place with Darren Cahill, a former professional tennis player, former coach of Andre K. Agassi and current co-coach of Jannik Sinner, current world No. 1 ranked tennis player by the Association of Tennis Professionals (ATP), and Andre Agassi, former professional tennis player and 8-time tennis Grand Slam winner, co-founder of the Company’s current business operations, and a significant stockholder of the Company. We are also party to a Brand Partner Agreement with Stefanie Graf, the spouse of Andre Agassi, and former professional tennis player (holding ATP No. 1 ranking for 377 consecutive weeks), with among her many accomplishments, winning 22 major singles titles, and being the only player to win the “Golden Grand Slam,” capturing all four majors and an Olympic Gold Medal in the same year.
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The license agreements provide the Company the non-exclusive (except as to certain specified uses, including as to Mr. Cahill our App and as to Mr. Agassi, our corporate name), to use the name and likeness of each of Mr. Cahill and Mr. Agassi in connection with the Company’s business operations. Pursuant to the Brand Partner Agreement, Ms. Graf will (i) participate in certain Company projects and initiatives, subject to agreement as to scope and compensation in each instance; (ii) promote the Company’s brand and content through public appearances, interviews, and social media activity, subject to mutual agreement as to each social media post; and (iii) provide advice and consultation upon Company request with respect to the Company’s brand and content. Ms. Graf has also licensed her image, name and likeness to the Company for use in our public relations, advertising and marketing, on a worldwide basis, subject to her right to disapprove of any particular use. The Brand Partner Agreement has a five-year term, subject to extension by mutual agreement.
Competitive Advantage
We believe that the name and likeness license agreements with Darren Cahill and Andre Agassi, together with the brand partner agreement with Stefanie Graf, each discussed above, provide the Company with a meaningful strategic advantage in developing, marketing and commercializing its artificial intelligence-powered tennis and pickleball coaching platform and plans to compete in the pickleball industry. The Company’s App is being designed to deliver AI-based swing analysis, coaching and player development tools, and the association with three of the most recognizable and accomplished figures in professional tennis is expected to enhance the credibility and visibility of our technology among players, coaches, clubs, academies and other participants in the racket sports industry. In particular, Mr. Cahill’s reputation as one of the sport’s leading coaches and his experience coaching elite players, including Andre Agassi and current ATP World No. 1 Jannik Sinner, together with Mr. Agassi’s and Ms. Graf’s global recognition and longstanding reputations for excellence in tennis, are expected to support customer acquisition, brand awareness, strategic partnerships and marketing initiatives as we seek to expand our presence in the tennis and rapidly growing pickleball and padel markets. We also believe these relationships will facilitate the creation of authentic coaching content, instructional materials, promotional campaigns and other product features that align with our business strategy. While the Company cannot assure investors that these agreements will result in increased revenues, user adoption or other measurable commercial benefits, we believe they enhance our ability to differentiate our products from competing offerings and strengthen our overall brand within the racket sports industry.
We also believe that our license to use the Grateful Dead trademarks in Licensed Products will be a significant competitive advantage to the Company as we look to grow our revenues and name recognition.
Recent Agreements/Transactions
Lock-Up Agreements
On June 19 and June 24, 2026, the Company entered into lock-up agreements dated May 27, 2026, with twenty-three investors who had purchased shares of common stock in the Company’s November 2024 private offering (the “November 2024 Investors” and the “Lock-Up Agreements”), pursuant to which such investors agreed not to transfer any of the shares of common stock sold to such investors by the Company in November 2024 (the “November 2024 Shares”), nor any of the New Warrants or New Warrant Shares (defined below), until December 15, 2026, except in connection with certain customary permitted transfers described in the Lock-Up Agreements. In consideration for agreeing to the terms of the Lock-Up Agreements, the Company agreed to grant each of the counterparties entering into the Lock-Up Agreements, warrants to purchase 25% of the total shares of common stock purchased by such investors in the November 2024 offering, exercisable only for cash, with a term of two years and an exercise price of $5.00 per share (the “New Warrants”, and the shares of common stock issuable upon exercise thereof, the “New Warrant Shares”). The Lock-Up Agreements contain customary representations and warranties of the parties, and registration rights, pursuant to which we have agreed to include the registration of the resale of the November 2024 Shares held by such parties entering into the Lock-Up Agreements and the Warrant Shares in a registration statement filed under the Securities Act of 1933, as amended, which is required to be filed on or prior to December 15, 2026. In total, we granted Warrants to purchase 657,876 shares of common stock in connection with our entry into the Lock-Up Agreements.
USTA Commercial Agreement
On August 6, 2026, we entered into a Commercial Agreement with United States Tennis Association Incorporated, for itself and on behalf of USTA Coaching, Inc. (collectively, “USTA”, and the Commercial Agreement, the “USTA Agreement”). Pursuant to the USTA Agreement, USTA agreed to provide us the use of certain proprietary training content, coaching materials, training methodologies, curricula, coaching philosophies (including the USTA American Development Model for Tennis (ADM)), educational resources, and related materials developed by or on behalf of USTA or licensed thereto (collectively, the “USTA Content”), for use in our planned App, sole in order to train and fine-tune the App’s AI model solely to (i) direct users of the App in accordance with USTA’s coaching philosophy, including the ADM, and (ii) surface available resources offered by USTA programs, learning management system, and the USTA certification pathway (collectively, the “Permitted Purpose”).
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USTA also agreed to promote the App four times to its members and platform users and to grant us a limited, non-transferable, revocable license to use the USTA Content, for the Permitted Purpose, subject to certain customary restrictions set forth in the USTA Agreement.
The USTA Agreement includes trademark and brand licensing rights from USTA to the Company, subject to the restrictions and requirements set forth in the USTA Agreement; requirements for USTA to make promotional communications regarding the App; and requires us to use commercially reasonable efforts to maintain the availability of the App for end-users.
In consideration for agreeing to enter into the USTA Agreement and agree to the terms thereof, we agreed to make Darren Cahill available to speak at USTA’s Coaches Open event in August 2026, and Andre Agassi available to speak at a future event; agreed to provide USTA a fixed number of complementary subscriptions to the App, and to provide an agreed upon discount on yearly subscriptions to the App from USTA members and USTA coaches during the term of the agreement; and to share a fixed percentage of net revenues that we generate through the App from USTA members and USTA coaches, net of platform and application fees, and adjusted for chargebacks and refunds.
The agreement includes customary intellectual property ownership and prohibition provisions; audit rights for USTA; confidentiality obligations of the parties; representations and warranties of the parties; and mutual indemnification rights, subject to certain limitations of liabilities and caps on liabilities.
The USTA Agreement has a term of three years, and can be terminated prior to that by either party for cause, provided the non-breaching party provides the other 60 days after written notice of any such event relating to a for cause termination and the non-breaching party does not cure such breach within such 60 day period, and can also be terminated immediately by USTA in the event of (i) our unauthorized use of the USTA Content, (ii) the occurrence of a material security incident caused by our failure to comply with certain of our obligations under the agreement, (iii) our breach of the agreement’s prohibitions on reverse engineering and secondary use of the USTA Content, or (iv) our breach of our agreement to use commercially reasonable efforts to make the App available to users. Additionally, either party may terminate the agreement upon the other party’s insolvency or entry into bankruptcy.
Under the terms of the agreement, the license provided by USTA to use the USTA Content expires upon termination of the Agreement and the Company is required, within 30 days of termination of the USTA Agreement, to return to USTA or certify in writing the secure destruction of all copies of USTA’s proprietary content in the Company’s possession, including copies on backup media, development environments, and other systems. Separately, upon termination of the USTA Agreement, the Company must, within 180 days (subject to extension for technical complexity), use commercially reasonable efforts to implement technical measures intended to reduce the continued influence of USTA’s content on any AI model it operates, selecting from options such as retraining, fine-tuning reversal, machine unlearning, or exclusion of the data from future training runs. However, the agreement expressly acknowledges that AI models may retain residual effects from previously ingested data and that complete removal or verification of such removal is not currently technically feasible.
Convertible Note Conversion
On July 28, 2026, the Company entered into a Convertible Promissory Note (the “Convertible Note”), in the original principal amount of $1,000,000 with Investments AKA, LLC (“Investments AKA”), which entity is owned and controlled by Andre Agassi, former professional tennis player, 8x Grand Slam Champion, and Olympic Gold Medalist, and the Company’s largest beneficial stockholder, and whose Chief Financial Officer is Shawn Cable, our Chief Financial Officer.
The Convertible Note accrued interest at a fixed rate per annum equal to 3.96%, which the Company determined represented not less than the applicable federal rate published by the U.S. Internal Revenue Service under Section 1274(d) of the Internal Revenue Code of 1986, as amended, compounded semi-annually.
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Unless earlier converted, the outstanding principal balance of the Convertible Note, together with all accrued and unpaid interest, was due and payable in full on July 27, 2027 (“Maturity Date”). The Convertible Note was also subject to an automatic conversion, without any action required by holder, into the equity or equity-linked securities or units (the “New Securities”) issued by the Company to arm’s-length, new-money investors (“New Money Investors”) in the next sale (or related series of sales) by the Company of New Securities that results in gross proceeds to the Company of not less than $3,000,000 (the “Next Equity Financing”). The conversion price was to equal the price per share, unit, or other applicable denomination of New Securities actually paid in cash by the New Money Investors in the Next Equity Financing. If no Next Equity Financing occurred prior to the Maturity Date, the Convertible Note was to not automatically convert and the outstanding principal and accrued interest was to instead be due and payable in full on the Maturity Date.
On October 16, 2026, the Company entered into a First Amendment to Convertible Promissory Note (the “First Amendment”) dated October 15, 2026, with Investments AKA, which amended the Convertible Note to provide for the conversion, effective immediately upon the parties entry into the First Amendment, of the $1,000,000 principal balance of the Convertible Note into 200,000 shares of the Company’s common stock (the “Note Shares”), and warrants to purchase 200,000 shares of common stock of the Company (the “Note Warrants”), based on a unit (one share of common stock and one warrant) price of $5.00 per share, the same unit price paid by recent investors in the Company’s private placement (as discussed in greater detail below).
The First Amendment included customary representations of the parties, confirmed that the Convertible Note was satisfied in full upon conversion thereof, and clarified that it was the intention of the parties that interest would accrue under the Convertible Note semi-annually, that no interest had accrued as of the conversion date of the Convertible Note, and that to the extent that any interest had accrued, that such interest was forgiven by Investments AKA.
The Note Warrants have a term of three years (through October 15, 2029), cash only exercise rights, an exercise price of $7.00 per share, and customary adjustment provisions for stock splits, recapitalizations and similar transactions affecting the Company.
On October 16, 2026, the Company entered into a Subscription Agreement with Investments AKA, pursuant to which Investments AKA subscribed, in a private transaction, to purchase 300,000 units, each consisting of one share of common stock and one warrant to purchase one share of common stock of the Company, for $5.00 per unit, or $1,500,000 in aggregate. The Subscription Agreement warrants have identical terms as the Note Warrants, discussed above.
The Subscription Agreement included customary representations and warranties of Investments AKA and the Company. The Subscription Agreement also provided Investments AKA piggy-back registration rights for the Note Shares, Subscription Agreement shares and the shares of Company common stock issuable upon exercise of the Note Warrants and Subscription Agreement warrants, for a period of two years from the date of the Subscription Agreement, which applies to any secondary offering registration statement filed by the Company, subject to customary exceptions and carveouts, and subject to customary pre-requisites of Investments AKA.
Grateful Dead Licencing Agreement
On October 30, 2026, Agassi Sports Licensing LLC, a newly formed wholly-owned subsidiary of the Company, entered into a Merchandise License Agreement (the “Grateful Dead License Agreement”), with Rhino Entertainment LLC (“Rhino”). Rhino is the master licensee of Grateful Dead Productions, which in turn is the owner of Grateful Dead’s records and performances and numerous Grateful Dead trademarks.
Pursuant to the Grateful Dead License Agreement, Rhino granted us a worldwide, non-exclusive, non-transferable, non-assignable right to use certain Grateful Dead Brand trademarks, indicia and artwork as described in the Grateful Dead License Agreement (collectively, the “Licensed Property”), solely in connection with the manufacture, distribution and sale of certain (a) pickleball and padel equipment and accessories specifically paddles (basic and premium), pickleball and padel sets (basic and premium), custom paddle covers, tie-dye balls, pickleball and padel bags, grips and grip tape, roll-out pickleball and padel courts, and pickleball and padel nets, (b) pickleball and padel apparel including bucket hats, caps, visors, beanies, wrist bands, socks, and t-shirts, and (c) hydration, specifically water bottles and tumblers (collectively, the “Licensed Products”).
Approved channels of distribution under the Grateful Dead License Agreement include direct to consumer sales (including through our ecommerce website and at pickleball/racquet sporting events) and wholesale sales through department stores, online retailers, sporting good stores, and others.
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In consideration for providing us rights under the Grateful Dead License Agreement, we agreed to pay Rhino a royalty on the net sales of Licensed Products (“Royalties”).
