Decent Holding Inc 6-K, filed Aug 3, 2026
Decent Holding Inc. (DXST)
About this 6-K
Decent Holding Inc filed this 6-K on August 3, 2026.
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:
4th Floor & 5th Floor North Zone, Dingxin Building
No. 106 Aokema Avenue,
Laishan District, Yantai, Shandong Province
People’s Republic of China 264003
(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 ☐
INFORMATION CONTAINED IN THIS FORM 6-K REPORT
Decent Holding Inc. (the “Company”) is filing its unaudited financial results for the six months ended April 30, 2026 and to discuss its recent corporate developments. Attached as exhibits to this Report on Form 6-K are:
| ● | the Management’s Discussion and Analysis of Financial Condition and Results of Operations for the Six Months Ended April 30, 2026 and 2025 as Exhibit 99.1; |
| ● | the unaudited interim condensed consolidated financial statements and related notes as Exhibit 99.2; and |
| ● | interactive data file disclosure as Exhibit 101 in accordance with Rule 405 of Regulation S-T. |
1
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
This report on Form 6-K and the exhibits hereto contain “forward-looking statements” for purposes of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 that represent the Company’s beliefs, projections and predictions about future events. All statements other than statements of historical fact are “forward-looking statements,” including any projections of earnings, revenue or other financial items, any statements of the plans, strategies and objectives of management for future operations, any statements concerning proposed new projects or other developments, any statements regarding future economic conditions or performance, any statements of management’s beliefs, goals, strategies, intentions and objectives, and any statements of assumptions underlying any of the foregoing. Words such as “may”, “will”, “should”, “could”, “would”, “predicts”, “potential”, “continue”, “expects”, “anticipates”, “future”, “intends”, “plans”, “believes”, “estimates” and similar expressions, as well as statements in the future tense, identify forward-looking statements.
These statements are necessarily subjective and involve known and unknown risks, uncertainties and other important factors that could cause the Company’s actual results, performance or achievements, or industry results, to differ materially from any future results, performance or achievements described in or implied by such statements. Actual results may differ materially from expected results described in the Company’s forward-looking statements, including with respect to correct measurement and identification of factors affecting the Company’s business or the extent of their likely impact, and the accuracy and completeness of the publicly available information with respect to the factors upon which the Company’s business strategy is based or the success of the Company’s business.
Forward-looking statements should not be read as a guarantee of future performance or results, and will not necessarily be accurate indications of whether, or the times by which, the Company’s performance or results may be achieved. Forward-looking statements are based on information available at the time those statements are made and management’s belief as of that time with respect to future events, and are subject to risks and uncertainties that could cause actual performance or results to differ materially from those expressed in or suggested by the forward-looking statements. Important factors that could cause such differences include, but are not limited to, those factors discussed more fully under the caption “Risk Factors” as well as other risks and factors identified from time to time in the Company’s SEC filings.
2
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.
| DECENT HOLDING INC. | ||
| Date: August 3, 2026 | By: | /s/ Haicheng Xu |
| Name: | Haicheng Xu | |
| Title: | Chief Executive Officer | |
3
Exhibit Index
| Exhibit No. | Description | |
| 99.1 | Management’s Discussion and Analysis of Financial Condition and Results of Operations for the Six Months Ended April 30, 2026 and 2025 | |
| 99.2 | Unaudited Interim Condensed Consolidated Financial Statements for the Six Months Ended April 30, 2026 and 2025 | |
| 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) |
4
Exhibit 99.1
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis should be read in conjunction with our unaudited interim condensed consolidated financial statements, the notes to those financial statements and other financial data that appear elsewhere in this report. This discussion should also be read together with our audited consolidated financial statements and the notes thereto, and the other information contained in our annual report on Form 20-F for the fiscal year ended October 31, 2025 filed with the Securities and Exchange Commission on March 2, 2026. In addition to historical information, the following discussion contains forward-looking statements based on current expectations that involve risks and uncertainties. Actual results and the timing of certain events may differ significantly from those projected in such forward-looking statements due to a number of factors. Our unaudited interim condensed consolidated financial statements are prepared in conformity with U.S. GAAP.
Overview
Decent Holding Inc. is a holding company that was incorporated under the laws of the Cayman Islands, and our Class A ordinary shares are listed on the Nasdaq Capital Market under the symbol “DXST”. As a holding company with no material operations of its own, we conduct our operations in China through our PRC operating subsidiaries, Shandong Dingxin Ecology Environmental Co., Ltd. (“Shandong Dingxin”), which we hold through Decent Hong Kong Holding International Limited, our wholly-owned Hong Kong subsidiary (“Decent HK”), and Shandong Naxin Ecological Environment Engineering Co., Limited, our wholly foreign-owned enterprise in the PRC, and Suncare (Shanghai) Health Technology Co., Ltd. (“Suncare”), which was incorporated on December 24, 2025 and in which we hold a 99% equity interest through our subsidiary, Decent HK. We refer to Shandong Dingxin and Suncare collectively as our Operating Subsidiaries in China.
We strive to be a pioneer in the field of water pollution treatment and resource reutilization treatment in China. We specialize in the provision of wastewater treatment, ecological river restoration and river ecosystem management through water quality enhancement, as well as microbial products that are primarily used for water quality enhancement and pollutant removal, through our Operating Subsidiary, Shandong Dingxin Ecology Environmental Co., Ltd. In addition, through Suncare, we operate a community-based senior health and elderly care platform serving China’s aging population, which was launched in March 2026. The platform operates through a network of community service locations, each of which typically serves surrounding residential communities of approximately 30,000 to 100,000 people, and offers preventive health consultations, lifestyle management services and aging support, together with related training services and product sales, on a membership basis under an online-to-offline model. This business generated revenue of $3,502,890, or 18.85% of our total revenue, for the six months ended April 30, 2026.
Our main services and products include (1) wastewater treatment, (2) river water quality management, (3) microbial products for water quality enhancement and pollutant removal, (4) senior health and elderly care services, including related training services, and (5) other services and products.
We have invested heavily on research and development to sharpen our innovation edge. So far, we have established cooperation relationships for scientific research and development with well-known academic institutions in China, such as Yantai University with whom we had entered into a research cooperation agreement. We have an in-house research and development team with members possessing technical expertise in engineering and chemistry as well as a sharp business sense that we believe can accurately capture and meet our customers’ needs.
We have received a number of industry awards and certifications recognizing our success and achievements, including the “Yantai City Industrial Design Center” awarded by the Yantai Municipal Bureau of Industry and Information Technology in 2022, the “Yantai New Special Expertise Enterprise” awarded by the Yantai Municipal Bureau of Industry and Information Technology in 2022, the “High-Tech Enterprise” awarded by the Shandong Provincial Department of Science and Technology, Shandong Provincial Department of Finance, and Shandong Provincial Taxation Bureau of the State Administration of Taxation in 2022, the “Shandong Province ‘One Enterprise, One Technology’ Innovative Enterprises” awarded by the Shandong Provincial Bureau of Small and Medium Enterprises in 2015.
Recent Developments
Reverse Share Split.
On March 16, 2026, we effected a share consolidation of our Class A ordinary shares and Class B ordinary shares at a ratio of one-for-twenty-five. All share and per share amounts presented in this report and in our unaudited interim condensed consolidated financial statements have been retroactively restated to give effect to the share consolidation.
Launch and Expansion of Our Senior Health and Elderly Care Platform.
In March 2026, Suncare launched its digital senior health and elderly care platform. On March 10, 2026, Suncare entered into a strategic cooperation agreement with a regional senior care operator in China, which is expected to extend the platform to approximately 70 community service locations across several provinces in eastern and northern China. On June 9, 2026, we entered into a partnership with Taihao Robotics to establish a robotics training network in China. As of June 30, 2026, the platform had approximately 150,000 paid members across approximately 480 community service locations, and we are targeting approximately 1,000 community service locations by the end of 2026.
Financing Activities.
In November 2025, we completed a registered offering of our Class A ordinary shares and accompanying warrants. Net cash provided by financing activities was $7,037,437 for the six months ended April 30, 2026. On April 24, 2026, we filed a registration statement on Form F-3, which was declared effective on May 8, 2026.
Extraordinary General Meeting.
On July 14, 2026, our shareholders approved an increase in our authorized share capital from US$50,000, divided into 19,800,000 Class A ordinary shares and 200,000 Class B ordinary shares, to US$2,500,000, divided into 900,000,000 Class A ordinary shares and 100,000,000 Class B ordinary shares; authority for our board of directors to effect one or more share consolidations of our issued and unissued Class A ordinary shares and Class B ordinary shares at a ratio of not less than one-for-ten and not more than one-for-250 within one year of the meeting; and related amendments to our memorandum and articles of association.
Corporate Structure
2
Comparison of Results of Operations For the Six Months Ended April 30, 2026 and 2025
The following table sets forth key components of our results of operations during the six months ended April 30, 2026 and 2025, both in U.S. dollars and as a percentage of our revenue.
