Hongchang International Co., Ltd 10-Q for FY2026 Q1
Hongchang International Co., Ltd (HCIL)
About this 10-Q
Hongchang International Co., Ltd filed this 10-Q on August 14, 2025, covering the quarter ended June 30, 2025 (FY2026 Q1).
Headline figures
Quarter ended June 30, 2025, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Revenue
- $3.84M
- up 94.0% from $1.98M a year earlier
- Net income
- $499.94K
- compared with a net loss of $21.68K a year earlier
- Diluted EPS
- $0.00
- compared with $0.00 a year earlier
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
For the quarterly period ended
or
For the transition period from ___________ to ___________
Commission file number
| (Exact name of registrant as specified in its charter)
| ||
| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |
| Yinxi Subdistrict Fuqing City, | ||
| (Address of principal executive offices) | (Zip Code) |
(Telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
| None |
Indicate by check mark whether the registrant
(1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements
for the last 90 days.
Indicate by check mark whether the registrant
has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405
of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer, “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer | ☐ | Accelerated filer | ☐ |
| ☒ | Smaller reporting company | ||
| Emerging growth company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant
is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No
As of August 13, 2025,
TABLE OF CONTENTS
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FORWARD LOOKING STATEMENTS
This quarterly report on Form 10-Q (this “Report”), financial statements, and notes to financial statements contain forward-looking statements that discuss, among other things, future expectations and projections regarding future developments, operations, and financial conditions. Forward-looking statements may appear throughout this Report and other documents we file with the U.S. Securities and Exchange Commission (the “SEC”), including without limitation, the following section: Part I, Item 2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in this Report.
Forward-looking statements generally can be identified by words such as “anticipates,” “believes,” “estimates,” “expects,” “intends,” “plans,” “predicts,” “projects,” “will be,” “will continue,” “may,” “could,” “will likely result,” and similar expressions. These forward-looking statements are based on current expectations and assumptions that are subject to risks and uncertainties, which could cause our actual results to differ materially from those reflected in the forward-looking statements. We undertake no obligation to revise or publicly release the results of any revision to these forward-looking statements, except as required by law. Given these risks and uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements.
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PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Hongchang International Co., Ltd
Condensed Consolidated Balance Sheets
| As of | ||||||||
| June 30, 2025 | March 31, 2025 | |||||||
| (unaudited) | ||||||||
| US$ | US$ | |||||||
| ASSETS: | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | ||||||||
| Restricted cash | ||||||||
| Accounts receivable | ||||||||
| Amount due from a related party | ||||||||
| Other receivable | ||||||||
| Inventories, net | ||||||||
| Advance to suppliers | ||||||||
| Other current assets | ||||||||
| Total current assets | ||||||||
| Non-current assets: | ||||||||
| Property and equipment, net | ||||||||
| Construction-in-progress | ||||||||
| Intangible assets, net | ||||||||
| Land use rights, net | ||||||||
| Equity-method investments | ||||||||
| Other non-current assets | ||||||||
| Total non-current assets | ||||||||
| Total assets | ||||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| Current liabilities: | ||||||||
| Long-term loans -current portion | ||||||||
| Accounts payable | ||||||||
| Accounts payable-construction in progress | ||||||||
| Amounts due to related parties -current portion | ||||||||
| Advances from customers | ||||||||
| Accrued expenses and other liabilities | ||||||||
| Total current liabilities | ||||||||
| Non-current liabilities | ||||||||
| Deferred subsidies | ||||||||
| Long term loans | ||||||||
| Amounts due to related parties | ||||||||
| Deferred Tax Liability | ||||||||
| Total non-current liabilities | ||||||||
| Total liabilities | ||||||||
| Commitments and contingencies | ||||||||
| Stockholders’ equity: | ||||||||
| Common stock (US$ | ||||||||
| Additional paid-in capital | ||||||||
| Statutory reserves | ||||||||
| Accumulated surplus (deficit) | ( | ) | ||||||
| Accumulated other comprehensive income (loss) | ( | ) | ||||||
| Total Hongchang International Co., Ltd’s stockholders’ equity | ||||||||
| Non-controlling interests | ||||||||
| Total equity | ||||||||
| Total liabilities and equity | ||||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
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Hongchang International Co., Ltd
Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)
(Unaudited)
| For the three months ended | ||||||||
| June 30, | ||||||||
| 2025 | 2024 | |||||||
| US$ | US$ | |||||||
| Revenue | ||||||||
| Cost of revenue | ( | ) | ( | ) | ||||
