America Great Health 10-Q for FY2025 Q1
America Great Health (AAGH)
About this 10-Q
America Great Health filed this 10-Q on March 27, 2025, covering the quarter ended September 30, 2024 (FY2025 Q1).
Headline figures
Quarter ended September 30, 2024, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Revenue
- $140.13K
- up 914.8% from $13.81K a year earlier
- Net loss
- $145.4K
- compared with a net loss of $156.38K a year earlier
- Diluted EPS
- $0.00
- compared with $0.00 a year earlier
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
For the quarterly period ended
For the transition period from to
Commission File No.
(Exact name of registrant as specified in its charter)
| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
| (Address of principal executive offices) | (Zip Code) |
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
| N/A | N/A |
Indicate by check mark whether the registrant
(1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements
for the past 90 days. Yes ☐
Indicate by check mark whether the registrant
has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405
of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes
☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer ☐ | Accelerated filer ☐ |
| Smaller reporting company | |
| Emerging growth company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant
is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No
Indicate the number of shares outstanding of each
of the registrant’s classes of common stock, as of the latest practicable date. The number of shares outstanding of the registrant’s
common stock as of March 24, 2025 was
AMERICA GREAT HEALTH AND SUBSIDIARIES
TABLE OF CONTENTS
| PART I – FINANCIAL INFORMATION | 3 | |
| ITEM 1 | Condensed Consolidated Financial Statements (Unaudited) | 3 |
| ITEM 2 | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 19 |
| ITEM 3 | Quantitative and Qualitative Disclosures About Market Risk | 22 |
| ITEM 4 | Controls and Procedures | 23 |
| PART II – OTHER INFORMATION | 24 | |
| ITEM 1 | Legal Proceedings | 24 |
| ITEM 1A | Risk Factors | 24 |
| ITEM 2 | Unregistered Sales of Equity Securities and Use of Proceeds | 24 |
| ITEM 3 | Defaults Upon Senior Securities | 24 |
| ITEM 4 | Mine Safety Disclosures | 24 |
| ITEM 5 | Other Information | 24 |
| ITEM 6 | Exhibits | 24 |
PART I – FINANCIAL INFORMATION
This Quarterly Report includes forward-looking statements within the meaning of the Securities Exchange Act of 1934 (the “Exchange Act”). These statements are based on management’s beliefs and assumptions, and on information currently available to management. Forward-looking statements include the information concerning our possible or assumed future results of operations set forth under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Forward-looking statements also include statements in which words such as “expect,” “anticipate,” “intend,” “plan,” “believe,” “estimate,” “consider” or similar expressions are used.
Forward-looking statements are not guarantees of future performance. They involve risks, uncertainties and assumptions. Our future results and shareholder values may differ materially from those expressed in these forward-looking statements. Readers are cautioned not to put undue reliance on any forward-looking statements.
Item 1. Financial Statements
America Great Health and Subsidiaries
Condensed Consolidated Balance Sheets
| September 30, | June 30, | |||||||
| 2024 | 2024 | |||||||
| (Unaudited) | (Unaudited) | |||||||
| ASSETS | ||||||||
| CURRENT ASSETS | ||||||||
| Cash | $ | $ | ||||||
| Account receivable, net | ||||||||
| Inventory | ||||||||
| Prepaid and other assets | ||||||||
| TOTAL CURRENT ASSETS | ||||||||
| Right-of-use asset, net | ||||||||
| Due from the related parties | ||||||||
| Other assets | ||||||||
| Property and equipment, net | ||||||||
| TOTAL ASSETS | $ | $ | ||||||
| LIABILITIES AND SHAREHOLDERS’ DEFICIT | ||||||||
| CURRENT LIABILITIES | ||||||||
| Accounts payable | $ | $ | ||||||
| Income tax payable | ||||||||
| Short term loan | ||||||||
| Wage and wage tax payable | ||||||||
| Other payable | ||||||||
| Due to related party | ||||||||
| Advances from customers | ||||||||
| Lease liability – current | ||||||||
| TOTAL CURRENT LIABILITIES | ||||||||
| Lease liability - non current | ||||||||
| Accrued liability | ||||||||
| Long term loan | ||||||||
| TOTAL LIABILITIES | ||||||||
| Commitments and Contingencies | ||||||||
| SHAREHOLDERS’ DEFICIT | ||||||||
| Redeemable, convertible preferred stock, | ||||||||
| Common stock, no par value, unlimited shares authorized; | ||||||||
| Additional paid-in capital | ||||||||
| Treasury stock, | ||||||||
| Accumulated other comprehensive income | ( | ) | ( | ) | ||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Total deficit attributed to owners of the Company | ( | ) | ( | ) | ||||
| Non-Controlling interest | ( | ) | ( | ) | ||||
| TOTAL SHAREHOLDERS’ DEFICIT | ( | ) | ( | ) | ||||
| TOTAL LIABILITIES AND SHAREHOLDERS’ DEFICIT | $ | $ | ||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
3
America Great Health and Subsidiaries
Condensed Consolidated Statements of Operations and Comprehensive Loss
| Three Months Ended September 30, | ||||||||
| 2024 | 2023 | |||||||
| (Unaudited) | ||||||||
| Sales | $ | $ | ||||||
| Cost of goods sold | ||||||||
| Gross profit | ||||||||
| Selling, general and administrative expenses | ||||||||
| Selling expense | ||||||||
| General and administrative expense | ||||||||
| Loss from operations | ( | ) | ( | ) | ||||
| Other income (expenses) | ||||||||
| Interest income | ||||||||
| Interest expense | ( | ) | ( | ) | ||||
| ( | ) | ( | ) | |||||
| Loss before income taxes | ( | ) | ( | ) | ||||
| Income tax provision | ||||||||
| NET LOSS | $ | ( | ) | $ | ( | ) | ||
| BASIC AND DILUTED LOSS PER SHARE | $ | ( | ) | $ | ( | ) | ||
| WEIGHTED-AVERAGE COMMON SHARES OUTSTANDING | ||||||||
| Less: net loss attributable to non-controlling interest | ( | ) | ( | ) | ||||
| Net loss attributed to the owners of the company | ( | ) | ( | ) | ||||
| Foreign currency translation | ||||||||
| Comprehensive loss | $ | ( | ) | $ | ( | ) | ||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
4
America Great Health and Subsidiaries
Condensed Consolidated Statement of Shareholders’ Deficit
For the three months ended September 30, 2024 and 2023
(Unaudited)
| Preferred Stock | Common Stock | Treasury Stock | Additional paid-in | Accumulated Other Comprehensive Income/ | Accumulated Deficit During | Total Deficit Attributable to the Owners of the | Non- Controlling | Total Shareholders’ | ||||||||||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Shares | Amount | Capital | (Loss) | Period | Company | Interest | Deficit | |||||||||||||||||||||||||||||||||||||