| For the Six Months Ended April 30, | ||||||||||||||||
| 2026 | 2025 | |||||||||||||||
| Amount | % of revenue | Amount | % of revenue | |||||||||||||
| Revenue | ||||||||||||||||
| Wastewater treatment revenue | $ | 9,186,083 | 49.43 | $ | 493,123 | 8.97 | ||||||||||
| River water quality management revenue | 4,297,181 | 23.12 | 4,728,449 | 85.99 | ||||||||||||
| Product sales revenue | 1,344,830 | 7.24 | 277,081 | 5.04 | ||||||||||||
| Training Services | 3,502,890 | 18.85 | — | — | ||||||||||||
| Others | 254,541 | 1.36 | — | — | ||||||||||||
| Total revenue | 18,585,525 | 100.00 | 5,498,653 | 100.00 | ||||||||||||
| Cost of revenue | ||||||||||||||||
| Wastewater treatment revenue | (7,220,924 | ) | (38.85 | ) | (401,310 | ) | (7.30 | ) | ||||||||
| River water quality management revenue | (3,288,424 | ) | (17.69 | ) | (3,424,737 | ) | (62.28 | ) | ||||||||
| Product sales revenue | (1,004,579 | ) | (5.41 | ) | (161,511 | ) | (2.94 | ) | ||||||||
| Training Services | (872,309 | ) | (4.69 | ) | — | — | ||||||||||
| Total cost of revenue | (12,386,236 | ) | (66.64 | ) | (3,987,558 | ) | (72.52 | ) | ||||||||
| Gross profit | 6,199,289 | 33.36 | 1,511,095 | 27.48 | ||||||||||||
| Selling expenses | (3,076,861 | ) | (16.56 | ) | (223,821 | ) | (4.07 | ) | ||||||||
| General and administrative expenses | (3,809,799 | ) | (20.50 | ) | (1,740,278 | ) | (31.65 | ) | ||||||||
| Research and development expenses | (188,381 | ) | (1.01 | ) | (12,784 | ) | (0.23 | ) | ||||||||
| Net loss from operations | (875,752 | ) | (4.71 | ) | (465,788 | ) | (8.47 | ) | ||||||||
| Total other income, net | 7,622 | 0.04 | 16,375 | 0.30 | ||||||||||||
| Net loss before income taxes | (868,130 | ) | (4.67 | ) | (449,413 | ) | (8.17 | ) | ||||||||
| Income tax expenses | (205,963 | ) | (1.11 | ) | (29,752 | ) | (0.54 | ) | ||||||||
| Net loss | $ | (1,074,093 | ) | (5.78 | ) | $ | (479,165 | ) | (8.71 | ) | ||||||
The following table lists the calculation methods of gross profit and gross profit margin of each type of revenue:
| For the six months ended April 30, | Changes | |||||||||||||||
| 2026 | 2025 | Amount | % | |||||||||||||
| Wastewater treatment revenue | ||||||||||||||||
| Revenue | $ | 9,186,084 | $ | 493,123 | $ | 8,692,961 | 1762.84 | % | ||||||||
| Cost of revenue | 7,220,924 | 401,310 | 6,819,614 | 1699.34 | % | |||||||||||
| Gross profit | $ | 1,965,160 | $ | 91,813 | $ | 1,873,347 | 2040.39 | % | ||||||||
| Gross profit margin | 21.39 | % | 18.62 | % | 2.77 | % | 14.88 | % | ||||||||
| River water quality management revenue | ||||||||||||||||
| Revenue | $ | 4,297,180 | $ | 4,728,449 | $ | (431,269 | ) | (9.12 | )% | |||||||
| Cost of revenue | 3,288,423 | 3,424,737 | (136,314 | ) | (3.98 | )% | ||||||||||
| Gross profit | $ | 1,008,757 | $ | 1,303,712 | $ | (294,955 | ) | (22.62 | )% | |||||||
| Gross profit margin | 23.47 | % | 27.57 | % | (4.10 | )% | (14.87 | )% | ||||||||
| Product sales revenue | ||||||||||||||||
| Revenue | $ | 1,344,830 | $ | 277,081 | $ | 1,067,749 | 385.36 | % | ||||||||
| Cost of revenue | 1,004,580 | 161,511 | 843,069 | 521.99 | % | |||||||||||
| Gross profit | $ | 340,250 | $ | 115,570 | $ | 224,680 | 194.41 | % | ||||||||
| Gross profit margin | 25.30 | % | 41.71 | % | (16.41 | )% | (39.34 | )% | ||||||||
| Training revenue | ||||||||||||||||
| Revenue | $ | 3,502,890 | $ | — | $ | 3,502,890 | 100.00 | % | ||||||||
| Cost of revenue | 872,309 | — | 872,309 | 100.00 | % | |||||||||||
| Gross profit | $ | 2,630,581 | $ | — | $ | 2,630,581 | 100.00 | % | ||||||||
| Gross profit margin | 75.10 | % | — | % | 75.10 | % | 100.00 | % | ||||||||
| Other revenue | ||||||||||||||||
| Revenue | $ | 254,541 | $ | — | $ | 254,541 | 100.00 | % | ||||||||
| Cost of revenue | — | — | — | — | % | |||||||||||
| Gross profit | $ | 254,541 | $ | — | $ | 254,541 | 100.00 | % | ||||||||
| Gross profit margin | 100.00 | % | — | % | 100.00 | % | 100.00 | % | ||||||||
| Total | ||||||||||||||||
| Revenue | $ | 18,585,525 | $ | 5,498,653 | $ | 13,086,872 | 238.00 | % | ||||||||
| Cost of revenue | 12,386,236 | 3,987,558 | 8,398,678 | 210.62 | % | |||||||||||
| Gross profit | $ | 6,199,289 | $ | 1,511,095 | $ | 4,688,194 | 310.25 | % | ||||||||
| Gross profit margin | 33.36 | % | 27.48 | % | 5.88 | % | 21.40 | % | ||||||||
3
Revenue
Our revenue primarily comes from wastewater treatment projects, river water quality management services, product sales, training and others. Total revenue increased by 238.00% or $13,086,872 to $18,585,525 for the six months ended April 30, 2026 compared with total revenue of $5,498,653 for the six months ended April 30, 2025. Our total revenue for the six months ended April 30, 2026 exceeded our total revenue of $12,949,345 for the entire fiscal year ended October 31, 2025. Revenue growth was primarily attributable to the expansion of existing business lines and the incremental contribution from the newly launched digital health and wellness segment, which mainly includes training services and product sales.
Revenue from Wastewater Treatment Service
For the six months ended April 30, 2026, the revenue from wastewater treatment service increased significantly to $9,186,084, from $493,123 for the six months ended April 30, 2025, with a growth of 1,762.84%. The cost of revenue for wastewater treatment was $7,220,924 for the six months ended April 30, 2026, as compared to $401,310 for the six months ended April 30, 2025, with a growth of 1,699.34%. This substantial growth is reflective of successful bids and project completions in this stream. Consequently, the gross profit margin was 21.39% and 18.62% for the six months ended April 30, 2026 and 2025, respectively.
Revenue from River Water Quality Management
For the six months ended April 30, 2026, the revenue from river water quality management witnessed a minor decrease of $431,269, or 9.12%, as compared to $4,728,449 for the six months ended April 30, 2025. Hence, the costs associated had also decreased, leading to a gross profit margin of 23.47% and 27.57% for the six months ended April 30, 2026 and 2025, respectively.
Revenue from Product Sales
For the six months ended April 30, 2026, the revenue from product sales increased by 385.36% to $1,067,749 compared to $277,081 for the six months ended April 30, 2025. The Company's main product is microbial inoculum, with customers primarily being local enterprises. In response to intensifying market competition and to enhance attractiveness to target customers, the Company implemented a strategic price reduction on its microbial inoculum products during the period, which significantly improved the products' cost-effectiveness in the market. This strategy effectively drove a substantial increase in sales revenue; however, the price reduction consequently exerted pressure on product gross margin, resulting in a contraction of profit margins. Additionally, the newly added digital health business line also contributed a portion of product sales revenue during the period. The cost of revenue for product sales saw an increase of 521.99% to $1,004,580 for the six months ended April 30, 2026 from $161,511 for the six months ended April 30, 2025. Consequently, the gross profit as a percentage of revenue was 25.30% and 41.71% for the six months ended April 30, 2026 and 2025, respectively.
Revenue from Training
During the period, the Company strategically expanded into the digital health business segment, with training services emerging as a key new component. This segment contributed revenue of $3,502,890, incurred cost of revenue of $872,309, and delivered gross profit of $2,630,581, achieving a gross margin of 75.1%. With its high-margin profile, this new business line contributed meaningfully to the overall revenue growth and gross margin improvement during the period.
Overall, despite varied performance across different segments, it showed a continuously upward trend in revenue for the six months ended April 30, 2026 compared with the same period in 2025. The total gross profit margin raised from 27.48% for the six months ended April 30, 2025 to 33.36% for the six months ended April 30, 2026.
Cost of revenue
Our cost of revenue was $12,386,236 and $3,987,558 for the six months ended April 30, 2026 and 2025, respectively. The increase in cost of revenues is a direct result of our increase of revenues.
Gross profit and gross margin
Our gross profit was $6,199,289 for the six months ended April 30, 2026, compared with a gross profit of $1,511,095 for the six months ended April 30, 2025. Gross profit as a percentage of revenue (gross margin) was 33.36% for the six months ended April 30, 2026, compared to a gross profit of 27.48% for the six months ended April 30, 2025. The increase in gross profit and gross profit margin was primarily attributable to the improvement in revenue mix. On one hand, the wastewater treatment service segment accounted for a larger share of total revenue during the period; while this segment carries a moderate gross margin, its expanding scale drove down unit costs through economies of scale, thereby enhancing its marginal profit contribution. On the other hand, the Company's newly launched digital health business line contributed relatively high gross profit, further lifting the overall profitability.
Operating Expenses
Total operating expenses increased by $5,098,158 or 257.89% to $7,075,041 for the six months ended April 30, 2026 from $1,976,883 for the six months ended April 30, 2025.
Our selling expense increased $2,853,040 for the six months ended April 30, 2026 as compared to the six months ended April 30, 2025, mainly due to the increase in marketing fees for the Company's newly launched digital health business line.
The increase in general and administrative expenses of approximately $2,069,521 was mainly attributable to 1) an increase in consultant and service fees of approximately $1.14 million; 2) an increase in salary and welfare of approximately $0.84 million, due to the implemented internal personnel adjustments; 3) an increase in rental of approximately $0.06 million.
Our research and development expenses increased by $175,597 for the six months ended April 30, 2026, as compared to the same period last year, mainly due to the engagement of external research institutions to assist with our research and development initiatives.
4
Income tax expenses
Our income tax expenses were $205,963 for the six months ended April 30, 2026, compared to an income tax expenses for the six months ended April 30, 2025, which was $29,752.
Net loss
As a result of the cumulative effect of the factors described above, our net loss for the six months ended April 30, 2026 and 2025 were $1,074,093 and $479,165, respectively.
Liquidity and Capital Resources
The following table sets forth a summary of our cash flows for the periods indicated:
| For six months ended April 30, | ||||||||
| 2026 | 2025 | |||||||
| Net cash used in operating activities | $ | (5,730,198 | ) | $ | (1,559,979 | ) | ||
| Net cash used in investing activities | (259,445 | ) | (1,945,771 | ) | ||||
| Net cash provided by (used in) financing activities | 7,037,437 | 3,971,014 | ||||||
| Net change in cash | 1,047,794 | 465,264 | ||||||
| Effect of exchange rate changes on cash | 32,707 | (33,880 | ) | |||||
| Cash at the beginning of period | 572,807 | 407,031 | ||||||
| Cash at the end of period | $ | 1,653,308 | $ | 838,415 | ||||
As of April 30, 2026, we had cash of $1,653,308, consisted of $1,506,822 denominated in USD and $146,486 denominated in RMB. As of October 31, 2025, the cash consisted of $79,440 denominated in USD and $493,367 denominated in RMB.
