Park Ha Biological Technology Co., Ltd 6-K, filed Aug 26, 2025
Park Ha Biological Technology Co., Ltd. (BYAH)
About this 6-K
Park Ha Biological Technology Co., Ltd filed this 6-K on August 26, 2025.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16
UNDER THE SECURITIES EXCHANGE ACT OF 1934
For the month of August
Commission File Number:
901, Building C, Phase 2,
Wuxi International Life Science Innovation Campus
196 Jinghui East Road
Xinwu District, Wuxi, Jiangsu Province
People’s Republic of China 214000
+86 400 012 7562
(Address of principal executive offices)
Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F:
Form 20-F ☒ Form 40-F ☐
EXHIBIT INDEX
| Exhibit No. | Description | |
| 99.1 | Operating and Financial Review and Prospects in Connection with the Unaudited Consolidated Financial Statements for the Six Months Ended April 30, 2025 and 2024 | |
| 99.2 | Unaudited Consolidated Financial Statements for the Six Months Ended April 30, 2025 and 2024 | |
| 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 Document. | |
| 101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document. | |
| 101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document. | |
| 104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101). |
1
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.
| Park Ha Biological Technology Co., Ltd. | ||
| Date: August 26, 2025 | By: | /s/ Xiaoqiu Zhang |
| Name: | Xiaoqiu Zhang | |
| Title: | Chief Executive Officer, Chairperson of the Board of Directors | |
2
Exhibit 99.1
MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our consolidated financial statements and related notes that appear in this report. In addition to historical consolidated financial information, the following discussion contains forward-looking statements that reflect our plans, estimates, and beliefs. Our actual results could differ materially from those discussed in the forward-looking statements. Factors that could cause or contribute to these differences include those discussed below and elsewhere in this report. All amounts included herein with respect to the six months ended April 30, 2025 are derived from our consolidated financial statements included elsewhere in this report. Our financial statements have been prepared in accordance with U.S. Generally Accepted Accounting Principles, or U.S. GAAP.
Overview
Our business primarily consists of developing our private skincare label, direct skincare products sales and franchise alliances promotions. Our “Park Ha” brand focuses on providing solutions for problematic skin. Established in 2016, the brand had its first store launched in 2017. In addition to the three stores directly operated by Park Ha Jiangsu, as of April 30, 2025 and 2024, we had 39 and 43 franchisees in China, of which 38 and 41 franchisees operate under the store name “Park Ha”. As of April 30, 2025 and 2024, we had one and two franchisees operate under a different brand name, “Geni” or “歌妮”. XinZhan has entered into supplemental agreements with these four franchisees that operate stores under a different brand name, pursuant to which each such franchisee is allowed to keep the existing store name and does not have to change the store name to “Park Ha”. The franchisees operating under the “Geni” or “歌妮” brand sell products from the “Park Ha” brand and other third-party brands with XinZhan’s permission.
Our operating subsidiaries specialize in providing skincare and cosmetic products under our brand name “Park Ha” in China. Our operating subsidiaries develop our proprietary beauty products and offer complimentary after-sales beauty services in our physical stores. Park Ha Jiangsu, in addition to operating our three physical stores, is the research and development center focusing on skincare products development and improvement for sensitive skin. XinZhan leads the marketing and promotional efforts and is the entity in charge of our franchising business. Park Ha Shanghai is a training center for our franchisee staff. As part of our value-added service for our products, our directly operated stores and franchisees offer “light beauty experience”, a quick complimentary after-sales beauty service performed in the stores. Light beauty experience is offered to our customers as an effective way to demonstrate how our products are used in order to deliver the intended results.
Our revenues mainly consist of (i) products sales and (ii) franchise fees. Our total revenue increased by $386,269 to $1,239,197 for the six months ended April 30, 2025 from $852,928 for the six months ended April 30, 2024. Products sales accounted for 33% of the total revenue and franchise fees accounted for 67% of the total revenue for the six months ended April 30, 2025. Products sales accounted for 35% of the total revenue and franchise fees accounted for 65% of the total revenue for the six months ended April 30, 2024.
As of April 30, 2025, the 39 franchisees locate in the following regions: 22 in Jiangsu Province, 4 in Shandong Province, 3 in Shaanxi Province, 1 in Anhui Province, 1 in Liaoning Province, 1 in Shanxi Province, 1 in Hainan Province, 1 in Henan Province, 1 in Heilongjiang Province, 1 in Guizhou Province, 1 in Zhejiang Province, 1 in Tianjin, and 1 in Hebei Province, forming a complete commercial network.
As of April 30, 2024, the 43 franchisees locate in the following regions: 20 in Jiangsu Province, 5 in Guangdong Province, 4 in Shandong Province, 3 in Shaanxi Province, 1 in Anhui Province, 1 in Liaoning Province, 1 in Shanxi Province, 1 in Hainan Province, 1 in Henan Province, 1 in Heilongjiang Province, 1 in Guizhou Province, 1 in Sichuan Province, 1 in Zhejiang Province, 1 in Tianjin, and 1 in Hebei Province, forming a complete commercial network.
Factors Affecting Our Results of Operations
Our operating subsidiaries currently derive a majority of their revenues from the sale of products and receipt of franchise fees. Park Ha intends to continually enhance its services and cross-sell new services to existing customers and acquire new customers by increasing market penetration with a deeper market coverage and broader geographical reach. Maintaining and enhancing the recognition, image and acceptance of our brand are important to Park Ha’s ability to differentiate our products from and to compete effectively with our peers. Our brand image, however, could be jeopardized if we fail to maintain high product quality, pioneer and keep pace with evolving technology trends, or timely fulfill the orders for our products. If we fail to promote our brand or to maintain or enhance our brand recognition and awareness among our customers, or if we are subject to events or negative allegations affecting our brand image or the publicly perceived position of our brand, our business, results of operations and financial condition could be adversely affected.
Our business is in the beauty industry, which is now experiencing rapid technological and model changes. Failure to anticipate technological innovations or adapt to such innovations in a timely manner, or at all, may result in our products and services becoming obsolete or suffering unpredictable intervals.
We monitor a number of financial and non-financial key business metrics to evaluate on a regular basis business, growth trends and company budgets, measure the effectiveness of our sales and marketing efforts, and assess operational efficiencies. We believe that some of the most important measures include gross profit margin, operating margin, net income (loss) as well as the non-financial key metrics discussed below which may differ from other similarly titled metrics used by other companies, securities analysts or investors.
Number of contracts for our franchisees
We monitor the number of contracts with customers for our franchisees. The number of contracts will directly impact our results of operations, including revenues and gross profit margins for the foreseeable future. As of April 30, 2025 and 2024, we had 39 and 43 franchisees in China, of which 38 and 41 franchisees operate under the store name “Park Ha”. As of April 30, 2025 and 2024, we had one and two franchisees operate under a different brand name. XinZhan has entered into supplemental agreements with these franchisees that operate stores under a different brand name, pursuant to which each such franchisee is allowed to keep the existing store name and does not have to change the store name to “Park Ha” .The business relationships between us and our independent franchisees are built on our standards and policies that is of fundamental importance to the overall performance and protection of the “Park Ha” brand.
Expansion of our geographic coverage
We believe there is a substantial opportunity to further grow our customer base by continuing to make significant investments in sales, marketing and brand building. Our ability to attract new customers will depend on a number of factors, including competitive dynamics in our targeted new geographical markets in China. We intend to expand our marketing and sales team with a focus on increasing sales in targeted geographies and customer segments. This will play a pivotal role in driving the company’s growth in terms of sales revenue and franchise fee revenue.
2
Results of Operations
For the six months ended April 30, 2025 and 2024
The following table presents a summary of the Company’s comprehensive operating performance for the six months ended April 30, 2025 and 2024.
The historical performance listed below does not necessarily indicate expected performance for any future period.
| For the six months ended April 30, | Change | |||||||||||||||
| 2025 | 2024 | Amount | % | |||||||||||||
| Revenues, net | 1,239,197 | 852,928 | 386,269 | 45 | % | |||||||||||
| Cost of revenues | 58,500 | 98,109 | (39,609 | ) | (40 | )% | ||||||||||
| Gross profit | 1,180,697 | 754,819 | 425,878 | 56 | % | |||||||||||
| Selling and marketing expenses | 229,775 | 157,733 | 72,042 | 46 | % | |||||||||||
| General and administrative expenses | 20,632,549 | 452,098 | 20,180,451 | 4464 | % | |||||||||||
| Research and development expenses | 26,087 | 20,083 | 6,004 | 30 | % | |||||||||||
| Allowance for expected credit losses | 7,883 | 32,537 | (24,654 | ) | (76 | )% | ||||||||||
| Operating (expenses) income | (19,715,597 | ) | 92,368 | (19,807,966 | ) | (21445 | )% | |||||||||
| Other income | 58,154 | - | 58,154 | - | ||||||||||||
| Interest income | 416 | 1,051 | (635 | ) | (60 | )% | ||||||||||
| Interest expense | 20 | - | 20 | - | ||||||||||||
| Other expense | - | 133 | (133 | ) | (100 | )% | ||||||||||
| Total other income (expenses) | 58,550 | 918 | 57,632 | 6278 | % | |||||||||||
| (Loss) Income before tax | (19,657,048 | ) | 93,286 | (19,750,334 | ) | (21172 | )% | |||||||||
| Income tax expense (benefit) | 178,946 | 44,386 | 134,560 | 303 | % | |||||||||||
| Net (loss) income | (19,835,994 | ) | 48,900 | (19,884,894 | ) | (40664 | )% | |||||||||
Revenue
The sales revenue consists of the following:
| For the six months ended | Change | |||||||||||||||||||||||
| April 30, 2025 | April 30, 2024 | Amount | % | |||||||||||||||||||||
| Products sales – Non-franchisees | 208,701 | 17 | % | 164,958 | 19 | % | 43,743 | 27 | % | |||||||||||||||
| Product sales – Franchisees | 195,737 | 16 | % | 136,000 | 16 | % | 59,737 | 44 | % | |||||||||||||||
| Franchise fees | 834,759 | 67 | % | 551,970 | 65 | % | 282,789 | 51 | % | |||||||||||||||
| Amount | 1,239,197 | 100 | % | 852,928 | 100 | % | 386,269 | 45 | % | |||||||||||||||
Direct costs consist of the following:
| For the six months ended | Change | |||||||||||||||||||||||
| April 30, 2025 | April 30, 2024 | Amount | % | |||||||||||||||||||||
| Products sales – Non-franchisees | 10,316 | 18 | % | 11,764 | 12 | % | (1,448 | ) | (12 | )% | ||||||||||||||
| Product sales – Franchisees | 37,566 | 64 | % | 28,460 | 29 | % | 9,106 | 32 | % | |||||||||||||||
| Franchise fees | 10,618 | 18 | % | 57,885 | 59 | % | (47,267 | ) | (82 | )% | ||||||||||||||
| Amount | 58,500 | 100 | % | 98,109 | 100 | % | (39,609 | ) | (40 | )% | ||||||||||||||
3
The gross profit consists of the following:
| For the six months ended | Change | |||||||||||||||||||||||
| April 30, 2025 | April 30, 2024 | Amount | % | |||||||||||||||||||||
| Products sales – Non-franchisees | 198,385 | 17 | % | 153,194 | 20 | % | 45,191 | 29 | % | |||||||||||||||
| Product sales – Franchisees | 158,171 | 13 | % | 107,540 | 15 | % | 50,631 | 47 | % | |||||||||||||||
| Franchise fees | 824,141 | 70 | % | 494,085 | 65 | % | 330,056 | 67 | % | |||||||||||||||
| Amount | 1,180,697 | 100 | % | 754,819 | 100 | % | 425,878 | 56 | % | |||||||||||||||
The gross profit margin consists of the following:
| For the six months ended | Change | |||||||||||
| April 30, 2025 | April 30, 2024 | % | ||||||||||
| Products sales – Non-franchisees | 95 | % | 93 | % | 2 | % | ||||||
| Product sales – Franchisees | 81 | % | 79 | % | 2 | % | ||||||
| Franchise fees | 99 | % | 90 | % | 9 | % | ||||||
| Amount | 95 | % | 88 | % | 7 | % | ||||||
For the six months ended April 30, 2025, our total revenue was $1,239, 197, while for the six months ended April 30, 2024, our total revenue was $852,928, increased by $386,269, or 45%, which was primarily attributable to the increase in franchise fees and products sales.
