Executive Summary / Key Takeaways

• Sparta Commercial Services (SRCO) is a diversified micro-cap company demonstrating significant revenue growth in its FinTech and Health & Wellness segments, with total revenue increasing 133% year-over-year for the three months ended July 31, 2025.
• The company's FinTech segment, Agoge Global USA, is a key growth driver, leveraging blockchain technology (EZBroker360) to streamline cross-border trade finance between the U.S. and Brazil, reducing transaction times and costs, and has achieved $2 million in loan deployment.
• Despite strong growth in specific areas, SRCO faces substantial financial headwinds, including recurring losses, negative operating cash flow, and a significant accumulated deficit, leading to a "going concern" warning from its auditors.
• SRCO differentiates itself by targeting underserved niche markets with specialized, bundled technology and financing solutions, positioning it distinctly from larger, more generalized competitors in digital services.
• The company's future hinges on its ability to successfully raise additional capital, execute its strategic initiatives like the 2026 launch of the Sparta Crypto platform, and address internal control weaknesses to achieve sustainable profitability.

A Diversified Approach to Niche Markets

Sparta Commercial Services, Inc. (SRCO) operates as a multi-disciplined parent corporation, strategically positioning itself across four primary business sectors: FinTech Services, Financial Services, E-Commerce Mobile Technology, and Health and Wellness. Incorporated in 1980, Sparta initially focused on Powersports consumer finance but pivoted its operations after the 2008 financial crisis, embarking on a journey of diversification to target underserved markets with specialized solutions. This strategic evolution has shaped its current portfolio, aiming to provide technology-driven solutions, specialized financing products, and consumer wellness offerings.

The company's overarching strategy centers on identifying and serving niche markets where larger, more generalized competitors may not offer tailored solutions. This approach is evident across its segments, from blockchain-enabled trade finance to specialty vehicle history reports. For instance, its FinTech subsidiary, Agoge Global USA, operates in the substantial $252 billion cross-border trade market, specifically targeting small-to-midsize importers in high-demand sectors. This focus allows Sparta to carve out a distinct competitive space, emphasizing service quality, niche market focus, and the deployment of proprietary technology solutions.

Technological Innovation: The Core of Sparta's Strategy

Sparta's investment thesis is deeply rooted in its technological differentiators, particularly within its FinTech and E-Commerce segments, which are designed to offer tangible benefits over conventional alternatives.

FinTech Services: EZBroker360 and the Future of Trade Finance

The FinTech Services segment, primarily driven by Agoge Global USA, Inc., a subsidiary of Sparta Crypto, Inc., represents a significant technological leap for SRCO. Formed in December 2022, Agoge entered a joint venture with Brazil's WeDev Group Ltda. to develop EZBroker360, a blockchain-enabled platform. This platform utilizes stablecoins and distributed ledger technology to fundamentally transform cross-border trade between the United States and Brazil.

The core technology of EZBroker360 offers several quantifiable benefits. It is designed to reduce transaction times from days to hours, significantly lower cross-border payment costs, and enhance security, transparency, and auditability in international trade. Beyond payment processing, EZBroker360 provides staged financing for freightage, customs duties, and taxes, alongside assistance with Brazilian tax and regulatory compliance, import/export documentation, and market entry facilitation. This specialized financing addresses gaps not traditionally served by conventional banks. Since its inception, Agoge's loan deployment has reached $2 million, with clients reporting enhanced cash flow flexibility, increased import volumes, and avoidance of demurrage fees. Notably, Patta Brazil's CEO attributed Agoge's financing solutions to supporting a projected 50% revenue increase and enabling additional hiring.

Building on this foundation, the joint venture has developed iGoCards, a virtual card and expense management platform for globally oriented businesses. iGoCards will enable fund loading via USD or stablecoins, incorporate multi-user controls, and offer advanced expense management features. A planned "Receive" capability aims to position Agoge as a comprehensive financial ecosystem provider for international commerce. The broader Sparta Crypto platform, designed to connect users of widely adopted digital currencies with sellers of various goods and services, is scheduled to launch in 2026. These technological advancements are critical to Sparta's competitive moat, enabling higher margins through efficient, specialized services and strengthening its market position in niche trade finance.

