10-Q: Agassi Sports Entertainment Reports Q3 Loss, IBM Partnership

Agassi Sports Entertainment Corp. reported increased net losses for Q3 2025, highlighting significant investments in its new pickleball and padel strategy, including a major partnership with IBM.

Summary

• Agassi Sports Entertainment Corp. (formerly Global Acquisitions Corporation) reported a net loss of $755,899 for the three months ended September 30, 2025, an increase from $637,013 in the same period of 2024.
• For the nine months ended September 30, 2025, the net loss significantly increased to $2,757,059, compared to $670,135 for the nine months ended September 30, 2024.
• The company generated no revenues for both the three and nine months ended September 30, 2025 and 2024.
• General and administrative expenses rose to $755,899 for the three months and $2,757,059 for the nine months ended September 30, 2025, primarily due to stock-based compensation, payroll costs, and legal and consulting fees related to its new business focus.
• Cash and cash equivalents decreased to $515,624 as of September 30, 2025, from $2,319,242 at December 31, 2024.
• Working capital surplus decreased by 45% to $1,249,330 as of September 30, 2025, from $2,272,365 at December 31, 2024.
• The company acquired the 'World Series of Pickleball' trademark on May 31, 2025, for $25,000 in cash and warrants to purchase 50,000 shares of common stock valued at $283,287.
• A significant partnership with IBM Norge AS was announced on October 31, 2025, for the development of a website, mobile application, e-commerce, and an A.I.-powered video analysis model, with total payments of $2,134,716 due by June 30, 2026.
• IBM will also provide $2,953,000 in non-cash investments (in-kind and reduced rates) as part of the commitment agreement.
• The company's disclosure controls and procedures were deemed not effective as of September 30, 2025, due to insufficient personnel for segregation of duties.

Sentiment

Score: 3

Explanation: The sentiment is largely negative due to significant and increasing net losses, zero revenue, substantial cash burn, and a stated 'going concern' doubt. While the IBM partnership and trademark acquisition offer future potential, the current financial state and governance issues (ineffective controls) present considerable immediate challenges and risks. The need for future capital raises, with potential dilution, further dampens the outlook.

Positives

• Secured a significant partnership with IBM Norge AS to develop a comprehensive digital ecosystem for racquet sports, including a website, mobile app, e-commerce, and an A.I.-powered video analysis model.
• IBM is providing $2,953,000 in non-cash investments (in-kind and reduced rates) as part of the partnership, demonstrating a strong commitment from a major technology partner.
• Acquired the 'World Series of Pickleball' trademark, establishing a key intellectual property asset in the rapidly growing pickleball industry.
• Entered into a Collaboration and Licensing Agreement with Sport Squad, Inc. (JOOLA) to identify and pursue ventures in the racquet sports space, leveraging established brands.
• The company has transitioned from a shell company to a start-up/development stage company with a specific business plan and revenue generation strategy focused on high-growth sports like pickleball and padel.

Negatives

• Reported a substantial net loss of $2,757,059 for the nine months ended September 30, 2025, a significant increase from $670,135 in the prior year period.
• No revenues were generated for the reported periods, indicating the company is still in a pre-revenue development stage.
• Cash and cash equivalents decreased significantly to $515,624 as of September 30, 2025, from $2,319,242 at December 31, 2024.
• Working capital surplus declined by 45% to $1,249,330, reflecting increased operating expenses and cash usage.
• Management concluded that disclosure controls and procedures were not effective as of September 30, 2025, due to insufficient personnel for segregation of duties, which poses a corporate governance risk.
• The company has an accumulated deficit of $32,895,627 as of September 30, 2025, raising substantial doubt about its ability to continue as a going concern.
• Significant future payments totaling $2,134,716 are due to IBM by June 30, 2026, requiring additional funding.

Risks

• The company has an illiquid and volatile market for its common stock, with prices ranging from $0.95 to $8.40 in the last 52 weeks, and the current stock price may not reflect its actual value.
• The exercise of 3,925,000 outstanding warrants could lead to significant dilution for existing stockholders and adversely affect the trading price of common stock.
• Securities are not currently eligible for sale under Rule 144 until one year after the Form 10 information reflecting non-shell status was filed (June 4, 2025), limiting liquidity for some investors.
• The company will need to raise additional funding to fulfill its obligations under the IBM agreements (approximately $2.1 million) and for general operations, which may not be available on favorable terms or at all, potentially causing significant dilution.
• The success of the transactions with IBM is uncertain and may not produce the anticipated benefits or sufficient revenues to justify the expenditures.
• Obligations under the IBM agreements will require substantial management attention and resources, potentially diverting focus from other initiatives.
• The company has a lack of significant operating history and current negative operating cash flows.
• Competition in the pickleball and padel industries could impact the company's ability to generate revenues.
• The company is exposed to risks related to changes in interest rates, inflation, economic downturns, and geopolitical events.
• The loss of key personnel or failure to attract and retain additional personnel could adversely affect operations.
• The company's ability to protect its intellectual property and not infringe on others' intellectual property is crucial.
• Changes in laws and regulations could impact the business.