| Balance June 30, 2023 | - | - | - | - | - | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||||||||||||||||||||||||||
| Gain/loss on foreign currency translation | - | - | - | - | - | - | - | - | - | |||||||||||||||||||||||||||||||||||||||
| Net loss | - | - | - | - | - | - | - | - | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||
| Balance September 30, 2023 | - | $ | - | $ | - | - | $ | - | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||||||||||||||||||||||||
| Balance June 30, 2024 | - | - | - | - | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||||||||||||||||||||||||||
| Issuance of common stock for cash | - | - | - | - | - | - | - | - | - | |||||||||||||||||||||||||||||||||||||||
| Gain/loss on foreign currency translation | - | - | - | - | - | - | - | - | - | |||||||||||||||||||||||||||||||||||||||
| Net loss | - | - | - | - | - | - | - | - | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||
| Balance September 30, 2024 | - | $ | - | | $ | - | | $ | - | $ | | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||||||||||||||||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
5
America Great Health and Subsidiaries
Condensed Consolidated Statements of Cash Flows
| Three Months Ended September 30, | ||||||||
| 2024 | 2023 | |||||||
| (Unaudited) | ||||||||
| Cash Flows from Operating Activities | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Depreciation | ||||||||
| Payment of lease and rent | ( | ) | ( | ) | ||||
| Changes in operating Assets and Liabilities: | ||||||||
| Right of use asset – net | ||||||||
| Lease liabilities – net | ( | ) | ||||||
| Accounts receivable – net | ||||||||
| Customer advance | ( | ) | ||||||
| Inventory | ( | ) | ||||||
| Accounts payable and accrued expense | ||||||||
| Supplier advances | ||||||||
| Accrued interest for short term loan | ( | ) | ||||||
| Accrued interest for long term loan | ||||||||
| Wage and wage tax payable | ||||||||
| Other payable | ||||||||
| Income tax payable | ||||||||
| Net cash used in operating activities from continuing operations | ( | ) | ( | ) | ||||
| Net cash used in operating activities | ( | ) | ( | ) | ||||
| Cash Flows from Financing Activities | ||||||||
| Proceeds from issuance of common stock | ||||||||
| Proceeds of short term loan | ( | ) | ||||||
| Repayment of short term loan | ( | ) | ||||||
| Interest payment to short term loan | ||||||||
| Proceeds of long term loan | ( | ) | ||||||
| Repayment of long term loan | ||||||||
| Interest payment to long term loan | ||||||||
| Advance from related party | ( | ) | ||||||
| Repayment to related party | ( | ) | ||||||
| Net cash provided by financing activities | ||||||||
| Effect of exchange rate change on cash | ||||||||
| Net increase (decrease) in cash | ( | ) | ||||||
| Cash beginning of period | ||||||||
| Cash end of period | $ | $ | ||||||
| Interest paid | $ | $ | ||||||
| Taxes paid | $ | $ | ||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
6
AMERICA GREAT HEALTH AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
NOTE 1 – NATURE OF BUSINESS
History and Organization
America Great Health, formerly Crown Marketing,
is a Wyoming corporation (the “Company”). A change of control of the Company was completed on January 19, 2017 from Jay Hooper,
the former officer and director of the Company and its former majority shareholder. Control was obtained by the sale of
On March 1, 2017, the Company filed with the Secretary of State of the State of Wyoming an Articles of Amendment to change the corporate name from Crown Marketing to America Great Health.
On March 9, 2017, the Company formed a wholly owned subsidiary, America Great Health, under the laws of the State of California.
On June 24, 2019, the Company registered a wholly owned subsidiary in China, US-China Mega Beauty Health Industry Development Co., LTD. The subsidiary is mainly engaged in merger and acquisition, investment and financing, and marketing of medical equipment and health products in China.
On June 30, 2020, the Company and Purecell
Group (“Purecell”), a leading anti-aging medical institution in Australia, entered into a Cooperation Agreement, in which
the Company agreed to acquire
On
December 7, 2020, the Company’s wholly-owned Californian subsidiary, America Great Health, entered into a Cooperation Agreement
with Brilliant Healthcare Limited (“Brilliant”) pursuant to which the parties will establish a joint venture in China (the
“JV Company”) for the purpose of promoting and developing stem cell related product’s R&D, production, sales, raw
material procurement, mergers and acquisitions, and consulting services. After the formation of the JV company is completed, the Company
shall invest US$
On May 18, 2021, the Company and David Tsai (“Dr. Tsai”), a pioneer in anti-cancer peptide research and invention in the United States, entered into a Cooperation Agreement, in which Dr. Tsai shall provide to the Company theories, technologies, methods, sources of raw materials, processing and production techniques, quality standards, quality control methods and other information and details related to his anti-cancer protein peptides, oral insulin and activation technology. Dr. Tsai shall also be responsible for the whole process of technology and product production, application and implementation, as well as professional technical support, consultation and cooperation in the process of product verification, publicity, promotion and sales. Currently, several patents are in the application process, and several products are in the process of getting ready for production.
7
On September 3, 2021, the Company entered
into an Assets Acquisition Agreement with Wang’s Property Investment & Management LLC to purchase
On November 4, 2021, the Company set up a
On November 11, 2021, America Great Health (the
“Company”) entered into an Advisory Committee Member Consulting Agreement with Dr. Kevin Buckman MD (“Consultant”).
Pursuant to the Agreement, Consultant is to provide advisory services, as a member to the Advisory Committee to the Board of Directors
of the Company, including without limitation, assisting GOF Biotechnologies Inc. in its new drug approval process for oral insulin and
Amylase X. Consultant shall be compensated with a warrant to purchase
On November 15, 2021, the Company set up a
On February 4, 2021, the Company set up a
On November 25,2022, the Company signed
a supplementary agreement with Men Hwei, Tsai who is an unrelated party.