E-Commerce & Mobile Technology: Tailored Digital Solutions

Through iMobile Solutions, Inc. (iMS), Sparta's E-Commerce Mobile Technology segment provides a suite of digital tools. The iMobileApp brand creates, hosts, and maintains custom mobile applications for small and medium-sized businesses across diverse industries, incorporating advanced features like geo-fencing, push notifications, and CRM integration. iMS also offers website design, hosting, and SEO services, custom software development (including kitchen ordering systems with payment integration), and text messaging platforms. These offerings provide cost-effective, customizable solutions, allowing SMBs to increase revenue and improve customer engagement.

Furthermore, iMS operates Specialty Vehicle History Reports under the Cyclechex (motorcycle), RVchex (recreational vehicle), and Truckchex (heavy-duty truck) brands. These reports serve markets not fully addressed by major providers such as CARFAX or AutoCheck , providing data on prior damage, title brands, and recall history. Sparta explicitly states it does not intend to compete directly with CarFax or AutoCheck, underscoring its niche market focus. This targeted approach, backed by industry-specific expertise, allows Sparta to compete on service quality and the ability to deploy proprietary technology solutions.

Financial Services: Municipal Leasing

Sparta's Municipal Financing program, launched in 2007, offers equipment financing solutions to over 100 jurisdictions nationwide, including local and state government agencies and eligible non-profit organizations. The program finances essential equipment such such as police motorcycles, fire trucks, and EMS vehicles, and Sparta is a preferred financing source for BMW Motorrad USA (BMWYY) Police Motors. This segment provides custom financing solutions not widely available from traditional lenders, reinforcing Sparta's niche market focus.

Health and Wellness: U.S.-Sourced Supplements

The Health and Wellness segment, operating through New World Health Brands, Inc. (NWHB), offers nutritional supplements sourced and manufactured exclusively in the United States under strict quality standards. Products are sold via its e-commerce website and major marketplaces, appealing to consumers seeking premium, transparently sourced products.

Financial Performance: A Story of Contrasting Growth and Persistent Challenges

Sparta Commercial Services' recent financial performance reveals a dynamic picture of significant growth in key segments juxtaposed with persistent overall financial challenges. For the three months ended July 31, 2025, total revenue surged to $96,688, marking a substantial 133% increase compared to $41,551 in the same period of 2024. This growth was primarily fueled by robust increases in merchant financing fees and sales of wellness products.

A deeper look into segment performance highlights the drivers of this revenue expansion:

• Merchant financing revenue (under FinTech Services) experienced an extraordinary 2,352% increase, rising from $2,145 in Q3 2024 to $52,590 in Q3 2025. This underscores the rapid adoption and impact of the Agoge Global USA platform.
• Wellness products revenue (Health and Wellness) also demonstrated strong momentum, growing 123.8% from $5,062 to $11,330 over the same period.
• Conversely, Information technology revenue (E-Commerce Mobile Technology) saw a slight decrease of 4.6%, from $34,344 to $32,768.
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The company reported a gross profit of $88,216 for the three months ended July 31, 2025. The trailing twelve-month (TTM) gross profit margin stands at an impressive 90.34%, indicating efficient cost management relative to revenue generated. Operating expenses decreased by 2%, or $9,213, to $367,549 for the three months ended July 31, 2025, primarily due to a reduction in compensation and related costs.

Despite these positive revenue and expense trends, Sparta continues to face significant profitability challenges. The net loss attributable to common stockholders for the three months ended July 31, 2025, was $482,329, a notable improvement from the $963,173 net loss in the prior year, largely due to changes in the valuation of derivative liabilities. However, TTM profitability metrics remain deeply negative, with an Operating Profit Margin of -399.28%, a Net Profit Margin of -399.22%, and an EBITDA Margin of -350.10%.

Liquidity and capital resources present a critical concern. As of July 31, 2025, Sparta had an accumulated deficit of $69.40 million and a total stockholders' deficit of $11.92 million. The company also reported a working capital deficit of $9.96 million, with total current liabilities exceeding total current assets. Net cash used in operating activities for the three months ended July 31, 2025, was $346,671. While the company met its cash requirements during the period through revenue, $95,000 from common share sales, and $166,000 from convertible notes, it estimates needing approximately $1.00 million in additional capital over the next twelve months to fund operations.

The independent auditors' report on the April 30, 2025, financial statements explicitly raised substantial doubt about Sparta's ability to continue as a going concern due to historical losses and insufficient revenues.

Strategic Positioning and Competitive Dynamics

Sparta's strategic positioning is defined by its commitment to niche markets, a deliberate choice that differentiates it from larger, more generalized technology and financial service providers. The company's competitive advantages stem from its ability to offer specialized, bundled solutions that cater to specific industry needs.