Our products sales revenue increased by $103,480, or 34%, from $300,958 for the six months ended April 30, 2024 to $404,438 for the six months ended April 30, 2025, which is mainly because with the improvement of the company’s brand awareness, the sales business is in the trend of increasing year by year.
Products sales — Non-franchisees
Product sales revenue from non-franchisees increased by $43,743, or 27%, from $164,958 for the six months ended April 30, 2024 to $208,701 for the six months ended April 30, 2025. Sales revenue from non-franchisees accounted for 17% and 19% of the total revenue, respectively, for the six months ended April 30, 2025 and 2024. Product sales revenue from non-franchisees for the six months ended April 30, 2025 and 2024 remained relatively stable.
The cost of products sales to non-franchise for the six months ended April 30, 2025 was $10,316, decreased by $1,448 or 12% compared to $11,764 for the six months ended April 30, 2024. For the six months ended April 30, 2025 and 2024, cost of products sales to non-franchisees accounted for 18% and 12% of the total cost of revenue, respectively. The above decrease in cost of revenue was mainly due to:(i) compared with the previous period, the company phased out certain older products and reduced sales of other legacy products with higher unit costs; (ii) the newly introduced product varieties and their sales volumes remained relatively low.
4
For the six months ended April 30, 2025 and 2024, gross profit of products sales to non-franchisees accounted for 17% and 20% of the total gross profit, respectively. For the six months ended April 30, 2025, gross profit and gross profit margin were $198,385 and 95%, respectively, while for the six months ended April 30, 2024, gross profit and gross profit margin were $153, 194 and 93%, respectively. The increase of gross profit margin of products sales to non-franchisees for the six months ended April 30,2025, which is mainly because with the improvement of the company’s brand awareness, the sales business is in the trend of increasing year by year.
Product sales — Franchisees
Product sales revenue from franchisees increased by $59,737, or 44%, from $136,000 for the six months ended April 30, 2024 to $195,737 for the six months ended April 30, 2025. Sales revenue from franchisees accounted for 16% and 16% of the total revenue, respectively, for the six months ended April 30, 2025 and 2024. Product sales revenue from franchisees for the six months ended April 30, 2025 and 2024 remained a relatively stable growth trend.
The cost of products sales to franchisees for the six months ended April 30, 2025 was $37,566 representing an increase of $9,106, or 32%, compared to $28,460 for the six months ended April 30, 2024. For the six months ended April 30, 2025 and 2024, the cost of products sales to franchisees accounted for 64% and 29% of the total cost of revenue, respectively. The above increase in cost of revenue was mainly due to higher sales volumes.
For the six months ended April 30, 2025 and 2024, gross profit of products sales to franchisees accounted for 13% and 15% of the total gross profit, respectively. The gross profit and gross profit margin for the six months ended April 30, 2025 were $158,171 and 81%, respectively. The gross profit and gross profit margin for the six months ended April 30, 2024 were $107,540 and 79%, respectively. The increase of gross profit margin of products sales to non-franchisees for the six months ended April 30, 2025, which is mainly because with the improvement of the company’s brand awareness, the sales business is in the trend of increasing year by year.
Franchise fees
For the six months ended April 30, 2025, the total revenue from franchise fees was $834,759, with a cost of franchise fees of $10,618, compared to $551,970 and $57,885 for the six months ended April 30, 2024. Gross profit of franchise fees increased by $330,056 for the same period. For the six months ended April 30, 2025 and 2024, the total revenue from franchise fees accounted for 67% and 65% of the total revenue, respectively. For the six months ended April 30, 2025 and 2024, the cost of franchise fees accounted for 18% and 59% of the total cost of revenue, respectively. For the six months ended April 30, 2025 and 2024, the gross profit of franchise fees accounted for 70% and 65% of the total gross profit. The main reason is that:
Roll-forward of franchisees
The following table provides a roll-forward of our franchise contracts during the six months ended April 30, 2025 and 2024:
| Number of | Number of | |||||||||||||||
| Franchise | Franchise | |||||||||||||||
| Contracts | Contracts | |||||||||||||||
| at the | Number of | Number of | at the | |||||||||||||
| Beginning of | Newly Joined | Terminated | End of | |||||||||||||
| Period | Franchisees | Franchisees | Period | |||||||||||||
| For the fiscal year ended April 30, 2024 | 38 | 5 | - | 43 | ||||||||||||
| For the fiscal year ended April 30, 2025 | 45 | 2 | 8 | 39 | ||||||||||||
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As of April 30, 2025, we had 39 franchisees as a result of (i) 33 franchisees renewed their contracts (“2025 Renewed Franchisees”) and 4 franchisees terminated their contracts in May 2025; (ii) 2 newly contracted franchisees.
The revenue for the six months ended April 30, 2025 comprised the revenue from (i) 2025 Renewed Franchisees of US$748,993, and (ii) newly contracted franchisees of US$8,253.
As of April 30, 2024, we had 43 franchisees as a result of (i) renewal of the contracts with 38 franchisees (“2024 Renewed Franchisees”) upon their expiry; (ii) 5 newly contracted franchisees.
The revenue for the six months ended April 30, 2024 comprised the revenue from (i) 2024 Renewed Franchisees of US$541,887, and (ii) newly contracted franchisees of US$10,083.
Our franchise fees are recognized over the franchise term as the performance obligation is satisfied, typically spanning one year. For details, see “Note 2 — Summary of Significant Accounting Policies — Revenue Recognition.” The revenue for the six months ended April 30, 2025 increased by appropriately 51% as compared to the six months ended April 30, 2024. The primary reason is that (i) compared to the previous period, newly signed franchisees contributed an increase of $107,614 in revenue; (ii) franchisees signed in the previous period but whose franchise fees were not received by the reporting date of the previous period did not recognize revenue in the previous period, resulting in a $162,895 increase in revenue for this period compared to the previous period; (iii) franchisees whose franchise fees were not received by the reporting date of the previous period did not recognize revenue for the new period’s franchise fees in the previous period, leading to a $57,458 increase in revenue for this period compared to the previous period; and (iv)terminated franchisees caused a decrease of $39,745 in revenue.
Cost of franchise fees mainly includes the training service cost and advertising support provided for franchisees. The main reason for the cost reduction is that the company hired external organizations from November 2023 to April 2024 to train franchisees, and organized internal employees to train franchisees from November 2024 to April 2025. The cost saved compared with the previous period is mainly due to the training cost of franchisees.
Selling and marketing expenses
For the six months ended April 30, 2025, our selling and marketing expenses were $229,775, while for the six months ended April 30, 2024, our selling and marketing expenses were $157,733, representing an increase of $72,042, or 46%. The main reason for the increase is (i) the increase of $37,015 in payroll and welfare expenses based on the increased directly-operated store and increased sales staff and increased annual bonuses；(ii) the increase in store rental expenses and renovation costs of $31,941 as the increased directly-operated store.
6
General and administrative expenses
For the six months ended April 30, 2025, our general and administrative expenses were $20,632,549, while for the six months ended April 30, 2024, our general and administrative expenses were $452,098, representing an increase of $20,180,451 or 4464%. The increase was primarily attributable to the following reasons: (i) the increase in Share-based Payment Expense of $19,950,000 from $nil for the six months ended April 30, 2024 to $19,950,000 for the six months ended April 30, 2025 as the vested immediately 2025 Share Incentive Award ; and (ii) the increase in professional expenses of $112,145 from $268,738 for the six months ended April 30, 2024 to $380,883 for the six months ended April 30, 2025 as the payment for Investor Relations Website Press Release and NASDAQ; and (iii) the increase in payroll and welfare expenses of $ 96,964 as the increased annual bonuses.
Research and development expenses
For the six months ended April 30, 2025, our R&D expenses were $26,087, while for the six months ended April 30, 2024, our R&D expenses were $20,083, representing an increase of $6,004 . R&D expenses for the six months ended April 30, 2025 and 2024 remained relatively stable.
Allowance for expected credit losses
Allowance for expected credit losses derives from allowances on accounts receivable and loan receivable from franchisees, based on past collection experience, current economic conditions, future economic conditions and changes in the Company’s customer collection trends. Allowance for expected credit losses of accounts receivables and franchisee loan and other receivables were $7,883 for the six months ended April 30, 2025, representing a decrease of $24,654 or 76% from $32,537 for the six months ended April 30, 2024.
Allowance for accounts receivables decreased from $231,851 as of October 31, 2024 to $226,319 as of April 30, 2025, a decrease of $5,532 or 2%. No significant changes have occurred.
Allowance for loans receivables from franchisees increased from $55,520 as of October 31, 2024 to $62,455 as of April 30, 2025, an increase of $6,935 or 12%. The main reason is that as of 30 April 2025, there was $430,501 in overdue accounts, of which $45,388 had been outstanding for more than one year and had been fully provisioned for impairment.
Allowance for other receivables decreased from $51,013 as of October 31, 2024 to $50,380 as of April 30, 2025, a decrease of $633 or 1%. No significant changes have occurred.
Interest income (expense)
Interest income mainly come from deposit interest income. Interest income for the six months ended April 30, 2025 and 2024 was approximately $416 and $1,051, respectively.
Interest expense mainly come from the bank transfer fees. Interest expense for the six months ended April 30, 2025 and 2024 was approximately $20 and $nil, respectively.
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Income tax expense (benefit)
The income tax expense for the six months ended April 30, 2025 and 2024 were approximately $178,946 and $44,386, respectively. Under the PRC Enterprise Income Tax Law, companies are generally subject to the enterprise income tax at the rate of 25%.
In accordance with the implementation rules of EIT Laws, a qualified “High and New Technology Enterprise” (“HNTE”) is eligible for a preferential tax rate of 15%. The HNTE certificate is effective for a period of three years. An entity could re-apply for the HNTE certificate when the prior certificate expires. “Park Ha Jiangsu” obtained its HNTE certificate on November 6, 2024. Therefore, “Park Ha Jiangsu” is eligible to enjoy a preferential tax rate of 15% from 2024 to 2026 to the extent it has taxable income under the EIT Law.
Announcement No. 12 [2023] of the Ministry of Finance and the State Taxation Administration stipulates that the preferential corporate income tax (CIT) policy for small and low-profit enterprises (SLPEs) — reducing taxable income by 25% and applying a 20% tax rate — shall be extended until December 31, 2027.Wuxi Muchen and Wuxi Mufeng, with annual taxable income not exceeding RMB 1 million, qualify as SLPEs. As such, 25% of their taxable income is subject to CIT at the reduced rate of 20%.
Announcement No. 12 [2023] of the Ministry of Finance and the State Taxation Administration on Further Tax and Fee Support Policies for Micro and Small Enterprises and Individual Businesses From January 1, 2023, to December 31, 2027, 50% of the personal income tax (PIT) payable on the portion of an individual business’s annual taxable income not exceeding RMB 2 million shall be exempted. Individual businesses may enjoy this preferential policy cumulatively with other existing PIT incentives. Huishan Yiyayue, as an individual business with taxable income not exceeding RMB 1 million, is eligible for a 50% reduction in PIT on its business income, which is subject to the five-tier progressive tax rates.