On November 26, 2022, the Company signed
a supplementary agreement with Men Hwei, Tsai who is an unrelated party and transferred pending anti-dementia patent to Men Hwei, Tsai
for $
Going Concern
The accompanying condensed consolidated financial
statements have been prepared on a going concern basis, which contemplates the realization of assets and the settlement of liabilities
and commitments in the normal course of business. As reflected in the accompanying condensed consolidated financial statements, the Company
has incurred recurring net losses. For the three months ended September 30, 2024, the Company recorded a net loss of $
8
During the year ended June 30, 2017, the Company’s former majority shareholder sold his shares to an investor group. The new owners’ plans to continue as a going concern revolve around its ability to achieve profitable operations, as well as raise necessary capital to pay ongoing general and administrative expenses of the Company. The ability of the Company to continue as a going concern is dependent on securing additional sources of capital and the success of the Company’s plan. There is no assurance that the Company will be successful in raising the additional capital or in achieving profitable operations.
Our cash needs for the three months ended September
30, 2024 were primarily met by loans and advances from the current majority shareholder. As of September 30, 2024, we had a cash balance
of $
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying CFS were prepared in conformity with accounting principles generally accepted in the United States of America (“US GAAP”).
The accompanying unaudited condensed consolidated financial statements of America Great Health, formerly Crown Marketing and Subsidiaries (the “Company”) have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all normal recurring adjustments considered necessary for a fair presentation have been included. Operating results for the three months ended September 30, 2024 are not necessarily indicative of the results that may be expected for the year ending June 30, 2024.
Basis of Consolidation
The Condensed Consolidated Financial Statements
includes the accounts of the Company and its current wholly owned subsidiaries, America Great Health in California (
The following table depicts the identity of the Company’s subsidiaries:
| Attributable | |||||||
| Place of | Equity | ||||||
| Name of Subsidiary | Incorporation | Interest % | |||||
| America Great Health in California | |||||||
| GOF Biotechnologies in California | |||||||
| International Institute of Great Health in California | |||||||
| Nutrature Health LLC in California | |||||||
| Sijinsai in China | |||||||
| US-China Mega Beauty Health Industry Development Co., LTD | |||||||
| Peptide Life Inc in California | |||||||
Estimates
The preparation of the financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosure of contingent liabilities at the date of the financial statements and the reported amounts of expenses during the reporting period. Significant estimates include accounting for potential liabilities and the assumptions made in valuing stock instruments issued for services, debt and equity investment. Actual results could differ from those estimates.
Foreign Currency Translation
Transactions denominated in currencies other than the functional currency are translated into the functional currency at the exchange rates prevailing at the dates of the transaction. Monetary assets and liabilities denominated in currencies other than the functional currency are translated into the functional currency using the applicable exchange rates at the balance sheet dates. The resulting exchange differences are recorded in the statement of operations.
9
In accordance with ASC 830, “Translation of Financial Statements” the subsidiary’s assets and liabilities booked and recorded at the non-US local functional currency are generally translated into USD for consolidation purposes, using the exchange rate on the balance sheet date, and revenues and expenses are translated at average rates prevailing during the period. The gains and losses resulting from translation of foreign subsidiary’s financial statements are recorded as a separate component of accumulated other comprehensive income within the statement of stockholders’ equity.
The Company’s reporting currency is the United States Dollar (“USD”). The Company’s wholly owned subsidiary of US-China Mega Beauty Health Industry Development Co., LTD. maintains its books and records in its local currency. The Chinese Yuan (“RMB”), which is the functional currency as being the primary currency of the economic environment in which the subsidiary operates.
Below is a table with foreign exchange rates used for translation:
| September 30, | ||||
| 2024 | ||||
| Average Quarterly (average rate) | ||||
| Chinese Renminbi (RMB) | RMB | |||
| United States dollar ($) | $ | |||
| September 30, | ||||
| 2024 | ||||
| Quarter Ended (Closing rate) | ||||
| Chinese Renminbi (RMB) | RMB | |||
| United States dollar ($) | $ | |||
Reclassification of Prior period (three months ended September 30, 2023) Presentations
Certain prior period accounts and amounts have been reclassified for consistency with the current period presentation. These reclassifications have no effect on the reported results of operations. Below is the comparison of the reclassification and the original representation of the related accounts and amounts.
Consolidated Statement of Cash Flows
| Reclassified 10-Q | Original 10-Q | |||||||
| September 30, 2023 | September 30, 2023 | |||||||
| Cash Flows from Operating Activities | ||||||||
| Adjustments to reconcile net loss to net cash used in operating activities | ||||||||
| Payment of lease and rent | $ | ( | ) | $ | ||||
| Changes in operating assets and liabilities | - | |||||||
| Right to use asset – net | ||||||||
| Lease liabilities – net | ( | ) | ||||||
| Account payable and accrued expense | ( | ) | ||||||
| Accrued interest for short term loan | ||||||||
| Accrued interest for long term loan | ||||||||
| Wage and wage tax payable | ||||||||
| Other payable | ||||||||
| Income tax payable | ||||||||
| Net cash used in operating activities from continuing operations | ( | ) | ( | ) | ||||
| Cash Flows from Financing Activities | ||||||||
| Proceeds of long term loan | ||||||||
| Repayment to related party | ( | ) | ( | ) | ||||
| Net cash provided by financing activities | ||||||||
| Total | $ | $ | ||||||
10
Consolidated Statement of Operations and Comprehensive Loss
| Reclassification 10-Q | Original 10-Q | |||||||
| September 30, 2023 | September 30, 2023 | |||||||
| Foreign currency translation | $ | $ | ||||||
| Comprehensive loss | $ | ( | ) | $ | ( | ) | ||
Cash
The Company considers all highly liquid debt instruments purchased with maturity periods of six months or less to be cash equivalents. The carrying amounts reported in the accompanying balance sheet for cash and cash equivalents approximate their fair value. The Company’s bank account in the United States is protected by FDIC insurance.
The Company’s bank account in the United
States is protected by FDIC insurance. As of September 30, 2024 and June 30, 2024, the Company’s bank account in the United States
had $
As of June 30, 2024, the Company had $
Cash and marketable securities subject to contractual restrictions and not readily available are classified as Restricted cash and marketable securities.