We also agreed to pay Rhino certain “Guaranteed Payments” relating to the Royalties each contract year and to advance a portion of the Guaranteed Payments, including certain amounts required to be paid upon entry into the agreement. Advance payments are recoupable from Royalties due and are nonrefundable. In the event the actual Royalties are less than the Guaranteed Payments, we are required to pay Rhino the difference between such Guaranteed Payments and such actual Royalties at the end of the applicable contract year.
The Grateful Dead License Agreement has an initial term through June 30, 2030, subject to the right to extend the agreement under certain circumstances.
We also agreed to make certain advertising expenditures during each contract year of the Term and the Grateful Dead License Agreement includes certain minimum net sales requirements for each year of the term.
The initial marketing date for Licensed Products to be marketed under the agreement is no later than May 1, 2027 and the initial shipment date for Licensed Products to be sold by the Company is no later than July 1, 2027.
The Grateful Dead License Agreement includes the requirement for us to deliver customary statements of sales and royalties; provides for customary audit rights to Rhino, quality assurance and control requirements, Rhino’s approval rights for packaging, advertising and promotional activities; intellectual property confirmations; and customary protective provisions, insurance requirements, representations and warranties of the parties, indemnification obligations of the parties, confidentiality obligations of the parties, termination and force majeure provisions.
Manufacturer Agreement
On October 30, 2026, we entered into a Manufacturer Agreement for Use of Licensed Property dated October 26, 2026 (the “Manufacturer Agreement”), with a manufacturer (the “Manufacturer”). Pursuant to the Manufacturer Agreement, the Manufacturer agreed to manufacture and distribute the Licensed Products for us. The Manufacturer Agreement has a term from October 26, 2026, through June 30, 2030, unless earlier terminated as provided therein, and also terminates automatically upon the termination of the Grateful Dead License Agreement.
The Manufacturer Agreement includes customary representations and warranties of the parties, including as to the Manufacturer’s manufacturing and employment practices; requirements for us to indemnify the Manufacturer for losses relating to any alleged misuse or infringement of intellectual property rights; mutual indemnification obligations of the parties; inspection rights for the Company; and mutual confidentiality obligations.
We have the right to terminate the Manufacturer Agreement if (i) the Manufacturer breaches the agreement and the Manufacturer fails to cure the purported breach within 30 days after notice thereof; and (ii) promptly upon giving or receiving notice of termination of the Grateful Dead License Agreement.
We agreed to reimburse the Manufacturer for all costs and expenses incurred by the Manufacturer upon termination of the Manufacturer Agreement, including payment for finished goods, work in process, non-cancelable commitments, equipment used to manufacture products under the agreement, packaging, raw materials, and costs of destruction of inventory if requested, provided, no reimbursement shall be required if the Manufacturer or its subcontractor engaged in the unauthorized use of the Licensed Property.
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Media Value Letter Agreement
On November 5, 2026, the Company entered into separate Media Value Letter Agreements (the “Media Value Agreements”) with each of Sinclair Television Group, Inc. (“Sinclair”) and The Tennis Channel, LLC (the “Tennis Channel”, and together with Sinclair, the “Media Value Providers”). Pursuant to the Media Value Agreements, during the two year term of the Media Value Agreements, each of the Media Value Providers and the Company, agreed to work together and determine the appropriate procurement of inventory based on advertising availabilities (each an “Ad Buy”) on Sinclair/Tennis Channel owned and/or operated properties which may include without limitation, its linear television, digital, or social media properties with a net media value of $1.5 million ($300,000 as to Sinclair and $1.2 million as to Tennis Channel), based on the Media Value Provider’s then-current rate card (“Media Value”).
In consideration for Sinclair and Tennis Channel providing an aggregate of $1.5 million of Media Value to the Company, we agreed to issue the Media Value Providers an aggregate of 300,000 shares of restricted common stock (60,000 shares to Sinclair and 240,000 shares to the Tennis Channel) (the “Media Value Shares”), with an agreed upon value of $5.00 per share, pursuant to separate Media Value Share Issuance Agreements entered into between each of the Media Value Providers and the Company on November 5, 2026 (the “Equity Agreement”).
The Equity Agreements confirmed the $5.00 per share value of the Media Value Shares; provide that the Media Value Shares shall not be subject to forfeiture, cancellation, repurchase, redemption, set-off or clawback by the Company for any reason; include customary representations and warranties of the Company and the Media Value Providers; and provide for mutual indemnification rights for breaches of the Equity Agreements by either party.
The Media Value Shares are subject to lock-up restrictions prohibiting each Media Value Provider from transferring any Media Value Shares during the six months following the date of the Equity Agreements. Thereafter, half of the Media Value Shares issued to each Media Value Provider, subject to equitable adjustment for stock dividends, stock splits and similar transactions, remain subject to the lock-up until the first anniversary of the date of the agreements, while the remaining Media Value Shares are released from the lock-up. These restrictions also apply to certain securities issued in respect of the Media Value Shares and prohibit pledges, short sales, hedging and other transactions that transfer the economic consequences of ownership.
The lock-up permits customary transfers without consideration to affiliates and direct equity holders, subject to prior notice, the transferee’s written agreement to the applicable restrictions and compliance with applicable securities laws. Exceptions also apply to transfers in board-approved tender offers, exchange offers, mergers or change of control transactions, registered offerings in which the Media Value Provider includes its securities pursuant to the applicable Equity Agreement, and transfers required by law or court order. The lock-up terminates automatically if the Company materially breaches the applicable agreement and fails to cure the breach within 30 days after receiving written notice from the Media Value Provider.
The Equity Agreements grant the Media Value Providers piggyback registration rights to include the resale of the Media Value Shares in certain registration statements filed by the Company for its own account or for other securityholders, subject to timely election, customary information requirements, specified exceptions and limitations, and customary underwriter, placement agent and Securities and Exchange Commission cutbacks. These piggyback rights expire on the earlier of five years after the date of the Equity Agreements and the date all Media Value Shares may be sold without restriction or limitation, and without a restrictive legend, under Rule 144. In addition, if, at any time after six months following the date of the Equity Agreements, the Media Value Shares cannot be sold without restriction or limitation under Rule 144, the Media Value Provider may request that the Company register their resale. Upon such request, the Company must file a resale registration statement within 45 days, or 30 days if the Company is eligible to use Form S-3 or another short-form registration statement, use commercially reasonable efforts to obtain effectiveness thereof within 90 days after the request, and maintain effectiveness thereof until all covered securities have been sold or may be sold without restriction or limitation under Rule 144. The Company will bear the registration expenses of such filing, subject to specified exclusions, and the parties have agreed to customary mutual indemnification provisions.
If the Company fails to include Media Value Shares required to be included in a registration statement or fails to meet the applicable filing or effectiveness deadlines, subject to the Equity Agreement’s exceptions and limitations, a Media Value Provider may, upon written notice, suspend its obligations under the Media Value Agreement, including providing Media Value and procuring, placing or fulfilling Ad Buys, without breaching either agreement. The suspension may continue until the affected shares are covered by an effective resale registration statement or the Company, at its expense, obtains an appropriate Rule 144 resale opinion. The Media Value Provider must immediately resume performance upon satisfaction of either condition, and any suspension will not extend the term of the Media Value Agreement.
We also agreed that, without the approval of the Media Value Providers, we would not grant any registration rights that conflict with, or rank senior to, the registration rights of the Media Value Providers, until such time as the Media Value Shares have been registered under the Securities Act, unless we provide the same rights to the Media Value Providers.
Executive Vice Chairman
Effective on November 6, 2026, the Board of Directors appointed director James Askew as the Non-Executive Vice Chairman of the Board of Directors, to serve until his successor is appointed or his earlier resignation, removal by the Board of Directors or cessation of service as a director. In this non-executive Board role, he shall assist the Board of Directors, its Chairman, if any, and management with strategic planning; evaluating, structuring and negotiating transactions; reviewing and advising on agreement terms; attending counterparty meetings and negotiations; coordinating with the Company’s advisers; facilitating Board of Directors and management communications and follow-up; and reporting material developments and recommendations to the Board. He shall also perform other related duties assigned by the Board. The appointment does not make him an officer, employee or independent director, confer authority to bind the Company or direct employees, or authorize responsibilities reserved to independent directors.
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Recent Funding Transactions
On May 22nd, June 1st, 2nd and 4th, 2026, the Company entered into Subscription Agreements with certain accredited investors, pursuant to which such investors purchased an aggregate of 235,000 shares of restricted common stock of the Company, for $5.00 per share, or a total of $1,175,000. The Subscription Agreements included customary representations and warranties of the investors and the Company.
On June 19, 2026, the Company entered into Subscription Agreements with two accredited investors pursuant to which the Company sold the investors an aggregate of 14,000 shares of common stock for an aggregate of $70,000 ($5.00 per share). The Subscription Agreements included customary representations and warranties of the Investors and the Company.
On June 1, 2026, in connection with the Subscription Agreements entered into in May and June 2026, the Company entered into a Registration Rights Agreement (the “June Registration Rights Agreement”) in favor of the investors (who executed a counterparty thereof in connection with their investments).
On July 13, 2026, the Company entered into a Subscription Agreement with an accredited investor pursuant to which the Company sold the investor 25,000 shares of common stock for $125,000 ($5.00 per share). The Subscription Agreement included customary representations and warranties of the Investor and the Company.
On July 13, 2026, in connection with the Subscription Agreement entered into in July 2026, the Company entered into a Registration Rights Agreement (the “July Registration Rights Agreement”, and together with the June Registration Rights Agreement, the “Registration Rights Agreements”) in favor of the investor (who executed a counterparty thereof in connection with his investment).
Pursuant to the Registration Rights Agreements, the Company agreed to file a registration statement to register the resale of the shares sold to such investors (a) on or before the first business day following 45 days after the first sale of shares (i.e., May 22, 2026), in the case of the June Registration Rights Agreement; and (b) on or before the first business day following the date which falls 45 days after the last sale of securities in the offering in connection with the July Registration Rights Agreement, and to use commercially reasonable efforts to cause such registration statement to be declared effective as promptly as possible thereafter. Once effective, the Company agreed to keep the registration statement effective until the earlier of (a) the date that all shares covered by such registration statement (i) have been sold, thereunder or pursuant to Rule 144, or (ii) may be sold without volume or manner-of-sale restrictions pursuant to Rule 144 and without the requirement for the Company to be in compliance with the current public information requirement under Rule 144, and (b) three years after the date of the Registration Rights Agreements.
If the Company fails to file the registration statement by the required dates as disclosed above, then the Company is required to promptly issue to each investor, as liquidated damages and not as a penalty, additional shares of common stock equal to five percent (5%) of the shares then held by such Investor subject to such failure to file. If such failure to file continues for a period of thirty (30) days following the initial occurrence thereof, the Company is required to promptly issue to each such investor additional shares of common stock equal to an additional five percent (5%) of the shares then held by such investor which remain subject to such failure for each additional thirty (30)-day period during which such event continues; provided, however, that the aggregate number of additional shares of common stock required to be issued to any investor will not exceed fifteen percent (15%) of the shares originally subject to such failure with respect to such investor.
The Registration Rights Agreements include customary representations, indemnification obligations of each party, and other provisions.
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On and effective on June 29, 2026, the Company entered into a First Amendment to Registration Rights Agreement (the “First Amendment”) with investors holding a majority in interest of the shares sold in the offering subject to the June Registration Rights Agreement, pursuant to which the parties amended the June Registration Rights Agreement to extend the Required Filing Date to July 31, 2026, which filing date was met by the Company.
The Company used, and plans to continue to use, the net proceeds from the offerings to advance business operations in the global racket sports entertainment business, with an initial focus on consolidating, building and growing pickleball and Padel related opportunities, to pay amounts owed to the IBM Parties, and for working capital and general corporate purposes.
On May 7, 2026, the Company entered into an agreement with INTE Securities LLC, a FINRA registered broker-dealer (“INTE”), whereby the Company agreed to pay INTE a cash fee of 7% of the aggregate proceeds received by the Company from investors introduced by INTE. In addition to the cash compensation payable to INTE, the Company agreed to grant warrants to purchase shares of Company common stock equal to 3% of the amount of securities purchased from such introductions with an exercise price based on the price of securities sold. The warrants have a five year term and a cashless exercise feature.
A total of $150,000 has been invested by two investors that were introduced to the Company by INTE, resulting in a cash fee of $10,500 and warrants to purchase 4,500 shares at an exercise price of $5.00 per share, which were issued in the name of Nathan Low, a principal of INTE.
On July 28, 2026, the Company entered into the Convertible Note which was converted into shares of common stock and warrants on October 16, 2026, as discussed in greater detail above under Convertible Note Conversion.
