Item 7. Management’s Discussion and Analysis
Item
7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Overview
Legacy
Business (Overview):
Our
historical business model focused on purchasing or acquiring life insurance policies and related residual interests, such as net insurance
benefits (NIBs). These NIBs provided us with the right to receive a portion of settlement proceeds from third-party-held policy portfolios,
after associated servicing and financing costs. As of the date of this report, we no longer directly hold NIBs or life insurance policies.
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Current
Focus:
Since
the latter part of fiscal 2021, our efforts have shifted toward providing professional services to specialty finance groups, bond issuers,
and aggregators in the life settlement space. Our role includes advising on portfolio construction and applying proprietary analytics
to help structure bond offerings secured by life insurance assets and managed cash. We aim to assist clients with asset assembly, cash
management, and support for both investment- and non-investment-grade credit ratings. In exchange, we will be reimbursed for structuring
expenses, earn an advisory fee upon closing, and retain residual rights to certain underlying assets post-maturity.
For
the fiscal year ended March 31, 2026, the Company earned no revenue from bond advisory or portfolio consulting services. Management continues
to pursue opportunities, but no definitive engagements were in place as of the date of this report.
Results
of Operations
Fiscal
year ended March 31, 2026 compared to March 31, 2025
General
& Administrative Expenses
General
and administrative expenses totaled $436,110 and $604,167 during the years ended March 31, 2026, and 2025, respectively. A significant
portion of these expenses were professional fees, payroll, and rent. The decrease in general and administrative expenses is mostly due
to decreased professional fees during 2026.
Other
Income and Expenses
During
the years ended March 31, 2026 and 2025, we recognized losses on extinguishment of debt totaling $989,968 and $435,199, respectively,
in connection with related party debt arrangements. The increase in loss for the year ended March 31, 2026, reflects a higher volume
of debt extensions or modifications that resulted in extinguishment accounting treatment compared to the prior year.
For
the years ended March 31, 2026, and 2025, interest expense totaled $372,847 and $349,016 , respectively.
For
the years ended March 31, 2026, and 2025, expenses incurred pursuing potential financing alternatives totaled $15,000 and $215,000, respectively.
The decrease in financing-related expenses is primarily attributable to decreased costs incurred in connection with bond structuring
and placement efforts.
Income
Taxes
During
the years ended March 31, 2026, and 2025, the Company recorded a net loss before income taxes of $1,813,964 and $1,603,382,
respectively. The income tax provision for both periods was also $0.
Liquidity
and Capital Resources
Since
our inception, our operations have been primarily financed through sales of equity instruments, debt financing, lines of credit and notes
payable from related parties, and the issuance of convertible debentures. As of March 31, 2026, we had $32,035 of cash, compared to $168,648
as of March 31, 2025. As of March 31, 2026, the Company had access to draw an additional $4,257,253 on the notes payable, related party,
$55,000 on a promissory note, and $3,000,000 on the Convertible Debenture Agreement. Our monthly expenses average approximately $37,000,
which includes the salary of our employee, policy servicing expenses, consulting agreements and contract labor, general and administrative
expenses, and estimated legal and accounting expenses. Outstanding Accounts Payable as of March 31, 2026, totaled $451,372, and other
accrued liabilities totaled $ 2,470,347. We believe that the available capacity under our existing related party lines of credit, together
with our current capital resources, will be sufficient to fund our operating and working capital needs for at least the 12-month period
following the issuance of these financial statements.
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2026
Cash Flows Compared to 2025 Cash Flows
For
the year ended March 31, 2026, we recorded net cash used in operating activities of $390,302, compared to $916,212 during the prior year.
The decrease in cash used is primarily attributable to a reduction in financing expenses and a reduction in operating expenses, as well
as higher non-cash accrual of interest payable which resulted in a larger adjustment to reconcile net loss to operating cash.
For
the years ended March 31, 2026, and 2025 no cash was used in or provided by investing activities.
During
the years ended March 31, 2026, and 2025 net cash provided by financing activities was $253,689, and $755,000, respectively. The Company
borrowed on new related-party promissory notes and existing notes payable and lines-of-credit in the amounts of $8,689 during the year
ended March 31, 2026. Additionally, during the years ended March 31, 2026, and 2025, the Company received $0 and $805,000 in proceeds
raised by issuance of our common stock through private placement memorandums, respectively.
Debt
At
March 31, 2026, we owed $5,978,126, including accrued interest, for debt obligations. We owed $3,298,747 in principal pursuant to notes
payable and lines-of-credits from related parties and $545,000 in other notes payable. As of March 31, 2026, one note payable had a principal
balance of $1,168,197 and has been extended to be due on May 31, 2027 or when the Company completes a successful equity raise (if earlier
than the due date), at which time principal and interest is due in full. The second note payable and line-of-credit had a principal balance
of $1,304,550, and the line of credit and has been extended to be due May 31, 2028. The third series of related-party promissory notes
had a total principal balance of $826,000 and is due on April 30, 2027. The convertible debenture agreement, which has no principal balance
due as of March 31, 2026, is open through August 31, 2026. As of June 29, 2026, there was $4,257,253 available under the lines-of-credit
we currently have with related parties and $3,000,000 available under the 8% convertible debenture agreement, and $55,000 available under
the 7.5% promissory note.