Operating Activities
Our net cash used in operating activities was $5,730,198 for the six months ended April 30, 2026, as compared to net cash used in operating activities of $1,559,979 for the six months ended April 30, 2025.
Our net cash used in operating activities for the six months ended April 30, 2026 reflects (i) our net loss of $1,074,093, adjustments to reconcile net loss to net cash used in operating activities of $896,505, (ii) an increase in accounts receivable of $8,999,285, (iii) an increase in contract assets of $4,119,007, partially offset by (iv) an increase in accounts payable of $4,173,124, (v) an increase in other payables of $1,986,935, and (vi) an increase in contract liabilities of $1,233,224.
Our net cash used in operating activities for the six months ended April 30, 2025 reflects (i) our net loss of $479,165, adjustments to reconcile net loss to net cash used in operating activities of $720,349, (ii) an increase in accounts receivables of $651,784 due to the increase of revenue, (iii) a decrease in accounts payables of $703,567, partially offset by (iv) an increase in other payables of $632,182.
Investing Activities
Net cash used in investing activities was $259,445 for the six months ended April 30, 2026, as compared to net cash used in investing activities of $1,945,771 for the six months ended April 30, 2025.
The net cash used in investing activities for the six months ended April 30, 2026 was mainly attributable to (i) purchase of property and equipment of $16,445, (ii) loan made to third parties of $243,000.
The net cash used in investing activities for the six months ended April 30, 2025 was mainly attributable to (i) purchase of property and equipment of $585, (ii) loan made to third parties of $1,984,087, and (iii) repayment from related parties of $38,901.
5
Financing Activities
Our net cash provided by financing activities was $7,037,437 for the six months ended April 30, 2026, as compared to the net cash provided by financing activities of $3,971,014 for the six months ended April 30, 2025. The net cash provided by financing activities for the six months ended April 30, 2026 was mainly due to net proceed from offering of $7,037,437. The net cash provided by financing activities for the six months ended April 30, 2025 was mainly due to net proceed from offering of $3,035,285, partially offset by principal payment for obligation under finance leases of $11,695.
Contractual Obligation
The following table summarizes our contractual obligations, which are comprised entirely of operating lease obligations, as of April 30, 2026, and the effect these obligations are expected to have on our liquidity and cash flows in future periods.
| Payments due by period | ||||||||||||||||||||
| Total | Less than 1 year | 1 – 2 years | 2 – 3 years | More than 3 years | ||||||||||||||||
| Contractual Obligations | ||||||||||||||||||||
| Operating Lease Obligations | $ | 747,508 | $ | 302,493 | $ | 309,816 | $ | 135,200 | $ | - | ||||||||||
Off-Balance Sheet Arrangements
We have not entered into any financial guarantees or other commitments to guarantee the payment obligations of any third parties. In addition, we have not entered into any derivative contracts that are indexed to our own shares and classified as shareholders’ equity, or that are not reflected in our financial statements. Furthermore, we do not have any retained or contingent interest in assets transferred to an unconsolidated entity that serves as credit, liquidity or market risk support to such entity. Moreover, we do not have any variable interest in an unconsolidated entity that provides financing, liquidity, market risk or credit support to us or engages in leasing, hedging or research and development services with us.
6
Exhibit 99.2
DECENT HOLDING INC. AND SUBSIDIARIES
UNAUDITED INTERIM CONDENSED CONSOLIDATED BALANCE SHEETS
(Stated in U.S. dollars, except for share and per share data)
| As of April 30, 2026 | As of October 31, 2025 | |||||||
| Unaudited | ||||||||
| ASSETS | ||||||||
| CURRENT ASSETS | ||||||||
| Cash | $ | $ | ||||||
| Accounts receivable, net | ||||||||
| Prepayment, net | ||||||||
| Prepaid expenses, current | ||||||||
| Other Receivables | ||||||||
| Contract assets | ||||||||
| Loan receivable, current | ||||||||
| Due from related parties | ||||||||
| Inventories | ||||||||
| Interest receivable | ||||||||
| Total current assets | ||||||||
| NON-CURRENT ASSETS | ||||||||
| Deferred offering costs | ||||||||
| Prepaid expenses, non-current | ||||||||
| Loan receivable, non-current | ||||||||
| Operating lease assets, net | ||||||||
| Property and equipment, net | ||||||||
| Intangible assets, net | ||||||||
| Deferred tax asset | ||||||||
| Total non-current assets | ||||||||
| TOTAL ASSETS | $ | $ | ||||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
| CURRENT LIABILITIES | ||||||||
| Accounts payable | $ | $ | ||||||
| Advance from Customers | ||||||||
| Payroll payable | ||||||||
| Tax payables | ||||||||
| Other payables | ||||||||
| Contract liabilities | ||||||||
| Operating lease liabilities – current | ||||||||
| Estimated warranty liabilities | ||||||||
| Total current liabilities | ||||||||
| NON-CURRENT LIABILITIES | ||||||||
| Operating lease liabilities – non-current | ||||||||
| Total non-current liabilities | ||||||||
| TOTAL LIABILITIES | ||||||||
| SHAREHOLDERS’ EQUITY | ||||||||
| Class A Ordinary shares (US$ | ||||||||
| Class B Ordinary shares (US$ | ||||||||
| Subscription receivable | ( | ) | ( | ) | ||||
| Additional paid-in capital | ||||||||
| Statutory reserve | ||||||||
| Retained earnings | ||||||||
| Accumulated other comprehensive income (loss) | ( | ) | ||||||
| Total Decent’s shareholders’ equity | ||||||||
| Non-controlling interests | ( | ) | ||||||
| Total shareholders’ equity | ||||||||
| TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | $ | $ | ||||||
The accompanying notes are an integral part of these unaudited interim condensed consolidated financial statements.
DECENT HOLDING INC. AND SUBSIDIARIES
UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENTS OF OPERATION AND COMPREHENSIVE (LOSS) INCOME
(Stated in U.S. dollars, except for share and per share data)
| For The Six Months Ended April 30, | ||||||||
| 2026 | 2025 | |||||||
| REVENUE | ||||||||
| Wastewater treatment revenue | $ | $ | ||||||
| River water quality management revenue | ||||||||
| Product sales revenue | ||||||||
| Training revenue | ||||||||
| Others | ||||||||
| TOTAL REVENUE | ||||||||
| COST OF REVENUE | ||||||||
| Wastewater treatment revenue | ( | ) | ( | ) | ||||
| River water quality management revenue | ( | ) | ( | ) | ||||
| Product sales revenue | ( | ) | ( | ) | ||||
| Training revenue | ( | ) | ||||||
| TOTAL COST OF REVENUE | ( | ) | ( | ) | ||||
| GROSS PROFIT | ||||||||
| OPERATING EXPENSES | ||||||||
| Selling expenses | ( | ) | ( | ) | ||||
| General and administrative expenses | ( | ) | ( | ) | ||||
| Research and development expenses | ( | ) | ( | ) | ||||
| Total operating expenses, net | ( | ) | ( | ) | ||||
| NET LOSS FROM OPERATIONS | ( | ) | ( | ) | ||||
| OTHER INCOME (EXPENSES) | ||||||||
| Interest income | ||||||||
| Other income | ||||||||
| Total other income, net | ||||||||
| NET LOSS BEFORE TAXES | ( | ) | ( | ) | ||||
| Income tax expenses | ( | ) | ( | ) | ||||
| NET LOSS | ( | ) | ( | ) | ||||
| Net loss attributable to non-controlling interests | ( | ) | ||||||
| Net loss attributable to shareholders | ( | ) | ( | ) | ||||
| OTHER COMPREHENSIVE (LOSS) INCOME | ||||||||
| Foreign currency translation adjustment attributable to non-controlling interests | ( | ) | ||||||
| Foreign currency translation adjustment attributable to shareholders | ( | ) | ||||||
| Total comprehensive income (loss) | ( | ) | ||||||
| COMPREHENSIVE LOSS ATTRIBUTABLE TO NON-CONTROLLING INTERESTS | $ | ( | ) | $ | ||||
| COMPREHENSIVE LOSS ATTRIBUTABLE TO DECENT’S SHAREHOLDERS | $ | ( | ) | $ | ( | ) | ||
| Weighted average shares outstanding during the year – basic and diluted | ||||||||
| Loss per Ordinary Share – basic and diluted | $ | ( | ) | $ | ( | ) | ||
The accompanying notes are an integral part of these unaudited interim condensed consolidated financial statements.
2
DECENT HOLDING INC. AND SUBSIDIARIES
UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
(Stated in U.S. dollars, except for share and per share data)
| Ordinary Shares | Additional | Retained earnings | Accumulated other | |||||||||||||||||||||||||||||||||||||
| Class A | Class B | Subscription | paid-in | Statutory | (Accumulated | comprehensive | Total | |||||||||||||||||||||||||||||||||
| Shares | Par value | Shares | Par value | receivable | capital | reserve | deficits) | income (loss) | Equity | |||||||||||||||||||||||||||||||
| BALANCE, October 31, 2024 | $ | $ | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||
| Issuance of ordinary shares upon Initial Public Offering (“IPO”) | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||
| Net loss | — | — | — | — | — | — | — | ( | ) | — | ( | ) | ||||||||||||||||||||||||||||
| Statutory reserve | — | — | — | — | — | — | ( | ) | — | — | ||||||||||||||||||||||||||||||
| Foreign currency translation adjustments | — | — | — | — | — | — | — | — | ( | ) | ( | ) | ||||||||||||||||||||||||||||
| BALANCE, April 30, 2025 | $ | $ | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||
| Ordinary Shares* | Additional | Retained earnings | Accumulated other | Total Decent | Non- | |||||||||||||||||||||||||||||||||||||||||||
| Class A | Class B | Subscription | paid-in | Statutory | (Accumulated | comprehensive | shareholders’ | controlling | Total | |||||||||||||||||||||||||||||||||||||||
| Shares | Par value | Shares | Par value | receivable | capital | reserve | deficits) | income (loss) | Equity | interests | Equity | |||||||||||||||||||||||||||||||||||||
| BALANCE, October 31, 2025 | $ | $ | ( | ) | ( | ) | — | |||||||||||||||||||||||||||||||||||||||||
| Issuance of ordinary shares upon offering, net of offering cost | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
| Ordinary shares issued upon cashless exercise of the warrants | — | — | — | ( | ) | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||
| Net loss | — | — | — | — | — | — | — | ( | ) | — | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||
| Statutory reserve | — | — | — | — | — | — | ( | ) | — | — | — | — | ||||||||||||||||||||||||||||||||||||
| Foreign currency translation adjustments | — | — | — | — | — | — | — | — | ( | ) | ||||||||||||||||||||||||||||||||||||||
| BALANCE, April 30, 2026 | $ | $ | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||||||||
The accompanying notes are an integral part of these unaudited interim condensed consolidated financial statements.