| Gross profit | ||||||||
| Sales and marketing expenses | ( | ) | ||||||
| General and administrative expenses | ( | ) | ( | ) | ||||
| Total operating expenses | ( | ) | ( | ) | ||||
| Operating income (loss) | ( | ) | ||||||
| Interest (expense) income | ( | ) | ||||||
| Loss on disposal of unconsolidated entities | ( | ) | ||||||
| Other income | ||||||||
| Other expenses | ( | ) | ||||||
| Income (loss) before income taxes | ( | ) | ||||||
| Income tax (expense) benefit | ( | ) | ||||||
| Net income (loss) | ( | ) | ||||||
| Other comprehensive income (loss) net of tax: | ||||||||
| Foreign currency translation difference net of tax | ( | ) | ||||||
| Total comprehensive income (loss) | ( | ) | ||||||
| Less: comprehensive income attributable to non-controlling interest | ( | ) | ( | ) | ||||
| Comprehensive income (loss) attributable to Hongchang International Co., Ltd’s common stockholders | ( | ) | ||||||
| Earnings (Loss) per share: | ||||||||
| Common stock - basic and diluted | ( | ) | ( | ) | ||||
| Weighted average shares outstanding used in calculating basic and diluted loss per share: | ||||||||
| Common stock - basic and diluted | ||||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
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Hongchang International Co., Ltd
Condensed Consolidated Statements of Changes
in Stockholders’ Equity
(Unaudited)
| Ordinary Shares | Subscription | Additional Paid-in | Statutory | Accumulated | Accumulated other comprehensive | Total Hongchang International Co., Ltd stockholder's | Non- controlling | Total Stockholder’s | ||||||||||||||||||||||||||||||||
| Shares | Amount | Receivable | Capital | Reserve | Deficit | income (loss) | equity | interests | Equity | |||||||||||||||||||||||||||||||
| US$ | US$ | US$ | US$ | US$ | US$ | US$ | US$ | US$ | ||||||||||||||||||||||||||||||||
| Balance as of April 1, 2024 | ( | ) | ||||||||||||||||||||||||||||||||||||||
| Net loss | - | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||
| Foreign currency translation adjustment | - | ( | ) | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||||||||||||
| Balance as of June 30, 2024 | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||
| Balance as of April 1, 2025 | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||
| Net Income | - | |||||||||||||||||||||||||||||||||||||||
| Foreign currency translation adjustment | - | |||||||||||||||||||||||||||||||||||||||
| Balance as of June 30, 2025 | ||||||||||||||||||||||||||||||||||||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
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Hongchang International Co., Ltd
Condensed Consolidated Statements of Cash Flows
(Unaudited)
For the three months ended June 30, | ||||||||
| 2025 | 2024 | |||||||
| US$ | US$ | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES | ||||||||
| Net income (loss) | ( | ) | ||||||
| Adjustments to reconcile net (loss) income to net cash provided by operating activities: | ||||||||
| Depreciation and amortization | ||||||||
| Loss on disposal of unconsolidated entities | ||||||||
| Deferred tax benefit | ( | ) | ( | ) | ||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | ( | ) | ||||||
| Inventories | ( | ) | ||||||
| Advance to supplier | ( | ) | ||||||
| Other receivable | ( | ) | ( | ) | ||||
| Other current assets | ||||||||
| Accounts payable | ( | ) | ||||||
| Accounts payable-related party | ||||||||
| Accrued expenses and other payables | ( | ) | ( | ) | ||||
| Advance from customers | ||||||||
| Deferred subsidies | ( | ) | ||||||
| Net cash used in operating activities | ( | ) | ( | ) | ||||
| CASH FLOWS FROM INVESTING ACTIVITIES | ||||||||
| Purchases of property and equipment | ( | ) | ( | ) | ||||
| Net cash used in investing activities | ( | ) | ( | ) | ||||
| CASH FLOWS FROM FINANCING ACTIVITIES | ||||||||
| Repayments of long-term payables | ( | ) | ||||||
| Repayments of a loan from a related party | ( | ) | ( | ) | ||||
| Proceeds from loans from related parties | ||||||||
| Net cash (used in) provided by financing activities | ( | ) | ||||||
| Effect of exchange rate changes | ( | ) | ||||||
| Net decrease in cash | ( | ) | ( | ) | ||||
| Cash and Restricted cash at beginning of period | ||||||||
| Cash and Restricted cash at end of period | ||||||||
| Supplemental disclosure of cash flow information | ||||||||
| Interest paid | ||||||||
| Interest capitalized | ||||||||
| Accrued but unpaid interest capitalized in construction-in-progress | ||||||||
| Other receivable from disposal of a subsidiary | ||||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
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Hongchang International Co., Ltd
Notes to Unaudited Condensed Consolidated Financial Statements
1. ORGANIZATION
(a) Nature of operations
Hongchang International Co., Ltd (the “Company”)
was incorporated in the state of Nevada on
On September 4, 2023, the Company completed the merger and other related transactions (the “Merger Transactions”) with Hongchang Global Investment Holdings Limited (“Hongchang BVI”), as a result of which Hongchang BVI became a wholly owned subsidiary of the Company and the Company assumed and began conducting the principal business of Hongchang BVI. The name of the Company was changed from “Heyu Biological Technology Corporation” to “Hongchang International Co., Ltd.”
