Sparta Commercial Services Reports Significant Financial Decline, Widened Net Loss in Q2 2024

Sparta Commercial Services, Inc. reported significant financial changes in its 10-Q filing for the quarter ending July 31, 2024. The company experienced a decline in total revenue, which fell to $41,551 from $62,279 in the same period of the previous year, marking a decrease of approximately 33%. This decline was attributed to a 38% drop in revenues from information technology and a 29% decrease in sales of New World Health Products, although there was a slight increase in merchant financing revenues.

Gross profit also decreased to $32,968 from $53,355 year-over-year. Operating expenses rose to $376,762, up from $315,036, reflecting a 12% increase driven by higher compensation and consulting fees. The net loss for the quarter widened to $(964,516) compared to $(208,634) in the prior year, with net loss attributable to common stockholders also increasing to $(963,173) from $(211,343).

As of July 31, 2024, Sparta's total assets surged to $368,531, a significant increase from $119,681 as of April 30, 2024. This growth was primarily due to an increase in current assets, which rose to $359,531 from $110,681. However, total liabilities also increased to $10,445,446 from $9,756,278, leading to a total shareholder's deficit of $(10,076,915), up from $(9,636,597).

The company reported cash and cash equivalents of $136,492, a notable increase from $100,953 at the end of April 2024. Cash flow from operating activities showed a net outflow of $(449,461), compared to $(249,687) in the previous year. The company raised $335,000 through stock sales and $150,000 via promissory notes during the quarter to address its cash requirements.

Strategically, Sparta has been focusing on expanding its product lines, including dietary supplements through its New World Health Brands division, and enhancing its mobile technology services. The company has also engaged a financial advisory firm to assist in raising capital, as it faces substantial doubts about its ability to continue as a going concern due to ongoing losses and insufficient revenues.

As of the reporting date, Sparta had four full-time and three part-time employees, with potential for growth depending on revenue generation and financing. The company continues to seek additional financing options, including credit facilities and private placements, to support its operations over the next twelve months.