The income tax expense for the six months ended April 30, 2025 was adjusted by (i) the increase in the income tax expense by $5,059,645, of which $19,132 because Park Ha Jiangsu enjoyed a preferential rate of 15%, of which $5,045,947 because Park Ha Cayman is not subject to tax, of which $(4221) because Wuxi Muchen and Wuxi Mufeng enjoyed a preferential rate of 5% for small and Low-Profit Enterprises, of which $(1213) because Huishan Yiyayue enjoyed a preferential rate of 3% for Individual Businesses (Self-Employed); (ii) the decrease in the income tax expense of $3,913 due to the effect of super deduction of R&D expenses of $26,087;and (iii)the increase in the income tax expense by 35,614 because Park Ha Jiangsu and Park Ha Shanghai recorded net loss for the six months ended April 30,2025; and (iv) the increase in the income tax expense of $1,862 due to the effect of non-deductible expense of $12,295.
The income tax expense for the six month ended April 30, 2024 was adjusted by (i) the decrease in the income tax expense of $7,899 as a result of increased loss carried forward of $39,495; (ii) decrease in the income tax expense of $3,013 due to the effect of super deduction of R&D expenses of $15,063; and (iii) the increase by $2,706 because Park Ha Jiangsu and Park Ha Shanghai enjoyed a preferential rate of 20% and recorded net loss for the six months ended April 30, 2024.; partially offset by the increase in the income tax expense of $13,472 due to the effect of non-deductible expenses of $54,459.
8
Net (Loss) income
As a result of the foregoing, for the six months ended April 30, 2025, our net loss was $19,835,994, compared to net income $48,900 for the six months ended April 30, 2024, representing a decrease of $19,884,894 or 40664%.
Working capital and capital resources
As of April 30, 2025, we had $1,351,285 in cash as compared to $547,498 as of October 31, 2024. The Company’s working capital and other capital needs mainly come from shareholders’ equity contributions and operating cash flows. Cash is needed to pay for inventory, wages, sales expenses, rent, income tax, and other operating expenses. All of the cash is located in China.
Although the Company’s management believes that the cash generated from operations will be sufficient to meet the Company’s normal working capital needs, its ability to service its current debts will depend on its future realization of its current assets for at least the next 12 months. The management has considered historical experience, economic conditions, trends in the beauty industry, the collectability of accounts receivable as of April 30, 2025, and the realization of inventory. Based on these considerations, the management believes that the Company has sufficient funds to meet its working capital needs and debt obligations, as they will be due at least 12 months from the date of financial reporting. However, there is no guarantee that the management’s plan will be succeed. There are many factors that may occur and cause the Company’s plan to fall short, such as economic conditions, competitive pricing in the industry and the continuous support of our suppliers. If future operating cash flows and other capital resources are insufficient to meet its liquidity needs, the Company may be forced to reduce or postpone its anticipated expansion plans, sell assets, acquire additional debt or equity capital, or refinance all or part of its debt.
The following table summarizes the Company’s cash flow data for the six months ended April 30, 2025 and 2024:
| For the six months ended April 30, | ||||||||
| 2025 | 2024 | |||||||
| Net cash provided by operating activities | $ | 245,433 | $ | 31,286 | ||||
| Net cash (used in) investing activities | (3,262,430 | ) | (177,671 | ) | ||||
| Net cash provided by financing activities | 3,833,511 | 37,001 | ||||||
| Net increase (decrease) of cash | 816,514 | (109,384 | ) | |||||
| Effect of foreign currency translation | (12,727 | ) | 7,716 | |||||
| Cash – beginning of period | 547,498 | 1,033,634 | ||||||
| Cash – end of period | $ | 1,351,285 | $ | 931,966 | ||||
Net cash provided by operating activities
For the six months ended April 30, 2025, the net cash provided by operating activities was $245,433, as compared to the net cash provided by operating activities of $31,286 for the six months ended April 30, 2024. The increase in net cash provided by operating activities was mainly due to the decrease in other receivables and other current assets.
9
Net cash (used in) investing activities
For the six months ended April 30, 2025, the net cash used in investment activities was $3,262,430, as compared to the net cash used in investment activities of $177,671 for the six months ended April 30, 2024. The increase in net cash used in investment activities is mainly due to loans to the third party.
Net cash provided by financing activities
For the six months ended April 30, 2025, the net cash provided by financing activities was $3,833,511, as compared to the net cash provided by financing activities of $37,001 for the six months ended April 30, 2024. The increase in net cash provided by financing activities for the six months ended April 30, 2025 was mainly due to the proceeds from issuance of shares.
Non-cash lease expenses
For the six months ended April 30, 2025, our Company has operating leases for seven operating leases for its two office locations, three company-operated stores, one staff dormitory and one warehouse.
The right to use assets and liabilities of operating leases are recognized on the lease commencement date based on the present value of lease payments during the lease term. The discount rate used to calculate present value is the incremental borrowing rate, or (if any) the interest rate implied in the lease. The company mainly determines the incremental loan interest rate for each lease based on its lease term in China, with approximately 3.77% and 3.75% for the six months ended April 30, 2025 and October 31,2024, respectively.
For the six months ended April 30, 2025 and 2024, the operating lease charges were $14,098 and $11,652, respectively.
The components of the lease fee and the supplementary cash flow related to the lease are as follows:
| For the six months | For the six months | |||||||
| ended | ended | |||||||
| April 30, | April 30, | |||||||
| 2025 | 2024 | |||||||
| Lease Cost | ||||||||
| Operating lease cost | $ | 14,098 | $ | 11,652 | ||||
| Other information | ||||||||
| Cash paid for amounts included in the measurement of lease liabilities | $ | 13,422 | $ | 12,092 | ||||
10
As of April 30, 2025 and October 31,2024, the weighted average lease term and discount rate are as follows:
| April 30, | October 31, | |||||||
| 2025 | 2024 | |||||||
| Weighted average remaining lease term – operating leases (in years) | 4.08 | 4.64 | ||||||
| Average discount rate – operating lease | 3.77 | % | 3.75 | % | ||||
The supplementary balance sheet information related to leasing is as follows:
| April 30, | October 31, | |||||||
| 2025 | 2024 | |||||||
| Operating leases | ||||||||
| Right-of-use assets | $ | 91,198 | $ | 70,739 | ||||
| Operating lease liabilities, current | $ | 28,402 | $ | 17,573 | ||||
| Operating lease liabilities, non-current | $ | 63,060 | $ | 52,745 | ||||
| Total operating lease liabilities | ||||||||
| $ | 91,462 | $ | 70,318 | |||||
The undiscounted minimum future lease payment schedule is as follows:
| For the years ending April 30, | ||||
| 2025 | 16,403 | |||
| 2026 | 28,552 | |||
| 2027 | 26,199 | |||
| 2028 | 14,635 | |||
| 2029 | 11,598 | |||
| Total undiscounted lease payments | 97,387 | |||
| Less imputed interest | (5,925 | ) | ||
| Total lease liabilities | 91,462 | |||
Concentration of credit risk
Cash deposits with banks are held in financial institutions in China, which deposits are not federally insured. Accordingly, the Company has a concentration of credit risk related to the uninsured part of bank deposits. The Company has not experienced any losses in such accounts and believes it is not exposed to significant credit risk.
Concentration of customers and suppliers
The Company has a concentration risk related to suppliers and customers. Failure to maintain existing relationships with the suppliers or customers to establish new relationships in the future could negatively affect the Company’s ability to obtain goods sold to customers in a price advantage and timely manner. If the Company is unable to obtain ample supply of goods from existing suppliers or alternative sources of supply, the Company may be unable to satisfy the orders from its customers, which could materially and adversely affect revenues.
The customers accounting for 10% or more of the Company’s revenue include the following:
| For the Years ended | ||||||||
| April 30, | April 30, | |||||||
| 2025 | 2024 | |||||||
| Percentage of Company revenue | ||||||||
| Customer F | 9 | % | 15 | % | ||||
| Customer G | 9 | % | 14 | % | ||||
11
The customers that accounted for 10% or more of the Company’s accounts receivable comprised of the following:
| April 30, | October 31, | |||||||
| 2025 | 2024 | |||||||
| Percentage of the Company’s accounts receivable | ||||||||
| Customer A | 26 | % | 17 | % | ||||
| Customer B | 10 | % | 7 | % | ||||
| Customer C | - | 1 | % | |||||
| Customer D | 5 | % | 3 | % | ||||
| Customer E | - | 8 | % | |||||
| Customer F | - | 15 | % | |||||
| Customer G | - | 14 | % | |||||
| Customer H | 13 | % | 8 | % | ||||
| Customer I | 13 | % | 9 | % | ||||
The suppliers that accounted for 10% or more of the Company’s purchases comprised of the following:
| For the Years ended | ||||||||
| April 30, | ||||||||
| 2025 | 2024 | |||||||
| Percentage of the Company’s purchases | ||||||||
| Supplier A | 12 | % | 19 | % | ||||
| Supplier B | 12 | % | 16 | % | ||||
| Supplier C | 13 | % | 12 | % | ||||
| Supplier D | - | 10 | % | |||||
| Supplier E | 14 | % | - | |||||
| Supplier H | 11 | % | 4 | % | ||||
| Supplier I | 11 | % | 6 | % | ||||
The suppliers that accounted for 10% or more of the Company’s accounts payable comprised of the following:
| April 30, | October 31, | |||||||
| 2024 | 2025 | |||||||
| Percentage of the Company’s accounts payable | ||||||||
| Supplier F | - | % | 36 | % | ||||
| Supplier G | 77 | % | 55 | % | ||||
| Supplier J | 13 | % | 9 | % | ||||
Contract liability
The contract liabilities consist of advances from customers, which relate to unsatisfied performance obligations at the end of each reporting period and consists of cash payments received in advance from customers in sales of beauty products and devices and unearned franchise fee. As of April 30, 2025 and October 31, 2024, the Company’s advances from customer deposit and unearned franchise fee amounted to $118,277 and $325,924 respectively.
Trend Information
Except as disclosed elsewhere in this annual report, we are not aware of any trends, uncertainties, demands, commitments or events that may reasonably be likely to have a significant impact on our net income, income from continuing operations, profitability, working capital or capital resources, or that would cause reported may not necessarily to be indicative of future operating results or financial condition.
Off-Balance Sheet Arrangements
Except as disclosed elsewhere in this annual report, we have not entered into any financial guarantees or other commitments to ensure the payment obligations of any third party. We have not entered into any derivative contracts that are indexed to its shares and classified as shareholders ’ equity or that are not reflected in its consolidated financial statements. In addition, we do not have any retained or contingent interests in the assets transferred to unconsolidated entities that services as credit, liquidity, or market risk support to such entities. We do not have any variable interests in any unconsolidated entity that provides us with financing, liquidity, market risk or credit support, or that engages in leasing, hedging or research and development services.
12
Critical Accounting Policies and Estimates
Our discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements. These financial statements are prepared in accordance with U.S. GAAP, which requires us to make estimates and assumptions that affect the reported amounts of our assets and liabilities and revenue and expenses, to disclose contingent assets and liabilities on the date of the consolidated financial statements, and to disclose the reported amounts of revenue and expenses incurred during the financial reporting period. The most significant estimates and assumptions include the assessment of the expected credit losses for receivables. We continue to evaluate these estimates and assumptions that we believe to be reasonable under the circumstances. We rely on these evaluations as the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Since the use of estimates is an integral component of the financial reporting process, actual results could differ from those estimates. Some of our accounting policies require higher degrees of judgment than others in their application. We believe critical accounting policies as disclosed in this annual report reflect the more significant judgments and estimates used in preparation of our consolidated financial statements.