3
DECENT HOLDING INC. AND SUBSIDIARIES
UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Stated in U.S. dollars, except for share and per share data)
| For The Six Months Ended April 30, | ||||||||
| 2026 | 2025 | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Allowance for credit losses and bad debts | ||||||||
| Depreciation and amortization | ||||||||
| Amortization of finance lease assets | ||||||||
| Non-cash operating lease expenses | ||||||||
| Deferred income tax effect | ( | ) | ( | ) | ||||
| Estimated warranty effect | ( | ) | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | ( | ) | ( | ) | ||||
| Prepayment | ( | ) | ||||||
| Prepaid expenses | ||||||||
| Other receivables | ( | ) | ||||||
| Contract assets | ( | ) | ||||||
| Due from related party | ||||||||
| Inventories | ||||||||
| Other current assets | ( | ) | ||||||
| Tax payables | ||||||||
| Other payables | ||||||||
| Accounts payable | ( | ) | ||||||
| Advance from customers | ||||||||
| Contract liabilities | ||||||||
| Operating lease liabilities | ( | ) | ( | ) | ||||
| Advance from related parties | ( | ) | ||||||
| Payroll payable | ||||||||
| CASH USED IN OPERATING ACTIVITIES | ( | ) | ( | ) | ||||
| CASH FLOWS FROM INVESTING ACTIVITIES | ||||||||
| Purchase of property and equipment | ( | ) | ( | ) | ||||
| Loan made to third party | ( | ) | ( | ) | ||||
| Repayment from related parties | ||||||||
| CASH USED IN INVESTING ACTIVITIES | ( | ) | ( | ) | ||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
| Offering costs paid | ( | ) | ( | ) | ||||
| Principal payment for obligation under finance leases | ( | ) | ||||||
| Gross proceeds from offering | ||||||||
| CASH PROVIDED BY FINANCING ACTIVITIES | ||||||||
| EFFECT OF EXCHANGE RATE ON CASH | ( | ) | ||||||
| NET CHANGE IN CASH | ||||||||
| CASH AT BEGINNING OF PERIOD | ||||||||
| CASH AT END OF PERIOD | $ | $ | ||||||
| SUPPLEMENTAL CASH FLOW INFORMATION | ||||||||
| Cash paid during the period for: | ||||||||
| Income taxes | $ | $ | ||||||
| Interest | $ | $ | ||||||
| NON-CASH TRANSACTIONS | ||||||||
| Operating lease assets obtained in exchange for lease obligations | $ | $ | ||||||
| Cashless exercise of warrants | ||||||||
The accompanying notes are an integral part of these unaudited interim condensed consolidated financial statements.
4
DECENT HOLDING INC. AND SUBSIDIARIES
NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
| 1. | ORGANIZATION, PRINCIPAL ACTIVITIES AND MANAGEMENT’S PLANS |
Decent Holding Inc. (the “Company” or “Decent”) is a holding company incorporated on January 6, 2022 under the laws of the Cayman Islands. The Company has no substantial operations other than holding all of the issued and outstanding share capital of Decent Hong Kong Holding International Limited (“Decent HK”), which was incorporated in Hong Kong on February 24, 2022. Decent HK is also a holding company that is holding all of the equity interest of Shandong Naxin Ecological Environment Engineering Co., Limited (“WFOE”), a wholly foreign owned enterprise incorporated in the People’s Republic of China (“PRC” or “China”) on September 30, 2022.
The Company, through its PRC subsidiary, WFOE, wholly owns Shandong Dingxin Ecology Environmental Co., Limited (“Decent China”) that was incorporated on September 5, 2011. Decent China engages in wastewater treatment, river water quality management, and microbial product sales.
On December 19, 2022, the Company completed its reorganization of entities under the common control of all shareholders, who collectively owned a majority of the equity interests of the Company prior to the reorganization. WFOE wholly owns Decent China and all of these entities included in the Company are under common control, which results in the consolidation of Decent China at the carrying value. This transaction has been accounted for as a reorganization of entities under common control. The consolidated financial statements are prepared on the basis as if the reorganization became effective as of the beginning of the first period presented in the accompanying consolidated financial statements of the Company.
The details of the ownership and percentage of ownership of the Company and Decent China held by the shareholders before the reorganization are described below:
| (i) | Decent China, the Operating Subsidiary incorporated under the laws of PRC, was incorporated on June 23, 2017. Prior to the reorganization, Mr. Dingxin Sun (“Mr. Sun”), Yantai Xinxing Investment Center (Limited Partnership), and Chaofu Chen, each hold |
| (ii) | On January 6, 2022, the Company was incorporated in the Cayman Islands and an authorized share capital of |
| (iii) | On December 19, 2022, the Company completed its reorganization of entities under the common control of all shareholders, who collectively owned a majority of the equity interests of the Company prior to the reorganization. |
5
The table below demonstrates details about the shareholding structure of Decent China prior to the reorganization:
| Name | Shares Owned | Percentage | ||||||
| Dingxin Sun | % | |||||||
| Yantai Xinxing Investment Center (Limited Partnership) | % | |||||||
| Chaofu Chen | % | |||||||
| TOTAL | % | |||||||
The shareholding structure of Yantai Xinxing Investment Center (Limited Partnership) as of November 22, 2021 is as follows:
| Names | Shares Owned | Percentage | ||||||
| Dingxin Sun | % | |||||||
| Youquan Zhu | % | |||||||
| Dingyan Sun | % | |||||||
| Haicheng Xu | % | |||||||
| Shaohui Jia | % | |||||||
| Lianlian Wang | % | |||||||
| TOTAL | % | |||||||
Upon the reorganization and as at the date of this report, details of the subsidiary companies are as follows:
| Name of Entity | Date of Incorporation | Place of Incorporation | % of Ownership | Principal Activities | ||||
| Decent Hong Kong Holding International Limited (“Decent HK”) | ||||||||
| Shandong Naxin Ecological Environment Engineering Co., Limited (“WFOE”) | ||||||||
| Shandong Dingxin Ecology Environmental Co., Limited (“Decent China”) | ||||||||
| Suncare (Shanghai) Health Technology Co., Ltd. ("Suncare") |
6
On January 23, 2025,
the Company completed its initial public offering (“IPO”) on the Nasdaq Capital Market, issuing an aggregate of
On May 9, 2025, the Company
convened its extraordinary general meeting of shareholders, during which the shareholders of the Company adopted resolutions approving
to i) reclassify all
On November 12, 2025, the
Company completed its public offering on the Nasdaq Capital Market, issuing an aggregate of
On December 24, 2025, Decent
HK and Mr. Li Kai jointly incorporated Suncare (Shanghai) Health Technology Co., Ltd. ("Suncare"), a company focused on the
core business of AI-powered digital health and wellness. Decent HK holds
Reverse Stock Split
On March 16, 2026, the Company
effected a 1-for-25 reverse stock split of its issued and outstanding Class A ordinary shares and Class B ordinary shares. As a result,
every 25 ordinary shares were combined into
No fractional shares were issued in connection with the reverse stock split; any fractional shares resulting from the split were rounded up to the nearest whole share.
7
The reverse stock split did not change the total amount of shareholders’ equity. All share and per share information in the accompanying unaudited interim condensed consolidated financial statements and notes for all periods presented have been retroactively adjusted to give effect to the reverse stock split.
Liquidity and capital resources
As of April 30, 2026, we
had cash of $
| 2. | RECLASSIFICATION |
The Company has reclassified certain comparative amounts in the consolidated cash flow for the six months ended April 30, 2025 to conform to the current year’s presentation. The principal reclassifications are related to the offering cost paid being reclassified from the cash flows from operating activities to cash flows from financing activities. The reclassification did not have an impact on the reported total assets, liabilities, stockholders’ equity and net income.
| 3. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
Basis of Presentation
The accompanying unaudited interim condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for information pursuant to the rules and regulations of the Securities Exchange Commission (“SEC”).
In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. These financial statements should be read in conjunction with the audited financial statements and notes thereto for the fiscal years ended October 31, 2025 and 2024. Operating results for the six months ended April 30, 2026 are not necessarily indicative of the results that may be expected for the year ending October 31, 2026.
Principles of Consolidation
The unaudited interim condensed consolidated financial statements include the financial statements of the Company and its subsidiaries. All transactions and balances among the Company and its subsidiaries have been eliminated upon consolidation.
Subsidiaries are those entities in which the Company, directly or indirectly, controls more than one half of the voting power; or has the power to govern the financial and operating policies, to appoint or remove the majority of the members of the board of directors, or to cast a majority of votes at the meeting of directors.
8
Use of Estimates
The preparation of these unaudited interim condensed consolidated financial statements in conformity with U.S. GAAP requires management of the Company to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues, costs and expenses, and related disclosures. On an on-going basis, the Company evaluates its estimates based on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. Identified below are the accounting policies that reflect the Company’s most significant estimates and judgments, and those that the Company believes are the most critical to fully understanding and evaluating its unaudited interim condensed consolidated financial statements. Significant accounting estimates reflected in the Company’s unaudited interim condensed consolidated financial statements include but not limited to the useful lives of property and equipment, impairment of long-lived assets, valuation of accounts receivables, prepayments, other receivable, inventory and deferred tax assets. Actual results could differ from these estimates.