Revenues
Revenue from sale of goods under Topic 606, Revenue from Contracts with Customers, is recognized in a manner that reasonably reflects the delivery of the Company’s products and services to customers in return for expected consideration and includes the following elements:
| ● | executed contract(s) with customers that the Company believes is legally enforceable; |
| ● | identification of performance obligation in the respective contract; |
| ● | determination of the transaction price for each performance obligation in the respective contract; |
| ● | allocation of the transaction price to each performance obligation; and |
| ● | recognition of revenue only when the Company satisfies each performance obligation. |
11
The Company sells health-related products through wholesale and retailers. The Company considers purchase orders to be a contract with a customer. Contracts with customers are considered to be short-term when the time between order confirmation and satisfaction of the performance obligations is equal to or less than one year, and virtually all of the Company’s contracts are short-term. The Company recognizes revenue for the transfer of promised goods to customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods. The Company typically satisfies its performance obligations in contracts with customers upon shipment of the goods. The Company usually does not have any contract assets since the Company has an unconditional right to consideration when the Company has satisfied its performance obligation and payment from customers is not contingent on a future event. Generally, payment is due from customers within 40 to 60 days of the invoice date and 180 days for a major customer, and the contracts do not have significant financing components nor variable consideration. Returns and allowances are not a significant aspect of the revenue recognition process as historically they have been immaterial. All of the Company’s contracts have a single performance obligation satisfied at a point in time and the transaction price is stated in the contract, usually as a price per unit. All estimates are based on the Company’s historical experience; complete satisfaction of the performance obligation, and the Company’s best judgment at the time the estimate is made. Historically, sales returns have not significantly impacted on the Company’s revenue.
Product Revenue
A majority of the Company’s sales are for products sold at a point in time when shipped to customers, for which control is transferred to the customer as goods are delivered to the third-party carrier for shipment. The Company receives payment for the sale of products at the time customers place orders and payment is required prior to shipment. Any payment received prior to shipment is recognized as a contract liability under the account deferred revenue. The Company does not recognize assets associated with costs to obtain or fulfill a contract with a customer.
Shipping and handling activities are performed by third-party carriers for shipment. The Company accounts for these activities as fulfillment costs. Therefore, the Company recognizes the costs of these activities when revenue for the goods is recognized. Shipping and handling costs are included in the cost of sales for all periods presented.
Account Receivable
The Company has been developing its new products
and launching large-scale production since November 2023. As of September 30, 2024 net accounts receivable amounted to $
The Company has not established a reserve for
uncollectible amounts on the newly launched products since the historical data on bad debts in the aging categories of the new products
could not support such estimates. The Company has $
Inventories
Inventories are stated at the lower of cost (first-in,
first-out) or net realizable value. Adjustments to reduce the cost of inventory to its net realizable value are made, if required, for
estimated excess, obsolescence, or impaired balances. For the three months ended September 30, 2024 and the year ended June 30, 2024,
the Company has both $
As of the three months ended on September 30 2024 and the year ended June 30, 2023, inventories comprised:
| September 30, 2024 | June 30, 2024 | |||||||
| Raw materials | $ | $ | ||||||
| Finished goods | ||||||||
| Inventory valuation reserve | ( | ) | ( | ) | ||||
| Subtotal | $ | $ | ||||||
Cost of Goods Sold
The cost of goods sold includes product costs only and is recorded in the same period in which related revenues have been recorded.
12
Property and Equipment
Property and equipment are stated at cost less accumulated depreciation and accumulated impairment losses, if any. Depreciation is calculated using the straight-line method over the estimated useful lives of the assets.
| Machinery and equipment |
As of the three months ended September 30, 2024 and the end of fiscal year 2024, machinery and equipment at cost and accumulated depreciation were:
| September 30, 2024 | June 30, 2024 | |||||||
| Machinery and equipment | $ | $ | ||||||
| Accumulated depreciation | ( | ) | ( | ) | ||||
| Subtotal | $ | $ | ||||||
Equity Method Investments
We apply the equity method of accounting to investments when we have significant influence but not controlling interest in the investee. Judgment regarding the level of influence over each equity method investment includes considering key factors such as ownership interest, representation on the board of directors, participation in policy-making decisions and material intercompany transactions. The Company’s proportionate share of the net income (loss) resulting from these investments is reported under the line item captioned “equity investment” in our Consolidated Statements of Operations. The carrying value of our equity investments is reported in the equity investment method in the Consolidated Balance Sheets. The Company’s equity method investments are reported at cost and adjusted each period for the Company’s share of the investee’s income or loss and dividend paid, if any. The Company’s share of the investee’s income or loss is recorded on a one quarter lag for all equity method investments. The Company classifies distributions received from equity method investments using the cumulative earnings approach on the Consolidated Statements of Cash Flows. The Company assesses investments for impairment whenever events or changes in circumstances indicate that the carrying value of an investment may not be recoverable.
As of September 30, 2024, the investment in Purecell Group Pty Ltd account has a zero balance.
Fair Value Measurements
Fair value measurements are determined using authoritative guidance issued by the FASB, with the exception of the application of the guidance to non-recurring, non-financial assets and liabilities as permitted. Fair value is defined in the authoritative guidance as the price that would be received to sell an asset or paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. A fair value hierarchy was established, which prioritizes the inputs used in measuring fair value into three broad levels as follows:
Level 1—Quoted prices in active markets for identical assets or liabilities.
Level 2—Inputs, other than the quoted prices in active markets, are observable either directly or indirectly.
Level 3—Unobservable inputs based on the Company’s assumptions.
The Company is required to use observable market data if available without undue cost and effort.
The Company’s financial instruments include cash and accounts payable. Management has estimated that the carrying amounts approximate their fair value due to the short-term nature.
Stock-based Compensations
The Company offers restricted stock-based compensation to the employees and contractors. All stock-based compensations are measured based on their values and are expensed over the period during which an employee or a contractor is required to provide service in exchange for the compensations.
Treasury Stock Shares
Treasury shares are recognized at acquisition cost and are presented as a deduction from shareholder’s equity. Upon sale of treasury shares, the realized gain or loss is recognized through the income statement as income or expense from financial assets.
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Loss per Share
Basic earnings (loss) per share are computed by dividing income available to common shareholders by the weighted-average number of common shares available. Diluted earnings (loss) per share is computed similar to basic earnings per share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common shares had been issued and if the additional common shares were dilutive. The Company’s diluted loss per share is the same as the basic loss per share for the three months ended September 30, 2024 and 2023, as there are no potential shares outstanding that would have a diluted effect.
Income Taxes
Income tax expense is based on pretax financial
accounting income. Deferred tax assets and liabilities are recognized for the expected tax consequences of temporary differences between
the tax bases of assets and liabilities and their reported amounts. Valuation allowances are recorded to reduce deferred tax assets to
the amount that will more likely than not be realized. The Company records a valuation allowance against its deferred tax assets of $
The Company accounts for uncertainty in income taxes using a two-step approach to recognizing and measuring uncertain tax positions. The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates that it is more likely than not that the position will be sustained on audit, including resolution of related appeals or litigation processes, if any. The second step is to measure the tax benefit as the largest amount that is more than 50% likely of being realized upon settlement. The Company classifies the liability for unrecognized tax benefits as current to the extent that the Company anticipates payment (or receipt) of cash within one year. Interest and penalties related to uncertain tax positions are recognized in the provision for income taxes.
