{"url_path":"/sec/catg/10-k/2026/item-7","section_key":"item-7","section_title":"Item 7 Management’s Discussion and Analysis of Financial","topic":"sec","document":{"doc_type":"10-K","doc_date":"2026-05-20","source_url":"https://www.sec.gov/Archives/edgar/data/1470129/0001753926-26-000917-index.html","accession_number":"0001753926-26-000917","cik":"0001470129","ticker":"VIIQ","issuer_name":"VisitIQ Corp.","edgar_url":"https://www.sec.gov/Archives/edgar/data/1470129/0001753926-26-000917-index.html","primary_entity_key":"0001470129","primary_entity_name":"VisitIQ Corp."},"word_count":6445,"has_tables":true,"body_markdown":"**Item 7. Management’s Discussion and Analysis of Financial\nCondition and Results of Operations. **\n\n \n\n*The following discussion and analysis\nprovides information which our management believes is relevant to an assessment and understanding of our results of operations\nand financial condition. The discussion should be read in conjunction with our audited consolidated* *financial statements\nincluded elsewhere in this Annual Report. This discussion contains forward-looking statements based upon our current expectations,\nestimates and projections, and involves numerous risks and uncertainties. Actual results may differ materially from those contained\nin any forward-looking statements due to, among other considerations, the matters discussed in the sections titled “Risk\nFactors” and “Special Note Regarding Forward-Looking Statements.”*\n\n \n\n44\n\n \n\n \n\n**Overview**\n\n \n\nVisitIQ is an AI-powered campaign targeting\nengine that gives marketers, agencies, and enterprise go-to-market (GTM) teams the ability to find, define, and activate the audiences\nmost likely to convert. The platform identifies anonymous website visitors, generates real-time Ideal Customer Profiles (ICPs),\nbuilds high-precision lookalike audiences, detects in-market behavior, maps real-world movement patterns, and activates every audience\nacross paid media, email, CRM, and marketing automation platforms—while integrating seamlessly with existing go-to-market\nworkflows and tools.\n\n \n\nVisitIQ is needed by GTM teams now more\nthan ever, because the modern go-to-market landscape has shifted under their feet. AI-driven search experiences have collapsed\norganic visibility across the web. Zero-click search has removed the very behavior relied on to generate inbound demand. Paid acquisition\ncosts continue to rise as platforms consolidate inventory and shrink signal availability. Most website visitors remain anonymous,\nmost campaigns waste spend on the wrong audiences, and most brands have no practical way to understand who is on their site, what\nthey want, or whether they’re actively in a buying cycle.\n\n \n\nVisitIQ solves this problem by delivering\na unified, AI-driven targeting layer that sits across the entire go-to-market stack - continuously enriching data, clarifying ICPs,\nidentifying high-intent prospects, and delivering audiences directly into the execution tools companies already use to run their\nGTM efforts. \n\n \n\n**Recent Developments **\n\n \n\n**Recent Financing and Capital Structure\nTransactions**\n\n \n\nAs more fully described in the notes to\nthe audited consolidated financial statements included elsewhere in this Annual Report, in October 2024, the Company entered into\na note purchase agreement with Arena, pursuant to which the Company issued to Arena a convertible promissory note (the “October\nNote”) with a principal amount of $1,333,333. The October Note was issued with an original issue discount and resulted in\ngross proceeds to the Company of $1,200,000. In April 2025, the October Note, and the related accrued interest, was converted into\n3,903,065 shares of Series B Convertible Preferred Stock. In November 2024 we completed a capital restructuring to simplify our\ncapital structure whereby convertible notes payable and warrants were exchanged for Series B Convertible Preferred Stock. Additionally,\nin April 2025 and November 2025, we signed convertible note agreements with our largest shareholder of convertible preferred stock,\nArena, which has provided the Company with approximately $3.75 million of funding to date. In November 2025, we also received a\n$391,000 investment from our main outsourced technology development partner into our Series C Convertible Preferred Stock. The\ninvestment was comprised of $80,000 of cash and cancellation of approximately $311,000 in outstanding payables to this vendor.\n\n \n\nIn March 2026, the Company, VisitIQ, LLC\nand Vern Hanzlik, as a key person of the Company, entered into a Revenue Loan and Security Agreement, dated March 26, 2026 (the\n“Revenue Loan and Security Agreement”) with Decathlon Alpha V, L.P. (“Decathlon”) relating to a secured\nfinancing of $2,200,000 (the “Revenue Loan Amount”), with $1,000,000 being advanced to the Company upon execution\nof the Revenue Loan and Security Agreement and one or more addition advances available for the remainder of the Revenue Loan Amount\navailable to the Company upon request, provided that the Company has satisfied all conditions with respect to such advance. \n\n \n\nThe Revenue Loan and Security Agreement\nrequires monthly payments of Fixed Payment Amounts (as set forth in the Revenue Loan and Security Agreement) with all outstanding\nadvances and the Interest (as defined in them Revenue Loan and Security Agreement) being due at maturity on March 26, 2030 (unless\naccelerated upon a change of control or the occurrence of other events of default). Interest does not accrue on advance(s) pursuant\nto the Loan Agreement, rather a minimum amount of Interest (as defined in the Loan Agreement) is due pursuant to the terms of the\nLoan Agreement. The Revenue Loan and Security Agreement further provides for the payment of fees by the Borrower and includes customary\nrepresentations and warranties, indemnification provisions, covenants and events of default. Subject in some cases to cure periods,\namounts outstanding and otherwise due under the Revenue Loan and Security Agreement may be accelerated for typical defaults including,\nbut not limited to, the failure to make when due payments, the failure to perform any covenant, the inaccuracy of representations\nand warranties, and the occurrence of debtor-relief proceedings.