On August 31, 2026, and September 18, 2026, the Company entered into two Subscription Agreements with two accredited investors, pursuant to which the investors purchased an aggregate of 65,000 units, each consisting of one share of restricted common stock and one warrant to purchase one share of common stock from the Company, for a purchase price of $5.00 per unit, or a total of $325,000. The Subscription Agreements included customary representations and warranties of the investors and the Company and piggy-back registration rights for two years from the date of sale, subject to customary cutbacks and exceptions. The warrants to purchase 65,000 shares of common stock granted to the two accredited investors, have substantially similar terms as the Note Warrants, discussed above, except that such Investor Warrants include an ownership blocker preventing any portion of the applicable Investor Warrant from being exercised if upon such exercise the applicable holder and its affiliates would own more than 4.999% of the Company’s then outstanding common stock, which may be increased to 9.999% with 61 days written notice to the Company.
Plan of Operations
We had a working capital deficit of $2,545,343 as of September 30, 2026; mainly due to our current liabilities of $2,819,681. We expect to require funding in the future, including to complete payments due under our agreements with the IBM Parties, under which we had been invoiced $2,651,521 (including approved change orders and late-payment interest) and had paid $1,817,548 as of September 30, 2026, leaving approximately $834,000 unpaid. We paid $200,000 in October 2026, leaving approximately $634,000 unpaid as of the date of this Report, which we expect to pay from the proceeds of future financings (see Notes 4 and 9).
During the nine months ended September 30, 2026 and through the date of this Report, the Company raised $4,095,000 through the sale of 454,000 shares of common stock at $5.00 per share and 365,000 units at $5.00 per unit, each consisting of one share of common stock and one warrant to purchase one share of common stock with an exercise price of $7.00 per share and a term of three years, in private placements and $1,000,000 through the sale of a convertible promissory note to Investments AKA, LLC, which entity is affiliated with Andre Agassi, our largest beneficial stockholder (which has subsequently been converted into 200,000 shares of common stock and 200,000 warrants to purchase shares of common stock with an exercise price of $7.00 per share and a term of three years, as discussed above), and whose Chief Financial Officer is Shawn Cable, our Chief Financial Officer, as discussed in greater detail above under “Recent Funding Transactions”.
We plan on raising additional required funding through the sale of equity in the future, which is expected to be on similar terms as our recent private offerings. If we are successful in raising this additional capital, we anticipate that it will be sufficient to make the remaining scheduled payments to the IBM Parties under the Services Agreement; however, we have not yet secured commitments for this funding, and there can be no assurance that it will be available on acceptable terms, if at all. See Note 4 – Going Concern to the accompanying unaudited condensed financial statements.
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We also hope to begin generating revenues in the first quarter of 2027, from our launch of the App, which will include AI-agents created based off the digital minds of Andre Agassi and Darren Cahill, exclusive content, instructional videos, and ecommerce, as well as from future expected sponsorship relations, and pickleball and padel facilities.
Notwithstanding the above, we may sell additional equity in the future, which may not be available on favorable terms, if at all, and may, if sold, cause significant dilution to existing stockholders. If we are unable to access additional capital moving forward, it may hurt our ability to grow and to generate revenues.
Results of Operations
Results of Operations for the Three Months Ended September 30, 2026 Compared to the Three Months Ended September 30, 2025.
We generated no revenues for the three months ended September 30, 2026, or 2025.
For the three months ended September 30, 2026, and 2025, we had general and administrative expenses, consisting of stock-based compensation, audit fees, IBM cloud services costs under our embedded solution agreement with the IBM Parties ($21,737 for the three months ended September 30, 2026) and miscellaneous administrative costs, that totaled $2,734,041 and $755,899, respectively, an increase of $1,978,142 from the prior period. This increase is mainly due to share based expenses of $1,705,503 (discussed below), compared to $309,893 in the prior period, and increases in SEC and legal fees of $294,587, marketing, promotion and investor relations costs of $113,546, salaries and payroll costs of $91,043 and other administrative costs of $104,638, partially offset by a $67,511 decrease in professional fees. We also had research and development expenses of $78,543 for the three months ended September 30, 2026, and no research and development expenses for the three months ended September 30, 2025. Share based compensation for the three months ended September 30, 2026 totaled $1,705,503, consisting of (i) $1,275,348 of expense relating to warrants granted to consultants, (ii) $135,155 of expense relating to restricted stock units, (iii) $165,000 of expense relating to restricted shares of common stock issued to a consultant, and (iv) $130,000 of expense relating to shares of common stock issued to an investor relations firm, in each case as discussed in greater detail in “Note 7. Capital Stock and Share-Based Compensation” to the financial statements included herein.
We had other income of $75,000 and interest expense – related party of $6,600 for the three months ended September 30, 2026, and no other income or expense for the three months ended September 30, 2025. The $75,00 in other income is to be passed on to Daren Cahill and Andre Agassi equally for speaking engagements, less a 10% commission fee. Daren Cahill has been paid for his engagement to date, and Andre Agassi has not.
We had a net loss of $2,744,184 and $755,899 for the three months ended September 30, 2026, and 2025, respectively, which net loss increased for the reasons described above.
Results of Operations for the Nine Months Ended September 30, 2026, Compared to the Nine Months Ended September 30, 2025.
We generated no revenues for the nine months ended September 30, 2026, or 2025.
For the nine months ended September 30, 2026 and 2025, we had general and administrative expenses, consisting of stock-based compensation, audit fees, IBM cloud services costs under the embedded solution agreement with the IBM Parties ($21,737 for the nine months ended September 30, 2026, with a further $33,553 incurred in the three months ended June 30, 2026 included in research and development expenses) and miscellaneous administrative costs, that totaled $5,443,468 and $2,757,059, respectively, an increase of $2,686,409 from the prior period, which increase was mainly the result of increased share based compensation and increases in SEC and legal fees of $626,831, salaries, bonus and payroll costs of $392,008 (including the $250,000 sign-on bonus to our Chief Executive Officer), marketing, promotion and investor relations costs of $322,400 and other administrative costs of $192,820, partially offset by an $83,714 decrease in professional fees. Share based compensation, which for the nine months ended September 30, 2026 totaled $2,922,757, compared to $1,750,670 of share based compensation for the nine months ended September 30, 2025. Share based compensation for the nine months ended September 30, 2026 consisted of (i) $2,256,803 of expense relating to warrants granted to consultants and service providers, including expense recognized during the period on warrants granted in prior periods which vest over time, (ii) $215,954 of expense relating to restricted stock units, (iii) $320,000 of expense relating to restricted shares of common stock issued to a consultant and our investor relations firm, and (iv) $130,000 of expense relating to shares of common stock issued to an investor relations firm, in each case as discussed in greater detail in “Note 7. Capital Stock and Share-Based Compensation” to the financial statements included herein. We also had research and development expenses of $169,564 for the nine months ended September 30, 2026, and no research and development expenses for the nine months ended September 30, 2025.
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We had other income of $75,000, interest income of $6,473 and interest expense of $6,685 (including $6,600 on the related party note) for the nine months ended September 30, 2026, and no other income or expense for the nine months ended September 30, 2025. The $75,00 in other income is to be passed on to Daren Cahill and Andre Agassi equally for speaking engagements, less a 10% commission fee. Daren Cahill has been paid for his engagement to date, and Andre Agassi has not.
We had a net loss of $5,538,244 and $2,757,059, for the nine months ended September 30, 2026, and 2025, respectively, which net loss increased for the reasons described above. After giving effect to a deemed dividend of $3,548,508 relating to warrants issued to certain stockholders in consideration for lock-up agreements, net loss attributable to common stockholders was $9,086,752 for the nine months ended September 30, 2026 (see Note 2 and Note 7 to the financial statements included herein).
Liquidity and Capital Resources
The following table summarizes our current assets, liabilities, and working capital at September 30, 2026 and December 31, 2025.
| September 30, | December 31, | Increase/ | ||||||||||||||
| 2026 | 2025 | (Decrease) $ | % | |||||||||||||
| Current assets | $ | 274,338 | $ | 496,375 | $ | (222,037 | ) | -44.7 | % | |||||||
| Current liabilities | $ | 2,819,681 | $ | 494,400 | $ | 2,325,281 | 470.3 | % | ||||||||
| Working capital (deficit) | $ | (2,545,343 | ) | $ | 1,975 | $ | (2,547,318 | ) | -128,978.1 | % | ||||||
The decrease of $2,547,318 in working capital was mainly due to an increase in accounts payable and accrued expenses, primarily from the agreements with the IBM Parties, discussed above, and the $1,000,000 Investments AKA Convertible Note, which is due on July 27, 2027, and has since been converted into common stock and warrants, as discussed above, and related accrued interest.
Cash Flows
We had $2,231,024 of net cash used in operating activities for the nine months ended September 30, 2026, which was due to $5,538,244 in net loss and a $331,731 decrease in accounts payable and accrued expenses, offset by a $250,000 increase in accounts payable and accrued expenses – related party, $2,792,757 of stock-based compensation expense, $130,000 of shares issued for services, $60,226 of depreciation and amortization expense, a $6,600 increase in accrued interest – related party, and a $399,368 decrease in prepaid expenses and other current assets. We had $1,778,618 of net cash used in operating activities for the nine months ended September 30, 2025, which was mainly due to $2,757,059 in net loss, offset by $1,750,670 of stock-based compensation expense and $8,354 of depreciation expense.
We had $1,186,645 of net cash used in investing activities for the nine months ended September 30, 2026, which was due to $1,167,548 of payments for software development in progress and $19,097 for the purchase of property and equipment. We had $25,000 of net cash used in investing activities for the nine months ended September 30, 2025, which was due to the acquisition of an intangible asset.
We had $3,595,000 of net cash provided by financing activities for the nine months ended September 30, 2026, which was due to $2,270,000 of proceeds from the sale of 454,000 shares of common stock sold in our private offerings for $5.00 per share and $325,000 of proceeds from the sale of 65,000 units, each consisting of one share of common stock and one three year warrant to purchase common stock for an exercise price of $7.00 per share in a private offering, and $1,000,000 of proceeds from the Investments AKA Convertible Note. We had no cash provided by financing activities for the nine months ended September 30, 2025.
On October 16, 2026, Investments AKA, a related party, subscribed for 300,000 units for $1,500,000 (see Note 10). We have relied significantly on funding from Investments AKA and other related parties, and other than this subscription, we do not currently have any additional commitments or identified sources of additional capital from third parties or from our officers, directors or majority stockholders. Additional financing may not be available on favorable terms, if at all.
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In the future, we may be required to seek additional capital by selling additional debt or equity securities, or otherwise be required to bring cash flows in balance when we approach a condition of cash insufficiency. The sale of additional equity or debt securities, if accomplished, may result in dilution to our then stockholders. Financing may not be available in amounts or on terms acceptable to us, or at all. In the event we are unable to raise additional funding and/or obtain revenues sufficient to support our expenses, we may be forced to curtail or abandon our business operations, and any investment in the Company could become worthless.
Going Concern
The accompanying unaudited condensed financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. As of September 30, 2026, we had cash of $273,079 and an accumulated deficit of $45,168,346, and we used $2,231,024 of cash in operating activities during the nine months ended September 30, 2026. In addition, the Company’s current liabilities exceed its current assets by $2,545,343 as of September 30, 2026.
The Company has limited cash resources and continues to depend on equity raises to provide funds to pay its ongoing expenses. There can be no assurance however that the Company will be able to raise additional capital when needed, or at terms deemed acceptable, if at all. These factors raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date that the unaudited condensed financial statements are issued.
The unaudited condensed financial statements do not include any adjustments relating to the recoverability and classification of asset carrying amounts or the amount and classification of liabilities that might result should the Company be unable to continue as a going concern.
Off-Balance Sheet Arrangements
We do not have any 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 that is material to investors.
Critical Accounting Policies and Estimates
The preparation of financial statements and related disclosures in conformity with U.S. generally accepted accounting principles and the Company’s discussion and analysis of its financial condition and operating results require the Company’s management to make judgments, assumptions and estimates that affect the amounts reported. Management bases its estimates on historical experience and on various other assumptions it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities. Actual results may differ from these estimates, and such differences may be material.
“Note 2. Summary of Significant Accounting Policies” in Part I, Item 1 of this Form 10-Q and “Note 2. Summary of Significant Accounting Policies” in the Notes to Financial Statements in Part II, Item 8, of the 2025 Annual Report, describe the significant accounting policies and methods used in the preparation of the Company’s financial statements.
Related party transactions
Parties are considered to be related to the Company if the parties, directly or indirectly, through one or more intermediaries, control, are controlled by, or are under common control with the Company. Related parties also include principal owners of the Company, its management, members of the immediate families of principal owners of the Company and its management and other parties with which the Company may deal if one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests.
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Stock-Based Compensation
The Company accounts for stock-based compensation to employees in accordance with Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) 718, “Compensation-Stock Compensation”. ASC 718 requires companies to measure the cost of employee services received in exchange for an award of equity instruments, including stock options, based on the grant date fair value of the award and to recognize it as compensation expense over the period the employee is required to provide service in exchange for the award, usually the vesting period. Stock option forfeitures are recognized at the date of employee termination.