The following critical accounting policies rely upon assumptions and estimates and were used in the preparation of our consolidated financial statements:
Credit Losses
On January 1, 2023, we adopted Accounting Standards Update (“ASU”) 2016-13 “Financial Instruments — Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments,” by using a modified retrospective transition method, which replaces the incurred loss impairment methodology with an expected loss methodology that is referred to as the current expected credit loss methodology. The expected credit loss impairment model requires the entity to recognize its estimate of expected credit losses for affected financial assets using an allowance for credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. The adoption of ASU 2016-13 did not have a material impact on our financial statements.
Our account receivables, loans receivable from franchisees, due from related parties and other receivables which is included in other receivables and other current assets line item in the balance sheet are within the scope of ASC Topic 326. We use the roll-rate method to measure expected credit losses of account receivables and loans receivable from franchisees, on a collective basis when similar risk characteristics exist. The roll-rate method stratifies the receivables balance by delinquency stages and projected forward in one-year increments using historical roll rate. In each year of the simulation, losses on the receivables are captured, and the ending delinquency stratification serves as the beginning point of the next iteration. This process is repeated on a yearly rolling basis. The loss rate calculated for each delinquency stage is then applied to respective receivables balance. The management adjusts the allowance that is determined by the roll-rate method for both current conditions and forecasts of economic conditions. For due from related parties and other receivables, we use the loss-rate method to evaluate the expected credit losses on an individual basis. When establishing the loss rate, we make the assessment on various factors, including historical experience, creditworthiness of debtors, current economic conditions, reasonable and supportable forecasts of future economic conditions, and other factors that may affect its ability to collect from the debtors. We also provide specific provisions for allowance when facts and circumstances indicate that the receivable is unlikely to be collected.
Expected credit losses are included in the consolidated statements of operations and comprehensive income. After all attempts to collect a receivable have failed, the receivable is written off against the allowance. Account receivables, loans receivable from franchisees, due from related parties and other receivables are recognized and carried at original amount less an allowance for credit losses, as necessary. As of April 30,2025, and October 31, 2024, allowance for credit losses for accounts receivable amounted to $226,319 and $231,851, respectively, allowance for credit losses for loans to franchisees amounted to $62,455, and $55,520, respectively, and allowance for credit losses for other receivables amounted to $50,380 and $51,031, respectively.
Quantitative and qualitative disclosure of market risk
The deterioration of the overall economic conditions in the United States and globally, including the impact of long-term deflation on our customers and suppliers, may harm our business and operational results.
Our business and operating results may be adversely affected by changes in national or global economic conditions. These situations include but are not limited to inflation and/or deflation, changes in interest rates, availability of capital markets, availability and cost of energy (including fuel surcharges), negative impacts caused by military conflicts between Russia and Ukraine, and the impact of government measures to manage economic conditions. The impact of such situations may be transmitted to our business in the form of a decrease in customer base and/or our customer expenses, as industry wide expenses may decrease and/or our suppliers may face economic pressure to shift costs.
Risks related to conducting business in China
The recent intervention of the state government in the commercial activities of Chinese companies listed in the United States may have a negative impact on our operations.
Recently, the Chinese government announced that it will strengthen regulation of Chinese companies listed overseas. According to the new measures, China will strengthen the supervision of cross-border data flow and security, crack down on illegal activities in the securities market, punish fraudulent securities issuance, market manipulation, and insider trading. China will also inspect the sources of funds for securities investment and control leverage. The Cyberspace Administration also conducted cybersecurity investigations on several technology giants listed in the United States, with a focus on antitrust, fintech regulation, and recently, with the passage of the Data Security Law, how companies collect, store, process, and transfer data. Our operations and commercial interests are in Chinese Mainland. If the intervention of the Chinese government is expanded and through agency, our commercial interests will be affected, and our operations may be negatively affected, although there is currently no obvious direct impact.
13
Exhibit 99.2
Park Ha Biological Technology Co., Ltd. and
its Subsidiaries
Unaudited Interim Condensed Consolidated Balance Sheets
As of April 30, 2025 and October 31, 2024
| April 30, 2025 | October 31, 2024 | |||||||
| (Unaudited) | ||||||||
| ASSETS | ||||||||
| Current Assets | ||||||||
| Cash and cash equivalents | ||||||||
| Accounts receivable, net | ||||||||
| Due from related parties | ||||||||
| Inventories | ||||||||
| Advances to suppliers | ||||||||
| Loans receivable from franchisees, net | ||||||||
| Other receivables and other current assets | ||||||||
| Total current assets | ||||||||
| Non-current Assets | ||||||||
| Property and equipment, net | ||||||||
| Intangible assets, net | ||||||||
| Operating lease right of use asset | ||||||||
| Other non-current assets | ||||||||
| Total non-current assets | ||||||||
| TOTAL ASSETS | ||||||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
| Current liabilities | ||||||||
| Accounts payable | ||||||||
| Due to related parties | — | |||||||
| Taxes payable | ||||||||
| Operating lease liabilities – current | ||||||||
| Contract liability | ||||||||
| Accruals and other payables | ||||||||
| Total current liabilities | ||||||||
| Non-current liabilities | ||||||||
| Operating lease liabilities – non-current | ||||||||
| Total non-current assets | ||||||||
| TOTAL LIABILITIES | ||||||||
| Commitments and contingencies | ||||||||
| Shareholders’ equity | ||||||||
| Ordinary shares ( | ||||||||
| Additional paid in capital | ||||||||
| Statutory reserve | ||||||||
| Accumulated deficits | ( | ) | ||||||
| Accumulated other comprehensive loss | ( | ) | ( | ) | ||||
| Total Shareholders’ equity | ||||||||
| TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
| * |
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
F-1
Park Ha Biological Technology Co., Ltd. and
its Subsidiaries
Unaudited Interim Condensed Consolidated Statements of Operations and Comprehensive Income
For the Six Months Ended April 30, 2025 and 2024
| Six Months Ended April 30, 2025 | Six Months Ended April 30, 2024 | |||||||
| Revenues, net | ||||||||
| Cost of revenues | ||||||||
| Gross profit | ||||||||
| Operating expenses | ||||||||
| Selling and marketing expenses | ||||||||
| General and administrative expenses | ||||||||
| Research and development expenses | ||||||||
| Allowance for expected credit losses | ||||||||
| Total operating expenses | ||||||||
| Operating (expenses) income | ( | ) | ||||||
| Non-operating income (expense) items: | ||||||||
| Other income | ||||||||
| Other expense | ||||||||
| Interest income | ||||||||
| Interest expense | ||||||||
| Total other income | ||||||||
| (Loss) Income before income tax | ( | ) | ||||||
| Income tax expense | ||||||||
| Net (loss) income | ( | ) | ||||||
| Earnings per share | ||||||||
| Ordinary shares – basic and diluted | ( | ) | ||||||
| Weighted average shares outstanding used in calculating basic and diluted earnings per share: | ||||||||
| Ordinary shares – basic and diluted | ||||||||
| * | Certain shares are related to the IPO (See Note 14 ). |
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
F-2
Park Ha Biological Technology Co., Ltd. and
its Subsidiaries
Unaudited Interim Condensed Consolidated Statements of Changes in Shareholders’ Equity (Deficits)
For the Six Months Ended April 30, 2025 and 2024
| Ordinary Shares | Additional | Retained earning | Accumulated Other | |||||||||||||||||||||||||||||
| Number of Shares | Amount | Subscription Receivable | Paid-in Capital | Statutory Reserves | (Accumulated Deficits) | Comprehensive Loss | Total Equity | |||||||||||||||||||||||||
| Balance at October 31, 2023 | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Contribution in capital | ||||||||||||||||||||||||||||||||
| Net income | — | |||||||||||||||||||||||||||||||
| Appropriation to statutory reserve | — | |||||||||||||||||||||||||||||||
| Foreign currency translation adjustment | — | |||||||||||||||||||||||||||||||
| Balance at April30, 2024 | ( | ) | ( | ) | ||||||||||||||||||||||||||||
| Balance at October 31, 2024 | ( | ) | ||||||||||||||||||||||||||||||
| Issuance of shares, net | ||||||||||||||||||||||||||||||||
| Share-based Compensation | ||||||||||||||||||||||||||||||||
| Net loss | — | ( | ) | ( | ) | |||||||||||||||||||||||||||
| Foreign currency translation adjustment | — | ( | ) | ( | ) | |||||||||||||||||||||||||||
| Balance at April 30, 2025 | ( | ) | ( | ) | ||||||||||||||||||||||||||||
| * | Certain shares are related to the IPO (See Note 14 ). |
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
F-3
Park Ha Biological Technology Co., Ltd. and
its Subsidiaries
Unaudited Interim Condensed Consolidated Statements of Cash Flows
For the Six Months Ended April 30, 2024 and 2023
(Unaudited)
| Six Months Ended April 30, 2025 | Six Months Ended April 30, 2024 | |||||||
| Cash flows from operating activities | ||||||||
| Net income | ( | ) | ||||||
| Depreciation and amortization | ||||||||
| Allowance for credit losses | ||||||||
| Impairments and write-offs of assets | ||||||||
| Deferred tax benefits | ( | ) | ( | ) | ||||
| Operating lease expenses | ||||||||
| Share-based Compensation Expense | ||||||||
| Non-cash interest income | ( | |||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | ||||||||
| Inventories | ( | ) | ||||||
| Advances to suppliers | ( | ) | ||||||
| Other receivables and other current assets | ||||||||
| Operating advance payments to related parties | ( | ) | ||||||
| Other non-current assets | ( | ) | ( | ) | ||||
| Accruals and other payables | ( | ) | ( | ) | ||||
| Accounts payable | ( | ) | ( | ) | ||||
| Taxes payable | ||||||||
| Contract liability | ( | ) | ( | ) | ||||
| Operating lease liabilities | ( | ) | ( | ) | ||||
| Net cash provided by operating activities | ||||||||
| Cash flows from investing activities | ||||||||
| Purchase of equipment and intangible assets | ( | ) | ( | ) | ||||
| Loans to franchisees | ( | ) | ( | ) | ||||
| Loan repayment from franchisees | ||||||||
| Loans to the third party | ( | ) | ||||||
| Repayment from related parties | ||||||||
| Net cash used in investing activities | ( | ) | ( | ) | ||||
| Cash flows from financing activities | ||||||||
| Proceeds from shareholder’s contribution of capital | ||||||||
| Proceeds from issuance of shares | ||||||||
| Borrowing from related party | ||||||||
| IPO Costs | ( | ) | ||||||
| Net cash provided by financing activities | ||||||||
| Net increase (decrease) of cash and cash equivalents | ( | ) | ||||||
| Effect of foreign currency translation | ( | ) | ||||||
| Cash and cash equivalents– beginning of period | ||||||||
| Cash and cash equivalents– end of period | $ | $ | ||||||
| Supplementary cash flow information: | ||||||||
| Interest paid | $ | $ | ||||||
| Income tax paid | $ | $ | ||||||
| Non-cash investing and financing activities: | ||||||||
| Non-cash IPO Costs | ( | ) | ||||||
| Non-cash interest income | ||||||||
| Operating lease right-of-use assets obtained in exchange for operating lease liabilities | $ | $ | ||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial.