\n\n \n\nIn connection with the Revenue Loan and\nSecurity Agreement, the Company, VisitIQ, LLC, Decathlon and Arena also entered into a Subordination Agreement (the “Subordination\nAgreement”), dated March 26, 2026, pursuant to which Arena subordinated all security interests or liens that Arena may have\nin the property of the Company or VisitIQ, LLC to Decathlon.\n\n \n\n45\n\n \n\n \n\n**Trends\nand Other Factors Affecting Our Business**\n\n \n\nWe\nbelieve that our performance and future success depend on many factors that present significant opportunities for us but also\npose risks and challenges, including those discussed below and in the section of this Annual Report titled “*Risk Factors*.” \n\n \n\nWe\nregularly evaluate several metrics, including the metrics presented in the table below, to measure our performance, identify trends\naffecting our business, prepare financial projections, make strategic decisions and establish performance goals for compensation\nand we periodically review and revise these metrics to reflect changes in our business.\n\n \n\n  \n2025  \n2024 \n\n  \n   \n  \n\nBookings for the year ended August 31 \n$4,379,609  \n$593,999 \n\nData revenue for the year ended August 31 \n 2,212,601  \n 2,059,174 \n\nGross profit for the year ended August 31 \n 1,428,369  \n (1,184)\n\n \n\nBookings\nare defined as a contracted future platform license in contracted dollars.\n\n \n\n*Customer\nConcentration*\n\n \n\nDuring\nthe year ended August 31, 2025, three customers accounted for 29%, 15% and 11% of consolidated revenue. As of August 31, 2025,\nthese three customers accounted for 61% of consolidated accounts receivable, net.\n\n \n\nDuring\nthe year ended August 31, 2024, one customer accounted for 22% of consolidated revenue. As of August 31, 2024, three customers,\ninclusive of the customer with the revenue concentration, accounted for 54% of consolidated accounts receivable, net. \n\n \n\n*Continued\nInvestment and Innovation*\n\n \n\nWe\ncontinue to invest in our platform by working to develop innovative solutions to address our customers’ needs and focus\non our customers identifying the most impactful areas for advancement. We believe this process has contributed significantly to\nour increases in bookings and customer growth. We believe that continued investments in our products are important to our future\ngrowth and, as a result, we expect our software development costs to continue to increase, which may adversely affect our near-term\nliquidity. \n\n \n\n**Macroeconomic\nConditions and Other World Events**\n\n \n\nGeneral\neconomic and political conditions such as recessions, interest rates, fuel prices, inflation, foreign currency fluctuations, international\ntariffs, social, political and economic risks and acts of war or terrorism (including, for example, the ongoing military conflicts\nin Israel and in Ukraine and the economic sanctions related thereto), have added uncertainty in timing of customer orders.\n\n \n\nSee\n*“Risk Factors - Risks Related to Our Business and Industry-Our business is subject to the risk of catastrophic\nevents such as pandemics, hurricanes, wildfires, tornadoes, earthquakes, extreme weather events, flooding, droughts and power\noutages, and to business and operational interruption by man-made problems such as war, conflicts and terrorism” and “We\nmay be adversely affected by the effects of inflation.” *\n\n \n\n**Components\nof Results of Operations**\n\n \n\n*Revenue*\n\n \n\nRevenues\narise primarily from the Company’s proprietary AI-driven technology platform, which is named VisitIQ, via subscription fees\nand volume-based utilization fees.\n\n \n\n46 \n\n \n\nWe\nalso offer media activation services to our customers and this service consists of the fees charged for the Company’s management\nof media campaigns for customers, and the activation of the data to the related media campaign.\n\n \n\n*Cost\nof Sales*\n\n \n\nOur\ncost of sales is largely related to the costs of our customer data that drives our technology platform, the hosting fees for that\ndata and our platform, and other costs related to maintaining our platform and its responsiveness.\n\n \n\n*Legal\nand Professional Fees*\n\n \n\nLegal\nand professional fees relate mainly to fees paid to our lawyers in connection with various financing agreements our other capital\nstructure-related items, in addition to fees paid to our auditors and tax accountants. \n\n \n\n*Personnel\nExpenses*\n\n \n\nPersonnel\nexpenses consist primarily of salaries and related personnel costs for individuals working on our team.\n\n \n\n*General\nand Administrative Expenses*\n\n \n\nGeneral\nand administrative expenses consist primarily of our insurance expense, non-capitalized software costs, general corporate costs,\nand rent. \n\n \n\n*Selling\nand Marketing Expenses*\n\n \n\nSales\nand marketing expenses consist primarily of costs related to advertising, marketing promotions, and travel costs.\n\n \n\n*Depreciation\nand Amortization Expenses*\n\n \n\nDepreciation\nand amortization expenses primarily relate to the amortization of our capitalized software development costs, which are expensed\nover a period of 3 years.\n\n \n\n*Credit\nLoss Expenses*\n\n \n\nCredit\nloss expenses relate to the expense incurred when accounts receivable are considered to be uncollectable.