10-Q: E-Smart Corp. Q3 2026: Revenue Dip, Net Loss Widens

E-Smart Corp. reported a decrease in quarterly revenue and an increased net loss for the third quarter of fiscal year 2026, while highlighting ongoing efforts to secure funding.

Summary

• E-Smart Corp. reported revenue of $7,950 for the three months ended May 31, 2026, a decrease from $9,756 in the same period of the prior year.
• The net loss for the three months ended May 31, 2026, was $24,322, an increase from $34,423 in the prior year's comparable period.
• For the nine months ended May 31, 2026, revenue increased to $37,710 from $20,101 in the prior year's period.
• The net loss for the nine months ended May 31, 2026, widened to $88,821 from $71,952 in the prior year's period.
• Total assets decreased to $107,584 as of May 31, 2026, from $141,281 as of August 31, 2025.
• Total liabilities increased to $248,326 as of May 31, 2026, from $200,988 as of August 31, 2025.
• The company has an accumulated deficit of $199,070 as of May 31, 2026.
• Management anticipates dependence on additional investment capital and plans to finance operations through available cash, director loans, or a private offering.
• Disclosure controls and procedures were found to be not effective as of May 31, 2026.

Sentiment

Score: 2

Explanation: StockSavvy.ai views this filing as negative due to the widening net loss, declining assets, critical cash position, and the explicit statement of substantial doubt about the company's ability to continue as a going concern, despite some revenue growth in the nine-month period.

Positives

• Revenue for the nine months ended May 31, 2026, increased by approximately 87.6% to $37,710 compared to $20,101 in the prior year's period.
• The company has secured a related party loan, increasing from $200,790 to $248,227, providing some level of financial support.
• The company has no current legal proceedings that would materially affect its financial position or results of operations.

Negatives

• Quarterly revenue decreased by approximately 18.5% to $7,950 for the three months ended May 31, 2026, compared to $9,756 in the prior year's period.
• The net loss for the three months ended May 31, 2026, increased by approximately 30% to $24,322 compared to $34,423 in the prior year's period.
• The net loss for the nine months ended May 31, 2026, increased by approximately 23.4% to $88,821 compared to $71,952 in the prior year's period.
• Total assets decreased by approximately 23.9% to $107,584 as of May 31, 2026, from $141,281 as of August 31, 2025.
• Total liabilities increased by approximately 23.6% to $248,326 as of May 31, 2026, from $200,988 as of August 31, 2025.
• The company has a substantial accumulated deficit of $199,070 as of May 31, 2026.
• Disclosure controls and procedures were determined to be not effective as of May 31, 2026.

Risks

• There is substantial doubt about the Company's ability to continue as a going concern due to ongoing losses and insufficient revenue to cover operating costs.
• The Company's capacity to operate as a going concern is reliant on its ability to generate profitable operations in the future and/or secure required funding.
• Management anticipates dependence on additional investment capital to fund operating expenses.
• There are no assurances that the Company will be successful in raising additional funds through capital markets or becoming financially viable.
• The business is subject to risks inherent in the establishment of a new business enterprise, including limited capital resources and possible cost overruns.
• There is no assurance that future financing will be available on acceptable terms, which could prevent the Company from continuing, developing, or expanding its operations.
• Equity financing could result in additional dilution to existing shareholders.

Future Outlook

Management anticipates dependence on additional investment capital to fund operating expenses for the near future. The company intends to position itself to raise additional funds through capital markets. Management plans to finance operational expenses for the next twelve months by using available cash on hand, as well as loans from directors and/or a private offering of Common Stock. There are no assurances of success in raising funds or achieving financial viability.

Management Comments

• "The Company currently has losses and has not completed its efforts to establish a stabilized source of revenues sufficient to cover operating costs over an extended period of time. Therefore, there is substantial doubt about the Companys ability to continue as a going concern."
• "Management anticipates that the Company will be dependent, for the near future, on additional investment capital to fund operating expenses."
• "The Company intends to position itself so that it will be able to raise additional funds through the capital markets."
• "In light of managements efforts, there are no assurances that the Company will be successful in this or any of its endeavors or become financially viable and continue as a going concern."
• "Management plans to finance operational expenses for the next twelve months by using available cash on hand, as well as loans from directors and/or a private offering of Common Stock."

Industry Context

StockSavvy.ai notes that E-Smart Corp. operates in the digital platform space, aiming to connect tattoo artists and clients. The company's focus on an AI-driven design tool and API services places it within the growing trend of AI integration in creative industries. However, its current financial performance, characterized by increasing losses and a precarious going concern status, highlights the significant challenges faced by early-stage tech companies in monetizing innovative solutions and achieving sustainable revenue.

Comparison to Industry Standards

• The company's revenue of $37,710 for the nine months ended May 31, 2026, is significantly lower than established players in the digital platform or AI service sectors. For instance, companies like Adobe (ADBE) or Autodesk (ADSK) generate billions in annual revenue from their creative software and AI-powered design tools.
• E-Smart Corp.'s net loss of $88,821 for the nine months ended May 31, 2026, while concerning, is typical for early-stage startups in the technology sector that are investing heavily in product development and market penetration. However, the lack of significant revenue growth and the increasing net loss raise concerns about the scalability and market adoption of its platform compared to venture-backed startups that often show more rapid revenue growth, even with substantial losses.
• The company's reliance on related party loans for funding, with a balance of $248,227 as of May 31, 2026, contrasts with industry standards where growth-stage companies typically access venture capital, private equity, or public markets for substantial funding rounds.

Corporate Governance

Legal Proceedings

• No current legal proceedings that would have a material effect on the company's financial position or results of operations.

Related Party Transactions

• The company has a Loan Agreement with its CEO, with the amount due to the related party being $248,227 as of May 31, 2026.
• Imputed interest expense of $7,787 for the nine months ended May 31, 2026, was recorded as additional paid-in capital related to the CEO loan.

Stakeholder Impact

• Shareholders: Potential for further dilution if equity financing is pursued; significant risk to investment value given the going concern issues.
• Creditors: Increased risk of non-payment due to the company's precarious financial position and reliance on future funding.
• Employees: Uncertainty regarding job security and company stability due to the going concern warning.
• Management: Faces significant challenges in securing necessary funding and achieving operational viability.

Next Steps

• Management plans to seek additional investment capital through capital markets or a private offering.
• Management plans to finance operational expenses for the next twelve months using available cash, director loans, or a private offering.

Key Dates

Recommendation

The filing indicates significant financial distress, including a widening net loss, declining assets, a critically low cash balance, and an explicit statement of substantial doubt about the company's ability to continue as a going concern. While there was revenue growth in the nine-month period, the quarterly performance worsened, and the company's future viability is heavily dependent on securing additional capital, which is not guaranteed. These factors present a high risk to investors.

Keywords

E-Smart Corp, 10-Q Filing, Quarterly Report, Tattoo Industry Platform, AI Tattoo Design, Digital Platform, Revenue, Net Loss, Going Concern, Capital Raise, Nevada Company