Recent Accounting Pronouncements
In July 2023, the FASB issued Accounting Standard Update (“ASU”) No. 2023-03, Presentation of Financial Statements (Topic 205), Income Statement - Reporting Comprehensive Income (Topic 220), Distinguishing Liabilities from Equity (Topic 480), Equity (Topic 505), and Compensation – Stock Compensation (Topic 718). As ASU 2023-03 did not provide any new guidance, there was no transition or effective date associated with its adoption. Accordingly, the Company adopted ASU 2023-03 immediately upon its issuance. The adoption of ASU 2023-03 did not have any impact on the Company’s consolidated financial statement presentation or related disclosures.
In December 2023, the FASB issued ASU No. 2023-09 (ASU 2023-09), Income Taxes (Topic 740): Improvements to Income Tax Disclosures to enhance the transparency and decision usefulness of income tax disclosures. ASU 2023-09 is effective for annual periods beginning after December 15, 2024 on a prospective basis. Early adoption is permitted. As the amendments apply to income tax disclosures only, the Company does not expect adoption to have a material impact on our consolidated financial statements.
Management does not believe that any other recently issued, but not yet effective, authoritative guidance, if currently adopted, would have a material impact on the Company’s financial statement presentation or disclosures.
NOTE 3 – OTHER ASSET
As of September 30, 2024 and June 30, 2024, other
assets amounted to $
| September 30, 2024 | June 30, 2024 | |||||||
| Rent deposits | ||||||||
| Total | ||||||||
14
NOTE 4 – RELATED PARTY TRANSACTIONS
During the three months ended September 30, 2024,
the Company’s current majority shareholder advanced $
NOTE 5 – SHORT TERM LOAN
As of September 30, 2024 and June 30, 2024, short
term loan principals amounted to $
Short Term Loans
| As of September 30, 2024 | As of June 30, 2024 | |||||||||||||||||||||||||||||||||||||||
| Maturity | Principal Balance as of July 1, | Accrued Interest | Principal | Interest | Total As of September 30, | Principal Balance as of July 1, | Accrued Interest | Total as of June 30, | 2024 Annualized percentage | |||||||||||||||||||||||||||||||
| Receiving Date | Date | 2024 | Liability | Paid | Paid | 2024 | 2023 | Liability | 2024 | rate | ||||||||||||||||||||||||||||||
| 1/13/2023 | $ | - | $ | $ | - | $ | $ | - | $ | - | $ | $ | % | |||||||||||||||||||||||||||
| 1/19/2023 | - | - | % | |||||||||||||||||||||||||||||||||||||
| 2/6/2023 | - | - | - | - | % | |||||||||||||||||||||||||||||||||||
| 2/25/2023 | - | % | ||||||||||||||||||||||||||||||||||||||
| 3/1/2023 | - | % | ||||||||||||||||||||||||||||||||||||||
| 3/1/2023 | - | - | % | |||||||||||||||||||||||||||||||||||||
| 3/1/2023 | - | - | % | |||||||||||||||||||||||||||||||||||||
| 3/1/2023 | % | |||||||||||||||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||
NOTE 6 – LONG TERM LOAN
As of September 30, 2024 and June 30, 2024, long
term loan principal both amounted to $
As of September 30, 2024 and June 30, 2024, long term loan consisted of the following:
| As of September 30, 2024 | As of June 30, 2024 | |||||||||||||||||||||||
| Shares pledged | Principal | Accrued interest liability | Balance | Accrued Interest liability | Balance | |||||||||||||||||||
| Received long term loan on | $ | $ | $ | $ | $ | |||||||||||||||||||
| Received long term loan on | ||||||||||||||||||||||||
| Received long term loan on | ||||||||||||||||||||||||
| Received long term loan on | ||||||||||||||||||||||||
| Received long term loan on | ||||||||||||||||||||||||
| Received long term loan on | ||||||||||||||||||||||||
| Received long term loan on | ||||||||||||||||||||||||
| Received long term loan on | ||||||||||||||||||||||||
| Received long term loan on | ||||||||||||||||||||||||
| Received long term loan on | ||||||||||||||||||||||||
| Received long term loan on | ||||||||||||||||||||||||
| Received long term loan on | ||||||||||||||||||||||||
| Received long term loan on | ||||||||||||||||||||||||
| Received long term loan on | ||||||||||||||||||||||||
| Received long term loan on | ||||||||||||||||||||||||
| Received long term loan on | ||||||||||||||||||||||||
| Received long term loan on | ||||||||||||||||||||||||
| Received long term loan on | ||||||||||||||||||||||||
| Received long term loan on | ||||||||||||||||||||||||
| Received long term loan on | ||||||||||||||||||||||||
| Received long term loan on | ||||||||||||||||||||||||
| Total | $ | $ | $ | $ | $ | |||||||||||||||||||
15
The principal balance, the scheduled principal payments, the schedule interest payments, and the weighted average interest rates of the long-term loan future maturities are as follows:
| Weighted | ||||||||||||||||
| Scheduled | Schedule | Average | ||||||||||||||
| Principal | Principal | Interest | Interest | |||||||||||||
| Balance | Payments | Payments | Rate | |||||||||||||
| Year Ending September 30 | ||||||||||||||||
| 2025 | % | |||||||||||||||
| 2026 | % | |||||||||||||||
| 2027 | % | |||||||||||||||
| 2028 | % | |||||||||||||||
NOTE 7 – CONVERTIBLE, REDEEMABLE PREFERRED STOCK
During the year ended June 30, 2016, the Company’s
Board of Directors authorized the creation of a series of preferred stock consisting of
The Series A is also subject to adjustments to the Conversion Rate. If the common stock issuable on conversion of the Series A is changed into the same or a different number of shares of any other class or classes of stock, whether by capital reorganization, reclassification, or otherwise (other than a subdivision or combination of shares provided for above), the holders of the Series A shall, upon its conversion, be entitled to receive, in lieu of the common stock which the holders would have become entitled to receive but for such change, a number of shares of such other class or classes of stock that would have been subject to receipt by the holders if they had exercised their rights of conversion of the Series A immediately before that change.
In August 2016, the Company filed an amendment
to its Articles of Incorporation to increase the number of authorized shares of Series A Preferred Stock from 1,000,000 to
There were no preferred shares outstanding as of September 30, 2024 and June 30, 2024.
NOTE 8 – STOCK BASED COMPENSATION
The Company sometimes issues common stock to employees, contractors and consultants for services rendered.
