10-Q: Agassi Sports Entertainment Corp. Faces Financial Hurdles

Agassi Sports Entertainment Corp. reported a substantial net loss and a significant increase in liabilities for the quarter ended September 30, 2026, raising concerns about its ability to continue as a going concern.

Summary

• Agassi Sports Entertainment Corp. reported a net loss of $2,744,184 for the three months ended September 30, 2026, and a net loss of $5,538,244 for the nine months ended September 30, 2026.
• Total assets increased to $4,857,645 as of September 30, 2026, from $800,443 as of December 31, 2025, primarily due to increases in intangible assets and software development in progress.
• Total liabilities significantly increased to $2,819,681 as of September 30, 2026, from $494,400 as of December 31, 2025, resulting in a working capital deficit of $2,545,343.
• The company has substantial near-term obligations, including payments to IBM Parties and other fees, raising substantial doubt about its ability to continue as a going concern.
• The company is pursuing several strategic initiatives including a digital platform and app, the World Series of Pickleball, and a 'Lets Play' pickleball and padel facilities initiative.
• Significant stock-based compensation expenses were incurred, totaling $1,705,503 for the three months and $2,922,757 for the nine months ended September 30, 2026.

Sentiment

Score: 2

Explanation: StockSavvy.ai views this as a negative score due to significant ongoing losses, substantial liabilities exceeding assets, and a going concern warning, despite strategic initiatives.

Positives

• Acquisition of the 'World Series of Pickleball' trademark.
• Launch of the 'Lets Play' pickleball and padel facilities initiative.
• Development of an AI-powered digital platform and mobile application in partnership with IBM.
• Secured name and likeness license agreements with prominent figures like Andre Agassi, Darren Cahill, and Stefanie Graf, providing a competitive advantage.
• Entered into a Merchandise License Agreement with Rhino Entertainment for Grateful Dead-branded products.
• Secured media value agreements with Sinclair Television Group and The Tennis Channel, providing advertising value in exchange for restricted stock.

Negatives

• Significant net losses reported for both the three-month and nine-month periods ended September 30, 2026.
• A substantial increase in liabilities, leading to a working capital deficit of $2,545,343 as of September 30, 2026.
• The company has substantial near-term obligations and faces substantial doubt about its ability to continue as a going concern.
• High operating expenses, particularly general and administrative expenses, driven by stock-based compensation and legal/professional fees.
• Dependence on funding from related parties, including Andre Agassi and management, raises concerns about future financing and potential conflicts of interest.
• The company's disclosure controls and procedures were found to be not effective as of September 30, 2026, due to insufficient personnel for segregation of duties.

Risks

• The company will need to raise additional funding, which may not be available on favorable terms or at all, potentially leading to dilution for existing stockholders.
• Delays in the financing, design, buildout, and launch of the planned Platform and App could negatively impact the business.
• The company's reliance on key personnel, particularly Andre Agassi, and the potential loss of these relationships could be disruptive.
• The company's e-commerce website and AI software offerings could be negatively impacted by disruptions, security breaches, or issues with open-source software.
• Failure to successfully launch the World Series of Pickleball event or protect its intellectual property could adversely affect the business.
• The 'Lets Play' initiative faces significant industry and franchise-related risks, including potential bankruptcies of other franchisees.
• The Grateful Dead License Agreement requires guaranteed payments and nonrefundable advances, which could adversely affect liquidity and profitability.
• The company's reliance on USTA content for its app and the potential termination of the USTA Agreement pose risks to the app's functionality and marketing.

Future Outlook

The company anticipates generating revenue in the first quarter of 2027 from its app launch, e-commerce, sponsorships, and pickleball/padel facilities. However, it acknowledges the need for substantial additional funding, which may not be available on favorable terms, and warns that failure to secure capital could force it to curtail or abandon operations.