Future Outlook

The company is focused on becoming a leader in the global sports entertainment and media industry, initially targeting growth opportunities in pickleball and padel. Plans include acquiring/building physical facilities, developing strategic relationships, creating an 'ACE Program' for certification, developing proprietary content, and launching a 'Pickleball for All' charitable initiative. A key part of this strategy is the partnership with IBM to build a global commercial digital ecosystem around wellness, learning, and entertainment, expected to create strong and recurring revenue streams under the Agassi brand. The company anticipates needing additional funding to support these operational plans and meet its obligations to IBM.

Management Comments

• "We believe the partnership with IBM supports and will facilitate the acceleration of our mission to build a global commercial digital ecosystem around wellness, learning and entertainment."
• "We expect the partnership, and the A.I. Model, to create strong and recurring revenue streams, while also fostering a fun, thriving and informative racquet sports community on a global scale under our iconic Agassi brand."
• "Our management believes that its operations may not be sufficient to fund operating cash needs over at least the next 12 months."
• "We plan to raise additional required funding 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."

Industry Context

The company is strategically positioning itself within the rapidly expanding pickleball and padel industries, which are experiencing significant global growth. Pickleball, in particular, has seen a 223.5% growth rate in the U.S. over three consecutive years, with an estimated 36.5 million players and a market projected to grow from $65 billion in 2022 to over $155 billion by 2033. The company's focus on content creation, community building, and digital platforms aligns with broader trends in sports entertainment and media, aiming to capitalize on the increasing popularity of these court sports.

Comparison to Industry Standards

• NA

Management Changes

Corporate Governance

Legal Proceedings

• Not currently a party to any material legal proceeding and not aware of any material legal or governmental proceedings contemplated against the company.

Related Party Transactions

• Settled $593,670 in payables to All-American Golf Center, Inc. (controlled by Ronald S. Boreta, CEO, and John Boreta, former director) by issuing 1,495,390 shares of common stock on July 3, 2024.
• Issued warrants to James Askew (subsequently appointed director) for 2,269,583 shares and to Investments AKA, LLC (indirectly controlled by Andre K. Agassi, a significant beneficial owner) for 705,417 shares on July 3, 2024, for services and support.
• Corporate offices are provided without charge in space shared with The Agassi Foundation.

Stakeholder Impact

• **Shareholders:** Face significant dilution risk from future equity raises and warrant exercises. The illiquid and volatile stock market, coupled with the 'going concern' doubt, poses substantial investment risk. Ineffective disclosure controls could also impact confidence.
• **Employees/Management:** Key personnel are receiving stock-based compensation (warrants), aligning their interests with company growth. However, the company's financial instability and need for funding could create job insecurity if capital is not secured.
• **Customers (future):** The planned digital ecosystem and 'Pickleball for All' initiative aim to create value and community for racquet sports enthusiasts, potentially benefiting them with new services and access.
• **Creditors:** The company's 'going concern' status and need for additional funding could pose risks to creditors if the company defaults on future debts, although current liabilities are relatively low.
• **Partners (IBM, JOOLA):** IBM and JOOLA stand to benefit from the company's growth in the racquet sports market, with IBM receiving substantial payments and a performance bonus, and JOOLA engaging in potential joint ventures. However, the company's financial instability could impact the long-term viability of these partnerships.

Next Steps

• Continue to execute on the plan to become a leader in the global sports entertainment and media industry, focusing on pickleball and padel.
• Develop the website, mobile application, e-commerce, and A.I.-powered video analysis model with IBM Norge AS, with an expected completion by June 30, 2026.
• Make scheduled payments to IBM Norge AS totaling $2,134,716 by June 30, 2026.
• Identify and pursue ventures under the Collaboration and Licensing Agreement with Sport Squad, Inc. (JOOLA).
• Launch the 'Pickleball for All' charitable initiative.
• Seek additional funding through debt or equity sales to support operational plans and meet financial obligations.
• Address the deficiency in disclosure controls and procedures by expanding operations and personnel when additional funding is secured.

Key Dates

Recommendation

The company presents an extremely high-risk investment profile. It is a pre-revenue entity with rapidly increasing net losses, a significant accumulated deficit, and a substantial cash burn rate that has depleted cash reserves by over 77% in nine months. The explicit 'going concern' doubt, coupled with the acknowledged ineffectiveness of disclosure controls due to insufficient personnel, signals severe operational and financial instability. While the strategic shift to pickleball/padel and the IBM partnership offer long-term potential, the immediate need for significant additional capital to fund operations and meet IBM obligations, with the high likelihood of substantial shareholder dilution and no guarantee of favorable terms, makes the stock highly speculative. The illiquid and volatile market for its common stock further exacerbates the risk, making it unsuitable for most investors at this stage.

Keywords

pickleball, padel, sports entertainment, digital ecosystem, IBM partnership, trademark acquisition, Agassi Sports Entertainment, Form 10-Q, quarterly report, net loss, going concern, warrants, stock-based compensation, shell company, racquet sports