F-4
Park Ha Biological Technology Co., Ltd. and
its Subsidiaries
Notes to the Unaudited Interim Condensed Consolidated Financial Statements
NOTE 1 — ORGANIZATION AND BASIS OF PRESENTATION
Park Ha Biological Technology
Co., Ltd. (“Park Ha Cayman”) was incorporated in the Cayman Islands on
Park Ha Biological Technology (HK) Co., Ltd. (“Park Ha HK”) was incorporated in Hong Kong on October 25, 2022. It is a wholly owned subsidiary of Park Ha Cayman.
Park Ha Investment (Wuxi) Co., Ltd. (“Park Ha WFOE”) was incorporated on May 5, 2023 as a wholly foreign owned entity in the People’s Republic of China (“PRC”). Park Ha WFOE is a wholly owned subsidiary of Park Ha HK.
Wuxi Xinzhan Enterprise Management
Consulting Co., Ltd. (“XinZhan”) was incorporated on March 31, 2016 in the People’s Republic of China (“PRC”)
with Ms. Xiaoqiu Zhang being the majority shareholder owning
Shanghai Park Ha Industrial Development Co., Ltd. (“Park Ha Shanghai”) was incorporated on April 17, 2017 in the People’s Republic of China (“PRC”) as a wholly owned subsidiary of Wuxi XinZhan. Park Ha Shanghai’s primary business includes beauty services, sales of beauty products and devices, management of beauty salon franchises.
Jiangsu Park Ha Biotechnology
Co., Ltd. (“Park Ha Jiangsu”) was incorporated on August 13, 2019 in the People’s Republic of China (“PRC”)
with Ms. Xiaoqiu Zhang being the majority shareholder owning
On May 17, 2023, Park Ha WFOE entered into equity transfer agreements with each shareholder of Wuxi XinZhan and Park Ha Jiangsu to purchase all the equity interest in such entities. The restructure was completed on July 7, 2023. As a result, Wuxi XinZhan and Park Ha Jiangsu became a wholly owned subsidiary of Park Ha WFOE.
Wuxi Mufeng Biotechnology Co., Ltd (“Wuxi Mufeng”) and Wuxi Muchen Biotechnology Co., Ltd were incorporated on February 21, 2025 in the People’s Republic of China (“PRC”) as a wholly owned subsidiary of Park Ha Jiangsu.
Huishan Yiyayue Beauty Salon (“Huishan Yiyayue”) was incorporated on January 22, 2025 in the People’s Republic of China (“PRC”) as a wholly owned subsidiary of Park Ha Jiangsu.
Upon the completion of the above Reorganization, Park Ha Cayman became the ultimate holding company of all other entities mentioned above. The Company is effectively controlled by the same group of controlling shareholders before and after the Reorganization; therefore, the Reorganization is considered as a recapitalization of these entities under common control. The consolidation of the Company was accounted for at historical cost and prepared on the basis as if the aforementioned transactions had become effective as of the beginning of the first period presented in the accompanying unaudited condensed consolidated financial statements. Results of operations for the period presented comprise those of the previous separate entries combined from the beginning of the period to the end of the period, eliminating the effects of intra-entity transactions.
Park Ha Biological Technology Co., Ltd. and its subsidiaries are collectively referred to as the “Company”.
NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation and Principles of Consolidation
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. GAAP and pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) for interim financial information. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments considered necessary for a fair presentation have been included in the Company’s unaudited condensed consolidated financial statement. The unaudited condensed consolidated financial statements should be read in conjunction with the Company’s consolidated financial statements and the notes thereto for the year ended October 31, 2024 included in the other.
F-5
Park Ha Biological Technology Co., Ltd. and
its Subsidiaries
Notes to the Unaudited Interim Condensed Consolidated Financial Statements
NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)
The accompanying unaudited condensed consolidated financial statements include the financial statements of the Company and its subsidiaries. All inter-company balances and transactions are eliminated upon consolidation. Operating results for the six months ended April 30, 2025 and 2024 are not necessarily indicative of the results that may be expected for the full year.
Use of Estimates
The preparation of the unaudited condensed consolidated 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 disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Significant accounting estimates include certain assumptions related to, among others, the valuation of the amount due from related parties, inventory valuations, the estimation of useful lives of property and equipment and intangible assets, allowance for expected credit losses, and income taxes including the valuation allowance for deferred tax assets. Actual results could differ from those estimates.
Functional and Presentation Currency
The functional currency of the Company is the currency of the primary economic environment in which the Company operates which is Chinese Yuan (“RMB”). The RMB is not freely convertible into the US dollar and may be subject to PRC currency restrictions for payments, including the distributions of dividends or retained earnings to the Company by its subsidiaries.
Transactions in currencies other than the entity’s functional currency are recorded at the rates of exchange prevailing on the date of the transaction. At the end of each reporting period, monetary items denominated in foreign currencies are translated at the rates prevailing at the end of the reporting periods. Exchange differences arising on the settlement of monetary items and on translation of monetary items at period-end are included in income statement of the period.
For the purpose of presenting these financial statements, the Company’s assets and liabilities are expressed in US$ at the exchange rate on the balance sheet date, shareholder’s equity accounts are translated at historical rates, and income and expense items are translated at the periodic average exchange rate during the period. The resulting translation adjustments are reported under accumulated other comprehensive income (loss) in the shareholder’s equity section of the balance sheets.
Exchange rate used for the translation as follows:
| As of | ||||||||
| April 30, 2025 | October 31, 2024 | |||||||
| Period end US$: RMB exchange rate | ||||||||
| For the six months ended | ||||||||
| April 30 | ||||||||
| 2025 | 2024 | |||||||
| Period average US$: RMB exchange rate | ||||||||
F-6
Park Ha Biological Technology Co., Ltd. and
its Subsidiaries
Notes to the Unaudited Interim Condensed Consolidated Financial Statements
NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)
Fair Values of Financial Instruments
The Company adopted ASC 820 “Fair Value Measurements,” which defines fair value, establishes a three-level valuation hierarchy for disclosures of fair value measurement and enhances disclosures requirements for fair value measures. Current assets and current liabilities qualified as financial instruments and management believes their carrying amounts are a reasonable estimate of fair value because of the short period of time between the origination of such instruments and their expected realization and if applicable, their current interest rate is equivalent to interest rates currently available. The three levels are defined as follow:
| ● | Level 1 — inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets. |
| ● | Level 2 — inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the assets or liability, either directly or indirectly, for substantially the full term of the financial instruments. |
| ● | Level 3 — inputs to the valuation methodology are unobservable and significant to the fair value. |
As of the balance sheet date, the estimated fair values of the financial instruments approximated their fair values due to the short-term nature of these instruments. Determining which category an asset or liability falls within the hierarchy requires significant judgment. The Company evaluates the hierarchy disclosures each year.
Cash and Cash Equivalents
Cash consists of cash on hand and cash in bank, as well as balances in Douyin and Meituan accounts, which are highly liquid and have original maturities of three months or less and are unrestricted as to withdrawal or use. The Company maintains cash with various financial institutions primarily in mainland China. The Company has not experienced any losses in bank accounts. The balances in Douyin and Meituan represent transaction balances from customers purchasing products through these platforms. Merchants’ income can be withdrawn within 1-3 business days without any restrictions.
Accounts Receivable and allowance for credit losses
Accounts receivables are stated at the historical carrying amount net of allowance for expected credit losses.
The Company adopted ASU No. 2016-13, “Financial Instruments — Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments” on January 1, 2023 using a modified retrospective approach. The Company also adopted this guidance to due from related parties, loans receivable from franchisees, other receivables. To estimate expected credit losses, the Company has identified the relevant risk characteristics of its customers and the related receivables. The Company considers the past collection experience, current economic conditions, future economic conditions (external data and macroeconomic factors) and changes in the Company’s customer collection trends. The allowance for credit losses and corresponding receivables were written off when they are determined to be uncollectible.
Inventory
Loans Receivable
Loans receivable is recorded at origination at the fair value less estimates for expected credit losses. Loans receivable is reviewed periodically to determine whether it’’s carrying value has become impaired. The Company uses credit loss method to estimate the allowance for loans receivables.
Property and Equipment
Property and equipment are
stated at historical cost net of accumulated depreciation. Repairs and maintenance are expensed as incurred.
| Office furniture | ||
| Motor Vehicle | ||
| Office equipment | ||
| Leasehold improvements |
F-7
Park Ha Biological Technology Co., Ltd. and
its Subsidiaries
Notes to the Unaudited Interim Condensed Consolidated Financial Statements
NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)
Intangible assets
Intangible assets with definite useful lives are amortized over their estimated useful lives to their estimated residual values. Intangible assets mainly represent software at cost, less accumulated amortization on a straight-line basis over an estimated life of years.
Impairment of long-lived assets other than goodwill
Long-lived assets are evaluated for impairment whenever events or changes in circumstances (such as a significant adverse change to market conditions that will impact the future use of the assets) indicate that the carrying amount may not be fully recoverable or that the useful life is shorter than the Company had originally estimated. When these events occur, the Company evaluates the impairment by comparing carrying value of the assets to an estimate of future undiscounted cash flows expected to be generated from the use of the assets and their eventual disposition. If the sum of the expected future undiscounted cash flows is less than the carrying value of the assets, the Company recognizes an impairment loss based on the excess of the carrying value of the assets over the fair value of the assets. Impairment charge recognized for the six months ended April 30, 2025 and 2024 was .
Related parties
The Company adopted ASC 850, Related Party Disclosures, for the identification of related parties and disclosure of related party transactions. According to the standard, financial statements are required to disclose material related-party transactions other than compensation arrangements, expense allowances, or other similar items that occur in the ordinary course of business. A related party is essentially any party that controls or can significantly influence the management or operating policies of the company to the extent that the company may be prevented from fully pursuing its own interests. Related parties include affiliates, investees accounted for by the equity method, trusts for the benefit of employees, principal owners, management, and immediate family members of owners or management. Transactions with related parties must be disclosed even if there is no accounting recognition made for such transactions (e.g., a service is performed without payment).
Lease
The Company recognizes right-of-use (“ROU”) assets and lease liabilities for its lease commitments with terms greater than one year. Contractual options to extend or terminate lease agreements are reflected in the lease term when they are reasonably certain to be exercised. The initial measurements of new ROU assets and lease liabilities are based on the present value of future lease payments over the lease term as of the commencement date. In determining future lease payments, the Company has elected not to separate lease and non-lease components. As the Company’s lease arrangements do not provide an implicit interest rate, we apply the Company’s incremental borrowing rate based on the information available at the commencement date in determining the present value of future lease payments. Relevant information used in determining the Company’s incremental borrowing rate includes the duration of the lease, transaction currency of the lease, and the Company’s credit risk relative to risk-free market rates. The Company’s ROU assets also include any initial direct costs incurred and exclude lease incentives. The Company’s lease agreements do not contain any significant residual value guarantees or restrictive covenants. All leases of the Company are classified as operating leases, with lease expense being recognized on a straight-line basis.
Revenue Recognition
In 2014, the FASB issued guidance on revenue recognition (“ASC 606”), with final amendments issued in 2016. The underlying principle of ASC 606 is to recognize revenue to depict the transfer of goods or services to customers at the amount expected to be collected. ASC 606 creates a five-step model that requires entities to exercise judgment when considering the terms of contracts, which includes (1) identifying the contracts or agreements with a customer, (2) identifying our performance obligations in the contract or agreement, (3) determining the transaction price, (4) allocating the transaction price to the separate performance obligations, and (5) recognizing revenue as each performance obligation is satisfied. The Company only applies the five-step model to contracts when it is probable that the Company will collect the consideration it is entitled to in exchange for the goods or services it transfers to its clients. The Company has concluded that the new guidance did not require any significant change to its revenue recognition processes.