The Company accounts for stock-based payments to employees, contractors and consultants by measuring the cost of services received in exchange for equity awards utilizing the grant date fair value of the awards, with the cost recognized as compensation expense.
The Company recognizes the fair value of stock-based compensation awards in payroll if it is for employees, and operating costs if it is for contractors and consultants, as appropriate, in the Company’s consolidated statements of operations.
No stock based compensation shares were issued during the period.
NOTE 9 – TREASURY STOCK SHARES
On January 22, 2024, the Company issued
NOTE 10 – COMMON STOCK SHARES
As of September 30, 2024 and June 30, 2024, the
Company had both
1) Shares issued for equity investment
16
NOTE 11 – EQUITY INVESTMENT
On June 30, 2020, the Company and Purecell Group
(“Purecell”), a leading anti-aging medical institution in Australia, entered into a Cooperation Agreement, in which the Company
agreed to acquire
On May 11, 2021, Aussie Produce PTY LTD (“AP”)
signed agreement with Purecell to invest $
The following table summarizes the income statement of Purecell.
| From 7/1/2024 to | From 7/1/2023 to | |||||||
| 9/30/2024 | 6/30/2024 | |||||||
| (Unaudited) | (Unaudited) | |||||||
| Sales | $ | $ | ||||||
| Gross profit | ||||||||
| Net loss | ( | ) | ( | ) | ||||
| $ | ( | ) | $ | ( | ) | |||
The following table provides the summary of balance sheet information for Purecell. Because the
| As of September 30, | As of June 30, | |||||||
| 2024 | 2024 | |||||||
| (Unaudited) | (Unaudited) | |||||||
| Total assets | $ | $ | ||||||
| Net assets | ||||||||
| Beginning balance of investment, May 11, 2021 | ||||||||
| Loss on equity investment - accumulated | $ | ( | ) | ( | ) | |||
| Ending balance of investment | ||||||||
NOTE 12 – INCOME TAXES
As of September 30, 2024, the Company had federal
and California income tax net operating loss carryforwards of approximately $
Uncertain Tax Positions
Interest associated with unrecognized tax benefits are classified as income tax, and penalties are classified in selling, general and administrative expenses in the statements of operations. For the three months ended September 30, 2024 and 2023, the Company had unrecognized tax benefits and related interest and penalties expenses. Currently, the Company is not subject to examination by major tax jurisdictions.
17
NOTE 13 – LEASE
The Company has a month-to-month leases agreement
with GKT, Alhambra, LP after the prior lease expired on November 30, 2023. The current monthly rent including monthly management fee is
$
The Company has entered into an operating lease
agreement with SoCal Industrial LLC, Irwindale. The lease term of the office space is from June 1, 2024 to May 31, 2026 after the prior
lease expired on May 31, 2024. The current monthly rent including monthly management fee is $
Operating lease right-of-use assets and liabilities
commencing are recognized at commencement date based on the present value of lease payments over the lease term. For the three months
ending September 30, 2024, the Company recognized approximately $
Because the rate implicit in each lease is not readily determinable, the Company uses its incremental borrowing rate to determine the present value of the lease payments.
Information related to the Company’s operating ROU assets and related lease liabilities are as follows:
| Three months ended September 30, 2024 | ||||
| Cash paid for operating lease liabilities | $ | |||
| Weighted-average remaining lease term | ||||
| Weighted-average discount rate | % | |||
| Minimum future lease payments | $ | |||
The following table presents the amortization of the Company’s lease liabilities under ASC 842 for each of the following years ending September 30:
| 2025 | ||||
| 2026 | ||||
| Total minimum payments | ||||
| Less: imputed interest | ( | ) | ||
| Total lease liability | ||||
| Less: short-term lease liability | ( | ) | ||
| Long-term lease liability | $ |
NOTE 14 – CONCENTRATION
Major vendors
For the year ended September 30, 2024, no vendors accounted for 10% or more of the Company’s purchases and its outstanding accounts payable balances as at year-end dates.
NOTE 15 – SUBSEQUENT EVENTS
On December 30, 2024, the Company issued
On December 30, 2024, the Company issued
On December 30, 2024, another investor issued
On February 24, 2025, the Company received $
18
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
Forward Looking Statement Notice
Certain statements made in this Quarterly Report on Form 10-Q are “forward-looking statements” (within the meaning of the Private Securities Litigation Reform Act of 1995) regarding the plans and objectives of management for future operations. Such statements involve known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements of Crown Marketing, (“we”, “us”, “our” or the “Company”) to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. The forward-looking statements included herein are based on current expectations that involve numerous risks and uncertainties. The Company’s plans and objectives are based, in part, on assumptions involving the continued expansion of business. Assumptions relating to the foregoing involve judgments with respect to, among other things, future economic, competitive and market conditions and future business decisions, all of which are difficult or impossible to predict accurately and many of which are beyond the control of the Company. Although the Company believes its assumptions underlying the forward-looking statements are reasonable, any of the assumptions could prove inaccurate and, therefore, there can be no assurance the forward-looking statements included in this Quarterly Report will prove to be accurate. In light of the significant uncertainties inherent in the forward-looking statements included herein, the inclusion of such information should not be regarded as a representation by the Company or any other person that the objectives and plans of the Company will be achieved.
Overview of Business
Our mission is to invest in innovative technologies integrated with business development in the healthcare ecosystem.
We are focused on protein and peptide small molecular drugs research and development, diagnostic and medical devices with AI cloud computing, cell therapy and regenerational medicine and supplements manufacturing and sales.
On September 3, 2021, the Company entered into an Assets Acquisition Agreement with Wang’s Property Investment & Management LLC to purchase 53 units in 19 real estate properties appraised at $7,626, 286.37 for a purchase price of $7,000,000, The purchase price shall be paid as follows: (i) $1,000,000 on execution of the Agreement, (ii) $2,000,000 within 60 days thereof and (iii) the remainder by April 10, 2022. The Agreement is subject to customary closing conditions, including, satisfactory due diligence. On September 9, 2021, the Company entered into a Supplemental Assets Acquisition Agreement with Wang’s Property Investment & Management LLC to amend and clarify that (i) it was purchasing 19 real estate properties which includes 53 units appraised at $7,626,286.37 for a purchase price of $7,000,000 and (ii) that it will waive and not conduct due diligence in order for the transaction to proceed. The acquisition has not been consummated. With the asset acquisition from Wang’s Property Investment & Management LLC, the Company will diversify its business into property investment and management. By the end of May 2022, the Company ceased the acquisition of Wang’s Property Investment & Management LLC.