Cash
Cash consists of cash on
hand and at banks. The Company has not experienced any losses in such accounts and does not believe the cash is exposed to any significant
risk.Pursuant to the Regulations on Deposit Insurance of the People’s Republic of China, corporate legal entities are entitled to
deposit insurance coverage with a maximum limit of RMB
Accounts Receivable, Net
Accounts receivable represents the revenues earned from the clients but have not yet collected. Accounts receivable is recorded at net realizable value.
On November 1, 2023,
the Company adopted ASU 2016-13, Financial Instruments — Credit Losses (Topic 326): Measurement of Credit Losses
on Financial Instruments (“ASC 326”). ASC 326 requires the application of a credit loss model based prospectively
on current expected credit losses (CECL), and replaces the previous model based retrospectively on past incurred losses. The Company adopted
ASC 326 using the modified retrospective method for all financial assets measured at amortized cost, of which the Company reported
only accounts receivable as of October 31, 2024. Results for reporting periods beginning November 1, 2023 are presented under ASC 326.
The Company carries accounts receivable at the face amounts less a reserve for estimated credit losses. The effects on adoption of ASC
326 was $
9
Prepayment, Net
Prepayments are cash deposited or advanced to suppliers for future inventory purchases or service providers for future services. This amount is refundable and bears no interest. For any prepayments determined by management that such advances will not be in receipts of inventories, services, or refundable, the Company will recognize an allowance account to reserve such balances. Management reviews its advances to suppliers on a regular basis to determine if the allowance is adequate, and adjusts the allowance when necessary. Delinquent account balances are written-off against allowance for doubtful accounts after management has determined that the likelihood of collection is not probable. The Company’s management continues to evaluate the reasonableness of the valuation allowance policy and update it if necessary.
Prepaid expenses
Prepaid expenses represent
payments made in advance for goods and services that will be consumed in future periods. These amounts are initially recorded as assets
on the balance sheet at cost and are amortized over the period the related benefits are expected to be received. Prepaid expenses with
a benefit period of
Lease
Under ASC Topic 842, lease assets and liabilities are recognized at the present value of the future lease payments at the lease commencement date. The interest rate used to determine the present value of the future lease payments is the Company’s incremental borrowing rate based on the information available at the lease commencement date. The Company generally uses the base, non-cancellable lease term in calculating the right-of-use assets and lease liabilities.
For operating leases, lease expense for lease payments is recognized on a straight-line basis over the lease term. Variable lease payments that do not depend on a rate or index are expensed as incurred.
The Company elected the practical expedients for an entity ongoing accounting and applied the short-term lease exception for lease arrangements with a lease term of 12 months or less at commencement. Lease terms used to compute the present value of lease payments do not include any option to extend, renew or terminate the lease that the Company is not able to reasonably certain to exercise upon the lease inception. Accordingly, operating lease right-of-use assets and liabilities do not include leases with a lease term of 12 months or less.
The Company did not adopt the practical expedient that allows lessees to treat the lease and non-lease components of a lease as a single lease component. Non-lease components include payments for building management, utilities and property tax. It separates the non-lease components from the lease components to which they relate.
The Company’s accounting for finance lease (formerly called capital lease) remains substantially unchanged. ASC Topic 842 adoption did not have a material impact on the Company’s unaudited interim condensed consolidated financial statements. On the other hand, operating lease expense is recognized on a straight-line basis over the lease term.
10
The Company evaluates the impairment of its right of use (ROU) assets consistent with the approach applied for its other long-lived assets. The Company reviews the recoverability of its long-lived assets when events or changes in circumstances occur that indicate that the carrying value of the asset may not be recoverable. The assessment of possible impairment is based on its ability to recover the carrying value of the asset from the expected undiscounted future pre-tax cash flows of the related operations. The Company has elected to include the carrying amount of finance and operating lease liabilities in any tested asset group and include the associated lease payments in the undiscounted future pre-tax cash flows. For the years ended October 31, 2025 and 2024, the Company did not have any impairment loss against its operating lease ROU assets.
Property and Equipment
Property and equipment are
recorded at cost less accumulated depreciation and accumulated impairment.
| Estimated useful lives (years) | ||
| Electronic equipment | ||
| Office facilities | ||
| Machinery equipment | ||
| Vehicles |
Expenditure for maintenance and repairs is expensed as incurred.
The gain or loss on the disposal of property and equipment is the difference between the net sales proceeds and the lower of the carrying value or fair value less cost to sell the relevant assets and is recognized in general and administrative expenses in the unaudited interim condensed consolidated statements of operation and comprehensive (loss) income.
The depreciation is recorded under the general and administrative expenses as well as research and development expenses in the unaudited interim condensed consolidated statements of operation and comprehensive (loss) income.
Intangible Assets
Intangible assets mainly comprise patent right. Intangible assets are recorded at cost less accumulated amortization with no residual value. Amortization of intangible assets is computed using the straight-line method over their estimated useful lives. The amortization is recorded under the general and administrative expenses in the unaudited interim condensed consolidated statements of operation and comprehensive (loss) income.
11
The estimated useful lives of the Company’s intangible assets are listed below:
| Estimated useful lives (years) | |||
| Patent right |
Impairment of Long-lived Assets
In accordance with ASC 360-10-35, the Company reviews the carrying values of long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable. Based on the existence of one or more indicators of impairment, the Company measures any impairment of long-lived assets using the projected discounted cash flow method at the asset group level. The estimation of future cash flows requires significant management judgment based on the Company’s historical results and anticipated results and is subject to many factors. The discount rate that is commensurate with the risk inherent in the Company’s business model is determined by its management. An impairment loss would be recorded if the Company determined that the carrying value of long-lived assets may not be recoverable. The impairment to be recognized is measured by the amount by which the carrying values of the assets exceed the fair value of the assets. impairment has been recorded by the Company for the six months ended April 30, 2026 and 2025.
Revenue Recognition
The Company recognized its revenue under Accounting Standards Codification (ASC) Topic 606, Revenue from Contracts with Customers (ASC 606). The Company recognizes revenues when its customer obtains control of promised goods or services, in an amount that reflects the consideration which the Company expects to receive in exchange for those goods or services. The Company recognizes revenues following the five-step model prescribed under Topic 606: (i) identify contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenues when (or as) the Company satisfies the performance obligation.
Revenues are recognized when control of the promised goods or services is transferred to our customers, which may occur at a point in time or over time depending on the terms and conditions of the agreement, in an amount that reflects the consideration we expect to be entitled to in exchange for those goods or services.
The Company generates its revenues primarily from 5 sources: (1) Wastewater treatment revenue, (2) River water quality management revenue, (3) Product sales revenue, (4) Training and (5) Others. The Company recognizes revenue, excluding any VAT, when performance obligations under the terms of a contract with its customers are satisfied. This occurs when the control of the goods and services have been transferred to the customer.
12
Wastewater treatment segment
As of April 30, 2026, RMB
(1) Wastewater treatment revenue
For wastewater treatment projects, the Company contracts with customers to provide design proposal according to customers’ need and complete the construction. The terms of pricing and payment are fixed with no discount or rebate offered, no variable consideration is involved. Apart from the completion of the construction, an assurance-type warranty promise is identified in the contract, which normally for one year. This promise is used to complete the project, and the customers cannot benefit from standalone promise. Thus, there is only one performance obligation with standard quality guarantee for wastewater treatment projects. The revenue is recognized at a point in time since the projects do not meet any of the following criteria:
| 1. | The customer simultaneously receives and consumes the economic benefits of the provided asset as the entity performs; |
| 2. | The seller’s performance creates or enhances an asset controlled by the customer as the asset is created or enhanced; or |
| 3. | The seller’s performance creates an asset with no alternative use, and the seller has an enforceable right to payment for performance completed to date. |
The performance obligation is satisfied at a point of time and recognized in revenue upon the completion of project, usually at the time when the project has been passed final acceptance by customers. The control of the project is then transferred from the Company to the customers upon completion of customers’ final acceptance. Payments are due from its customers based on the payment terms established in its contracts.
The Company only provides customers with the assurance that the projects would function in accordance with agreed-upon specifications are accounted for in accordance with existing guidance on product warranties. Hence, the warranties are considered as assurance type warranties, and would be treated as a liability with no impact to revenue recognition.
13
(2) River water quality management revenue
For river water quality management projects, the Company contracts with customers to provide design proposal according to customers’ need and achieve the target of water quality improvement which often takes an extended period of time. The terms of pricing and payment are fixed, no variable consideration is involved. Thus, there is only one performance obligation. Revenue generated from river water quality management is recognized over time using contract cost-based input method to measure progress. Contract costs include labor, material and allocable indirect expenses. Revenue is recognized proportionally as contract costs are incurred plus estimated fees. Under this method, the extent of progress towards completion is measured based on the ratio of total cost incurred to date to the total estimated cost at completion of the performance obligation. Revenues are recorded proportionally as total costs are incurred. The customer simultaneously receives and consumes the economic benefits once the river water quality management projects are performed. Payments are due from its customers based on the payment terms established in its contracts.
The Company only provides customers with the assurance that the products would function in accordance with agreed-upon specifications are accounted for in accordance with existing guidance on product warranties. Hence, the warranties are considered as assurance type warranties, and would be treated as a liability with no impact to revenue recognition.
(3) Product sales revenue
For product sales, the Company contracts with customers to provide hydrophyte and chemical reagent, which is the only performance obligation under the contract. The terms of pricing and payment are fixed with no discount or rebate offered, no variable consideration is involved. The performance obligation is satisfied at a point of time and recognized in revenue upon the completion of delivery to the customers, usually at the time when the goods related to products sales contract is delivered to and accepted by the customers. Payments are due from its customers based on the payment terms established in its contracts.
Digital health and wellness segment
The Company enters into cooperation agreements with service partners and business partners to expand its “Digital Health Center” (数字康养中心)门店 and partner network. Each agreement requires the partner to pay a nonrefundable upfront “Startup Service Package” (启动服务包) fee, including training service, core product package and supporting service. The Company should recognize the full upfront fee as Contract liabilities. Under ASC 606, the upfront cooperation fees should be treated as transaction price and allocated to identified performance obligations within the “Startup Service Package” (启动服务包). Revenue shall be recognized when each performance obligation is satisfied. Revenue recognition should be disaggregated based on the distinct performance obligations: (1) tangible products revenues was recognised at the point in time upon delivery (Product sales revenue); (2) training services revenues was recognised over the service period (Training revenue); and (3) one-time Q&A supporting services revenue was recognised at the point in time upon suppurting or 3 days after the delivery of training manual (Others).