Recent Accounting Developments
See Note 2 to the condensed financial statements included in this Report for a discussion of recent accounting pronouncements, including ASU 2023-07, which the Company has adopted and reflected in its segment disclosures, and ASU 2024-03, which is not yet effective and is expected to require disaggregated disclosure of the expenses included in the Company’s general and administrative expenses caption.
Item 3. Quantitative and Qualitative Disclosures about Market Risk
Pursuant to Item 305(e) of Regulation S-K (§ 229.305(e)), the Company is not required to provide the information required by this Item as it is a “smaller reporting company,” as defined by Rule 229.10(f)(1).
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
We have established and maintain a system of disclosure controls and procedures, as such term is defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act, that is designed to provide reasonable assurance that information required to be disclosed in our reports filed with the Securities and Exchange Commission pursuant to the Exchange Act, is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Commission and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, who are our principal executive officer (CEO) and principal financial/accounting officer (CFO), respectively, to allow timely decisions regarding required disclosures.
In connection with the preparation of this Quarterly Report on Form 10-Q, our management, with the participation of our CEO (our Principal Executive Officer) and CFO (Principal Financial/Accounting Officer), carried out an evaluation of the effectiveness of our disclosure controls and procedures as of September 30, 2026, as required by Rules 13a-15(e) and 15d-15(e) of the Exchange Act. Based on the evaluation described above, our management, including our Principal Executive Officer and Principal Financial/Accounting Officer, concluded that, as of September 30, 2026, our disclosure controls and procedures were not effective. That was because at September 30, 2026, we did not have sufficient personnel to allow segregation of duties to ensure the completeness or accuracy of our information.
Remediation Plan
Management has developed a remediation plan to address the segregation of duties deficiencies that contributed to the ineffectiveness of our disclosure controls and procedures as of September 30, 2026, and our ineffective internal control over financial reporting as of December 31, 2025. We plan to begin implementing the plan in the next few weeks. During the first 30 days of the plan, we intend to identify roles and systems with incompatible responsibilities, and assign separate individuals responsibility for initiating, authorizing and recording transactions. We also plan to document existing controls and proposed changes where full segregation of duties is not practicable.
The remediation plan includes taking steps to implement independent review and documented approval of vendor changes and payment batches against supporting invoices; approval and release of wire transfers by a second authorized bank user; and independent call-back verification of new or changed wire instructions. We also intend to require independent review of bank statements, wire confirmations and bank reconciliations where an individual involved in initiating payments also prepares the related reconciliation. For journal entries and account reconciliations, we plan to restrict self-approval, require independent review of supporting documentation and posted-entry reports, and document the review and resolution of reconciling items. Reviews will be performed by individuals who did not prepare or initiate the underlying transaction or reconciliation, with evidence of review and approval retained.
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Within approximately 45 to 90 days after commencement of the remediation plan, we intend to implement automated segregation of duties monitoring tools or periodic system access reviews, update job descriptions and authority matrices to reflect revised responsibilities, and train relevant personnel on segregation of duties principles and compliance expectations. We also plan to perform initial testing of the revised controls and document the results. Following the initial 90-day period, we intend to continue to integrate segregation of duties controls into our risk management process, establish an annual review with management sign-off, and retain supporting evidence of ongoing control performance.
Denise Berninger, our non-executive Controller, will lead the remediation efforts, with support from Shawn Cable, our Chief Financial Officer, and oversight by the Audit Committee. These timeframes represent management’s current targets and may change as implementation and testing progress. The deficiencies will not be considered remediated until the applicable controls have been implemented, have operated for a sufficient period, and management has concluded through testing that they are operating effectively; however, management believes that to the extent it can implement its remediation plan, the Company will be in a position to have effective controls and procedures and internal control over financial reporting by the later part of next year.
Changes in Internal Control Over Financial Reporting
We regularly review our system of internal control over financial reporting to ensure we maintain an effective internal control environment. There were no changes in our internal control over financial reporting that occurred during the quarter ended September 30, 2026 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Limitations on Effectiveness of Controls and Procedures
The Company’s disclosure controls and procedures are designed to provide the Company’s Chief Executive Officer and Chief Financial Officer with reasonable assurances that the Company’s disclosure controls and procedures will achieve their objectives. However, the Company’s management does not expect that the Company’s disclosure controls and procedures or the Company’s internal control over financial reporting can or will prevent all human error. A control system, no matter how well designed and implemented, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Furthermore, the design of a control system must reflect the fact that there are internal resource constraints, and the benefit of controls must be weighed relative to their corresponding costs. Because of the limitations in all control systems, no evaluation of controls can provide complete assurance that all control issues and instances of error, if any, within the Company are detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur due to human error or mistake. Additionally, controls, no matter how well designed, could be circumvented by the individual acts of specific persons within the organization. The design of any system of controls is also based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated objectives under all potential future conditions.
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Part II – Other Information
Item 1. Legal Proceedings
Although we may, from time to time, be involved in litigation and claims arising out of our operations in the normal course of business, we are not currently a party to any material legal proceeding. In addition, we are not aware of any material legal or governmental proceedings against us or contemplated to be brought against us.
Item 1A. Risk Factors
There have been no material changes from the risk factors previously disclosed in Part I, Item 1A of the Company’s Form 10-K for the year ended December 31, 2025, filed with the Commission on March 31, 2026 (the “Form 10-K”), under the heading “Risk Factors”, except as set forth below, and investors should review the risks provided in the Form 10-K and below, prior to making an investment in the Company. The business, financial condition and operating results of the Company can be affected by a number of factors, whether currently known or unknown, including but not limited to those described in the Form 10-K, under “Risk Factors”, and below, any one or more of which could, directly or indirectly, cause the Company’s actual financial condition and operating results to vary materially from past, or from anticipated future, financial conditions and operating results. Any of these factors, in whole or in part, could materially and adversely affect the Company’s business, financial condition, operating results and stock price.
We will need to raise additional funding in the future, including to fulfill our obligations under the IBM Parties agreements, which may not be available on favorable terms, or at all. We have historically relied on funding provided by management and Andre Agassi, our largest beneficial shareholder and such parties are under no contractual obligation to continue to provide us funding.
We are required to make payments to IBM under an October 31, 2025, Partnership Agreement for Consulting Services (the “Services Agreement”) and first statement of work, entered into simultaneously with the Services Agreement (“SoW 1”) totaling approximately $2,134,716, payable in monthly installments, all of which were due by June 30, 2026. As of September 30, 2026, $1,817,548 had been paid under the Services Agreement and SoW 1, including approved change orders, and a further $200,000 was paid in October 2026. The Company also paid IBM $75,000 in 2025 under a separate statement of work.
Pursuant to a February 2, 2026, Embedded Solution Agreement – IBM Cloud Enterprise Savings PLAN ESA Transaction Document (the “Embedded Solution Agreement”), entered into by us and International Business Machines Corporation, the Company has to pay International Business a minimum payment commitment of $500,000 for the period between February 1, 2026 and January 31, 2027 and $3,300,000 for the period between February 1, 2027 and January 31, 2031. The initial $500,000 commitment is non-refundable and the subsequent $3,300,000 commitment will become non-refundable unless the Company terminates such commitment by written notice to International Business on or before December 31, 2026. To date, $33,553 has been paid under the Embedded Solution Agreement.
The most likely source of these funds will be through the sale of equity capital. Any sale of share capital will result in dilution to existing stockholders. Furthermore, we may incur debt in the future, and may not have sufficient funds to repay our future indebtedness or may default on our future debts, jeopardizing our business viability.
A substantial portion of our recent capital has been provided by Investments AKA, LLC, an entity indirectly controlled by Andre K. Agassi, our largest beneficial stockholder, and by other related parties, including our President and Chief Executive Officer. On March 13, 2026, we raised an aggregate of $400,000 through the sale of 80,000 shares of restricted common stock to two accredited investors, including $250,000 from the Boreta Lifetime Trust, whose trustee is Ronald S. Boreta, our President, Chief Executive Officer and a director. On April 28, 2026, we raised an additional $250,000 through the sale of 50,000 shares of restricted common stock to Investments AKA. On July 28, 2026, we entered into a convertible promissory note with Investments AKA in the original principal amount of $1,000,000 (which was subsequently converted into 200,000 units, each consisting of one share of common stock and one three year warrant to purchase shares of common stock with an exercise price of $7.00 per share). On October 16, 2026, Investments AKA subscribed to purchase 300,000 units for an aggregate of $1.5 million, each consisting of one share of common stock and one three year warrant to purchase shares of common stock with an exercise price of $7.00 per share. Investments AKA’s Chief Financial Officer is Shawn Cable, who also serves as our Chief Financial Officer.
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As a result of these transactions, we have become substantially dependent on funding from a small number of related parties, including our largest shareholder and members of our management team, to support our operations and growth. We can provide no assurance that Mr. Agassi, Investments AKA, Mr. Boreta, or any other related party will continue to provide funding to us in the future, on the same terms or at all. If such funding is not available, we may need to seek capital from other sources, which may not be available on acceptable terms, or at all, and our business, financial condition and results of operations could be materially and adversely affected. In addition, our reliance on funding from related parties, including officers and directors, creates potential conflicts of interest.
If any of these related parties were to reduce or cease their financial support of the Company, or if we were unable to negotiate future financing on similar terms, our liquidity and ability to fund our operations could be materially and adversely affected.
We may not be able to borrow or raise additional capital in the future to meet our needs or to otherwise provide the capital necessary to expand our operations and business, which might result in the value of our common stock decreasing in value or becoming worthless. Additional financing may not be available to us on terms that are acceptable. Consequently, we may not be able to proceed with our intended business plans. Substantial additional funds will still be required if we are to reach our goals that are outlined in this Report. Obtaining additional financing contains risks, including:
| ● | additional equity financing may not be available to us on satisfactory terms and any equity we are able to issue could lead to dilution for current stockholders; |
| ● | loans or other debt instruments may have terms and/or conditions, such as interest rate, restrictive covenants and control or revocation provisions, which are not acceptable to management or our directors; |
| ● | the current environment in capital markets combined with our capital constraints may prevent us from being able to obtain adequate debt financing; and |
| ● | if we fail to obtain required additional financing to pay amounts to the IBM Parties, the IBM Parties may terminate their agreements with us, we may be unable to grow our business, we will need to delay or scale back our business plan, and/or reduce our operating costs, each of which would have a material adverse effect on our business, future prospects, and financial condition. |
In addition, pursuant to the Commitment Agreement, we may be required to pay IBM a performance bonus equal to between 2% and 2.5% of net revenues generated from our arrangements with IBM, minus costs from IBM, but not other expenses or costs of such revenues, which may be significant. If we do not generate sufficient revenues, we may need to raise additional funds to satisfy these obligations. Additional funding may not be available on favorable terms or at all, and the failure to obtain necessary funding could adversely affect our business, financial condition, results of operations, and prospects.
We may not be able to launch our planned Platform and our App in January 2027, as currently projected.
We will need to complete the build out of our Platform and App before commercially launching those. Any delay in the financing, design, buildout and launch of our Platform and/or App could delay, or could prevent, the commercial launch of the Platform and App. Platforms and applications often experience delays in their design, build-out and commercial release. These delays may result in additional costs and if we are not able to overcome these challenges, our business, prospects, operating results and financial condition will be negatively impacted and our ability to grow our business will be harmed.
Sales of a substantial number of shares of common stock by the selling shareholders named in our resale Form S-1 registration statement, or the perception that such sales may occur, could cause the market price of our common stock to decline or become volatile.
We have filed a registration statement on Form S-1, to register the resale of up to 13,981,982 shares of our common stock, including up to (a) 10,694,606 outstanding shares of common stock; and (b) 3,287,376 shares of common stock issuable upon exercise of certain warrants to purchase shares of common stock of the Company, which was declared effective on August 12, 2026. The shares registered for resale include only the shares and warrant shares held by the selling shareholders named in the registration statement, and do not include all shares of common stock issuable upon exercise of our outstanding warrants, which totaled 4,027,376 shares as of the date of this Report. The selling shareholders named in the registration statement may sell all, some or none of their shares at any time, subject to applicable securities laws, and certain lock-up agreements entered into by certain of such shareholders. Because many of the selling shareholders acquired their shares or warrants in privately negotiated transactions, they may be willing to dispose of their shares at prices below the prices paid by other investors or below the then-current market price.
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The resale by the selling shareholders of a substantial number of shares of our common stock, or the perception that these sales could occur, may adversely affect the prevailing market price of our common stock. Any such sales, or the availability of a significant number of additional shares for resale in the public market, could increase the supply of our common stock, reduce the trading price of our common stock, impair our ability to raise capital through future equity financings, and contribute to significant fluctuations in the market price of our common stock, regardless of our actual operating performance or prospects. Increased trading activity resulting from the availability of these shares could also make it more difficult for investors to sell their shares at favorable prices or at all.
Until our common stock is quoted on the OTCQB or OTCQX markets or listed on a national securities exchange, the selling shareholders named in our resale Form S-1 registration statement will be required to sell their shares at a fixed price, which may reduce the likelihood that the warrants will be exercised for cash or that registered shares will be sold.