Management Comments

• Management believes that cash generated from its operations and raised through sales of equity will not be sufficient to fund the Companys operating cash needs 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 cause significant dilution to existing stockholders.
• Management concluded that its plans do not alleviate the substantial doubt about the Companys ability to continue as a going concern.
• Management has developed a remediation plan to address segregation of duties deficiencies and expects to have effective controls and procedures by the later part of next year.

Industry Context

StockSavvy.ai notes that Agassi Sports Entertainment Corp. is operating in the rapidly growing racket sports market, particularly pickleball and padel, and is attempting to leverage digital technology, events, and brand partnerships to establish a leading media and entertainment company in this space. The company's strategy involves AI-powered platforms, event development, and physical facility expansion, mirroring trends seen in other sports-related ventures seeking to capitalize on increased participation.

Comparison to Industry Standards

• The company's net loss of $5,538,244 for the nine months ended September 30, 2026, is significant for a company aiming to establish itself in the sports entertainment and technology sector. Competitors like Topgolf (owned by Callaway) have demonstrated profitability through a combination of entertainment venues and technology integration, though on a much larger scale.
• The company's reliance on future equity raises for funding is common among early-stage tech and sports ventures, but the substantial liabilities and going concern warning place it at a disadvantage compared to more established, well-capitalized players in the sports facility and digital platform markets.
• The development of AI-powered coaching and analytics tools is a growing trend across sports, with companies like PlaySight and Hudl offering advanced performance tracking and analysis. Agassi Sports Entertainment's approach, leveraging high-profile athlete endorsements, aims to differentiate itself in this competitive landscape.

Corporate Governance

Legal Proceedings

• The company is not currently a party to any material legal proceedings and is not aware of any material legal or governmental proceedings contemplated against it.

Related Party Transactions

• Accounts payable and accrued expenses related party of $500,000 as of September 30, 2026.
• Convertible note payable related party of $1,000,000 as of September 30, 2026 (converted in October 2026).
• Accrued interest related party of $6,600 as of September 30, 2026.
• The company's corporate offices are provided without charge by The Agassi Foundation.
• A $250,000 license fee is due to AKA Licenses, LLC, an entity affiliated with Andre Agassi.
• Investments AKA, LLC, controlled by Andre Agassi, provided a $1,000,000 convertible note and subsequently subscribed for $1,500,000 in units.
• Shawn Cable, CFO, also serves as CFO for entities controlled by Andre Agassi, raising potential conflicts of interest.
• The Boreta Lifetime Trust, affiliated with CEO Ronald S. Boreta, purchased shares of restricted common stock.

Stakeholder Impact

• Shareholders face potential dilution from future equity raises and volatility in stock price due to potential sales of restricted shares.
• Creditors and suppliers may face delays in payment due to the company's liquidity concerns and working capital deficit.
• Employees may be impacted by the company's going concern status and potential need to curtail operations.
• Partners and service providers (e.g., IBM Parties, USTA) may face payment delays or potential contract terminations if funding is not secured.
• Investors are cautioned about the significant risks and uncertainties, including the company's ability to execute its business plan and achieve profitability.

Next Steps

• Complete the build-out of the digital platform and App.
• Launch the App and digital platform in early 2027.
• Pursue additional capital through equity or debt financing.
• Execute on the 'Lets Play' pickleball and padel facilities initiative through acquisitions, partnerships, and franchising.
• Develop and market Grateful Dead-branded products.
• Secure sponsorship agreements for the World Series of Pickleball.
• Implement remediation plan for disclosure controls and procedures.

Key Dates

Recommendation

The company exhibits significant financial distress, including substantial net losses, a growing liabilities burden, a working capital deficit, and a clear going concern warning. While strategic initiatives are underway, the immediate financial precariousness and dependence on future, uncertain funding make it a high-risk investment. The lack of effective internal controls further adds to the risk profile.

Keywords

pickleball, padel, AI coaching, digital platform, World Series of Pickleball, racket sports, sports entertainment, licensing