\n\n \n\n*Stock-Based\nCompensation Expenses*\n\n \n\nStock-based\ncompensation expenses relate primarily to the Company’s majority stockholder entering into a consulting agreement with the\nCompany. As payment under this consulting agreement, the stockholder was allowed to convert 42,814,596 shares of their Series\nB Convertible Preferred Stock into 57,086,261 shares of Series C Convertible Preferred Stock. The Company determined the fair\nvalue of the Series C Convertible Preferred Stock received as consideration under the consulting agreement was approximately $2,528,000\ngreater than the fair value of the Series B Convertible Preferred Stock at the conversion date and recorded this excess amount\nas Stock-based compensation expense in the consolidated statements of operations. Additionally, the Company incurred approximately\n$419,000 in stock-based compensation expense for stock option awards granted to employees, contractors, Directors and Board advisors.\n\n \n\n47 \n\n \n\n*Impairment\nLosses on Equity Investments* \n\n \n\nImpairment\nlosses in the year ended August 31, 2024 were related to an investment the Company had in an entity where the Company determined\nthat there was a partial impairment and reduced the recorded amount by $16,000.\n\n \n\n*Loss\non Disposition of Software Assets*\n\n \n\nDuring\nthe year ended August 31, 2024, the Company recorded a loss of approximately $377,000 related to the disposition of capitalized\nsoftware that was no longer being used by the Company.\n\n \n\n*Interest\nExpense*\n\n \n\nInterest\nexpense primarily consists of interest incurred and amortization of original issue discount under our outstanding convertible\ndebt agreements. \n\n \n\n*Interest\nincome* \n\n \n\nInterest\nincome of approximately $19,000 was recorded during the year ended August 31, 2024 related to interest received on a certain investment\nthe Company had at that time.\n\n \n\n*Gain\non Exchange of Convertible Notes Payable for Series B Convertible Preferred Stock*\n\n \n\nThe\nCompany recorded a gain on the exchange of a non-related party’s convertible debt to Series B Convertible Preferred Stock,\ncalculated as the difference between the carrying amount of this debt and accrued interest, in comparison to the estimated valuation\nof the Series B Convertible Preferred Stock received upon conversion.\n\n \n\n*Loss\nRecognized upon Dissolution of DrivenIQ*\n\n \n\nThe\nCompany recorded a loss on the dissolution of this entity in June 2025.\n\n \n\n*Income\nTaxes*\n\n \n\nThe\nCompany recorded income tax expense of $19,890 for the year ended August 31, 2025, which related to temporary differences. No\nprovision for, or benefit from, income taxes was recorded for the year ended August 31, 2024. Due to the level of historical losses,\nwe maintain a full valuation allowance on the deferred tax assets as of August 31, 2025 and 2024 against U.S. federal and state\ndeferred tax assets as we have concluded as of August 31, 2025 and 2024 it is more likely than not that these deferred tax assets\nwill not be realized.\n\n \n\n48 \n\n \n\n**Results\nof Operations**\n\n \n\n**Comparison\nof the Years Ended August 31, 2025 and 2024: **\n\n \n\nThe\nfollowing table summarizes our historical results of operations and as a percentage of revenue for the periods presented: \n\n \n\n  \nYears Ended August 31,  \n   \n  \n\n  \n2025  \n2024  \nChange  \n% \n\nData revenue \n 2,212,601  \n 83.9% \n$2,059,174  \n 68.7% \n$153,427  \n 7.5%\n\nMedia activation revenue \n 423,129  \n 16.1% \n 938,797  \n 31.3% \n (515,668) \n -54.9%\n\nTotal revenue \n 2,635,730  \n 100.0% \n 2,997,971  \n 100.0% \n (362,241) \n -12.1%\n\n  \n    \n    \n    \n    \n    \n   \n\nData cost of sales \n 1,058,993  \n 40.2% \n 2,021,102  \n 67.4% \n (962,109) \n -47.6%\n\nMedia activation cost of sales \n 148,368  \n 5.6% \n 978,053  \n 32.6% \n (829,686) \n -84.8%\n\nTotal cost of sales \n 1,207,361  \n 45.8% \n 2,999,155  \n 100.0% \n (1,791,794) \n -59.7%\n\n  \n    \n    \n    \n    \n    \n   \n\nGross profit (loss) \n 1,428,369  \n 54.2% \n (1,184) \n 0.0% \n 1,429,554  \n 54.2%\n\n  \n    \n    \n    \n    \n    \n   \n\nExpenses \n    \n    \n    \n    \n    \n   \n\nLegal and professional fees \n 417,010  \n 15.8% \n 1,493,084  \n 49.8% \n (1,076,074) \n -72.1%\n\nPersonnel expenses \n 3,119,626  \n 118.4% \n 3,938,737  \n 131.4% \n (819,111) \n -20.8%\n\nGeneral and administrative costs \n 540,366  \n 20.5% \n 670,723  \n 22.4% \n (130,357) \n -19.4%\n\nSales & marketing expenses \n 73,014  \n 2.8% \n 93,153  \n 3.1% \n (20,139) \n -21.6%\n\nDepreciation and amortization expense \n 1,461,665  \n 55.5% \n 1,304,905  \n 43.5% \n 156,759  \n 12.0%\n\nCredit losses expense \n 187,004  \n 7.1% \n 220,293  \n 7.3% \n (33,289) \n -15.1%\n\nStock-based compensation expense - primarily related party \n 2,947,578  \n 111.8% \n —  \n 0.0% \n 2,947,578  \n N/A \n\nImpairment losses on equity investments \n —  \n 0.0% \n 16,000  \n 0.5% \n (16,000) \n -100.0%\n\nLoss on disposition of software assets \n —  \n 0.0% \n 377,111  \n 12.6% \n (377,111) \n -100.0%\n\nTotal operating expenses \n 8,746,262  \n 331.8% \n 8,114,006  \n 270.6% \n 632,256  \n 7.8%\n\n  \n    \n    \n    \n    \n    \n   \n\nOther income (expense) \n    \n    \n    \n    \n    \n   \n\nInterest expense \n (775,731) \n -29.4% \n (2,609,918) \n -87.1% \n 1,834,187  \n -70.3%\n\nInterest income \n —  \n 0.0% \n 18,774  \n 0.6% \n (18,774) \n -100.0%\n\nGain on exchange of convertible notes payable for preferred stock \n 442,638  \n 16.8% \n —  \n 0.0% \n 442,638  \n N/A \n\nLoss recognized upon dissolution of DrivenIQ \n (481,717) \n -18.3% \n —  \n 0.0% \n (481,717) \n N/A \n\nNet loss before allowance for income taxes \n (8,132,703) \n -308.6% \n (10,706,334) \n -357.1% \n 2,573,631  \n -24.0%\n\n  \n    \n    \n    \n    \n    \n   \n\nIncome tax expense \n 19,890  \n 0.8% \n —  \n 0.0% \n 19,890  \n N/A \n\n  \n    \n    \n    \n    \n    \n   \n\nNet loss \n (8,152,593) \n -309.3% \n (10,706,334) \n -357.1% \n$2,553,741  \n -23.9%\n\n \n\n*Revenue*\n\n \n\nTotal\nrevenue for the years ended August 31, 2025 and 2024 was approximately $2,636,000 and $2,998,000, respectively. Total revenue\nfor the year ended August 31, 2025 decreased by approximately $362,000, or 12.1%, from the year ended August 31, 2024, primarily\ndriven by a decrease in media activation revenue as the Company has been focused on growing its subscription base for the data\nrevenue line.