F-8
Park Ha Biological Technology Co., Ltd. and
its Subsidiaries
Notes to the Unaudited Interim Condensed Consolidated Financial Statements
NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)
The Company generate revenues from sales of beauty products and devices, and management of beauty salon franchises.
Sales of Beauty Products and Devices:
The contracts for sales of beauty products and devices are established either through direct transactions or through formal agreements, creating enforceable rights and obligations for both parties. For these sales, the Company recognizes a single performance obligation: the transfer of goods to the customer. There are no additional identifiable promises within these contracts. The Company does not offer price protection but do allow for the return of goods in cases of quality issues, adhering to the standard warranty practices. The Company recorded reserve for sales returns was $ for the six months ended April 30, 2025, and 2024.
For sales at our owned store locations, revenue is recognized at the point of transfer of control, typically when the customer makes payment and accepts the goods in-store.
Regarding online sales via third-party platforms, control is transferred, and revenue is recognized at the point of delivery to the customer, facilitated by express delivery services.
Sales and deliveries of beauty products and devices to the franchisees are treated as distinct performance obligations, separate from the franchise agreement. These transactions are not highly dependent on, nor are they integrated with, the franchise services, allowing the franchisee to benefit from the goods independently. Revenue from sales to franchisees is recognized upon the transfer of control of the goods, generally upon delivery. As franchisees take ownership and resell the products at their discretion, these transactions are not considered consignment sales.
Management of beauty salon franchises:
The Company’s franchise revenues comprise non-refundable initial franchise fees received from franchisees. The initial franchise services, which constitute the Company’s obligation under these agreements, include: (i) granting exclusive operating rights in a specific area, (ii) allowing the use of the “PARK HA” brand, and (iii) providing initial setup services. These setup services encompass assistance with site selection, marketing strategy formulation, and training for franchisee management and beauticians.
Following the revenue recognition standard ASC 606, we consider the initial franchise services indistinct from the ongoing rights provided during the franchise agreement term. Consequently, these services are treated as a single performance obligation. Accordingly, initial franchise fees are deferred and recorded as a “Contract Liability.” These fees are recognized over the franchise term as the performance obligation is satisfied, typically spanning one year.
The Company offers advertising and renovation subsidies to franchisees, calculated as a percentage of the franchise fee. Since these subsidies are not in exchange for distinct goods or services from franchisees, they are accounted for as a reduction in the transaction price of the franchise fee.
The Company also offers short-term loans to franchisees, with terms not exceeding six months. The loan amounts are based on the franchise fee and a fixed ratio. Given the short duration of these loans, as a practical expedient, the Company does not adjust the consideration for the effects of a significant financing component.
Contract liability
The contract liabilities consist
of advances from customers, which relate to unsatisfied performance obligations at the end of each reporting period and consists of cash
payments received in advance from customers in sales of beauty products and devices and unearned franchise fee. As of April 30, 2025
and October 31, 2024, the Company’s advances from customer deposit and unearned franchise fee amounted to $
F-9
Park Ha Biological Technology Co., Ltd. and
its Subsidiaries
Notes to the Unaudited Interim Condensed Consolidated Financial Statements
NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)
The Company reports revenues net of applicable sales taxes and related surcharges.
Cost of revenues
Costs of sales of beauty products and devices consist primarily of materials costs, shipping and handling expenses, inspection costs and related costs, which are directly attributable to products. Write-down of inventories is also recorded in cost of sales, if any.
Costs of revenue of beauty salon franchises consist primarily of training costs, promotional material costs and related costs, which are directly attributable to franchises business.
Shipping and handling fees incurred to transport goods to customers are paid directly to the logistics company by customers.
Selling and marketing expense
Sales and marketing expenses
consist primarily of rent, depreciation of leasehold improvements, marketing conference expenses, advertising expenses and salaries and
other compensation-related expenses to sales and marketing personnel. The Company expenses all advertising costs as incurred. Advertising
costs were $
General and administrative expenses
General and administrative expenses consist primarily of Share-based Compensation Expense、salaries and benefits for employees involved in general corporate functions and those not specifically dedicated to research and development activities, depreciation and amortization of fixed assets which are not used in research and development activities, legal and other professional services fees, rental and other general corporate related expenses.
Research and development
The Company expenses research
and development expenses when incurred as periodic costs. The Company recognized research and development expenses for the six months
ended April 30, 2025 and 2024 in the amounts of $
Value Added Tax (VAT)
In accordance with the relevant tax laws in the PRC, VAT is levied on the invoiced value of sales and is payable by the purchaser. The Company is required to remit the VAT it collects to the tax authority but may deduct the VAT it has paid on eligible purchases. The difference between the amounts collected and paid is presented as VAT recoverable or payable balance on the balance sheet.
Income Taxes
Income taxes are provided in accordance with ASC No. 740, Accounting for Income Taxes. A deferred tax asset or liability is recorded for all temporary differences between financial and tax reporting and net operating loss carry-forwards. Deferred tax expense (benefit) results from the net change during the periods of deferred tax assets and liabilities.
Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion of all of the deferred tax assets will be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment.
F-10
Park Ha Biological Technology Co., Ltd. and
its Subsidiaries
Notes to the Unaudited Interim Condensed Consolidated Financial Statements
NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)
A tax benefit from an uncertain tax position may be recognized only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities. The determination is based on the technical merits of the position and presumes that the relevant taxing authority that has full knowledge of all relevant information will examine each uncertain tax position. Although the Company believes the estimates are reasonable, no assurance can be given that the final outcome of these matters will not be different than what is reflected in the historical income tax provisions and accruals.
Comprehensive Income (Loss)
Comprehensive income (loss) consists of two components, net income and other comprehensive income. The foreign currency translation gain or loss resulting from translation of the financial statements expressed in RMB to US$ is reported in foreign currency translation loss in the unaudited condensed consolidated statements of operations and comprehensive income.
Statutory Reserves
Pursuant to the laws applicable
to the PRC, PRC entities must make appropriations from after-tax profit to the non-distributable “statutory surplus reserve fund”.
Subject to certain cumulative limits, the “statutory surplus reserve fund” requires annual appropriations of
Earnings (loss) per share
Basic earnings (loss) per share is computed by dividing net income (loss) attributable to the holders of ordinary shares by the weighted average number of ordinary shares outstanding during the period. Diluted earnings (loss) per share is calculated by dividing net income (loss) attributable to the holders of ordinary shares as adjusted for the effect of dilutive ordinary share equivalents, if any, by the weighted average number of ordinary shares and dilutive ordinary share equivalents outstanding during the period. For the six months ended April 30, 2025 and 2024, the Company does not have any outstanding ordinary shares equivalents; therefore, a separate computation of diluted earnings (loss) per share is not presented.
Commitments and Contingencies
The Company follows ASC 450-20, “Loss Contingencies,” to report accounting for contingencies. Liabilities for loss contingencies arising from claims, assessments, litigation, fines, penalties and other sources are recorded when it is probable that a liability has been incurred and the amount of the assessment can be reasonably estimated. There were commitments or contingencies as of April 30, 2025 and October 31, 2024.
Segment reporting
ASC 280, Segment Reporting, (“ASC 280”), establishes standards for companies to report in their financial statements information about operating segments, products, services, geographic areas, and major customers.
Based on the criteria established
by ASC 280,
F-11
Park Ha Biological Technology Co., Ltd. and
its Subsidiaries
Notes to the Unaudited Interim Condensed Consolidated Financial Statements
NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)
Concentration and risks
a) Concentration of credit risk
Financial instruments that potentially subject the Company to concentration of credit risk are cash and cash equivalents, and accounts receivable arising from its normal business activities. The Company places its cash in what it believes to be credit-worthy financial institutions or trading platforms.
The Company conducts credit evaluations of customers, and generally does not require collateral or other security from its customers. The Company establishes an allowance for expected credit losses primarily based upon the factors surrounding the credit risk of specific customers.
b) Foreign currency exchange rate risk
The functional currency and the reporting currency of the Company are RMB and U.S. dollars, respectively. The Company’s exposure to foreign currency exchange rate risk primarily relates to cash, accounts receivable and accounts payable. Any significant fluctuation of RMB against U.S. dollars may materially and adversely affect the Company’s cash flows, revenues, earnings and financial positions.
Recent Accounting Pronouncements
In November 2023, the FASB issued Accounting Standards Update No. 2023-07, “Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures” (“ASU 2023-07”), which is intended to improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses. The guidance is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted. The guidance is to be applied retrospectively to all prior periods presented in the financial statements. Upon transition, the segment expense categories and amounts disclosed in the prior periods should be based on the significant segment expense categories identified and disclosed in the period of adoption. We are currently evaluating the potential impact of adopting this new guidance on our consolidated financial statements and related disclosures.
Other accounting standards that have been issued by FASB that do not require adoption until a future date are not expected to have a material impact on the consolidated financial statements upon adoption. The Company does not discuss recent pronouncements that are not anticipated to have an impact on, or are unrelated to, its consolidated financial condition, results of operations, cash flows or disclosures.
NOTE 3 — ACCOUNTS RECEIVABLES, NET
As of April 30, 2025 and
October 31, 2024,
| April 30, 2025 | October 31, 2024 | |||||||
| Accounts receivables – Non franchisees | ||||||||
| Allowance for expected credit losses | ( | ) | ( | ) | ||||
| Accounts receivables, net – Non-franchisees | ||||||||
| April 30, 2025 | October 31, 2024 | |||||||
| Accounts receivables – Franchisees | ||||||||
| Allowance for expected credit losses | ( | ) | ( | ) | ||||
| Accounts receivables, net – Franchisees | ||||||||
F-12
Park Ha Biological Technology Co., Ltd. and
its Subsidiaries
Notes to the Unaudited Interim Condensed Consolidated Financial Statements
NOTE 3 — ACCOUNTS RECEIVABLES, NET (cont.)
The following is a summary of the activity in the allowance for expected credit losses:
| April 30, 2025 | October 31, 2024 | |||||||
| Balance at beginning of period – Non-franchisees | ||||||||
| (Reversal) Provision | ( | ) | ||||||
| Effect of translation adjustment | ( | ) | ||||||
| Balance at end of period – Non-franchisees | ||||||||
| April 30, 2025 | October 31, 2024 | |||||||
| Balance at beginning of period – Franchisees | ||||||||
| Provision | ||||||||
| Effect of translation adjustment | ( | ) | ||||||
| Balance at end of period – Franchisees | ||||||||
NOTE 4 — INVENTORY, NET
As of April 30, 2025 and October 31, 2024, inventory comprised of the following:
| April 30, 2025 | October 31, 2024 | |||||||
| Raw materials | ||||||||
| Goods shipped to customer | ||||||||
| Finished goods | ||||||||
| Inventories, net | ||||||||
Inventory write-down expense
was $
NOTE 5 — LOANS RECEIVABLE FROM FRANCHISEES, NET
Loans receivables from franchisees
consist of non-interest-bearing advances provided by the Company to its franchisees to purchase inventory, equipment; or for use as working
capital. The maturity date of the loan is
As of April 30, 2025 and October 31, 2024, loan receivables from franchisees, net comprised of the following:
| April 30, 2025 | October 31, 2024 | |||||||
| Loan receivables from franchisees | ||||||||
| Allowance for expected credit losses | ( | ) | ( | ) | ||||
| Loan receivables from franchisees, net | ||||||||
The following is a summary of the activity in the allowance for expected credit losses:
| April 30, 2025 | October 31, 2024 | |||||||
| Balance at beginning of period | ||||||||
| Provision | ( | ) | ||||||
| Effect of translation adjustment | ( | ) | ||||||
| Balance at end of period | ||||||||
F-13
Park Ha Biological Technology Co., Ltd. and
its Subsidiaries
Notes to the Unaudited Interim Condensed Consolidated Financial Statements
NOTE 5 — LOANS RECEIVABLE FROM FRANCHISEES, NET (cont.)