Results of Operations
Results of Operations for the three months ended September 30, 2024 compared to the three months ended September 30, 2023.
Sales amounted to $140,126 and $13,808 for the three months ended September 30, 2024 and 2023, respectively. The increase in sales was mainly due to the launch of new products.
Cost of goods sold amounted to $11,335 and $177 for the three months ended September 30, 2024 and 2023, respectively. The increase in the cost of goods sold was mainly due to launching new products.
Gross profit amounted to $128,791 and $13,631 for the three months ended September 30, 2024 and 2023, respectively.
Operating expenses incurred for the three months ended September 30, 2024 and 2023 were $199,650 and $88,569, respectively. The increase was mainly due to increased advertising expense, advertising, and professional expenses.
Our net loss for the three months ended September 30, 2024 and 2023 were $146,967 and $156,980, respectively. The decrease in net loss was mainly due to a decrease in payroll expenses and professional expenses.
19
Liquidity and Capital Resources
Liquidity is the ability of a company to generate funds to support its current and future operations, satisfy its obligations, and otherwise operate on an ongoing basis. Significant factors in the management of liquidity are funds generated by operations, levels of accounts receivable and accounts payable and capital expenditure.
The accompanying consolidated financial statements have been prepared on a going concerning basis, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business. As reflected in the accompanying consolidated financial statements, the Company has incurred recurring net losses. For the three months ended September 30, 2024, the Company recorded a net loss of $146,967, used cash to fund operating activities of $95,578 and at September 30, 2024, had a shareholders’ deficit of $5,389,271. For the three months ended September 30, 2023 the Company recorded a net loss of $156,980, used cash to fund operating activities of $46,743 and at September 30, 2023, had a shareholders’ deficit of $4,525,038. These factors create substantial doubt about the Company’s ability to continue as a going concern. The financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.
The Company is raising the additional capital to achieve profitable operations.
Our cash needs for the three months ended September 30, 2024 were primarily met by loans and advances from current majority shareholder. As of September 30, 2024, we had a cash balance of $49,031. Our new majority shareholders will need to provide all of our working capitals going forward.
Liquidity and Capital Resources for the three months ended September 30, 2024 compared to the three months ended September 30, 2023
| For the Three Months Ended | ||||||||
| September 30 | ||||||||
| 2024 | 2023 | |||||||
| (Unaudited) | (Unaudited) | |||||||
| Net cash used in operating activities | $ | (96,578 | ) | $ | (46,743 | ) | ||
| Net cash provided by financing activities | 88,371 | 44,441 | ||||||
| Effect of exchange rate change on cash | 1,295 | 2,778 | ||||||
| Net increase (decrease) in cash | (5,912 | 476 | ||||||
| Cash beginning of period | 54,943 | 54,150 | ||||||
| Cash end of period | $ | 49,031 | $ | 54,626 | ||||
Operating Activities
Net cash used in operating activities was $96,578 for the three months ended September 30, 2024, an increase of $48,835 compared to cash used in operating activities of $46,743 for the three months ended September 30, 2023. The increase in net cash used in operating activities was mainly due to the increases of short term loan interest and inventory, offset by a decrease in account receivable, an increase in account payable, and supplier advance for the three months ended September 30, 2024 compared to the same period in 2023.
Investing Activities
None.
20
Financing Activities
Net cash provided by financing activities was $88,371 for the three months ended September 30, 2024, compared to $44,441 net cash provided by financing activities for the three months ended September 30, 2023. The increase in net cash provided by financing activities for the three months ended September 30, 2023 was primarily attributable to a increase in amount of proceeds from issuance of common stocks, short term loan and long term loan.
Financial Position
As of September 30, 2024, we had $49,031 in cash, negative working capital of $3,377,524 and total deficit attributable to owners of the Company of $5,307,214. As of June 30, 2024, we had $54,943 in cash, negative working capital of $3,367,989 and total deficit attributable to owners of the Company of $10,248,681.
Critical Accounting Policies and Estimates
Estimates
The preparation of these consolidated financial statements (“CFS”) in accordance with accounting principles generally accepted in the United States of America (“GAAP”) 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 dates of the consolidated financial statements and the reported amounts of net sales and expenses during the reported periods. Actual results may differ from those estimates and such differences may be material to the financial statements. The more significant estimates and assumptions by management include among others, the fair value of shares of common stock issued for services. The current economic environment has increased the degree of uncertainty inherent in these estimates and assumptions.
Revenues
Revenue from sale of goods under Topic 606, Revenue from Contracts with Customers, is recognized in a manner that reasonably reflects the delivery of the Company’s products and services to customers in return for expected consideration and includes the following elements:
date
| ● | executed contract(s) with customers that the Company believes is legally enforceable; |
| ● | identification of performance obligation in the respective contract; |
| ● | determination of the transaction price for each performance obligation in the respective contract; |
| ● | allocation of the transaction price to each performance obligation; and |
| ● | recognition of revenue only when the Company satisfies each performance obligation. |
Inventories
Inventories are stated at the lower of cost (first-in, first-out) or net realizable value. Adjustments to reduce the cost of inventory to its net realizable value are made, if required, for estimated excess, obsolescence, or impaired balances. For the three months ended September 30, 2024 and 2023, the Company has made provision of $9,400 and $0 for inventory in regards to slow moving or obsolete items. As of September 30, 2024 and June 30, 2024, net inventories amounted to $119,116 and $83,141, respectively.
Fair Value Measurements
Fair value measurements are determined using authoritative guidance issued by the FASB, with the exception of the application of the guidance to non-recurring, non-financial assets and liabilities as permitted. Fair value is defined in the authoritative guidance as the price that would be received to sell an asset or paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. A fair value hierarchy was established, which prioritizes the inputs used in measuring fair value into three broad levels as follows:
Level 1—Quoted prices in active markets for identical assets or liabilities.
21
Level 2—Inputs, other than the quoted prices in active markets, are observable either directly or indirectly.
Level 3—Unobservable inputs based on the Company’s assumptions.
The Company is required to use observable market data if available without undue cost and effort.
The Company’s financial instruments include cash and accounts payable. Management has estimated that the carrying amounts approximate their fair value due to the short-term nature.
Loss per Share
Basic earnings (loss) per share are computed by dividing income available to common shareholders by the weighted-average number of common shares available. Diluted earnings (loss) per share is computed similar to basic earnings per share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common shares had been issued and if the additional common shares were dilutive. The Company’s diluted loss per share is the same as the basic loss per share for the three months ended September 30, 2024 and 2023, as there are no potential shares outstanding that would have a dilutive effect.