14
Revenue by major product line
| For The Six Months Ended April 30, | ||||||||
| 2026 | 2025 | |||||||
| Wastewater treatment revenue | $ | $ | ||||||
| River water quality management revenue | ||||||||
| Product sales revenue | ||||||||
| Training revenue | ||||||||
| Others | ||||||||
| Total Revenue | $ | $ | ||||||
Cost of Revenues
Cost of revenues consists primarily of materials purchased from suppliers, and labor cost (including salaries and benefits), as well as project and production support cost, which are directly related to revenue generating transactions. These costs are charged to the unaudited interim condensed consolidated statements of operation and comprehensive (loss) income as incurred.
Contract balances
Timing of revenue recognition may differ from the timing of invoicing to customers. In accordance with ASC 340-40-25-1, an entity shall recognize as an asset the incremental costs of obtaining a contract with a customer if the entity expects to recover those costs.
The revenue is recognized
when control of the promised is rendered over the service period and the payment from customers is not contingent on a future event, and
the right to consideration in exchange that the Company has transferred to a customer is only conditioned on the passage of time.
| April 30, 2026 | October 31, 2025 | |||||||
| Contract assets for wastewater treatment revenue | $ | $ | ||||||
| Contract assets for river water quality management revenue | ||||||||
| Total | $ | $ | ||||||
15
The following table sets forth the movement of contract assets:
| April 30, 2026 | October 31, 2025 | |||||||
| Balance, at beginning of the year | $ | $ | ||||||
| Addition | ||||||||
| Reduction | ( | ) | ( | ) | ||||
| Exchange rate difference | ||||||||
| Balance, at end of the year | $ | $ | ||||||
Contract liabilities represents cash payment received from customers in advance of the Company satisfying performance obligations under contractual arrangements, including those with performance obligations to be satisfied over a period of time and point in time. Contract liabilities are derecognized when or as revenue is recognized. The following table sets forth the movement of contract assets:
| April 30, 2026 | October 31, 2025 | |||||||
| Balance, at beginning of the year | $ | $ | ||||||
| Addition | ||||||||
| Reduction | ( | ) | ||||||
| Exchange rate difference | ||||||||
| Balance, at end of the year | $ | $ | ||||||
General and administrative expenses
General and administrative expenses consist primarily of salaries and welfare expenses and related expenses for employees involved in general corporate functions, including accounting, legal and human resources; and costs associated with use by these functions of facilities and equipment, such as traveling and general expenses, professional service fees, depreciation, amortization and other general corporate related expenses. These expenses are charged to the unaudited interim condensed consolidated statements of operation and comprehensive (loss) income as incurred.
Selling expenses
Selling expenses consist primarily of salaries and welfare expenses to sales and marketing personnel and costs associated with use by sales function, such as travelling expenses, business entertainment expense and other sales related expenses. These expenses are charged to the unaudited interim condensed consolidated statements of operation and comprehensive (loss) income as incurred.
16
Research and Development Expenses
Research and development expenses consist primarily of compensation and benefits to research and development staffs, and costs associated with use by research and development function of facilities and equipment, such as traveling and general expenses, depreciation and other expenses related to research and development. These expenses are charged to the unaudited interim condensed consolidated statements of operation and comprehensive (loss) income as incurred.
Comprehensive income
The Company applies ASC 220, Comprehensive Income (“ASC 220”), with respect to reporting and presentation of comprehensive income and its components in a full set of financial statements. Comprehensive income is defined to include all changes in equity of the Company during a period arising from transactions and other event and circumstances except those resulting from investments by shareholders and distributions to shareholders. For the six months ended April 30, 2026 and 2025, the Company’s comprehensive income includes net income, and other comprehensive income (loss) consists of a foreign currency translation adjustment resulting from the Company’s subsidiaries not using the U.S. dollar as their functional currencies.
Earnings (Loss) per share
The Company computes earnings per share (“EPS”) in accordance with ASC 260, “Earnings per Share”. ASC 260 requires companies to present basic and diluted EPS. Basic EPS is measured as net income (loss) attributable to Xinzi shareholders, divided by the weighted average ordinary share outstanding for the period. Diluted EPS presents the dilutive effect on a per share basis of the potential Ordinary Shares (e.g., convertible securities, options and warrants) as if they had been converted at the beginning of the periods presented, or issuance date, if later. Potential Ordinary Shares that have an anti-dilutive effect (i.e., those that increase income per share or decrease loss per share) are excluded from the calculation of diluted EPS. No dilutive shares for the six months ended April 30, 2026 and 2025.
Fair Value Measurements
U.S. GAAP establishes a three-tier hierarchy to prioritize the inputs used in the valuation methodologies in measuring the fair value of financial instruments. This hierarchy also requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The three-tier fair value hierarchy is:
Level 1 – observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets.
Level 2 – include other inputs that are directly or indirectly observable in the market place.
Level 3 – unobservable inputs which are supported by little or no market activity.
The carrying value of the Company’s financial instruments, including cash, accounts and other receivables, other current assets, accounts and other payables, and other short-term liabilities approximate their fair value due to their short maturities.
Income Taxes
The Company’s subsidiaries in China are subject to the income tax laws of the relevant tax jurisdiction. No taxable income was generated outside the PRC for the six months ended April 30, 2026 and 2025. The Company accounts for income tax in accordance with U.S. GAAP.
17
Current income taxes are provided on the basis of net profit (loss) for financial reporting purposes, adjusted for income and expense items which are not assessable or deductible for income tax purposes, in accordance with the regulations of the relevant tax jurisdictions.
Deferred income taxes are recognized for temporary differences between the tax bases of assets and liabilities and their reported amounts in the unaudited interim condensed consolidated financial statements, net operating loss carry forwards and credits. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Current income taxes are provided in accordance with the laws of the relevant taxing authorities. Deferred tax assets and liabilities are measured using enacted rates expected to apply to taxable income in which temporary differences are expected to be reversed or settled. The effect on deferred tax assets and liabilities of changes in tax rates is recognized in the statement of comprehensive loss in the period of the enactment of the change.
The Company considers positive and negative evidence when determining whether a portion or all of its deferred tax assets will more likely than not be realized. This assessment considers, among other matters, the nature, frequency and severity of current and cumulative losses, forecasts of future profitability, the duration of statutory carry-forward periods, its experience with tax attributes expiring unused, and its tax planning strategies. The ultimate realization of deferred tax assets is dependent upon its ability to generate sufficient future taxable income within the carry-forward periods provided for in the tax law and during the periods in which the temporary differences become deductible. When assessing the realization of deferred tax assets, the Company has considered possible sources of taxable income including (i) future reversals of existing taxable temporary differences, (ii) future taxable income exclusive of reversing temporary differences and carry-forwards, (iii) future taxable income arising from implementing tax planning strategies, and (iv) specific known trend of profits expected to be reflected within the industry.
An uncertain tax position
is recognized as a benefit only if it is “more likely than not” that the tax position would be sustained in a tax examination,
with a tax examination being presumed to occur. The amount recognized is the largest amount of tax benefit that is greater than
Foreign Currency and Foreign Currency Translation
An entity’s functional currency is the currency of the primary economic environment in which it operates, normally that is the currency of the environment in which the entity primarily generates and expends cash. Management’s judgment is essential to determine the functional currency by assessing various indicators, such as cash flows, sales price and market, expenses, financing and inter-company transactions and arrangements. The functional currency of the Company is the United States dollar (“U.S. dollar”). The functional currency of the Company’s subsidiaries in the Hong Kong, China is the Hong Kong dollar (“HKD”). The functional currency of the Company’s operations in the PRC is the Chinese Yuan or Renminbi (“RMB”).
18
The unaudited interim condensed consolidated financial statements are presented in U.S. dollars. Assets and liabilities are translated into U.S. dollars at the current exchange rate in effect at the balance sheet date, and revenues and expenses are translated at the average of the exchange rates in effect during the reporting period. Shareholders’ equity accounts are translated using the historical exchange rates at the date the entry to shareholders’ equity was recorded, except for the change in retained earnings during the period, which is translated using the historical exchange rates used to translate each period’s income statement. Differences resulting from translating functional currencies to the reporting currency are recorded in accumulated other comprehensive income in the unaudited interim condensed consolidated balance sheets.
Foreign currency transactions denominated in currencies other than the functional currency are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies at the balance sheet date are re-measured at the applicable rates of exchange in effect at that date. Gains and losses resulting from foreign currency re-measurement are included in the statements of operation and comprehensive (loss).
Translation of amounts from RMB into U.S. dollars has been made at the following exchange rates:
| Balance sheet items, except for equity accounts | ||||
| April 30, 2026 | RMB | |||
| October 31, 2025 | RMB | |||
| Income statement and cash flows items | ||||
| For the six months ended April 30, 2026 | RMB | |||
| For the six months ended April 30, 2025 | RMB |
Segment Reporting
ASC Topic 280, “Segment
Reporting”, establishes standards for reporting information about operating segments on a basis consistent with the Company’s
internal organizational structure as well as information about geographical areas, business segments and major customers in financial
statements for detailing the Company’s business segments. The Company uses the “management approach” in determining
reportable operating segments. The management approach considers the internal organization and reporting used by the Company’s chief
operating decision maker for making operating decisions and assessing performance as the source for determining the Company’s reportable
segments. Management, including the chief operating decision maker, reviews operation results by the revenue of different products or
services. The chief executive officer is the chief operating decision maker. Based on management’s assessment, the Company had
19
Commitments and Contingencies
In the normal course of business, the Company is subject to contingencies, including legal proceedings and claims arising out of the business that relate to a wide range of matters, such as government investigations and tax matters. The Company recognizes a liability for such contingency if it determines it is probable that a loss has occurred, and a reasonable estimate of the loss can be made. The Company may consider many factors in making these assessments including historical and the specific facts and circumstances of each matter.