The following is a summary of the movement of the loan:
| April 30, 2025 | October 31, 2024 | |||||||
| Balance at beginning of period | ||||||||
| Loans lend to franchisees | ||||||||
| Repayment from franchisees | ( | ) | ( | ) | ||||
| Effect of translation adjustment | ( | ) | ||||||
| Balance at end of period | ||||||||
The amount of loans that are
past due as of April 30,2025 and October 31, 2024 were $
As of April 30, 2025 and October 31, 2024, loans receivable from franchisees, net comprised of the following:
| April 30, 2025 | October 31, 2024 | |||||||
| Gao Wenjing | ||||||||
| Wang Shimei | ||||||||
| Xu Yong | ||||||||
| Nan Xifeng | ||||||||
| Zeng Yongjian | ||||||||
| Song Mingfang | ||||||||
| Wang Zhiya | ||||||||
| Yu Yang | ||||||||
| Wang Limin | ||||||||
| Zhou Guixiang | ||||||||
| Wang Jia | ||||||||
| Wang Xuefeng | ||||||||
| Wang Xiaohui | ||||||||
| Zheng Yanhai | ||||||||
| Chen Yu | ||||||||
| Zhang Ying | ||||||||
| Wang Hongli | ||||||||
| Ge Xiaoqing | ||||||||
| Zhu Hongjun | ||||||||
| Liu Jie | ||||||||
| Zhou Qianqian | ||||||||
| Meng Hao | ||||||||
| Liu Zonghui | ||||||||
| Li Ruonan | ||||||||
| Yan Tianxiang | ||||||||
| Wu Yinghan | ||||||||
| Liu Yuping | ||||||||
| Xiao Yang | ||||||||
| Sun Zhongyao | ||||||||
| Shen Yue | ||||||||
| Sun Xuqiang | ||||||||
| Zhao Zhe | ||||||||
| Fan Lingfu | ||||||||
| Less: Allowance for expected credit loss | ( | ) | ( | ) | ||||
| Loan receivables from franchisees, net | ||||||||
F-14
Park Ha Biological Technology Co., Ltd. and
its Subsidiaries
Notes to the Unaudited Interim Condensed Consolidated Financial Statements
NOTE 6 — OTHER RECEIVABLES AND OTHER CURRENT ASSETS, net
As of April 30, 2025 and
October 31, 2024,
| April 30, 2025 | October 31, 2024 | |||||||
| Other receivables | ||||||||
| Deferred IPO Cost | ||||||||
| Prepaid expenses | ||||||||
| Total | ||||||||
| Allowance for expected credit loss | ( | ) | ( | ) | ||||
| Other receivables and other current assets, net | ||||||||
The following is a summary of the activity in the allowance for expected credit losses:
| April 30, 2025 | October 31, 2024 | |||||||
| Balance at beginning of period- Other receivables | ||||||||
| Provision | ( | ) | ||||||
| Effect of translation adjustment | ||||||||
| Balance at end of period other receivables | ||||||||
NOTE 7 — PROPERTY & EQUIPMENT, NET
As of April 30, 2025 and October 31, 2024, property and equipment, net comprised of the following:
| April 30, 2025 | October 31, 2024 | |||||||
| At Cost: | ||||||||
| Office furniture | ||||||||
| Motor vehicle | ||||||||
| Office equipment | ||||||||
| Leasehold improvements | ||||||||
| Total, Cost | ||||||||
| Accumulated depreciation | ( | ) | ( | ) | ||||
| Total, net | ||||||||
Depreciation expenses were
$
NOTE 8 — INTANGIBLE ASSETS, NET
As of April 30, 2025 and October 31, 2024, intangible assets, net comprised of the following:
| April 30, 2025 | October 31, 2024 | |||||||
| At Cost: | ||||||||
| Trademark | ||||||||
| Software | ||||||||
| Accumulated depreciation | ( | ) | ( | ) | ||||
| Total, net | ||||||||
Amortization expenses were
$
| For the years ending October 31, | ||||||||||||||||||||||||
| 2025* | 2026 | 2027 | 2028 | 2029 | thereafter | |||||||||||||||||||
| Amortization expenses | ||||||||||||||||||||||||
*
F-15
Park Ha Biological Technology Co., Ltd. and
its Subsidiaries
Notes to the Unaudited Interim Condensed Consolidated Financial Statements
NOTE 9 — OTHER NON-CURRENT ASSETS
As of April 30, 2025 and
October 31, 2024,
| April 30, 2025 | October 31, 2024 | |||||||
| Lease deposits | ||||||||
| Deferred Tax Asset | ||||||||
| Total | ||||||||
NOTE 10 — TAXES PAYABLE
As of April 30, 2025 and October 31, 2024, taxes payable comprised of the following:
| April 30, 2025 | October 31, 2024 | |||||||
| Enterprise income tax payable | ||||||||
| Value-added tax, net | ||||||||
| City maintenance and construction tax | ||||||||
| Additional education fees | ||||||||
| Other taxes | ||||||||
| Total | ||||||||
NOTE 11 — CONTRACT LIABILITIES
For service contracts where the performance obligation is not completed, contract liabilities were recorded for any payments received in advance of the performance obligation. The payments received in advance will not be refunded and will be amortized in future when met performance obligations.
As of April 30, 2025 and October 31, 2024, contract liabilities is comprised of the following:
| April 30, 2025 | October 31, 2024 | |||||||
| Unearned franchise fee | ||||||||
| Customer advance for beauty products | ||||||||
| Total | ||||||||
The unearned franchise fee
of $
F-16
Park Ha Biological Technology Co., Ltd. and
its Subsidiaries
Notes to the Unaudited Interim Condensed Consolidated Financial Statements
NOTE 11 — CONTRACT LIABILITIES (cont.)
As of April 30, 2025 and October 31, 2024, unearned franchise fee comprised of the following:
| April 30, 2025 | October 31, 2024 | |||||||
| Li Yi | ||||||||
| Gao Wenjing | ||||||||
| Yan Tianxiang | ||||||||
| Wu Yinghan | ||||||||
| Liu Yuping | ||||||||
| Wang Shimei | ||||||||
| Xu Yong | ||||||||
| Nan Xifeng | ||||||||
| Song Mingfang | ||||||||
| Wang Zhiya | ||||||||
| Yu Yang | ||||||||
| Wang Limin | ||||||||
| Li Jie | ||||||||
| Sheng Xidong | ||||||||
| Zhou Guixiang | ||||||||
| Wang Jia | ||||||||
| Wang Xuefeng | ||||||||
| Wang Xiaohui | ||||||||
| Ge Xiaoqing | ||||||||
| Li Ruonan | ||||||||
| Meng Hao | ||||||||
| Chen Yu | ||||||||
| Wang Hongli | ||||||||
| Zhang Ying | ||||||||
| Liu Zonghui | ||||||||
| Xiao Yang | ||||||||
| Sun Zhongyao | ||||||||
| Shen Yue | ||||||||
| Fan Lingfu | ||||||||
| Sun Xuqiang | ||||||||
| Zhao Zhe | ||||||||
| Zheng Tinghai | ||||||||
| Liu Jie | ||||||||
| Zhu Hongjun | ||||||||
| Zhou Qianqian | ||||||||
| Total | ||||||||
F-17
Park Ha Biological Technology
Co., Ltd. and its Subsidiaries
Notes to the Unaudited Interim Condensed Consolidated Financial Statements
NOTE 12 — RELATED PARTY TRANSACTIONS
The Company had transactions with the following related parties:
| Name of Related Party | Nature of Relationship | |
| Guozhen Liu | ||
| Fujun Yu | ||
| Hengquan Zhang | ||
| Xiaoqiu Zhang |
Due from related party
The Company made advances to
Ms. Xiaoqiu Zhang for working capital to be paid on behalf of the Company. The balance due from Ms. Xiaoqiu Zhang was $ and $
The Company made advances to
Mr. Hengquan Zhang for working capital to be paid on behalf of the Company. The balance due from Mr. Hengquan Zhang was $
Due to related party
The Company received advances
from Ms. Xiaoqiu Zhang as working capital. The balance due to Ms. Xiaoqiu Zhang was $
The amounts due from related party and due to related party above are non-interest bearing, without maturity and due on demand.
F-18
Park Ha Biological Technology Co., Ltd. and
its Subsidiaries
Notes to the Unaudited Interim Condensed Consolidated Financial Statements
NOTE 13 — LEASES
As of April 30, 2025,
the Company has operating leases for seven operating leases for its two office locations, three company-operated stores, one staff dormitory
and one warehouse. Leases with an initial term of
Operating lease right-of-use assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. The discount rate used to calculate present value is incremental borrowing rate or, if available, the rate implicit in the lease.
The components of lease expense and supplemental cash flow information related to leases for the period are as follows:
| For the Six Months End | ||||||||
| April 30, | ||||||||
| 2025 | 2024 | |||||||
| Lease Cost | ||||||||
| Operating lease cost | $ | $ | ||||||
| Other Information | ||||||||
| Cash paid for amounts included in the measurement of lease liabilities | $ | $ | ||||||
As of April 30, 2025 and October 31, 2024, the weighted average lease term and discount rate are as follows:
| April 30, 2025 | October 31, 2024 | |||||||
| Weighted average remaining lease term – operating leases (in years) | ||||||||
| Average discount rate – operating lease | % | % | ||||||
As of April 30, 2025 and October 31, 2024, the supplemental balance sheet information related to leases are as follows:
| April 30, 2025 | October 31, 2024 | |||||||
| Operating leases | ||||||||
| Right-of-use assets | $ | $ | ||||||
| Operating lease liabilities, current | $ | $ | ||||||
| Operating lease liabilities, non-current | $ | |||||||
| Total operating lease liabilities | $ | $ | ||||||
F-19
Park Ha Biological Technology
Co., Ltd. and its Subsidiaries
Notes to the Unaudited Interim Condensed Consolidated Financial Statements
NOTE 13 — LEASES (cont.)
The undiscounted future minimum lease payment schedule as follows:
| For the years ending April 30, | ||||
| Remainder of 2025 | ||||
| 2026 | ||||
| 2027 | ||||
| 2028 | ||||
| 2029 | ||||
| Total undiscounted lease payments | ||||
| Less imputed interest | ( | ) | ||
| Total lease liabilities | ||||
NOTE 14 — SHAREHOLDERS’ EQUITY
The Company was incorporated
in the Cayman Islands in October 2022 under the Cayman Islands Companies Act as an exempted company with limited liability. As
of April 30, 2025, the Company is authorized to issue
As of April 30, 2025, the Company
has
On December 30, 2024, the Company
completed initial public offering, issued and sold
On January 24, 2025, the Company
issued and sold
On February 28, 2025, the
Board of Directors resolved and approved: the company adopt the 2025 Equity Incentive Plan, under which the total number of authorized
and issuable shares of the company’s common stock (with a par value of $
F-20
Park Ha Biological Technology Co., Ltd. and
its Subsidiaries
Notes to the Unaudited Interim Condensed Consolidated Financial Statements
NOTE 15 — RESTRICTED NET ASSETS
As a result of the PRC laws
and regulations and the requirement that distributions by PRC entities can only be paid out of distributable profits computed in accordance
with PRC GAAP, the PRC entities are restricted from transferring a portion of their net assets to the Company.
| As of | ||||||||
| April 30, 2025 | October 31, 2024 | |||||||
| Paid-in capital | ||||||||
| Additional paid in capital | ||||||||
| Statutory reserve | ||||||||
| Total | ||||||||
NOTE 16 — SEGMENTS AND GEOGRAPHIC INFORMATION
The Company believes that it operates in two business segments which comprised of products sales and franchise service; and it operates in one geographical location China. The Company disaggregates its revenue into categories that depict how the nature, amount, timing and uncertainty of revenue and cash flows are affected by economic factors.