\n\n \n\n*Cost\nof Revenue* \n\n \n\nThe\nfollowing table presents the Cost of Sales disaggregated by service type, as well as the percentage of total cost of revenue.\n\n \n\n  \nYears Ended August 31,  \n   \n  \n\n  \n2025  \n   \n2024  \n   \nChange  \n% \n\nData cost of sales \n$1,058,993  \n 87.7% \n$2,021,102  \n 67.4% \n$(962,109) \n -47.6%\n\nMedia activation cost of sales \n 148,368  \n 12.3% \n 978,053  \n 32.6% \n (829,686) \n -84.8%\n\nTotal cost of sales \n$1,207,361  \n 100.0% \n$2,999,155  \n 100.0% \n$(1,791,794) \n -59.7%\n\n \n\nTotal\ncost of sales for the years ended August 31, 2025 and 2024 was approximately $1,207,000 and $2,999,000, respectively, a decrease\nof approximately $1,792,000, or 59.7%.\n\n \n\n49 \n\n \n\nWe\ncontinue to focus on controlling our data and hosting costs as our data customers and revenue increase by working with our vendors\nto secure longer-term agreements.\n\n \n\n*Gross\nProfit (Loss)*\n\n \n\nTotal\ngross profit (loss) was approximately $1,428,000 and $(1,000) for the years ended August 31, 2025 and 2024, respectively. As a\npercentage of revenue, the gross margin was 54.2% and (0.0)% for the years ended August 31, 2025 and 2024, respectively. The higher\ngross profit for the year ended August 31, 2025 was primarily attributable to a focused effort on reducing cost of sales and creating\na cost structure that was more fixed in nature as revenue increased.\n\n \n\nOur\ngross profit is primarily influenced by the costs associated with the acquisition of the consumer data that fuels our technology\nplatform, as well as the average selling price of our platform. \n\n \n\n*Legal\nand Professional Fees*\n\n \n\nLegal\nand professional fees were approximately $417,000 and $1,493,000 for the years ended August 31, 2025 and 2024, respectively. During\nthe year ended August 31, 2025, there was a decrease of $1,076,000 in legal and professional fees as a result of lower fees related\nto debt issuance as well as lower legal costs related to personnel termination events.\n\n \n\n*Personnel\nExpenses*\n\n \n\nPersonnel\nexpenses were approximately $3,120,000 and $3,939,000 for the years ended August 31, 2025 and 2024, respectively. During the year\nended August 31, 2025, there was a decrease of $819,000 in personnel expenses primarily due to a reduction in the number of individuals\nat the Company and a reduction in severance costs from the year ended August 31, 2024.\n\n \n\n*General\nand Administrative Expenses*\n\n \n\nGeneral\nand administrative expenses were approximately $540,000 and $671,000 for the years ended August 31, 2025 and 2024, respectively.\nDuring the year ended August 31, 2025, there was a decrease of $131,000 in general and administrative expenses due to a focused\neffort on reducing expenses in non-core business areas.\n\n \n\n*Selling\nand Marketing Expenses*\n\n \n\nOur\nsales and marketing efforts were consistent for the years ended August 31, 2025 and 2024, so sales and marketing expenses were\napproximately $73,000 and $93,000 for the years ended August 31, 2025 and 2024, respectively.\n\n \n\n*Depreciation\nand Amortization Expenses*\n\n \n\nDepreciation\nand amortization expenses were approximately $1,462,000 and $1,305,000 for the years ended August 31, 2025 and 2024, respectively.\nThe increase in depreciation and amortization costs for the year ended August 31, 2025 was due to higher software development\ncosts and the amortization of these costs.\n\n \n\n*Credit\nLoss Expenses*\n\n \n\nCredit\nloss expenses were approximately $187,000 and $220,000 for the years ended August 31, 2025 and 2024, respectively. The decrease\nwas due to improved contract governance and collections processes.\n\n \n\n*Stock-Based\nCompensation Expenses*\n\n \n\nThere\nwas no stock-based compensation plan prior to fiscal year 2025. Stock-based compensation expenses were approximately $2,948,000\nand $0 for the years ended August 31, 2025 and 2024, respectively. Approximately $2,528,000 of this expense during the year ended\nAugust 31, 2025 was related to a consulting agreement with the Company’s largest stockholder, as described in the section\nabove and the notes to the audited consolidated financial statements included elsewhere in this Annual Report. Approximately $419,000\nof this expense was related to stock-based compensation expense for stock option awards granted to employees, contractors, Directors\nand Board advisors, under the Incentive Plan, the details of which are described in the notes to the audited consolidated financial\nstatements included elsewhere in this Annual Report, as well as in Part III of this filing.\n\n \n\n50 \n\n \n\n*Impairment\nLosses on Equity Investments* \n\n \n\nImpairment\nlosses in the year ended August 31, 2024 were related to an investment the Company had in an entity where the Company determined\nthat there was a partial impairment and reduced the recorded amount by $16,000.