Recent Accounting Pronouncements
In November 2023, the FASB issued ASU 2023-07, which is an update to Topic 280, Segment Reporting. The amendments in this Update improve financial reporting by requiring disclosure of incremental segment information on an annual and interim basis for all public entities to enable investors to develop more decision-useful financial analyses. The amendments in this update: (1) require that a public entity disclose, on an annual and interim basis, significant segment expenses that are regularly provided to the chief operating decision maker (CODM) and included within each reported measure of segment profit or loss (collectively referred to as the “significant expense principle”), (2) Require that a public entity disclose, on an annual and interim basis, an amount for other segment items by reportable segment and a description of its composition. The other segment items category is the difference between segment revenue less the segment expenses disclosed under the significant expense principle and each reported measure of segment profit or loss, (3) Require that a public entity provide all annual disclosures about a reportable segment’s profit or loss and assets currently required by Topic 280 in interim periods, and (4) Clarify that if the CODM uses more than one measure of a segment’s profit or loss in assessing segment performance and deciding how to allocate resources, a public entity may report one or more of those additional measures of segment profit. However, at least one of the reported segment profit or loss measures (or the single reported measure, if only one is disclosed) should be the measure that is most consistent with the measurement principles used in measuring the corresponding amounts in the public entity’s consolidated financial statements. In other words, in addition to the measure that is most consistent with the measurement principles under generally accepted accounting principles (GAAP), a public entity is not precluded from reporting additional measures of a segment’s profit or loss that are used by the CODM in assessing segment performance and deciding how to allocate resources, (5) Require that a public entity disclose the title and position of the CODM and an explanation of how the CODM uses the reported measure(s) of segment profit or loss in assessing segment performance and deciding how to allocate resources, and (6) Require that a public entity that has a single reportable segment provide all the disclosures required by the amendments in this Update and all existing segment disclosures in Topic 280. The amendments in this Update also do not change how a public entity identifies its operating segments, aggregates those operating segments, or applies the quantitative thresholds to determine its reportable segments. The amendments in this Update are effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted. A public entity should apply the amendments in this Update 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. The Company adopted this guidance on November 1, 2024,to improve segment disclosure transparency and the adoption did not have a material impact on its unaudited interim condensed consolidated financial statements.
The Company does not believe other recently issued but not yet effective accounting standards, if currently adopted, would have a material effect on the Company’s unaudited interim condensed consolidated balance sheets, unaudited interim condensed consolidated statements of income and comprehensive income and unaudited interim condensed consolidated statements of cash flows.
20
| 4. | ACCOUNTS RECEIVABLE, NET |
Accounts receivable as of April 30, 2026 and October 31, 2025 are as follows:
| April 30, 2026 | October 31, 2025 | |||||||
| Accounts receivable | $ | $ | ||||||
| Less: Allowance for credit losses | ( | ) | ( | ) | ||||
| Totals | $ | $ | ||||||
Accounts receivable by aging bucket are as follows:
| Balance as of April 30, 2026 | Subsequent collection | % of Subsequent collection | ||||||||||
| Less than half year | $ | $ | ||||||||||
| half year to 1 year | ||||||||||||
| 1 year to 1.5 years | ||||||||||||
| 1.5 years to 2 years | ||||||||||||
| 2 years to 2.5 years | ||||||||||||
| 2.5 year to 3 years | ||||||||||||
| over 3 years | ||||||||||||
| Total gross accounts receivable | $ | |||||||||||
| Less: Allowance for accounts receivable | ( | ) | ||||||||||
| Accounts receivable, net | $ | |||||||||||
The following table sets forth the movement of allowance for accounts receivable:
| April 30, 2025 | October 31, 2025 | |||||||
| Balance, at beginning of the period | $ | $ | ||||||
| Addition (Reversal) | ||||||||
| Exchange rate difference | ||||||||
| Balance, at end of the period | $ | $ | ||||||
21
| 5. | PREPAYMENT, NET |
Prepayment as of April 30, 2026 and October 31, 2025 are as follows:
April 30, 2026 | October 31, 2025 | |||||||
| Prepayment | $ | $ | ||||||
| Less: Allowance for bad debt | ( | ) | ( | ) | ||||
| Totals | $ | $ | ||||||
The following table sets forth the movement of allowance for prepayment:
April 30, 2026 | October 31, 2025 | |||||||
| Balance, at beginning of the period | $ | $ | ||||||
| Addition (Reversal) | ||||||||
| Exchange rate difference | ||||||||
| Balance, at end of the period | $ | $ | ||||||
| 6. | LOAN RECEIVABLE |
Loan receivable as of April 30, 2026 and October 31, 2025 are as follows:
April 30, 2026 | October 31, 2025 | |||||||
| Current | ||||||||
| XIAOMING MANAGEMENT SERVICES PTE. LTD (b) | $ | $ | ||||||
| Yaruyun (Shanghai) Enterprise Management Co., Ltd. (a) | ||||||||
| Non-current | ||||||||
| Yaruyun (Shanghai) Enterprise Management Co., Ltd. (a) | $ | $ | ||||||
| (a) |
| (b) |
22
Interest income is recognized using the effective interest method over the term of the loan. The Company adopts the simplified interest calculation method (30 days per month) for interest recognition.
| 7. | PREPAID EXPENSES |
As of April 30, 2026 and October 31, 2025, prepaid expenses consisted of the following:
| April 30, 2026 | October 31, 2025 | |||||||
| Current portion | ||||||||
| Prepaid professional service fees | $ | $ | ||||||
| Prepaid research and development expenses | ||||||||
| Prepaid insurance | ||||||||
| Prepaid other expenses | ||||||||
| Non-current portion | ||||||||
| Prepaid research and development expenses | ||||||||
| Totals | $ | $ | ||||||
| 8. | PROPERTY AND EQUIPMENT |
As of April 30, 2026 and October 31, 2025, property and equipment consisted of:
April 30, 2026 | October 31, 2025 | |||||||
| Electronic equipment | $ | $ | ||||||
| Office facilities | ||||||||
| Machinery equipment | ||||||||
| Vehicles | ||||||||
| Less: Accumulated depreciation | ( | ) | ( | ) | ||||
| Less: Impairment loss | ( | ) | ( | ) | ||||
| Totals | $ | $ | ||||||
Depreciation recognized to
the unaudited interim condensed consolidated statements of income and comprehensive income for the six months ended April 30, 2026
and 2025 were $
| 9. | LEASE |
With the adoption of ASC Topic 842, the Company has recorded a right-of-use asset and corresponding lease liability, by calculating the present value of future lease payments.
The Company entered into
operating lease agreements for office spaces discounted at
23
Supplemental balance sheet information related to operating leases was as follows:
April 30, 2026 | October 31, 2025 | |||||||
| Operating lease assets, net | $ | $ | ||||||
| ROU assets | ||||||||
| Accumulated amortization | ( | ) | ( | ) | ||||
| Operating lease liabilities – current | ||||||||
| Operating lease liabilities – non-current | ||||||||
| Total operating lease liabilities | $ | $ | ||||||
The Company entered into
finance lease agreements for vehicle equipment discounted at
Cash flow information related to lease consisted of the following:
| For the six months ended April 30, | ||||||||
| 2026 | 2025 | |||||||
| Financing cash payments for finance leases | $ | $ | ||||||
The following is a schedule, by years, of maturities of lease liabilities as of April 30, 2026:
| Year ended October 31, | Operating Leases | |||
| 2026 | $ | |||
| 2027 | ||||
| 2028 | ||||
| Total lease payments | ||||
| Less: Imputed interest | ( | ) | ||
| Present value of lease liabilities | ||||
| Less: Current lease liabilities | ||||
| Long-term lease liabilities | ||||
24
| 10. | OTHER PAYABLES |
As of April 30, 2026 and October 31, 2025, other payables consisted of:
April 30, 2026 | October 31, 2025 | |||||||
| VAT and other taxes payable | $ | $ | ||||||
| Others | ||||||||
| Totals | $ | $ | ||||||
| 11. | INCOME TAXES |
The Company is subject to income taxes on an entity basis on income arising in or derived from the tax jurisdiction in which each entity is domiciled.
Cayman Islands
Under the current laws of the Cayman Islands, the Company is not subject to tax on income or capital gain. Additionally, upon payments of dividends to the shareholders, no Cayman Islands withholding tax will be imposed.
