10-Q: E-Smart Corp. Q2 2026: Revenue Growth, Increased Losses

E-Smart Corp. reports significant revenue increase in Q2 2026, but also a widening net loss and ongoing concerns about its ability to continue as a going concern.

Summary

• E-Smart Corp. reported revenue of $20,151 for the three months ended February 28, 2026, a substantial increase from $5,885 in the same period of the prior year.
• For the six months ended February 28, 2026, revenue was $29,760, up from $10,303 in the comparable period of 2025.
• Despite revenue growth, the net loss for the three months ended February 28, 2026, was $42,486, compared to $23,014 in the prior year.
• The net loss for the six months ended February 28, 2026, was $64,500, an increase from $37,529 in the prior year.
• The company has an accumulated deficit of $174,748 as of February 28, 2026.
• Total operating expenses increased significantly to $60,155 for the three months ended February 28, 2026, from $26,609 in the prior year.
• For the six months ended February 28, 2026, operating expenses were $89,344, up from $43,188 in the prior year.
• Cash and cash equivalents decreased to $1,138 as of February 28, 2026, from $6,825 as of August 31, 2025.
• The company has a related party loan of $239,773 as of February 28, 2026.
• Management acknowledges substantial doubt about the company's ability to continue as a going concern, citing losses and insufficient revenue to cover operating costs.
• The company plans to finance operations through available cash, loans from directors, and a private offering of common stock.

Sentiment

Score: 3

Explanation: StockSavvy.ai views this filing negatively due to significant increases in net loss and operating expenses, coupled with a clear going concern warning, despite strong revenue growth from a small base.

Positives

• Significant year-over-year revenue growth for both the three-month and six-month periods ended February 28, 2026.
• Revenue for the three months ended February 28, 2026, increased by approximately 242% to $20,151 from $5,885 in the prior year.
• Revenue for the six months ended February 28, 2026, increased by approximately 188% to $29,760 from $10,303 in the prior year.
• Deferred revenue increased to $7,950 as of February 28, 2026, indicating future revenue potential.

Negatives

• Net loss for the three months ended February 28, 2026, increased by approximately 84% to $42,486 from $23,014 in the prior year.
• Net loss for the six months ended February 28, 2026, increased by approximately 72% to $64,500 from $37,529 in the prior year.
• Operating expenses more than doubled for both the three-month and six-month periods, outpacing revenue growth.
• Cash and cash equivalents significantly decreased from $6,825 to $1,138.
• The company has a substantial accumulated deficit of $174,748.
• The company has a related party loan of $239,773, which increased from $200,790.
• Management has identified substantial doubt about the company's ability to continue as a going concern.

Risks

• Substantial doubt exists 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 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, with no assurance of success.
• The Company has no assurance that future financing will be available on acceptable terms, and if not, it may be unable to continue, develop, or expand its operations.
• Equity financing could result in additional dilution to existing shareholders.
• The Company has no patents or trademarks and relies on copyright laws to protect its website.
• The Company has limited operating history and is in the start-up stage, subject to risks inherent in new business enterprises, including possible cost overruns.

Future Outlook

Management anticipates dependence on additional investment capital to fund operating expenses and intends to raise additional funds through capital markets. The company 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 these endeavors or of becoming financially viable.

Management Comments

• Management acknowledges that there is substantial doubt about the Company's 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 and AI-driven design space within the tattoo industry. While the company shows strong revenue growth, its increasing losses and going concern issues are significant headwinds. The industry is seeing increased adoption of digital tools for artist-client interaction and design, but profitability remains a challenge for early-stage companies.

Comparison to Industry Standards

• The revenue growth of E-Smart Corp. (242% for the quarter, 188% for the six months) is exceptionally high, potentially exceeding industry averages for digital platforms, but this is from a very small base.
• The net loss and increasing operating expenses are a concern. Many early-stage tech companies experience losses while scaling, but the magnitude relative to revenue and the going concern warning are critical factors.
• Competitors in the digital tattoo platform space, such as Inkppl or Tattoo.com's artist directory, may have different monetization strategies and financial profiles. However, specific financial data for private competitors is not readily available for direct comparison.
• The reliance on AI for design generation is a growing trend, but its effectiveness and market adoption are still evolving. Companies like Adobe with its AI tools are setting benchmarks in creative software, but E-Smart's focus is niche.

Legal Proceedings

• As of February 28, 2026, there are no current legal matters that would have a material effect on the Company's financial position or results of operations.
• The Company is not currently a party to any legal proceedings and is not aware of any pending or potential legal actions.

Related Party Transactions

• Effective June 6, 2023, the Company entered a Loan Agreement with its CEO for a total of $70,000, with a 0% interest rate and a 5-year term.
• Effective November 14, 2023, the CEO agreed to increase the maximum loan amount to $220,000.
• Effective January 30, 2026, the loan amount was increased to $320,000.
• As of February 28, 2026, the amount due to a related party (CEO) was $239,773.
• As of August 31, 2025, the amount due to a related party (CEO) was $200,790.
• Imputed interest expense of $2,482 for the three months ended February 28, 2026, was recorded as additional paid-in capital.

Stakeholder Impact

• Shareholders: Potential for further dilution if equity financing is pursued; ongoing concern about the company's viability as a going concern.
• Creditors: The company's ability to meet its obligations is dependent on securing future funding, posing a risk to creditors.
• Employees: Continued employment may be at risk if the company cannot secure necessary funding to continue operations.
• Directors: Providing loans to the company may expose them to financial risk.

Next Steps

• Management plans to secure additional investment capital to fund operating expenses.
• The company intends to raise additional funds through capital markets.
• Management plans to finance operational expenses for the next twelve months through available cash, director loans, and a private offering of Common Stock.

Key Dates

Recommendation

Despite strong revenue growth, the company's net losses are widening, operating expenses are increasing significantly, and management has explicitly stated substantial doubt about its ability to continue as a going concern. The precarious financial position and reliance on future financing make it a high-risk investment.

Keywords

E-Smart Corp, 10-Q, Quarterly Report, Tattoo Industry, Digital Platform, AI Tattoo Design, API, Revenue, Net Loss, Going Concern, Nevada, Emerging Growth Company