\n\n \n\n*Loss\non Disposition of Software Assets* \n\n \n\nDuring\nthe year ended August 31, 2024, the Company recorded a loss of approximately $377,000 related to the disposition of capitalized\nsoftware that was no longer being used by the Company.\n\n \n\n*Interest\nExpense* \n\n \n\nInterest\nexpense was approximately $776,000 and $2,607,000 for the years ended August 31, 2025 and 2024, respectively. The decrease in\ninterest expense between years is related to the decrease in the outstanding convertible note agreements to which this interest\nexpense relates.\n\n \n\n*Interest\nincome*\n\n \n\nInterest\nincome of approximately $19,000 was recorded during the year ended August 31, 2024 related to interest received on certain investment\nthe Company had at that time.\n\n \n\n*Gain\non Exchange of Convertible Notes Payable for Series B Convertible Preferred Stock*\n\n \n\nThe\nCompany recorded a gain on the conversion of a non-related party’s exchange of their convertible debt to Series B Convertible\nPreferred Stock in the amount of approximately $443,000, calculated as the difference between the carrying amount of this debt\nand accrued interest, in comparison to the estimated valuation of the Series B Convertible Preferred Stock received upon conversion.\n \n\n \n\n*Loss\nRecognized upon Dissolution of DrivenIQ*\n\n \n\nThe\nCompany recorded a loss on the dissolution of this entity of approximately $482,000.\n\n \n\n*Income\nTaxes*\n\n \n\nThe\nCompany recorded income tax expense of $19,890 for the year ended August 31, 2025, which related to temporary differences. No\nprovision for, or benefit from, income taxes was recorded for the year ended August 31, 2024. We will continue to review our conclusions\nabout the appropriate amount of the valuation allowance on a quarterly basis. If we were to generate profits in our fiscal 2026\nand beyond, the U.S. valuation allowance position could be reversed in the foreseeable future. We expect a benefit to be recorded\nin the period the valuation allowance reversal is recorded and a higher effective tax rate in periods following the valuation\nallowance reversal. \n\n \n\n**Liquidity\nand Capital Resources**\n\n \n\nAs\nof August 31, 2025 and 2024, we had approximately $108,000 and $386,000 in cash, respectively, and negative cash flows from operations\nof approximately $2,620,000 and $4,684,000 for the years ended August 31, 2025 and 2024, respectively. Our business requires cash\nfor operating activities, including salaries and wages paid to our employees, consumer data acquisition costs, general and administrative\nexpenses, and others.\n\n \n\nWe\nexpect that we will need to engage in additional financings to fund our operations and satisfy our obligations in the near-term\nas well as to respond to business challenges and opportunities, including the need to provide working capital, develop new features\nand enhance our products. We may also seek to raise additional capital, including from offerings of our equity or debt securities,\non an opportunistic basis when we believe there are suitable opportunities for doing so. Arena has committed to providing additional\nfunding through December 29, 2026. Without such additional funding, we may not be able to continue operations.\n\n \n\n51 \n\n \n\nMore\ngenerally, our ability to meet our cash requirements depends on, among other things, our operating performance, competitive and\nindustry developments, and financial market conditions, all of which are significantly affected by business, financial, economic,\npolitical, and other factors, many of which we may not be able to control or influence. To the extent that our actual operating\nresults or other developments differ from our expectations, our liquidity could be adversely affected.\n\n \n\n*April\n2025 Convertible Notes*\n\n \n\nOn\nApril 17, 2025, the Company, along with its wholly-owned subsidiary, VisitIQ, LLC, entered into a note purchase agreement (the\n“April Note Purchase Agreement”) with Arena, pursuant to which, the Company may issue senior secured convertible promissory\nnotes in the aggregate principal amount of $2,222,222 for a purchase price of $2,000,000 to affiliates of Arena (the “April\n2025 Convertible Notes”).\n\n \n\nIn\nconnection with the April Note Purchase Agreement, VisitIQ Corp. has issued April Convertible Notes in the aggregate principal\namount of $2,222,222 for a purchase price of $2,000,000 to affiliates of Arena. The April 2025 Convertible Notes were issued by\nthe Company to the affiliates of Arena on April 17, 2025 and bear interest at 12.0% per annum. The April 2025 Convertible Notes\nmature on April 17, 2026 and are secured by a Security Agreement, dated as of October 24, 2024, as amended by that certain first\namendment thereto, dated as of April 17, 2025, made by the affiliates of Arena, the Company and VisitIQ, LLC (the “Security\nAgreement”). The April 2025 Convertible Notes are convertible into shares of Series C Convertible Preferred Stock at the\noption of the holder, subject to certain conditions, and, in any case, on the Maturity Date or upon liquidation of the Company.\n\n \n\n*November\n2025 Convertible Notes*\n\n \n\nOn\nNovember 10, 2025, the Company, along with its wholly-owned subsidiary, VisitIQ, LLC, entered into a note purchase agreement (the\n“November Note Purchase Agreement”) with Arena, pursuant to which, the Company may issue senior secured convertible\npromissory notes up to the aggregate principal amount of $1,944,444 for a purchase price of $1,750,000 to affiliates of Arena\n(the “November 2025 Convertible Notes”).