Because our common stock is not currently quoted on the OTCQB or OTCQX markets or listed on a national securities exchange, the selling shareholders named in our resale Form S-1 registration statement discussed above will be required to offer and sell the shares covered thereby, to the extent sold under the registration statement and not under Rule 144, at a fixed price until such time as an established public trading market develops, if at all, in accordance with the requirements of the Securities Act. If the fixed offering price exceeds the prevailing market value of our common stock or is otherwise unattractive to potential purchasers, the selling shareholders may be unable or unwilling to sell their registered shares. Similarly, holders of warrants may determine that exercising their warrants for cash is not economically advantageous if they are unable to readily resell the underlying shares at or above the exercise price. As a result, we may receive little or no cash proceeds from warrant exercises, and the registered resale offering may not achieve its intended purpose of providing liquidity to the selling shareholders.
Additionally, this limitation may artificially cap the market price of our common stock and create downward pressure on the trading price, particularly if market participants anticipate future selling activity at the fixed prices. Even if our common stock is trading above the fixed sales price, the continued offering of shares at those prices could result in the market price drifting back toward or remaining near the fixed price until such time as the restrictions are lifted, if ever. This could adversely affect investor perception, limit price appreciation, and impair our ability to raise capital at more favorable valuations.
In addition, the presence of a fixed-price offering could create disincentives for investor participation in the public market, reduce liquidity, and increase volatility. There is also no assurance as to when or if our common stock will be quoted or listed on a higher-tier market, and the longer this restriction remains in place, the greater the potential impact on the trading price and stability of our common stock.
Our common stock may not be approved for listing on Nasdaq in the future.
We have applied to have our common stock listed on the Nasdaq Capital Market, however we may not currently meet the required uplisting requirements of Nasdaq and even if we meet such requirements in the future, such application may not be approved.
In order to be approved for listing on the Nasdaq Capital Market, we need to meet certain requirements of Nasdaq, including, but not limited to: meeting one of the following tests: (1) $750,000 of pre-tax income (in either the last fiscal year or two of the three most recent years), $5 million of public float, $4 million of stockholders’ equity and a minimum bid of $4.00 per share; (2) $15 million of public float, $5 million of stockholders’ equity, a minimum bid price of $4.00 per share price and 2 years of operating history; or (3) a $50 million market cap; $15 million of public float, $4 million of stockholders’ equity, and a minimum bid price of $4.00 per share price, plus in each case 300 round lot stockholders and 1,000,000 shares of total public float, with at least half of such required number of round lot stockholders holding unregistered securities with a minimum value of $2,500. Currently traded companies qualifying under standard (2) above must meet the $50 million market value of listed securities and the applicable bid price requirement for 90 consecutive trading days before applying. We are also required to meet certain volume requirements in the event we uplist other than in connection with a firm commitment underwritten offering, which is our current plan.
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We may not currently meet Nasdaq’s initial listing standards and may not meet such standards in the future. Also, even if we meet such standards, Nasdaq may not approve our application for uplisting.
We recently launched our e-commerce website, and our limited operating history makes it difficult to evaluate our business and future prospects, particularly in light of our lack of brand recognition among consumers.
We launched our e-commerce website in July 2026, and as a result, we have only a limited operating history upon which prospective investors can evaluate our business, financial performance, and future prospects. Our historical sales data, to the extent it exists at all, covers a short period of time and may not be representative of the demand, customer behavior, or operating trends we will experience in the future as the business matures. We have not yet demonstrated an ability to grow revenue, achieve profitability, or maintain customer retention over a sustained period, and you should consider our prospects in light of the risks and uncertainties frequently encountered by early-stage companies in new and rapidly evolving markets.
Because our e-commerce website is new, we have limited brand recognition among consumers, retailers, and other participants in the padel community, particularly as compared to more established sporting goods retailers and racket sport brands that have operated for many years and have built substantial customer loyalty and word-of-mouth reputation. Building brand awareness requires us to spend significantly on marketing and customer acquisition without any assurance that such spending will result in a sufficient number of new customers, repeat purchases, or long-term brand loyalty. Because consumers researching pickleball equipment purchases frequently rely on reviews, established brand reputation, recommendations from padel clubs and coaches, or products they have seen used by other players, our lack of an established track record may cause potential customers to choose competitors with longer operating histories and greater brand recognition, even where our products are comparable or superior in price or quality.
In addition, prospective customers may be hesitant to purchase from a website with which they are not familiar or that lacks an established reputation for reliable fulfillment, product quality, and customer service. We also have limited data regarding customer acquisition costs, conversion rates, average order value, and customer lifetime value over any extended period, which limits our ability to accurately forecast future performance or to make informed decisions regarding marketing spend, inventory purchasing, and other operational matters. If we are unable to build brand awareness and a positive reputation efficiently, or if we experience a higher-than-expected rate of customer attrition due to our limited track record, our ability to grow revenue and achieve or maintain profitability could be materially and adversely affected.
Furthermore, our limited operating history means that our management team has limited experience operating our business as a going concern, and we may encounter unanticipated expenses, difficulties, complications, and delays in executing our business plan that a more established company would not experience. There can be no assurance that we will be successful in addressing these risks, and our failure to do so could materially harm our business, financial condition, and results of operations.
Any disruption to the functionality, security, or availability of our e-commerce website could materially harm our revenue and reputation.
We expect to generate revenue through our recently launched e-commerce website in the future. Our ability to generate sales is highly dependent on the continuous, reliable operation of our website and the underlying technology infrastructure that supports it, including our hosting provider, content delivery network, e-commerce platform, and payment gateway integrations. Any of the following could result in website downtime, degraded performance, or an inability to process transactions; server or hosting failures; software bugs or coding errors introduced during updates; capacity constraints during periods of high traffic, such as promotional events or holiday shopping seasons; distributed denial-of-service (DDoS) attacks or other malicious cyber activity; and errors by third-party vendors on whom we rely for critical infrastructure.
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We do not maintain full redundancy, and any significant interruption in the availability of our website could result in lost sales that we may not be able to recapture. In addition, our website’s checkout and payment functionality depends on third-party payment processors, and any technical failure, security incident, or change in the terms of service of these providers could prevent customers from completing purchases. We cannot guarantee that disruptions will not occur in the future. Any of the foregoing could damage our brand, reduce customer trust, and materially adversely affect our business, financial condition, and results of operations.
We use “open source” software, which could negatively impact our AI software offerings.
Our swing analysis AI App is built using both open source and publicly available (licensable) computer vision models, and proprietary and internally developed models. Open source software is generally freely accessible, usable and modifiable, and is made available to the general public on an “as-is” basis under the terms of a non-negotiable license. Use and distribution of open source software may entail greater risks than use of third-party commercial software or internally developed software. Open source licensors generally do not provide warranties or other contractual protections regarding infringement claims or other claims relating to violation of intellectual property rights or the quality of the software. In addition, certain open source licenses, may require us to offer for no cost the components of our platform that incorporate the open source software, to make available source code for modifications or derivative works we create by incorporating or using the open source software or to license our modifications or derivative works under the terms of the particular open source license. If we are required under the terms of an open source license to release our proprietary source code to the public, competitors could create similar products with lower development effort and time, which ultimately could result in a loss of sales for us.
We may also face claims alleging noncompliance with open source license terms or infringement, misappropriation or other violation of open source technology. These claims could result in litigation or require us to purchase a costly license, devote additional research and development resources to re-engineer our platform, discontinue the sale of our software products if re-engineering could not be accomplished on a timely or cost-effective basis, or make generally available our proprietary code in source code form, any of which would have a negative effect on our business and operating results, including being enjoined from the offering of the components of our platform that contained the open source software. We could also be subject to lawsuits by parties claiming ownership of what we believe to be open source software. Litigation could be costly for us to defend, have a negative effect on our operating results and financial condition and require us to devote additional research and development resources to re-engineer our platform.
Although we monitor use of open source software and try to ensure that none is used in a manner that would subject our platform to unintended conditions, few courts have interpreted open source licenses, and there is a risk that these licenses could be construed in a way that could impose unanticipated conditions or restrictions on our ability to commercialize our AI software. We cannot guarantee that we will incorporate open source software in our platform in a manner that will not subject us to liability, or in a manner that is consistent with our current policies and procedures.
We may be unable to successfully launch our planned World Series of Pickleball event, and any delay or failure to do so could adversely affect our business and the market price of our securities.
Our plans to launch the World Series of Pickleball are subject to numerous risks and uncertainties, many of which are outside our control, including our ability to secure and finalize sponsorship, media, and broadcast arrangements on acceptable terms; obtain necessary venues, permits, licenses, and approvals in the locations where the event is to be held; recruit a sufficient number of qualified participants and organizing partners; secure adequate financing and manage development and launch costs, which may exceed our expectations; and avoid disruption from litigation, insurance or liability issues, adverse weather, public health concerns, or other unforeseen events. Desirable locations may not be available at an acceptable cost or on a timely basis due to competition from established events, scheduling conflicts, zoning, licensing, or environmental requirements. Even if secured, we may be unable to attract sufficient spectators, players, or media attention to those locations. We have limited or no experience organizing and promoting an event of this kind, and there is no assurance that we will be able to execute on our plans within our anticipated timeframe, on economically viable terms, or at all. If we are unable to launch the event as planned, are required to delay, postpone, or significantly scale back the event, or determine to abandon the event entirely, we may not realize the anticipated business, marketing, or revenue benefits associated with it, we may be unable to recover development, marketing, and related costs already incurred, and our reputation, brand, and relationships with prospective sponsors, partners, and participants could be harmed, any of which could materially and adversely affect our business, financial condition, and results of operations.
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We may be unable to adequately protect our intellectual property rights in the World Series of Pickleball and future similar branded events, and competitors may develop and market similar or competing events, which could dilute our brand and adversely affect any competitive position we may have.
We intend to promote the World Series of Pickleball as a signature branded event, but our trademark and related intellectual property protections, generally extend only to specific names, marks, and trade dress, and do not prevent competitors (including those with greater financial and marketing resources) from launching similarly themed pickleball tournaments under different branding, potentially with overlapping timing or audiences. If a competitor successfully launches such an event, we may face increased competition for participants, sponsors, and viewers, our brand may be diluted, and we may incur significant costs enforcing our intellectual property rights with no assurance of success, any of which could materially and adversely affect our business, financial condition, and results of operations.
We rely significantly on Mr. Andre Agassi, and the loss of such relationship would be disruptive to, and could force us to significantly scale back and/or abandon our business.
We are currently significantly reliant on Mr. Andre Agassi, our largest beneficial stockholder. We believe that a significant amount of our relationships, partners, and opportunities, are based on our affiliation with Mr. Agassi, his ownership of our securities, and his assistance with the operations, business plan, and prospects of the Company, including relationships of Mr. Agassi in the tennis and pickleball areas. Mr. Agassi is a well-known public figure, and is one of the greatest tennis players of all time. Mr. Agassi’s wife, Stefanie Graf, is also a brand partner, and is herself one of the greatest tennis players of all time. We are currently party to a name and likeness agreement with the entity which owns Mr. Agassi’s name and likeness, AKA Licenses, LLC, which has a term through June 18, 2041, but may be terminated prior to that by AKA Licenses for cause in the event of any of the following: (i) the Company conducts itself in a manner that brings the Company, AKA Licenses, or Mr. Agassi into material disrepute and degradation in the eyes of the public and/or the media, as determined by AKA Licenses in its reasonable good faith determination; (ii) the Company becomes subject to court-filed charges by any governmental or administrative entity for fraud, mismanagement, criminal activity, or other similar bad acts; (iii) the Company enters into, or publicly announces its intention to enter into or support, any agreement, binding letter of intent, memorandum of understanding or other contract related to: (a) the sale of all or substantially all of the Company’s assets to a third-party(ies); (b) any merger, consolidation, plan of arrangement, share exchange, tender offer or other acquisition of the Company whereby the voting shareholders of the Company would have less than 50% of the voting power of the resulting entity; or (c) any change in the ownership of more than 50% of the voting capital stock of the Company in one or more related transactions, in each case without the written approval of AKA Licenses; or (iv) upon a material breach of the Company’s obligations under the Agassi License Agreement, which breach is not cured within thirty (30) days’ written notice thereof by AKA Licenses to the Company, to the extent such breach can be cured.
We believe Mr. Agassi’s assistance has been, and will continue to be, a critical element of our success. Our ability to maintain our brand image and leverage the goodwill associated with Mr. Agassi’s name would be significantly damaged if our relationship with Mr. Agassi were to change, in the event of Mr. Agassi’s death or disability, the termination of the name and likeness license agreement with Mr. Agassi and AKA Licenses, or in the event of any negative market or industry perception with respect to him. Additionally, in the event the name and likeness agreement with Mr. Agassi and AKA Licenses were to be terminated, we may be forced to change our name, brand, and marketing plans and cease using Mr. Agassi in our advertising and promotional activities which we expect would have a material adverse effect on our results of operations, business plans and prospects.