Hong Kong
Companies, which are incorporated
in Hong Kong, are 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 is
PRC Tax
Decent China is governed
by the income tax laws of the PRC and the income tax provision in respect to operations in the PRC is calculated at the applicable tax
rates on the taxable income for the periods based on existing legislation, interpretations and practices in respect thereof. Under the
Enterprise Income Tax Laws of the PRC (the “EIT Laws”), Chinese enterprises are subject to income tax at a rate of
25
A reconciliation of the income tax expenses determined at the statutory income tax rate to the Company’s income taxes is as follows:
| For The Six Months Ended April 30, | ||||||||
| 2026 | 2025 | |||||||
| Income tax computed at | $ | ( | ) | $ | ( | ) | ||
| Different tax rates in other jurisdictions | ||||||||
| Tax preferential rate | ( | ) | ( | ) | ||||
| Non deductible expenses | ||||||||
| Super deduction | ( | ) | ( | ) | ||||
| Tax loss not recognised | ||||||||
| Income tax expense | $ | $ | ||||||
| For The Six Months Ended April 30, | ||||||||
| 2026 | 2025 | |||||||
| Current income tax expense | $ | $ | ||||||
| Deferred income tax effect | ( | ) | ( | ) | ||||
| Total income tax expense | $ | $ | ||||||
| Effective tax rates | ( | )% | ( | )% | ||||
Deferred tax asset
As of April 30, 2026 and October 31, 2025, deferred tax asset consisted of:
| October 31, 2026 | October 31, 2025 | |||||||
| Deferred tax asset | ||||||||
| Provision for credit losses | $ | $ | ||||||
| Net operating loss carried forward | ||||||||
| Provision for inventory obsolescence | ||||||||
| Lease liabilities | ||||||||
| Estimated warranty liabilities | ||||||||
| Deferred tax liability | ||||||||
| Right-of-use assets | ( | ) | ( | ) | ||||
| Totals | $ | $ | ||||||
26
| 12. | RELATED PARTIES |
Balance with related parties
April 30, 2026 | October 31, 2025 | |||||||
| Due from related parties | ||||||||
| Dingxin Sun(1) | $ | $ | ||||||
| Totals | $ | $ | ||||||
Transactions with related parties
| For The Six Months Ended April 30, | ||||||||||
| Name of Related Party | Nature | 2026 | 2025 | |||||||
| Shandong Dingxin Energy Saving Technology Group Co. Ltd.(2) | $ | $ | ||||||||
Loan made to related parties*
| For the six months ended April 30, | ||||||||||||||||
| 2026 | 2025 | |||||||||||||||
| Name of Related Party | Borrowing | Repayment | Borrowing | Repayment | ||||||||||||
| Dingxin Sun(1) | $ | $ | $ | $ | ||||||||||||
| Totals | $ | $ | $ | $ | ||||||||||||
| * | Loan made to related parties above represented the Group’s interest-free loans. |
| (1) |
| (2) |
| 13. | EQUITY |
Ordinary share
As of April 30, 2026, ordinary
share has a par value of US$
27
On November 12, 2025, the
Company completed its public offering on the Nasdaq Capital Market, issuing an aggregate of
From the closing of this
offering through April 30, 2026, warrants to purchase
Surplus reserve
A significant portion of
the Company’s operations are conducted through its PRC (excluding Hong Kong) subsidiaries, the Company’s ability to pay
dividends is primarily dependent on receiving distributions of funds from the Company’s subsidiaries. Relevant PRC statutory laws
and regulations permit payments of dividends by the Company’s subsidiaries only out of their retained earnings, if any, as determined
in accordance with PRC accounting standards and regulations, and after it has met the PRC requirements for appropriation to statutory
reserves. The Company is required to make appropriations to certain reserve funds, comprising the statutory surplus reserve and the discretionary
surplus reserve, based on after-tax net income determined in accordance with generally accepted accounting principles of the PRC (“PRC
GAAP”). Appropriations to the statutory surplus reserve are required to be at least
As a result of these PRC
laws and regulations, the Company’s PRC Operating Subsidiary are restricted in their ability to transfer a portion of their net
assets to the Company. As of April 30, 2026 and October 31, 2025, net assets restricted in the aggregate, which include paid-in capital
and statutory reserves funds of the Company’s subsidiaries, that are included in the Company’s unaudited interim condensed
consolidated net assets were approximately $
| 14. | SEGMENT INFORMATION |
The Company has
28
Information on reportable segments and reconciliation to consolidated net income is as follows:
| For The Six Months Ended April 30, | ||||||||
| 2026 | 2025 | |||||||
| Wastewater treatment related | ||||||||
| Gross profits | $ | $ | ||||||
| Operating expenses | ( | ) | ( | ) | ||||
| Operating loss | ( | ) | ( | ) | ||||
| Digital health and wellness related | ||||||||
| Gross profits | $ | $ | ||||||
| Operating expenses | ( | ) | ||||||
| Operating loss | ( | ) | ||||||
| Consolidated | ||||||||
| Gross profits | $ | $ | ||||||
| Operating expenses | ( | ) | ( | ) | ||||
| Operating loss | ( | ) | ( | ) | ||||
| Total other income, net | ||||||||
| Provision for income taxes | ( | ) | ( | ) | ||||
| Net loss | ( | ) | ( | ) | ||||
Total segment assets reconciled to consolidated total assets as follows:
| As of April 30, 2026 | As of October 31, 2025 | |||||||
| Wastewater treatment related | $ | $ | ||||||
| Digital health and wellness related | ||||||||
| Consolidated | ||||||||
| 15. | CONCENTRATIONS, RISKS AND UNCERTAINTIES |
Deterioration in general economic conditions in the United States and globally, including the effect of prolonged periods of inflation on our customers and suppliers, could harm our business and results of operations.
Our business and results of operations could be adversely affected by changes in national or global economic conditions. These conditions include but are not limited to inflation, rising interest rates, availability of capital markets, energy availability and costs (including fuel surcharges), negative impacts resulting from the military conflict between Russia and the Ukraine, and the effects of governmental initiatives to manage economic conditions. Impacts of such conditions could be passed on to our business in the form of a reduced customer base and/or our customers spendings due to possible reductions in industry-wide spendings and/or economic pressure on our suppliers to pass on increased costs.
29
Risks Related to Doing Business in China
The recent state government interference into business activities on U.S. listed Chinese companies may negatively impact our operations.
Recently, the Chinese government announced that it would step up supervision of Chinese firms listed offshore. Under the new measures, China will improve regulation of cross-border data flows and security, crack down on illegal activity in the securities market and punish fraudulent securities issuance, market manipulation and insider trading, China will also check sources of funding for securities investment and control leverage ratios. The Cyberspace Administration of China (the “CAC”) has also opened a cybersecurity probe into several U.S.-listed tech giants focusing on anti-monopoly, financial technology regulation and more recently, with the passage of the Data Security Law, how companies collect, store, process and transfer data. Our operations and business interests are in Taiwan and mainland China. If the Chinese government’s interference expands and by proxy, our business interests are affected, our operations may be negatively impacted although presently, there is no discernible immediate impact.
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 risk
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 concentration on sales revenues generated by customers type comprised of the following:
| For the six months ended April 30, | ||||||||
| 2026 | 2025 | |||||||
| Percentage of the Company’s sales | ||||||||
| Customer C | % | % | ||||||
| Customer A | % | % | ||||||
| Customer H | % | % | ||||||
| Customer G | % | % | ||||||
30
The table sets above information as to the revenue derived from those customers that accounted for more than 10% of the Company’s total revenues for the six months ended April 30, 2026 and 2025.
| As of April 30, 2026 | As of October 31, 2025 | |||||||
| Percentage of the Company’s accounts receivable | ||||||||
| Customer A | % | % | ||||||
| Customer C | % | % | ||||||
| Customer G | % | % | ||||||
| Customer H | % | % | ||||||
The table above sets forth information as to each customer that accounted for more than 10% for the Company’s accounts receivable as of April 30, 2026 and October 31, 2025.
The concentration on purchases generated by suppliers type comprised of the following:
| For the six months ended April 30, | ||||||||
| 2026 | 2025 | |||||||
| Percentage of the Company’s purchases | ||||||||
| Supplier C | % | % | ||||||
| Supplier D | % | % | ||||||
| Supplier F | % | % | ||||||
| Supplier K | % | % | ||||||
The table sets above information as to the purchases derived from the supplier that accounted for more than 10% of the Company’s total purchases for the six months ended April 30, 2026 and 2025.
| As of | ||||||||
| April 30, 2026 | October 31, 2025 | |||||||
| Percentage of the Company’s accounts payable | ||||||||
| Supplier C | % | % | ||||||
| Supplier D | % | % | ||||||
| Supplier F | % | % | ||||||
| Supplier K | % | % | ||||||
The table above sets forth information as to each supplier that accounted for more than 10% for the Company’s accounts payable as of April 30, 2025 and October 31, 2025.
31
| 16. | SUBSEQUENT EVENT |
The Company evaluated all events and transactions that occurred after April 30, 2026 up through the reporting date. There were no other subsequent events occurred that would require recognition or disclosure in the Company’s unaudited interim condensed consolidated financial statements.
| 17. | FINANCIAL INFORMATION OF THE PARENT COMPANY |
The Company performed a test on the restricted net assets of consolidated subsidiary in accordance with Rule 4-08 (e)(3) of Regulation S-X, “General Notes to Financial Statements” and concluded that it was applicable to the Company; therefore, the financial statements for the parent company are included herein.
The condensed financial information of the parent company, Decent Holding INC., has been prepared using the same accounting policies as set out in the Company’s unaudited interim condensed consolidated financial statements except that the parent company has used equity method to account for its investment in its subsidiaries.
The Company and its subsidiaries are included in the unaudited interim condensed consolidated financial statements where the inter-company balances and transactions are eliminated upon consolidation. For the purpose of the Company’s stand-alone financial statements, its investments in subsidiaries are reported using the equity method of accounting. The Company’s share of income and losses from its subsidiaries is reported as income and losses from subsidiaries in the accompanying condensed financial information of parent company.
As of April 30, 2026 and October 31, 2025, the Company did not have any outstanding guarantees, long-term obligations, or significant capital and other commitments.
32
PARENT COMPANY BALANCE SHEETS
| April 30, 2026 | October 31, 2025 | |||||||
| Unaudited | ||||||||
| ASSETS | ||||||||
| Current assets | ||||||||
| Cash | $ | $ | ||||||
| Prepaid expenses, current | ||||||||
| Interest receivable | ||||||||
| Due from intercompany entity | ||||||||
| Non-current assets | ||||||||
| Investment in subsidiaries | $ | |||||||
| Prepaid expenses, non-current | ||||||||
| Loan receivable | ||||||||
| Deferred offering cost | ||||||||
| Total assets | $ | $ | ||||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
| Current liabilities | ||||||||
| Accounts payable | $ | |||||||
| Due to intercompany entity | $ | |||||||
| Total liabilities | $ | $ | ||||||
| Shareholders’ equity | ||||||||
| Class A Ordinary shares (US$ | ||||||||
| Class B Ordinary shares (US$ | ||||||||
| Subscription receivable | ( | ) | ( | ) | ||||
| Additional paid-in capital | ||||||||
| Statutory reserve | ||||||||
| Non-controlling interests | ( | ) | ||||||
| Retained earnings | ||||||||
| Accumulated other comprehensive loss | ( | ) | ||||||
| Total shareholders’ equity | ||||||||
| Total liabilities and shareholders’ equity | $ | $ | ||||||
33
PARENT COMPANY STATEMENTS OF OPERATION AND COMPREHENSIVE (LOSS) INCOME
| For the six months ended April 30, | ||||||||
| 2026 | 2025 | |||||||
| Unaudited | Unaudited | |||||||
| OPERATING EXPENSES | $ | ( | ) | $ | ( | ) | ||
| INCOME FROM SUBSIDIARIES | ||||||||
| NET LOSS | ( | ) | ( | ) | ||||
| FOREIGN CURRENCY TRANSLATION ADJUSTMENTS | ( | ) | ||||||
| COMPREHENSIVE (LOSS) INCOME | $ | ( | ) | $ | ( | ) | ||
34
PARENT COMPANY STATEMENTS OF CASH FLOWS
| For the six months ended April 30, | ||||||||
| 2026 | 2025 | |||||||
| Unaudited | Unaudited | |||||||
| Net cash used in operating activities | $ | ( | ) | $ | ( | ) | ||
| Net cash used in investing activities | ( | ) | ( | ) | ||||
| Net cash provided by financing activities | ||||||||
35