\n\n \n\nIn\nconnection with the November Note Purchase Agreement, the Company has issued November 2025 Convertible Notes in aggregate principal\namount of $1,944,444 for a purchase price of $1,750,000 to affiliates of Arena. The November 2025 Convertible Notes were issued\nby the Company to the affiliates of Arena in multiple closings on November 10, 2025, November 26, 2025, December 23, 2025, January\n8, 2026, February 3, 2026 and March 9, 2026. Each of the November 2025 Convertible Notes bear interest at 12.0% per annum. The\nNovember 2025 Convertible Notes mature one year from the date of issuance and are secured by the collateral set forth in the Security\nAgreement. The November 2025 Convertible Notes are convertible into shares of Series C Convertible Preferred Stock at the option\nof the holder, subject to certain conditions, and, in any case, on the Maturity Date or upon liquidation of the Company.\n\n \n\n*March\n2026 Financing*\n\n \n\nIn\nMarch 2026, the Company, VisitIQ, LLC and Vernon Hanzlik, as a key person of the Company, entered into the Revenue Loan and Security\nAgreement relating to a secured financing of $2,200,000, with $1,000,000 being advanced to the Company upon execution of the\nRevenue Loan and Security Agreement and one or more addition advances available for the remainder of the Revenue Loan Amount available\nto the Company upon request, provided that the Company has satisfied all conditions with respect to such advance.\n\n \n\nThe\nRevenue Loan and Security Agreement requires monthly payments of Fixed Payment Amounts (as set forth in the Revenue Loan and Security\nAgreement) with all outstanding advances and the Interest (as defined in the Revenue Loan and Security Agreement) being due at\nmaturity on March 26, 2030 (unless accelerated upon a change of control or the occurrence of other events of default). Interest\ndoes not accrue on advance(s) pursuant to the Loan Agreement, rather a minimum amount of Interest (as defined in the Loan Agreement)\nis due pursuant to the terms of the Loan Agreement. The Revenue Loan and Security Agreement further provides for the payment of\nfees by the Borrower and includes customary representations and warranties, indemnification provisions, covenants and events of\ndefault. Subject in some cases to cure periods, amounts outstanding and otherwise due under the Revenue Loan and Security Agreement\nmay be accelerated for typical defaults including, but not limited to, the failure to make when due payments, the failure to perform\nany covenant, the inaccuracy of representations and warranties, and the occurrence of debtor-relief proceedings.\n\n \n\n52 \n\n \n\nIn\nconnection with the Revenue Loan and Security Agreement, the Company, VisitIQ, LLC, Decathlon and Arena also entered into the\nSubordination Agreement, pursuant to which Arena subordinated all security interests or liens that Arena may have in the property\nof the Company or VisitIQ, LLC to Decathlon.\n\n \n\n**Cash\nFlow Summary**\n\n \n\nThe\nfollowing table summarizes our cash flows for the years ended August 31, 2025 and 2024:\n\n \n\n  \nYears Ended August 31,  \n  \n\n  \n2025  \n2024  \nChange \n\n  \n   \n   \n  \n\nNet cash used in operating activities \n$(2,619,662) \n$(4,684,082) \n$2,064,420 \n\nNet cash used in investing activities \n (662,638) \n (1,103,813) \n 441,175 \n\nNet cash provided by financing activities \n 3,003,859  \n 5,324,453  \n (2,320,595)\n\n \n\n*Operating\nActivities *\n\n \n\nNet\ncash used in operating activities for the year ended August 31, 2025 was approximately $2,620,000; consisting primarily of a net\nloss of $8,153,000, offset by cash provided from net operating assets of approximately $695,000 and net non-cash charges of approximately\n$4,838,000. The cash provided from operating assets was primarily comprised of increased accrued interest of approximately $461,000\nand accounts payable and accrued liabilities of approximately $376,000, partially offset by a decrease in deferred revenue and\naccounts receivable of approximately $76,000 and $73,000, respectively. The noncash charges primarily consisted of stock-based\ncompensation expense of approximately $2,948,000, depreciation and amortization of approximately $1,462,000, loss on dissolution\nof DrivenIQ of $482,000, and amortization of debt discount of $315,000, partially offset by a gain recognized on debt exchange\nfor preferred stock of $443,000.\n\n \n\nNet\ncash used in operating activities for the year ended August 31, 2024 was approximately $4,684,000; consisting primarily of a net\nloss of $10,706,000, offset by cash provided from net operating assets of $2,657,000, and non-cash charges of $3,365,000. The\ncash provided from operating assets was primarily comprised of increased accrued interest of $1,263,000, accounts payable and\naccrued liabilities of $969,000, and deferred revenue of $109,000 and a decrease in accounts receivable of $309,000. The noncash\ncharges primarily consisted of amortization of debt discount of $1,317,000, depreciation and amortization of $1,305,000, loss\non disposition of a software asset of $377,000, and settlement of a lease liability with an equity method investment of $256,000.\n\n \n\nWe\nexpect our cash used in operating activities to increase, driven by reduction in net losses.\n\n \n\n*Investing\nActivities *\n\n \n\nNet\ncash used in investing activities during the year ended August 31, 2025 was $663,000, consisting of $1,288,000 of capitalized\nsoftware development costs, partially offset by payments received on a note receivable of $625,000.\n\n \n\nNet\ncash used in investing activities during the year ended August 31, 2024 was $1,104,000, consisting of $1,073,000 of capitalized\nsoftware development costs and issuance of notes receivable of $31,000.\n\n \n\nWe\nexpect our capital expenditures to increase in 2026 compared to 2025 as we continue to advance our technology platform with our\nexternal development partner.