Furthermore, any negative publicity regarding Mr. Agassi, or other members of our management team, or our Company as a whole, especially through social media which accelerates and increases the potential scope of negative publicity, could adversely impact the image of our brand with our customers and result in diminished loyalty to our brand and potentially lead to adverse consumer actions, including boycotts, even if the subject of such publicity is unverified or inaccurate and we seek to correct it. Consumer sentiment can also be influenced by our partnership with athletes and other public figures, our relationships with partners, our views on political and social issues, or our long-term initiatives and goals regarding our impact on the environment and society as a whole, among other factors. Even if we react appropriately to negative publicity, customers’ perception of our brand image and our reputation could be negatively impacted. Any failure on our part to retain the value and reputation of brands could adversely impact our business.
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Our Chief Financial Officer’s other roles may give rise to conflicts of interest, or the perception thereof, that could adversely affect our business.
Our Chief Financial Officer, Shawn Cable, also serves as Chief Financial Officer of, and/or manager of, certain entities owned or controlled by Andre Agassi, one of our significant shareholders. As a result of these relationships, Mr. Cable may have obligations to these other entities that are similar to, or conflict with, his obligations to us. These other roles may require significant time and attention, which could reduce the time and attention Mr. Cable is able to devote to our business and affairs. In addition, because Mr. Agassi is one of our significant shareholders, has provided us the use of his name and likeness, which we believe is significant to our brand identity and business plans moving forward, and has provided us funding from time to time, Mr. Cable’s relationships with entities owned or controlled by Mr. Agassi may create, or may be perceived to create, conflicts of interest when he is faced with decisions that could have different implications for us than they do for Mr. Agassi or his affiliated entities. These decisions may relate to, among other things, corporate opportunities, negotiation and enforcement of agreements, the allocation of resources, and other matters where the interests of us and our shareholders may not be aligned with those of Mr. Agassi and its affiliated entities.
Although we have policies and procedures in place designed to address actual and potential conflicts of interest, these policies and procedures may not be effective in identifying, preventing, or adequately managing all such conflicts. Any actual or perceived conflict of interest could result in reputational harm, litigation, or regulatory scrutiny, or could result in decisions that are not in the best interests of our company or our other shareholders, any of which could adversely affect our business, financial condition, and results of operations.
Our App is expected to initially be significantly reliant on the USTA Content which is provided under the USTA Agreement and the cross-promotional aspect of our relationship with USTA, and the USTA Agreement which can be terminated under certain circumstances.
Our App is expected to initially be significantly reliant on the USTA Content, which is to be provided to us under the terms of the USTA Agreement. Additionally, pursuant to the terms of the USTA Agreement, USTA has agreed to help us promote the App and offer the App to its members and coaches at a discount, which we expect will at least initially be significantly responsible for the marketing awareness of, and user base for, our App. Because USTA receives a percentage of the net revenue generated from the App from USTA members and coaches, we expect that USTA will be incentivized to help us market and grow the App’s userbase of USTA members and coaches.
The USTA Agreement has a term of three years, and can be terminated prior to that by either party for cause, provided the non-breaching party provides the other 60 days after written notice of any such event relating to a for cause termination and the non-breaching party does not cure such breach within such 60 day period, and can also be terminated immediately by USTA in the event of (i) our unauthorized use of the USTA Content, (ii) the occurrence of a material security incident caused by our failure to comply with certain of our obligations under the agreement, (iii) our breach of the agreement’s prohibitions on reverse engineering and secondary use of the USTA Content, or (iv) our breach of our agreement to use commercially reasonable efforts to make the App available to users. Additionally, either party may terminate the agreement upon the other party’s insolvency or entry into bankruptcy.
Under the terms of the agreement, the license provided by USTA to use the USTA Content expires upon termination of the Agreement and the Company is required, within 30 days of termination of the USTA Agreement, to return to USTA or certify in writing the secure destruction of all copies of USTA’s proprietary content in the Company’s possession, including copies on backup media, development environments, and other systems. Separately, upon termination of the USTA Agreement, the Company must, within 180 days (subject to extension for technical complexity), use commercially reasonable efforts to implement technical measures intended to reduce the continued influence of USTA’s content on any AI model it operates, selecting from options such as retraining, fine-tuning reversal, machine unlearning, or exclusion of the data from future training runs. However, the agreement expressly acknowledges that AI models may retain residual effects from previously ingested data and that complete removal or verification of such removal is not currently technically feasible.
The termination of the USTA Agreement may have a material adverse effect on the App and/or the quality of coaching, including AI coaching outputs, that our App provides. Additionally, the termination of the USTA Agreement may make it harder for us to market the App, may result in USTA members/coaches who receive a discount to use the App terminating their subscriptions, and/or result in a decline in users, revenue and/or prospects. As a result, a termination of the USTA Agreement may adversely affect our results of operations and cash flow, and have a material adverse effect on the value of our securities.
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Our agreement with USTA requires us to share a percentage of revenues and provide free and discounted subscriptions, which will reduce our net revenues and could adversely affect our results of operations.
Pursuant to the USTA Agreement, in consideration for USTA entering into the Agreement, we agreed to (i) provide USTA with a fixed number of complimentary subscriptions to our App at no cost, (ii) provide USTA members and USTA coaches with a discount on yearly subscriptions to our App during the term of the Agreement, and (iii) pay USTA a fixed percentage of the net revenues we generate through the App from USTA members and USTA coaches, net of platform and application fees and as adjusted for chargebacks and refunds.
These obligations will directly reduce the net revenues we generate from the affected user base for as long as the USTA Agreement remains in effect. The complimentary subscriptions we are required to provide generate no subscription revenue to us at all, while the discounted subscriptions generate revenue at a reduced rate compared to the pricing we would otherwise be able to charge such users absent the USTA Agreement. In addition, the revenue-sharing payments we owe to USTA will further reduce the portion of net revenues we are able to retain from USTA members and USTA coaches. As the number of USTA members and USTA coaches who subscribe to the App grows, or as the discount or revenue-sharing percentage increases (whether upon renewal, renegotiation, or otherwise), the cumulative effect of these arrangements on our revenues and profitability will correspondingly increase.
We entered into the USTA Agreement, and may enter into similar arrangements with other organizations in the future, because we believe the anticipated benefits, including increased brand visibility, user acquisition, and market penetration, will outweigh the associated costs. However, we cannot guarantee that these anticipated benefits will be realized, or that they will be realized to an extent that offsets the reduction in revenues resulting from the free subscriptions, discounted pricing, and revenue-sharing payments required under the USTA Agreement. If the expected benefits do not materialize as anticipated, our obligations under the USTA Agreement could have a disproportionately negative effect on our net revenues and results of operations relative to the value we receive. Furthermore, because the discount and revenue-sharing obligations are tied to the number of USTA members and USTA coaches who subscribe to the App, our ability to accurately forecast the financial impact of the USTA Agreement is limited, and better-than-expected adoption by USTA members and coaches could result in a greater-than-anticipated reduction in our net revenues.
Any of the foregoing could have a material adverse effect on our business, financial condition, and results of operations.
We could be subject to claims related to the construction or operation of our planned future facilities and the use or condition of our future planned premises, facilities, equipment, services, activities or products, which could have a negative effect on our results of operations and financial condition.
Use of our future planned premises, facilities, equipment, services, activities or products pose potential health or safety risks to members and guests. Claims may be asserted against us for loss, injury or death suffered by someone (including a minor child) using our future planned premises, facilities, equipment, services, activities or products. We could also face claims in connection with the construction of our planned facilities, as well as claims related to environmental matters or remediation. While we expect to carry insurance generally applicable to such claims, we will face exposure for losses within any self-insured retention or for uninsured damages.
We could also face claims for economic or other damages by future members, guests or employees, including consumer protection, wage and hour, or other statutory or common law claims arising from our business operations. Such claims may be uninsured or the proceeds of our insurance coverages for such claims may be insufficient to cover our losses fully. Depending upon the outcome, these matters may have a material adverse effect on our business, results of operations and financial condition.
On August 4, 2026, we announced the launch of our “Let’s Play” pickleball and padel platform initiative, pursuant to which we intend to pursue the acquisition of, partnership with, and franchising of pickleball and padel facilities, beginning with the United States and future planned initial expansion into Germany and Australia. As of the date of this Report, we have not acquired any facilities, have not entered into any definitive agreement to acquire, partner with, or franchise any facility, and are not a party to any strategic partnership, collaboration, or franchise agreement in connection with this initiative. There can be no assurance that we will identify suitable facilities or operators, that any discussions will result in definitive agreements, or that any facilities we do acquire or affiliate with will operate profitably or as currently contemplated. The risks described herein and in our Annual Report on Form 10-K relating to construction, operation, insurance and liability exposure for facilities apply with equal or greater force to this initiative, including in international jurisdictions where our experience, insurance markets, and legal recourse may differ materially from the United States.
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We may not be able to compete successfully against present or future competitors.
We do not have the resources to compete with larger providers of similar planned services at this time. With the limited resources we have available, we may experience great difficulties in expanding our operations. Competition from existing and future competitors could result in our inability to secure funding to expand our business. This competition from other entities with greater resources and experience may result in our failure to maintain or expand our business, as we may never be able to successfully execute our business plan.
Additionally, in connection with our “Let’s Play” pickleball and padel initiative, established regional and national pickleball and padel club operators in Germany, Australia, and other target markets may have longer operating histories, superior local market knowledge, existing member bases, and lower-cost access to real estate than we do. We may be unable to identify, attract, or compete for attractive acquisition or partnership targets, and competitors, including local operators, other consolidators, and other racket-sports brands, may outbid us or reach similar operators first.
Our ability to grow and compete in the future will be adversely affected if adequate capital is not available.
The ability of our business to grow and compete depends on the availability of adequate capital, which in turn depends in large part on the availability of equity and debt financing. Our cash flow from operations, if any, in the future may not be sufficient or we may not be able to obtain equity or debt financing on acceptable terms or at all to implement our growth strategy. As a result, adequate capital may not be available to finance our current growth plans, take advantage of business opportunities or respond to competitive pressures, any of which could harm our business.
Our “Let’s Play” initiative is expected to require substantial additional capital for acquisitions, partnership investments, facility improvements, franchise development, and related working capital, which would be in addition to, and not a substitute for, our existing funding obligations to the IBM Parties described elsewhere in this Report. We have not secured financing specifically earmarked for this initiative, and our ability to pursue it, or to pursue it on the scale or timeline currently contemplated, is dependent on our ability to raise significant additional capital on acceptable terms, which may not be available. If we are unable to raise sufficient capital, we may be unable to pursue this initiative at all, may need to scale it back materially, or may be forced to prioritize it over other elements of our business plan (or vice versa), any of which could adversely affect our growth prospects and the market price of our common stock.
Our “Let’s Play” facilities initiative is in a very early stage, and we may never enter into any definitive agreements or realize any of its anticipated benefits.
We are currently in the beginning stages of discussions with facility operators, developers, and strategic partners regarding potential future acquisitions, collaborations, and franchise opportunities across potential domestic and international markets. As of the date of this Report, we have not acquired any facilities, have not entered into any definitive agreement to acquire any facility, and are not a party to any strategic partnership, collaboration, or franchising agreement in furtherance of this initiative. Preliminary discussions, non-binding expressions of interest, or letters of intent, even if entered into, do not guarantee that a transaction will be completed on the terms discussed, on the anticipated timeline, or at all. Negotiating and completing transactions of this nature can take considerably longer than we anticipate, and negotiations may be terminated at any time by us or a counterparty. Announcing this initiative may itself create expectations among investors, analysts, potential partners, and the public that we may be unable to satisfy, and if we fail to enter into definitive agreements or complete transactions consistent with our announced plans, our reputation and the trading price of our common stock could be adversely affected.
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We may be unable to identify, negotiate, finance, or successfully integrate acquisitions, partnerships, or franchise relationships, and any transactions we do complete may not achieve their intended benefits.
Our “Let’s Play” strategy contemplates growth through a combination of acquisitions of existing facility operators, strategic partnerships and collaborations, and franchising arrangements. Each of these approaches carries distinct and substantial risks, including: difficulty identifying suitable targets or partners on acceptable terms; competition from other acquirers, including better-capitalized strategic and financial buyers; the expense and diversion of management attention involved in due diligence and negotiation, whether or not a transaction is completed; the risk that we overpay for, or overestimate the prospects of, an acquired business; difficulty integrating acquired operations, personnel, technology, and financial and other controls with our own, particularly given that we currently have limited management infrastructure and no operating history running physical facilities; the potential loss of key employees, members, or customers of an acquired business following a transaction; assumption of known and unknown liabilities of acquired businesses, including litigation, employment, tax, environmental, and regulatory liabilities; and the need to fund acquisitions, franchise development, or partnership investments with cash, debt, or equity that may not be available to us on favorable terms, or at all, or which may cause significant dilution to existing shareholders. If we are unable to successfully execute and integrate acquisitions, partnerships, or franchise relationships, we may not realize the anticipated benefits of this initiative, and our business, financial condition, and results of operations could be adversely affected.