Summarized financial information
for the
| Six Months Ended April 30, 2025 | ||||||||||||
| Product Sales | Franchise fees | Consolidated | ||||||||||
| Revenues, net | ||||||||||||
| Cost of revenues | ||||||||||||
| Gross profit | ||||||||||||
| Depreciation and amortization | ||||||||||||
| Other expense (income), net | ||||||||||||
| Income tax expenses (benefits) | ||||||||||||
| Net (Loss) Income | ( | ) | ( | ) | ( | ) | ||||||
| Six Months Ended April 30, 2024 | ||||||||||||
| Product Sales | Franchise fees | Consolidated | ||||||||||
| Revenues, net | ||||||||||||
| Cost of revenues | ||||||||||||
| Gross profit | ||||||||||||
| Depreciation and amortization | ||||||||||||
| Other expense (income), net | ||||||||||||
| Income tax expenses (benefits) | ( | ) | ||||||||||
| Net (Loss) Income | ( | ) | ||||||||||
Summarized financial information for revenues, costs and profits is as follows
Sales revenues comprised of the following:
| Six Months Ended | ||||||||||||||||
| April 30, 2025 | April 30, 2024 | |||||||||||||||
| Products sales – Non-franchisees | % | % | ||||||||||||||
| Product Sales – Franchisees | % | % | ||||||||||||||
| Franchise fees | % | % | ||||||||||||||
| Total | % | % | ||||||||||||||
F-21
Park Ha Biological Technology Co., Ltd. and
its Subsidiaries
Notes to the Unaudited Interim Condensed Consolidated Financial Statements
NOTE 16 — SEGMENTS AND GEOGRAPHIC INFORMATION (cont.)
Direct costs comprised of the following:
| Six Months Ended | ||||||||||||||||
| April 30, 2025 | April 30, 2024 | |||||||||||||||
| Products sales – Non-franchisees | % | % | ||||||||||||||
| Product Sales – Franchisees | % | % | ||||||||||||||
| Franchise fees | % | % | ||||||||||||||
| Total | % | % | ||||||||||||||
Gross profit comprised of the following:
| Six Months Ended | ||||||||||||||||
| April 30, 2025 | April 30, 2024 | |||||||||||||||
| Products sales – Non-franchisees | % | % | ||||||||||||||
| Product Sales – Franchisees | % | % | ||||||||||||||
| Franchise fees | % | % | ||||||||||||||
| Total | % | % | ||||||||||||||
NOTE 17 — CONCENTRATION RISKS
Concentration of credit risk
Cash deposits with banks are held in financial institutions in China, which deposits are not federally insured. Accordingly, the Company has a concentration of credit risk related to the uninsured part of bank deposits. The Company has not experienced any losses in such accounts and believes it is not exposed to significant credit risk.
Concentration of customers and suppliers
The Company has a concentration risk related to suppliers and customers. Failure to maintain existing relationships with the suppliers or customers to establish new relationships in the future could negatively affect the Company’s ability to obtain goods sold to customers in a price advantage and timely manner. If the Company is unable to obtain ample supply of goods from existing suppliers or alternative sources of supply, the Company may be unable to satisfy the orders from its customers, which could materially and adversely affect revenues.
The customers accounting for 10% or more of the Company’s revenue include the following:
| For the Six Months Ended | ||||||||
| April 30, 2025 | April 30, 2024 | |||||||
| Percentage of Company revenue | ||||||||
| Customer F | % | % | ||||||
| Customer G | % | % | ||||||
The customers that accounted for 10% or more of the Company’s accounts receivable comprised of the following:
| April 30, 2025 | October 31, 2024 | |||||||
| Percentage of the Company’s accounts receivable | ||||||||
| Customer A | % | % | ||||||
| Customer B | % | % | ||||||
| Customer C | % | % | ||||||
| Customer D | % | % | ||||||
| Customer E | % | % | ||||||
| Customer F | % | % | ||||||
| Customer G | % | % | ||||||
| Customer H | % | % | ||||||
| Customer I | % | % | ||||||
F-22
Park Ha Biological Technology Co., Ltd. and
its Subsidiaries
Notes to the Unaudited Interim Condensed Consolidated Financial Statements
NOTE 17 — CONCENTRATION RISKS (cont.)
The suppliers that accounted for 10% or more of the Company’s purchases comprised of the following:
| For the Six Months Ended | ||||||||
| April 30, 2025 | April 30, 2024 | |||||||
| Percentage of the Company’s purchases | ||||||||
| Supplier A | % | % | ||||||
| Supplier B | % | % | ||||||
| Supplier C | % | % | ||||||
| Supplier D | % | % | ||||||
| Supplier E | % | % | ||||||
| Supplier H | % | % | ||||||
| Supplier I | % | % | ||||||
The suppliers that accounted for 10% or more of the Company’s account payables comprised of the following:
| April 30, 2025 | October 31, 2024 | |||||||
| Percentage of the Company’s accounts payable | ||||||||
| Supplier F | % | % | ||||||
| Supplier G | % | % | ||||||
| Supplier J | % | % | ||||||
NOTE 18 — INCOME TAX
Cayman Islands
Under the current laws of the Cayman Islands, entities are not subject to tax on income or capital gain. In addition, payments of dividends by the Company to their shareholders are not subject to withholding tax in the Cayman Islands.
Hong Kong
Park Ha Biological Technology
(HK) Co., Ltd. is incorporated in Hong Kong and is subject to Hong Kong Profits Tax on the taxable income as reported in its statutory
financial statements adjusted in accordance with relevant Hong Kong tax laws. The applicable tax rate for the first HKD$
F-23
Park Ha Biological Technology
Co., Ltd. and its Subsidiaries
Notes to the Unaudited Interim Condensed Consolidated Financial Statements
NOTE 18 — INCOME TAX (cont.)
China, PRC
The Company in general is subject
to profits tax rate at
In accordance with the implementation
rules of EIT Laws, a qualified “High and New Technology Enterprise” (“HNTE”) is eligible for a preferential tax
rate of
Announcement No. 12 [2023]
of the Ministry of Finance and the State Taxation Administration stipulates that the preferential corporate income tax (CIT) policy for
small and low-profit enterprises (SLPEs) — reducing taxable income by
Announcement No. 12 [2023]
of the Ministry of Finance and the State Taxation Administration on Further Tax and Fee Support Policies for Micro and Small Enterprises
and Individual Businesses From January 1, 2023, to December 31, 2027,
Income taxes in the PRC are consist of:
| For the Six Months Ended | ||||||||
| April 30, | ||||||||
| 2025 | 2024 | |||||||
| Current income tax expense | ||||||||
| Deferred income tax benefit | ( | ) | ( | ) | ||||
| Total income tax expense | ||||||||
F-24
Park Ha Biological Technology Co., Ltd. and
its Subsidiaries
Notes to the Unaudited Interim Condensed Consolidated Financial Statements
NOTE 18 — INCOME TAX (cont.)
The net taxable income before income taxes and its provision for income taxes comprised of the following:
| For the Six Months Ended | ||||||||
| April 30, | ||||||||
| 2025 | 2024 | |||||||
| (Loss) Income attributed to China | ( | ) | ||||||
| PRC statutory tax rate | % | % | ||||||
| Income tax expense at PRC statutory income tax rate | ( | ) | ||||||
| Tax effect of preferential tax treatments | ||||||||
| Research and development credit | ( | ) | ( | ) | ||||
| Non-deductible expenses | ||||||||
| Change in valuation allowance | ||||||||
| Tax expense, net | ||||||||
As of April 30, 2025and
October 31, 2024,
| As of | ||||||||
| April 30, 2025 | October 31, 2024 | |||||||
| Net operating losses carried forward in the PRC | ||||||||
| Allowance of expected credit loss | ||||||||
| Total | ||||||||
| Less: Valuation allowance | ( | ) | ( | ) | ||||
| Deferred tax assets, net | ||||||||
As of April 30, 2025 and
October 31, 2024, the Company’s PRC entities had net operating loss carryforwards of approximately $
NOTE 19 — SUBSEQUENT EVENTS
The Company has evaluated subsequent events through the filing of the financial statements and determined that there have been no events that have occurred that would require adjustments to or disclosure in the consolidated financial statements except for the following:
On March 3, 2025, Astra Nova
Ventures Limited borrowed US$
On July 7, 2025, the company’s
board of directors approved the adoption of the Amended Plan, which amended and restated the company’s 2025 Share Incentive Plan.
An additional
NOTE 20 — PARENT COMPANY ONLY CONDENSED FINANCIAL INFORMATION
Park Ha Biological Technology Co., Ltd. (“Park Ha Cayman”) was incorporated in the Cayman Islands on October 11, 2022.
The condensed parent company
financial statements have been prepared in accordance with Rule 12-04, Schedule I of Regulation S-X, as the restricted
net assets of the subsidiaries of Park Ha Cayman exceed
F-25
Park Ha Biological Technology Co., Ltd. and
its Subsidiaries
Notes to the Unaudited Interim Condensed Consolidated Financial Statements
NOTE 20 — PARENT COMPANY ONLY CONDENSED FINANCIAL INFORMATION (cont.)
The condensed parent company financial statements have been prepared using the same accounting principles and policies described in the notes to the unaudited condensed consolidated financial statements, with the only exception being that the parent company accounts for its subsidiaries using the equity method. Refer to the unaudited condensed consolidated financial statements and notes presented above for additional information and disclosures with respect to these financial statements.
As of April 30, 2025 and October 31, 2024, there were no material contingencies, significant provisions of long-term obligations, mandatory dividend or redemption requirements of redeemable stock or guarantees of the Company, except for those that have been separately disclosed in the consolidated financial statements, if any.
Condensed Balance Sheets
| April 30, | October 31, | |||||||
| 2025 | 2024 | |||||||
| ASSETS | ||||||||
| Current Assets | ||||||||
| Cash and cash equivalents | ||||||||
| Other receivables and other current assets | ||||||||
| Deferred IPO Cost | ||||||||
| Total Current Assets | ||||||||
| Non-Current Assets | ||||||||
| Investment in subsidiaries | ||||||||
| Total Non-Current Assets | ||||||||
| TOTAL ASSETS | ||||||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
| Current Liabilities | ||||||||
| Intercompany Payable | ||||||||
| Total Current Liabilities | ||||||||
| TOTAL LIABILITIES | ||||||||
| Shareholders’ Equity | ||||||||
| Ordinary shares ( | ||||||||
| Additional Paid In Capital | ||||||||
| Statutory Reserve | ||||||||
| Retained Earnings (Accumulated Deficits) | ( | ) | ||||||
| Accumulated Other Comprehensive Loss | ( | ) | ( | ) | ||||
| Total Stockholders’ Equity | ||||||||
| TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
| * |
Condensed Statements of Operations
| Six Months Ended April 30, 2025 | Six Months Ended April 30, 2024 | |||||||
| Operating costs and expenses: | ||||||||
| General and administrative expenses | ||||||||
| Total operating expenses | ||||||||
| Other income (expense): | — | |||||||
| Other income | ||||||||
| Interest income | ||||||||
| Interest expense | ||||||||
| Total other income (expenses) | ||||||||
| Share of income of subsidiaries | ||||||||
| Net (loss) income | ( | ) | ||||||
F-26