\n\n \n\n53 \n\n \n\n*Financing\nActivities *\n\n \n\nNet\ncash provided by financing activities during the year ended August 31, 2025 was $3,004,000, consisting of issuance of convertible\nnotes payable of $3,200,000, partially offset by $112,000 of payments on other notes payable and $84,000 of payments on insurance\nfinancing arrangements.\n\n \n\nNet\ncash provided by financing activities during the year ended August 31, 2024 was $5,324,000, consisting of issuance of convertible\nnotes payable with common stock warrants.\n\n \n\nWe\nexpect cash provided by financing activities to increase by issuing new equity or incurring new debt to continue and expand operations.\nOur future cash requirements and the adequacy of available funds will depend on many factors, including our operating performance,\ncompetitive and industry developments, and financial market conditions.\n\n \n\n**Off-Balance\nSheet Arrangements**\n\n \n\nAs\nof August 31, 2025 and 2024, we did not have any off-balance sheet arrangements. \n\n \n\n**Contractual\nObligations**\n\n \n\nNone.\n\n \n\n**Recent\nAccounting Pronouncements**\n\n \n\nFor\na description of recent accounting pronouncements, including the expected dates of adoption and estimated effects, if any, on\nour consolidated financial statements, see Note 3, *Summary of Significant Accounting Policies*, in the notes to the audited consolidated financial statements\nin this Annual Report.\n\n \n\n**Implications\nof Being a Smaller Reporting Company**\n\n \n\nWe\nare a “smaller reporting company” as defined in Item 10(f)(1) of Regulation S-K. Smaller reporting companies may take\nadvantage of certain reduced disclosure obligations, including, among other things, providing only two years of audited consolidated\nfinancial statements. \n\n \n\nWe\nwill remain a smaller reporting company and may take advantage of certain scaled disclosures available to smaller reporting companies\nuntil the last day of the fiscal year in which (a) the market value of our voting and nonvoting common stock held by non-affiliates\nequals or exceeds $250.0 million measured on the last business day of that year’s second fiscal quarter and (b) our annual\nrevenue equals or exceeds $100.0 million during the most recently completed fiscal year or our voting and nonvoting common stock\nheld by non-affiliates equals or exceeds $700.0 million measured on the last business day of that year’s second fiscal quarter. \n\n \n\n**Critical\nAccounting Policies and Significant Estimates**\n\n \n\nOur\ndiscussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements,\nwhich have been prepared in accordance with GAAP. We evaluated the development and selection of our critical accounting policies\nand estimates and believe that the following involve a higher degree of judgement or complexity and are most significant to reporting\nour results of operations and financial position and are therefore discussed as critical. The following critical accounting policies\nreflect the most significant estimates and judgements used in the preparation of our consolidated financial statements. Actual\nresults could differ materially from those estimates and assumptions, and those differences could be material to our consolidated\nfinancial statements. We re-evaluate our estimates on an ongoing basis. For information on our significant accounting policies,\nrefer to Note 3, *Summary of Significant Accounting Policies,*included in the notes to the consolidated financial statements\nin this Annual Report. \n\n \n\n**Revenue\nRecognition**\n\n \n\nRevenues\narise primarily from the Company’s proprietary AI-driven technology platform, which is named VisitIQ, via subscription fees,\nvolume-based utilization fees, and fees for media activation services designed to maximize the customers’ use of its proprietary\ntechnology platform. Revenues are recognized when control of these services is transferred to the customers, in an amount that\nreflects the consideration the Company expects to be entitled to in exchange for those services.\n\n \n\n54 \n\n \n\nThe\nCompany determines revenue recognition through the following steps:\n\n \n\n●Identification\nof the contract, or contracts, with a customer.\n\n●Identification\nof the performance obligations in the contract.\n\n●Determination\nof the transaction price.\n\n●Allocation\nof the transaction price to the performance obligations in the contract.\n\n●Recognition\nof revenue when performance obligations have been satisfied.\n\n \n\nAt\ncontract inception, the Company assesses the services promised in the contracts with customers and identifies a performance obligation\nfor each promise to transfer to the customer a service (or bundle of services) that is distinct. To identify the performance obligations,\nthe Company considers all the services promised in the contract regardless of whether they are explicitly stated or are implied\nby customary business practices.\n\n \n\nThe\ntransaction price is the amount of consideration that the Company is entitled to in exchange for transferring services to a customer.\nFurther, for the contracts having multiple performance obligations, the total transaction price for a contract is allocated amongst\nthe various performance obligations based on their relative stand-alone selling prices. The relative standalone selling price\n(“SSP”) is determined based on the terms of the contract and requires judgment. The transaction price for a contract\nexcludes any amounts collected on behalf of third parties, in cases where the Company acts as an agent. Payment terms are typically\n30 days. As such, the Company does not have any significant financing components.\n\n \n\nWhen\nthe Company enters into multiple contracts with a single counterparty, the Company will combine contracts and account for them\nas a single contract when one or more of the following criteria are met: (i) the contracts are negotiated with a single commercial\nobjective, (ii) consideration to be paid in one contract depends on the terms of the other contract, and (iii) services promised\nare a single performance obligation.