If we pursue franchising as part of our “Let’s Play” initiative, we will become subject to a complex and evolving body of U.S. and foreign franchise laws and regulations, and our failure to comply could result in significant liability.
Franchising is heavily regulated in the United States at both the federal level (including the Federal Trade Commission’s Franchise Rule) and the state level (including state franchise registration, disclosure, and relationship laws), as well as under the laws of foreign jurisdictions in which we may seek to franchise, including Germany, Australia, and other target markets, each of which may have differing (and in some cases more stringent) disclosure, registration, termination, and franchisee-protection requirements. We currently have no experience operating a franchise system. Establishing and administering a compliant franchise program will require us to develop franchise disclosure documents and related compliance infrastructure, which will involve significant cost, and any failure to comply with applicable franchise laws could result in rescission rights for franchisees, fines, injunctions, or other regulatory action, and could damage our relationships with future or prospective franchisees. In addition, even where we comply with applicable law, franchisees are independent business operators, and we will have limited ability to control the day-to-day operations, quality, and customer experience at franchised locations. Poor performance, non-compliance with our brand and operating standards, or negative publicity involving a franchised location could harm our brand and reputation across our entire network, even at facilities we do not own or directly operate.
We expect to rely significantly on Stefanie Graf and Darren Cahill in connection with our “Let’s Play” initiative in Germany and Australia, respectively, and the loss of, or any change to, these relationships could adversely affect this initiative.
We have announced that our initial international expansion efforts of our “Let’s Play” pickleball and padel initiative will be led by Stefanie Graf in Germany and Darren Cahill in Australia, and that each is expected to advise on facility design, programming, player development, and regional and local market strategy. Ms. Graf currently serves the Company as a brand partner under a five-year Brand Partner Agreement, and Mr. Cahill is party to a name and likeness license agreement with the Company, in each case entered into prior to, and not specifically contemplating, the scope of involvement described for the “Let’s Play” initiative. Neither has entered into any agreement with the Company obligating them to provide the operational, advisory, or market-development services contemplated by this initiative, and there can be no assurance that the scope of their involvement will be formalized on acceptable terms, or at all. If our relationship with Ms. Graf or Mr. Cahill were to change, including as a result of disagreement over the scope or terms of their involvement in this initiative, health, personal considerations, or reputational concerns affecting either individual, our ability to execute our German and Australian expansion plans as currently contemplated could be materially and adversely affected, and we may be required to identify alternative regional leadership without the benefit of their reputations, relationships, and expertise.
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Our “Let’s Play” initiative contemplates international expansion, which will subject us to risks specific to operating outside the United States that we have not previously faced.
We currently have no operating history outside the United States. Our initial international efforts are expected to focus on Germany and Australia, with the goal of expanding further into North America, Europe, Asia Pacific, and other markets. International operations, whether through direct acquisition, joint venture, partnership, or franchising, would expose us to a variety of risks that differ from, or are in addition to, the risks of our U.S. operations, including: compliance with foreign laws and regulations, including labor, real estate, consumer protection, tax, anti-corruption (including the U.S. Foreign Corrupt Practices Act and local anti-bribery laws), and data privacy laws (including the EU General Data Protection Regulation and Australian privacy law), which may differ significantly from U.S. requirements and may change in ways adverse to us; foreign currency exchange rate fluctuations, which could adversely affect our results of operations and the value of any international investments, and which we do not currently hedge; difficulty repatriating cash or profits from foreign operations, or restrictions on our ability to do so; differing cultural attitudes, business practices, and consumer preferences regarding club membership, sports participation, and hospitality, which may not respond as expected to our brand or model; tariffs, trade restrictions, and geopolitical instability affecting our ability to operate, procure equipment, or move personnel across borders; the burden and cost of complying with multiple, and potentially conflicting, legal and regulatory regimes with limited internal legal and compliance resources; and reduced or more limited legal protections and recourse in certain foreign jurisdictions relative to the United States. Our lack of experience operating internationally increases the risk that we will not be able to execute this strategy successfully, or at all.
Acquiring, developing, leasing, or franchising physical facilities will expose us to real estate, construction, and development risks that we have not previously faced.
Facilities acquired, developed, or franchised under the “Let’s Play” initiative, if any, may require us or our partners to enter into leases or purchase real property, obtain zoning, land use, health, safety, and other permits and approvals, and undertake construction or renovation, in each case in jurisdictions where we have limited or no experience. These activities are subject to risks including construction delays and cost overruns; the unavailability of suitable real estate in desirable locations on acceptable terms; difficulty obtaining necessary permits, licenses, and approvals on a timely basis, or at all; exposure to environmental liabilities associated with real property; landlord or counterparty default or insolvency; and the risk that facility designs or locations do not attract the anticipated level of member or customer interest. Any of these risks could increase our costs, delay our timeline, or prevent us from opening or maintaining “Let’s Play” facilities as planned, which could adversely affect our business, financial condition, and results of operations.
If we acquire or operate pickleball and padel facilities, our results will depend on our ability to attract and retain members and other facility customers, which may be seasonal, discretionary, and subject to significant local competition.
Revenue from any facilities we acquire, develop, or franchise in the future is expected to depend on membership fees, court and program bookings, food and beverage, retail, and related hospitality revenue, each of which is discretionary in nature and may be highly sensitive to local economic conditions, weather and seasonality, local competition (including from non-profit and municipal facilities that may have lower cost structures), and consumer trends in racket sports participation more generally. We have no experience operating or managing member-based athletic or recreational facilities, and there can be no assurance that we will be able to attract or retain a sufficient membership base, achieve targeted utilization levels, or operate any such facilities profitably.
Sales of shares of our common stock following the expiration of certain lock-up agreements, or the perception that such sales may occur, could cause the market price of our common stock to decline.
Certain investors in our November 2024 private offering entered into lock-up agreements covering an aggregate of 2,631,543 shares of our common stock and warrants to purchase an aggregate of 657,876 additional shares of our common stock, together with the shares issuable upon exercise of those warrants. Subject to certain customary permitted transfers, these investors agreed not to transfer such securities until December 15, 2026. We also agreed to file a registration statement covering the resale of the shares subject to these agreements, including the shares issuable upon exercise of the warrants, on or before December 15, 2026, which has been filed and declared effective to date.
Upon expiration of the lock-up period, these securities will no longer be subject to the contractual transfer restrictions and may be sold, subject to applicable securities laws. Sales of substantial amounts of our common stock following expiration of the lock-up period, or the perception that such sales may occur, could increase the supply of shares available for sale and cause the market price of our common stock to decline. These sales or the potential for these sales could also impair our ability to raise additional capital through the sale of equity securities. We cannot predict whether or when these investors will sell their shares or the effect that any such sales may have on the market price of our common stock.
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Our planned Let’s Play pickleball and padel initiative is subject to significant industry and franchise-related risks, and recent bankruptcies involving other pickleball franchisees demonstrate that we may not successfully develop or operate profitable facilities.
We plan to develop and operate pickleball and padel facilities under a franchisee model. Our success will depend on sustained consumer interest in pickleball and padel and our ability to attract and retain sufficient paying customers at prices that support profitable operations. The popularity of pickleball and padel does not assure the commercial viability of individual facilities, and participation in the sports may not translate into demand for paid memberships, court rentals, instruction, tournaments or other services we intend to offer. Changes in recreational preferences, reduced discretionary spending, seasonal fluctuations and competition from other pickleball and padel facilities, fitness and entertainment businesses, and free or lower-cost public courts could adversely affect demand. Additional facilities entering our target markets could also result in oversaturation, pricing pressure and increased customer acquisition costs.
Certain pickleball franchisees, and at least one franchisor, have recently sought bankruptcy protection. On September 24, 2026, Exton PB LLC and Newark PB LLC, franchisees of The Picklr, filed for Chapter 11 in the U.S. Bankruptcy Court for the Middle District of Florida. On or about October 9, 2026, The Picklr, a national pickleball franchisor, filed for Chapter 11 in the Northern District of Texas. PK Plano LLC, a Pickleball Kingdom franchisee in Plano, Texas, filed for Chapter 11 protection on September 26, 2025; that case was dismissed on May 29, 2026. These filings illustrate that businesses operating under established pickleball franchise brands may experience financial distress despite consumer interest in the sport. We could encounter similar difficulties, and there can be no assurance that our planned facilities will achieve or maintain profitability.
Developing and operating pickleball and padel facilities may require substantial expenditures for leases, construction, court installation, equipment, staffing, insurance, utilities and marketing, together with franchise fees, royalties and other required payments. We may incur significant costs before generating meaningful revenue, and construction delays, cost overruns, permitting difficulties or slower-than-expected membership growth could increase our capital requirements. Long-term lease commitments and other fixed expenses may limit our ability to reduce costs if revenues fall below expectations. Limited court capacity during peak periods, insufficient utilization during off-peak periods and membership pricing that does not adequately reflect operating costs could further constrain our revenues and margins.
Our franchisee model will also make us dependent on our brand, business systems, financial condition and ability to provide effective support. Franchise requirements may restrict our flexibility concerning pricing, suppliers, marketing, facility design and operations and may require additional expenditures. Financial distress, adverse publicity or operational failures involving us or our franchisees could harm our business even if our facilities perform satisfactorily. We may be unable to secure suitable locations, obtain financing on acceptable terms, open facilities as planned or generate sufficient cash flow to satisfy our obligations. If we cannot successfully implement our strategy, we could incur substantial losses, impairments and closure costs, lose our investment in one or more facilities or discontinue our business, which could materially adversely affect our business, financial condition and results of operations.
Our Grateful Dead License Agreement requires guaranteed payments and nonrefundable advances regardless of product sales, which could adversely affect our liquidity and profitability.
On October 30, 2026, we entered into a Merchandise License Agreement with Rhino covering certain Grateful Dead trademarks, indicia and artwork for use with specified pickleball and padel products, apparel and drinkware. Under the Grateful Dead License Agreement, we must pay royalties, subject to guaranteed payments during the term of the agreement. These obligations include certain nonrefundable advances. If actual royalties are less than the applicable guaranteed payment, we must pay the shortfall.
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These commitments require us to make payments before, and potentially without, generating sufficient sales or cash flow from the Licensed Products. We also must spend an agreed upon percentage of Net Sales on advertising each contract year. These obligations are in addition to our product development, manufacturing, inventory, distribution and other operating costs. Consequently, low sales could result in royalty costs that represent substantially a higher percentage of actual Net Sales, and even products that generate significant revenue may not be profitable. We may be unable to recover our advances, guaranteed payments or other investments through product sales. Any resulting cash shortfalls could require us to divert funds from other operations or obtain additional financing, which may not be available on acceptable terms or at all. Overdue amounts also accrue interest, increasing our obligations and potentially further straining our liquidity.
Our financial exposure also includes manufacturing commitments and potential termination-related reimbursements under our Manufacturer Agreement. A delay or interruption in manufacturing or distribution would not, by itself, relieve us of our guaranteed payment obligations under the Grateful Dead License Agreement. We could therefore be required to fund license payments, manufacturing commitments and replacement production arrangements while generating limited or no revenue from the affected products.
We may be unable to satisfy the sales and performance requirements under the Grateful Dead License Agreement, which could result in termination or loss of our extension rights.
The Grateful Dead License Agreement establishes minimum net sale requirements. Our ability to achieve these levels will depend on customer acceptance of the Licensed Products, the effectiveness of our marketing, access to distribution channels, timely product approvals, manufacturing capacity and other factors, many of which are outside our control. The popularity of the Grateful Dead brand may not translate into sufficient demand for our Licensed Products.
Rhino may terminate the Grateful Dead License Agreement if we fail to meet certain minimum sales obligations. The possibility of termination or nonrenewal could also limit our ability to plan production, commit to distribution arrangements and recover investments in the Licensed Products.
Rhino has significant rights to terminate the Grateful Dead License Agreement, and termination or expiration could disrupt our operations and cause losses on inventory and other investments.
Our ability to manufacture, distribute and sell the Licensed Products depends on the continued effectiveness of the Grateful Dead License Agreement. Rhino may terminate the agreement for specified events, certain of which do not provide an express cure period. Although we have rights to terminate for certain breaches by Rhino, exercising those rights would also result in the loss of the license and would not assure recovery of our investment or replacement of the licensed rights.
Termination or expiration of the agreement could result in inventory write-downs, unrecovered expenditures, obligations to suppliers or customers, lost sales and reputational harm, any of which could materially adversely affect our business, financial condition and results of operations.
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Approval requirements and operating restrictions under the Grateful Dead License Agreement could delay product launches, increase costs and limit our ability to respond to market demand.