Income Taxes
Income tax expense is based on pretax financial accounting income. Deferred tax assets and liabilities are recognized for the expected tax consequences of temporary differences between the tax bases of assets and liabilities and their reported amounts. Valuation allowances are recorded to reduce deferred tax assets to the amount that will more likely than not be realized. The Company recorded the valuation allowance against its deferred tax assets of 8,071,201 as of September 30, 2024 and $7,924,234 as of June 30, 2024.
The Company accounts for uncertainty in income taxes using a two-step approach to recognizing and measuring uncertain tax positions. The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates that it is more likely than not that the position will be sustained on audit, including resolution of related appeals or litigation processes, if any. The second step is to measure the tax benefit as the largest amount that is more than 50% likely of being realized upon settlement. The Company classifies the liability for unrecognized tax benefits as current to the extent that the Company anticipates payment (or receipt) of cash within one year. Interest and penalties related to uncertain tax positions are recognized in the provision for income taxes.
Recent Accounting Pronouncements
See Footnote 2 of the financial statements for a discussion of recently issued accounting standards.
Contractual Obligations and Off-Balance Sheet Arrangements
We do not have any contractual obligations or off-balance sheet arrangements.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
As a “smaller reporting company” as defined by Item 10 of Regulation S-K, the Company is not required to provide information required by this Item.
22
Item 4. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we conducted an evaluation of our disclosure controls and procedures, as such term is defined under Rule 13a-15(e) and Rule 15d-15(e) promulgated under the Securities Exchange Act of 1934, as amended (Exchange Act), as of September 30, 2023. Based on this evaluation, our principal executive officer and principal financial officer have concluded that our disclosure controls and procedures are not effective to ensure that information required to be disclosed by us in the reports we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms and that our disclosure and controls are not designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is accumulated and communicated to our management, including our principal executive officer and principal financial officer, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.
The matters involving internal controls and procedures that our management considered to be material weaknesses under the standards of the Public Company Accounting Oversight Board were: (1) lack of a functioning audit committee, resulting in ineffective oversight in the establishment and monitoring of required internal controls and procedures; (2) a lack of accounting staff and resources with appropriate knowledge of generally accepted accounting principles in the United States (“U.S. GAAP”) and SEC reporting and compliance requirements; (3) a lack of independent directors and (4) a lack of an effective review process by the accounting manager and management.
Management believes that the material weaknesses set forth in above did not have an effect on our financial results. However, management believes that the lack of a functioning audit committee and the lack of a majority of outside directors on our board of directors’ results in ineffective oversight in the establishment and monitoring of required internal controls and procedures, which could result in a material misstatement in our financial statements in future periods.
Changes in Internal Controls
There have been no changes in our internal controls over financial reporting during the period ended September 30, 2024 that have materially affected or are reasonably likely to materially affect our internal controls.
23
PART II — OTHER INFORMATION
Item 1. Legal Proceedings.
We are not a party to or otherwise involved in any legal proceedings.
In the ordinary course of business, we are from time to time involved in various pending or threatened legal actions. The litigation process is inherently uncertain and it is possible that the resolution of such matters might have a material adverse effect upon our financial condition and/or results of operations. However, in the opinion of our management, other than as set forth herein, matters currently pending or threatened against us are not expected to have a material adverse effect on our financial position or results of operations.
Item 1A. Risk Factors.
As a “smaller reporting company” as defined by Item 10 of Regulation S-K, the Company is not required to provide information required by this Item.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
Not applicable.
Item 3. Defaults Upon Senior Securities.
There have been no events which are required to be reported under this Item.
Item 4. Mine Safety Disclosures.
Not applicable.
Item 5. Other Information.
Item 6. Exhibits and Financial Statement Schedules
| 31.1 | Certification of President and Secretary. Filed herewith. | |
| 31.2 | Certification of Chief Financial Officer. Filed herewith. | |
| 32.1 | Certification pursuant to 18 U.S.C. Section 1350 of President and Secretary. Filed herewith. | |
| 32.2 | Certification pursuant to 18 U.S.C. Section 1350 of Chief Financial Officer. Filed herewith. | |
| 101.INS* | Inline XBRL Instance Document | |
| 101.SCH* | Inline XBRL Taxonomy Extension Schema Document | |
| 101.CAL* | Inline XBRL Taxonomy Extension Calculation Linkbase Document | |
| 101.DEF* | Inline XBRL Taxonomy Extension Definition Linkbase Definition | |
| 101.PRE* | Inline XBRL Taxonomy Extension Presentation Linkbase Document | |
| 101.LAB* | Inline XBRL Taxonomy Extension Label Linkbase Document | |
| 104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) |
24
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| AMERICA GREAT HEALTH | ||
| Dated: March 27, 2025 | By: | /s/ Quinn Chen |
| Quinn Chen | ||
| Financial Officer | ||
25
EXHIBIT 31.1
CERTIFICATION
I, Mike Wang, certify that:
| 1. | I have reviewed this quarterly report on Form 10-Q of America Great Health; |
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
| 4. | The registrant’s other certifying officer(s) and I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f) for the registrant and have: |
| (a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
| (b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles |
| (c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
| (d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
| 5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
| (a) | All significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
| (b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
| Dated: March 27, 2025 | By: | /s/ Mike Wang |
| Mike Wang | ||
| President, Secretary |
EXHIBIT 31.2
CERTIFICATION
I, Quinn Chen, certify that:
| 1. | I have reviewed this quarterly report on Form 10-Q of America Great Health; |
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
| 4. | The registrant’s other certifying officer(s) and I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f) for the registrant and have: |
| (a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
| (b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles |
| (c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
| (d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
| 5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
| (a) | All significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
| (b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
| Dated: March 27, 2025 | By: | /s/ Quinn Chen |
| Quinn Chen | ||
| Chief Financial Officer |
EXHIBIT 32.1
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of America Great Health (the “Company”) on Form 10-Q for the year ending September 30, 2024, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Mike Q. Wang, President and Secretary of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
| (1) | The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities and Exchange Act of 1934; and |
| (2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
| Dated: March 27, 2025 | By: | /s/ Mike Q. Wang |
| Mike Q. Wang | ||
| President, Secretary |
EXHIBIT 32.2
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of America Great Health (the “Company”) on Form 10-Q for the year ending September 30, 2024, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Mike Q. Wang, President and Secretary of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
| (1) | The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities and Exchange Act of 1934; and |
| (2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
| Dated: March 27, 2025 | By: | /s/ Quinn Chen |
| Quinn Chen | ||
| Chief Financial Officer |