\n\n \n\nData\nrevenue relates to fees paid for use of the Company’s proprietary platform and includes subscription-based and usage-based\nservice offerings. Subscriptions are recognized as revenue ratably during the period that the customer has access to use the Company’s\nplatform. Fees charged to customers based on usage of the Company’s platform are based on per-record charges and are recognized\nas revenue over time based on actual usage in the period. The Company’s standard contract periods are for one year and are\nnon-cancellable.\n\n \n\nMedia\nactivation revenue relates to the fees charged for the Company’s management of media campaigns for customers, and the activation\nof the data to the related media campaign and are recognized at the point of delivery of the related performance obligation. The\nCompany’s standard contract periods are for one year and are non-cancellable.\n\n \n\nWhen\ncustomers pay fees in advance of the specified period of use of the platform, those fees paid in advance are recorded as deferred\nrevenue in the Company’s consolidated balance sheets and recognized as revenue when the performance obligation is satisfied.\n\n \n\nSales\nand other taxes collected from customers that are remitted to governmental authorities are excluded from revenue.\n\n \n\n**Stock-Based\nCompensation**\n\n \n\nThe\nCompany compensates certain key employees, contractors, Directors and Board advisors through incentive stock options (the “Option\nAwards”). Grants of Option Awards are measured at the grant-date fair value of the award. The Company estimates the grant-date\nfair value using the Black-Scholes-Merton option-pricing model. Option Awards have only time-based vesting criteria. The Company\nrecognizes compensation expense for these Option Awards in the consolidated statements of operations over the vesting period.\n\n \n\n55 \n\n \n\n**Fair\nValue Measurements**\n\n \n\nThe\nCompany’s accounting for fair value measurements of assets and liabilities that are recognized or disclosed at fair value\nin the consolidated financial statements on a recurring or nonrecurring basis adheres to the FASB fair value hierarchy that prioritizes\nthe inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices\nin active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to measurements involving\nsignificant unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy are as follows:\n\n \n\n \n●\nLevel 1 is defined\nas observable inputs such as quoted prices in active markets for identical assets;\n\n \n●\nLevel 2 is defined\nas observable inputs other than Level 1 prices such as quoted prices for similar assets; quoted prices in markets that are\nnot active; or other inputs that are observable or can be corroborated by observable market data for substantially the full\nterm of the assets or liabilities; and\n\n \n●\nLevel 3 is defined\nas unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions.\n\n \n\nThe\nlevel in the fair value hierarchy within which a fair measurement in its entirety falls is based on the lowest level input that\nis significant to the fair value measurement in its entirety. The carrying amounts of cash, accounts receivable, accounts payable,\naccrued expenses, and other financial working capital items approximate their fair value at August 31, 2025 and 2024, due to the\nshort maturity nature of these items.\n\n \n\n**Basis\nof Presentation of Financial Information**\n\n \n\nThe\nconsolidated financial statements have been prepared assuming that the Company will continue as a going concern which contemplates\ncontinuation of operations, realization of assets and payment of liabilities in the ordinary course of business. As shown in the\naccompanying consolidated financial statements, the Company has incurred a net loss of approximately $8,153,000 and negative cash\nflows from operations of approximately $2,620,000 for the year ended August 31, 2025. In addition, the Company has negative working\ncapital of approximately $3,749,000 as of August 31, 2025. The Company’s ability to continue as a going concern is dependent\non meeting various obligations as they become due with cash generated from operations and/or through raising capital and ultimately\nachieving sustained profitable operations. In November 2025, the Company signed a convertible note payable agreement with its\nmajority stockholder in the total amount of approximately $1,950,000.\n\n \n\nDuring\nits fiscal year ending August 31, 2026, management is operating to a plan that includes an increase in bookings, revenue and gross\nmargin sufficient to allow the Company to fund operations. Management believes the Company will be able to continue to operate\nin its present form as a result of the additional investments received from investors and the increased gross profit and cash\nflows from operations. However, no assurance can be given that management’s actions will result in sustained profitable\noperations. If management is not successful with its plan, anticipated hires can be delayed and other planned expenses can be\nremoved from its plan to a level necessary to maintain positive cash flow. If management is not successful with its plans, there\nis a possibility that the Company may need to secure additional funding from its majority stockholder or other investors. The\nCompany’s majority stockholder has represented in writing that it has the intent and ability to provide additional funding\nif necessary to allow the Company to continue normal business operations for at least twelve months from the date of issuance\nof these consolidated financial statements.\n\n \n\n56"}