The Grateful Dead License Agreement requires Rhino’s approval of each design used for a Licensed Product and provides approval rights over packaging, advertising and promotional activities. We must also comply with quality control, insurance, reporting and other requirements, restrictions on distributing products without charge and obligations to make products available for resale through designated channels controlled by Rhino. Approvals may not be obtained within our anticipated development and production schedules or on terms consistent with our commercial objectives. Delayed approvals, rejected designs or required changes could cause us to incur additional design, tooling, manufacturing or marketing costs, miss selling opportunities or hold inventory that cannot be sold as planned.
We are required to begin marketing Licensed Products no later than May 1, 2027 and begin shipments no later than July 1, 2027. Approval delays, manufacturing problems, supply chain disruptions or other difficulties could prevent us from meeting these deadlines or generating anticipated sales. These difficulties could also impair our ability to satisfy minimum sales and payment requirements and could expose us to contractual remedies, including termination where applicable. The agreement’s restrictions on products, distribution channels and uses of the Licensed Property may further limit our ability to adapt our offerings and sales strategies to changing customer preferences.
Our ability to meet these requirements also depends on coordinating Rhino’s approvals with the Manufacturer’s manufacturing and distribution schedules. A product that meets our manufacturing specifications may still require changes to obtain Rhino’s approval, and approval of a design does not assure that the Manufacturer will manufacture or deliver compliant products on time. Changes or delays at either stage could require additional expenditures, delay sales and impair our compliance with the Grateful Dead License Agreement.
The limited scope of our licensed rights and the contractual calculation of royalties could constrain growth and reduce margins.
Our rights under the Grateful Dead License Agreement are non-exclusive, non-transferable and non-assignable and apply only to specified Licensed Products and approved uses and distribution channels. Although Rhino agreed not to use, directly or through third parties, the Licensed Property for products in the pickleball and padel equipment and accessories category during the term, that commitment is subject to pre-approved exceptions and does not provide equivalent protection across all licensed product categories. We may therefore face competition from other products bearing the Grateful Dead brand, including products offered by other licensees in categories where we do not have comparable protection. Restrictions on assignments, sublicensing and transfers may also limit our ability to pursue certain strategic transactions or commercial arrangements without Rhino’s consent.
The agreement also limits deductions used to calculate Net Sales. If actual deductions exceed these limits, we could owe royalties on amounts that do not reflect the revenue we ultimately retain. Combined with guaranteed payments, advertising requirements and competitive pricing pressures, these provisions could reduce our margins and cause the Licensed Products to generate lower profits, or greater losses, than anticipated.
We expect to depend on a third party to manufacture and distribute our Licensed Products, and disruptions in that relationship could impair our ability to meet our obligations under the Grateful Dead License Agreement.
We entered into a Manufacturer Agreement with a manufacturer, pursuant to which the Manufacturer agreed to manufacture and distribute the Licensed Products. Our ability to launch products, fulfill customer orders and generate sales under the Grateful Dead License Agreement therefore depends on the Manufacturer’s performance. Manufacturing delays, capacity constraints, shortages of materials or labor, financial difficulties, failures to meet our specifications or delivery requirements, or disruptions affecting the Manufacturer or its subcontractors could delay shipments, increase costs and adversely affect product quality and customer relationships. Although the Manufacturer Agreement includes representations regarding manufacturing and employment practices and provides us with inspection and contractual remedies, these protections may not prevent operational failures or resulting losses.
The Manufacturer Agreement permits termination upon specified events. Identifying and transitioning to another manufacturer or distributor could require substantial time and expense, including new tooling, production qualification and any required approvals under the Grateful Dead License Agreement. Any interruption could prevent us from meeting the initial marketing and shipment deadlines or minimum sales requirements under the Grateful Dead License Agreement, while our guaranteed payment and other financial obligations continue. These circumstances could result in lost sales and a material adverse effect on our business, financial condition and results of operations.
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Termination of our manufacturing arrangement could require substantial payments for inventory, equipment and other commitments, including amounts we may be unable to recover through product sales.
Upon termination of the Manufacturer Agreement, we must reimburse the Manufacturer for its costs and expenses, including finished goods, work in process, non-cancellable commitments, equipment used to manufacture products under the agreement, packaging, raw materials and inventory destruction costs, if destruction is requested. Except where the Manufacturer or its subcontractor has engaged in unauthorized use of the Licensed Property, these reimbursement obligations could apply even if termination results from manufacturing problems, deficient performance or other circumstances that make continuation of the relationship commercially undesirable. Accordingly, our right to terminate the Manufacturer Agreement may not allow us to exit the arrangement without substantial expense.
The Manufacturer Agreement also terminates automatically upon termination of the Grateful Dead License Agreement. A loss of our licensed rights could therefore trigger manufacturing-related reimbursement obligations at the same time that amounts become payable under the Grateful Dead License Agreement and our ability to generate revenue from the Licensed Products becomes restricted. Work in process, raw materials, packaging and specialized equipment may have limited alternative uses or resale value. Obligations under the Licence Agreement could require significant cash payments, result in inventory write-downs or other charges, and reduce the funds available for our continuing operations.
Our indemnification obligations to our Manufacturer could expose us to significant costs arising from intellectual property claims and other disputes.
The Manufacturer Agreement requires us to indemnify the Manufacturer for losses relating to alleged misuse or infringement of intellectual property rights and includes additional mutual indemnification obligations. Although the Grateful Dead License Agreement grants us specified rights to use the Licensed Property, those rights do not assure that third parties will not challenge particular designs, artwork, products or uses, or allege that our activities exceed the scope of the license. An allegation alone could result in defense costs and, depending on the applicable contractual provisions and circumstances, indemnification obligations before the underlying claim is resolved.
Intellectual property disputes could also require us to suspend production or sales, modify products or packaging, obtain additional rights, settle claims or discontinue affected products. We may be unable to obtain any necessary additional rights on commercially acceptable terms or at all. Our rights against Rhino, our Manufacturer or other parties, and any available insurance, may not cover all resulting losses or provide timely recovery. A significant claim could therefore impose substantial costs, disrupt the Licensed Product business and impair our ability to satisfy the payment and sales requirements under the Grateful Dead License Agreement.
If we fail to satisfy our resale registration obligations, Sinclair or Tennis Channel may suspend advertising services while retaining the shares we issued to it.
We agreed to issue an aggregate of 300,000 shares of restricted common stock to Sinclair and Tennis Channel in exchange for an aggregate of $1.5 million of media value to be provided over two years. If we fail to include these shares when required to be registered or fail to meet applicable filing or effectiveness deadlines for registration statements we are required to file, the affected provider may, subject to the terms of its agreement and upon written notice, suspend its advertising obligations. The timing of SEC review or our ability to obtain a Rule 144 resale opinion may affect how quickly we can resolve a suspension. Even if the provider resumes performance after the affected shares are covered by an effective resale registration statement or we obtain the required opinion, the suspension does not extend the two-year term of the agreements. We could therefore miss planned campaigns or have insufficient time to use the full media value before the agreements expire. The agreements prohibit us from recovering any shares already issued through forfeiture, repurchase, clawback or similar means. If we need to purchase replacement advertising, we could incur additional costs while our stockholders continue to bear the dilution from the shares already issued.
The advertising available under our agreements with Sinclair and Tennis Channel may be poorly timed for our campaigns or generate limited commercial returns.
We and the media providers will determine advertising placements based on available inventory during the two-year term of the agreements with such providers. The timing, audience and mix of television, digital and social media placements available to us may differ from what we need to support particular campaigns. The $1.5 million of contracted media value is calculated using each provider’s then-current rate card. Changes in those rates may affect the amount or mix of advertising we can obtain. Even if we receive the full contracted media value, the placements may generate limited audience engagement, customer acquisition or revenue. As a result, we may realize less commercial benefit from the advertising than we anticipated when we agreed to issue the shares.
Resales of the shares issued to Sinclair and Tennis Channel could put pressure on our stock price, and their registration rights could limit our flexibility in future financings.
Subject to specified exceptions and early termination provisions, the contractual lock-ups expire for half of the 300,000 shares issued to Sinclair and Tennis Channel after six months and for the remaining half after one year. Once the applicable lock-up expires or an exception applies, the providers may sell shares under an effective resale registration statement or an available exemption from registration. Sales of a substantial number of shares, or the perception that such sales may occur, could depress the market price of our common stock and make it more difficult to raise equity capital on favorable terms. We also agreed, until the media value shares have been registered, to obtain the providers’ approval before granting conflicting or senior registration rights unless we extend the same rights to the providers. That obligation could delay a financing or limit the registration terms we can offer prospective investors.
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Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Unregistered Sales of Equity Securities
There have been no sales of unregistered securities during the quarter ended September 30, 2026, and from the period from October 1, 2026, to the filing date of this Report that have not previously been disclosed in a Current Report on Form 8-K, except as discussed below:
On July 13, 2026, the Company entered into a Subscription Agreements with an accredited investor pursuant to which the Company sold the investor 25,000 shares of common stock for $125,000 ($5.00 per share). The Subscription Agreement included customary representations and warranties of the Investor and the Company.
On July 23, 2026, the Company granted two consultants warrants to purchase 200,000 shares of common stock (100,000 each) with an exercise price of $5.00 per share, cashless exercise rights, in consideration for services rendered. One warrant is exercisable in full and expires on July 23, 2029; the other expires on July 23, 2031 and is exercisable for up to one-half of the underlying shares prior to July 23, 2027 and in full thereafter.
On May 7, 2026, the Company entered into an agreement with INTE Securities LLC, a FINRA registered broker-dealer, whereby the Company agreed to pay INTE a cash fee of 7% of the aggregate proceeds received by the Company from investors introduced by INTE. In addition to the cash compensation payable to INTE, the Company agreed to grant warrants to purchase shares of Company common stock equal to 3% of the amount of securities purchased from such introductions with an exercise price based on the price of securities sold. The warrants have a five year term and a cashless exercise feature.
A total of $150,000 has been invested by two investors that were introduced to the Company by INTE, resulting in a cash fee of $10,500 and warrants to purchase 4,500 shares at an exercise price of $5.00 per share, which were issued in the name of Nathan Low, the principal of INTE.
On July 28, 2026, we issued an investor relations firm 20,000 shares of restricted common stock in consideration for strategic advisory and investor relations consulting services to be rendered to the Company over a term of three months.
On September 17, 2026, the Company granted a financial advisor warrants to purchase 50,000 shares of common stock as partial consideration under a letter agreement with the financial advisor. The warrants vested immediately, have an exercise price of $5.00 per share and cashless exercise rights, and expire on July 27, 2031.
On October 12, 2026, we issued an investor relations firm 50,000 shares of restricted common stock in consideration for strategic advisory and investor relations consulting services to be rendered to the Company over a term of six months.
* * * * *
The Company claims an exemption from registration pursuant to Section 4(a)(2) and/or Rule 506 of the Securities Act, for the issuance of the shares and grant of the warrants described above since the foregoing issuances/grants did not involve a public offering, the recipients were “accredited investors” and took the securities for investment and not resale, and we took appropriate measures to restrict transfer. The securities are subject to transfer restrictions, and the securities contain an appropriate legend stating that such securities have not been registered under the Securities Act and may not be offered or sold absent registration or pursuant to an exemption therefrom.
Use of Proceeds From Sale of Registered Securities
None.
Purchases of Equity Securities by the Issuer and Affiliated Purchasers
None.
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Item 3. Defaults Upon Senior Securities
None.
Item 4. Mine Safety Disclosures
Not applicable.
Item 5. Other Information.
(a) Form 8-K Information. The information and disclosures which are set forth above under “Part II, Item 2. Unregistered Sales of Equity Securities and Use of Proceeds”, are incorporated by reference into this “Item 5. Other Information”, in their entirety, and shall serve as disclosure of such information pursuant to Item 3.02 of Form 8-K.
(c)
Rule 10b5-1(c) Trading Plans. Our director and executive officer may from time to time enter into plans or other arrangements
for the purchase or sale of our shares that are intended to satisfy the affirmative defense conditions of Rule 10b5-1(c)
or may represent a non-Rule 10b5-1 trading arrangement under the Exchange Act. During the quarter ended September 30, 2026,
none of the Company’s directors or officers (as defined in Rule 16a-1(f))
Item 6. Exhibits
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* Filed herewith.
** Furnished herewith.
† Exhibit constitutes a management contract or compensatory plan or agreement.
# Certain confidential portions of this Exhibit were omitted by means of marking such portions with brackets (“[***]”) because the identified confidential portions (i) are not material and (ii) the Company customarily and actually treats that information as private or confidential.
♦ Certain schedules and exhibits have been omitted pursuant to Item 601(a)(5) of Regulation S-K. The Company agrees to furnish supplementally a copy of such schedules and exhibits, or any section thereof, to the SEC upon request; provided, however, that the Company may request confidential treatment pursuant to Rule 24b-2 under the Exchange Act for any exhibits or schedules so furnished.
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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 thereunto duly authorized.
| Agassi Sports Entertainment Corp. | ||
| Date: November 12, 2026 | By: | /s/ Ronald Boreta |
| Ronald Boreta | ||
| Chief Executive Officer, President and Treasurer | ||
| (Principal Executive Officer) | ||
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