We
may borrow money in the future to finance our operations but can make no guarantees that such credit will be made available to us. Any
such borrowing will increase the risk of loss to the debt holder in the event we are unsuccessful in repaying such loans.
The
accompanying financial statements have been prepared assuming the Company will continue as a going concern, which assumes the Company
will continue to operate and meet its obligations in the ordinary course of business. As the Company does not currently generate revenue,
it will need to rely on related party debt financing and/or additional capital raises to meet its financial obligations.
Management
believes that existing capital resources, along with availability under related party debt agreements and convertible debentures, will
be sufficient to fund operations for at least the next 12 months from the issuance date of these financial statements. Based on these factors, management has concluded that there is no substantial doubt about
the Company’s ability to continue as a going concern through June 2026.
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Contractual
Obligations and Contingencies
The
following table sets forth payments due by period for fixed contractual obligations by maturity date as of March 31, 2026:
Maturity Date
Total
Year Ended
March 31, 2027
Year Ended
March 31, 2028
Thereafter
Debt Obligations (1)
$ 3,843,747
$ 245,000
$ 2,294,197
$ 1,304,550
Interest Payable
2,134,379
6,512
1,528,824
599,043
Total
$ 5,978,126
$ 251,512
$ 3,823,021
$ 1,903,593
(1)
Debt obligations consist of the principal pursuant to the notes payable
from related parties and non-related parties (as mentioned above)
Critical
Accounting Policies and Estimates
Estimates,
the preparation of financial statements in conformity with accounting principles generally accepted in the United States of America
requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent
assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates.
Going
Concern Evaluation, management evaluates the Company’s ability to continue as a going concern in accordance with ASC 205-40. This
evaluation requires significant judgment regarding the Company’s expected cash requirements, available sources of liquidity, the availability
of funding under existing financing arrangements, the expected extension or renewal of certain debt obligations, and the likelihood of
obtaining additional financing necessary to support operations. Management also considers its operating plans and other events and conditions
that may affect liquidity during the one-year period following the issuance of the financial statements. Changes in these assumptions
or the occurrence of unforeseen events could materially affect management’s conclusions regarding the Company’s ability to continue as
a going concern and the related financial statement disclosures.
Stock-Based
Compensation and Financing Costs , we measure stock-based compensation expense related to employee stock-based awards and stock-based
expense associated with certain financing costs based on the estimated fair value of the awards as determined on the date of grant and
is recognized as expense over the remaining requisite service period or vesting period of the warrant. We utilize the Black-Scholes pricing
model to estimate the fair value of stock options issued as compensation and warrants issued as financing costs. The Black-Scholes model
requires the input of highly subjective and complex assumptions, including the estimated fair value of our common stock on the date of
grant, the expected term of the stock option and warrant, and the expected volatility of our common stock over the period equal to the
expected term of the grant or warrant. Uncontrollable uncertainties, such as fluctuation in interest rates, can have an effect on our
Black-Scholes estimate calculations. Such fluctuations and other unforeseen changes in inputs could have a material impact on the general
and administrative expenses within our financial statements. We estimate forfeitures at the date of grant and revise the estimates, if
necessary, in subsequent periods if actual forfeitures differ from those estimates.
Fair
Value, As defined by ASC Topic 820, “Fair Value Measurements and Disclosures” (“ASC 820”), fair value is
the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants
at the measurement date. ASC 820 also requires the consideration of differing levels of inputs in the determination of fair values.
Those
levels of input are summarized as follows:
●
Level 1: Quoted prices in active markets for identical assets and liabilities.
●
Level 2: Observable inputs other than Level 1 quoted prices, such as quoted prices for similar instruments in active markets, quoted
prices for identical or similar instruments in markets that are not active, and model-based valuation techniques for which all significant
assumptions are observable in the market.
●
Level 3: Unobservable inputs that are supported by little or no market activity. Level 3 assets and liabilities include financial instruments
whose value is determined using pricing models, discounted cash flow methodologies, or similar techniques as well as instruments for
which the determination of fair value requires significant management judgment or estimation.
The
level in the fair value hierarchy within which a fair value measurement in its entirety falls is based on the lowest level input that
is significant to the fair value measurement in its entirety.
We
did not have any transfers of assets and liabilities between Levels 1, 2 and 3 of the fair value measurement hierarchy during the years
ended March 31, 2026, and 2025.
Our
recorded values of cash and cash equivalents, accounts payable and accrued liabilities approximate their fair values based on their short-term
nature. The recorded values of the Notes Payable, Related Parties and Convertible Debenture approximate the fair values as the interest
rate approximates market interest rates.
Item
7A. Quantitative and Qualitative Disclosures About Market Risk
Not
Applicable.
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