In FinTech, Agoge Global USA's staged-based trade finance solution provides specialized financing not widely available from traditional lenders, creating a distinct competitive moat. This contrasts with the broad financial services offered by established institutions. Similarly, the Municipal Financing program offers custom solutions to municipalities and non-profits, a segment often overlooked by mainstream commercial lenders.

Within E-Commerce Mobile Technology, Sparta's iMobileApp and website products provide cost-effective, customizable solutions for small and medium-sized businesses, backed by industry-specific expertise. This allows Sparta to compete effectively against broader platforms like Wix.com (WIX) or GoDaddy (GDDY), which, while offering greater scale and ease of use, may lack the deep industry-specific customization that Sparta provides. For instance, while Wix and GoDaddy excel in general website building, Sparta's custom software for kitchen ordering systems or mobile apps for racetracks demonstrates a more tailored approach. In vehicle history reports, Sparta's Cyclechex, RVchex, and Truckchex products address specialty vehicle categories not fully served by dominant automotive report providers, explicitly avoiding direct competition with industry giants like CARFAX or AutoCheck (EXPN).

The Health and Wellness segment, with its U.S.-sourced supplement line, appeals to consumers seeking premium, transparently sourced products, carving out a niche in a crowded market.

While competitors like Shopify (SHOP) offer robust eCommerce ecosystems with strong network effects and Appy Pie provides rapid, no-code app development, Sparta differentiates through its integrated service bundles and deeper specialization for particular client types. However, Sparta's smaller scale and diversified operations mean it generally lags behind these more focused rivals in terms of overall market penetration, innovation speed, and financial performance metrics like revenue growth and cash flow generation. The company's uplisting to the OTCQB Venture Market on June 26, 2025, represents a strategic step to enhance visibility and potentially improve access to capital, which is crucial for its growth ambitions.

Outlook and Key Investment Risks

Sparta Commercial Services' future outlook is characterized by both promising technological initiatives and significant financial hurdles. The company anticipates the launch of the broader Sparta Crypto platform in 2026, which aims to connect digital currency users with sellers of goods and services. The continued expansion of Agoge Global USA, with its iGoCards platform, is also expected to drive future growth in cross-border FinTech. Management projects a potential increase in its employment base over the next twelve months, contingent upon generating increased revenues and securing additional financing.

However, the investment thesis is tempered by several critical risks. The most pressing is the company's "going concern" status, stemming from recurring losses and insufficient cash flow to cover operating expenses for the next twelve months. Sparta is actively seeking approximately $1.00 million in additional equity financing, but there is no assurance that such funding will be secured on favorable terms. Any additional equity financing could be dilutive to existing stockholders, and debt financing might impose restrictive covenants.

Furthermore, the company has identified material weaknesses in its internal control over financial reporting, including a lack of documented policies and procedures, the absence of an audit committee, a risk of management override due to high officer involvement, and insufficient segregation of duties. While management is evaluating steps to address these weaknesses, they pose operational and financial reporting risks. The success of Sparta's high-growth FinTech and wellness initiatives, and its ability to achieve sustainable profitability, are heavily dependent on its capacity to overcome these financial and operational challenges.

Conclusion

Sparta Commercial Services (SRCO) presents a compelling, albeit high-risk, investment narrative centered on its strategic diversification and technological innovation in niche markets. The company's FinTech segment, Agoge Global USA, stands out as a significant growth engine, leveraging blockchain technology to revolutionize cross-border trade finance and demonstrating impressive revenue expansion. Similarly, the Health & Wellness segment is capturing market share with its U.S.-sourced products. These specialized offerings, coupled with its E-Commerce and Municipal Financing solutions, underscore Sparta's ability to identify and serve underserved sectors, differentiating it from larger, more generalized competitors.

Despite these operational strengths and growth drivers, Sparta faces a formidable challenge in achieving financial stability. The persistent accumulated deficit, negative operating cash flow, and the auditors' "going concern" warning highlight the urgent need for successful capital raises and stringent cost management. For investors, the story of SRCO is one of potential high reward from its innovative FinTech and diversified portfolio, balanced against the substantial risks associated with its liquidity position and the imperative to translate niche market success into sustainable, company-wide profitability. The execution of its technological roadmap and the ability to secure necessary financing will be paramount in determining Sparta's long-term viability and value creation.