The “Group” means (i) prior to the completion of the Reorganization (as defined below), Hongchang BVI and its subsidiaries that engage in businesses of food trade and biotechnology in China (ii) upon and after completion of the Merger Transactions, the Company and its subsidiaries that engage in businesses of food trade and biotechnology in China.
(b) History and reorganization of the Group
In preparation of the Merger Transactions, the
following transactions were undertaken to reorganize the legal structure of Fuqing Hongchang Food Co., Ltd (“Hongchang Food”)
(collectively, the “Reorganization”). On January 13, 2023, Mr. Zengqiang Lin and Ms. Zhenzhu Lin, the existing stockholders
of Hongchang Food established two wholly owned subsidiaries, Zengqiang Investment Limited (“BVI-1”) and Hong Jin Investment
Limited (“BVI-2”) in the British Virgin Islands, respectively. On January 18, 2023, Hong Chang Global Investment Holdings
Limited (“Hongchang BVI”) was then incorporated by BVI-1 and BVI-2, which held
(c) Reverse merger
On August 21, 2023, the Company entered into a
Share Exchange Agreement (the “Share Exchange Agreement”) with Hongchang BVI and Hongchang BVI’s stockholders, BVI-1,
a business company incorporated in the BVI, and BVI-2, a business company incorporated in the BVI (the “Selling Stockholders”
and each a “Selling Stockholder”), in relation to the acquisition of Hongchang BVI by the Company (the “Hongchang Acquisition”).
BVI-1 is wholly owned by Mr. Zengqiang Lin and BVI-2 is wholly owned by Ms. Zhenzhu Lin. Mr. Zengqiang Lin has been a director of the
Company since February 17, 2023, and Ms. Zhenzhu Lin is the sister of Mr. Zengqiang Lin. In accordance with the terms of the Share Exchange
Agreement, the Selling Stockholders sold and transferred
5
Immediately following the closing of the Hongchang
Acquisition, the Company had a total of
As the Company, the legal acquirer and accounting acquiree, does not meet the definition of a business, management concluded that the Merger Transactions should be accounted for as a continuation of the financial statements of Hongchang BVI (the legal subsidiary), together with a deemed issue of shares and a re-capitalization of the equity of Hongchang BVI. Hongchang BVI is the continuing entity and is deemed to have issued shares in exchange for the identifiable net assets held by the Company together with the listing status of the Company. Management concluded that September 4, 2023 was the acquisition date of the Merger Transactions.
Upon the completion of the reverse merger, the Company has set up a few new subsidiaries: Fujian Hongchang Global Food Co., Ltd (“Hongchang Global Food”), Fuqing Hongchang Global Import & Export Co., Ltd (“Hongchang Import & Export”), Fuqing Hongchang Global Supply Chain Co., Ltd (“Hongchang Supply Chain”), and Hongchang Global (Fuqing City) Agricultural Technology Development Co., Ltd (“Hongchang Agricultural”) in order for the Company to develop different businesses. As of the date of this report, these subsidiaries have not generated significant revenue.
On May 8, 2024, Hongchang Food entered into a
shareholder agreement with Fujian Xindefu Agricultural Products Co., Ltd. (“Xindefu”). Pursuant to the agreement, Hongfu Food
(Fujian) Co. Ltd. (“Hongfu Food”) was established, with Hongchang Food holding a
Based on above transactions, the accompanying consolidated financial statements reflect the activities of each of the following entities:
| Entity | Place of incorporation | Percentage of direct or indirect ownership by the Company | Principal activities | |||||
| Subsidiaries: | ||||||||
| Hongchang BVI | ||||||||
| Hongchang HK | ||||||||
| WFOE | ||||||||
| Hongchang Food | ||||||||
| Hongchang Global Food | ||||||||
| Hongchang Import & Export | ||||||||
| Hongchang Supply Chain | ||||||||
| Hongchang Agricultural | ||||||||
| Hongfu Food | ||||||||
| Pucheng Green Health Food | ||||||||
| (1) |
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2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of presentation
The unaudited consolidated financial statements include the accounts of the Company and its subsidiaries and have been prepared in accordance with U.S. GAAP and the requirements of the U.S. Securities and Exchange Commission (the “SEC”). As permitted under those rules, certain footnotes or other financial information that are normally required by U.S. GAAP can be condensed or omitted. These consolidated financial statements have been prepared on the same basis as its annual consolidated financial statements and, in the opinion of management, reflect all adjustments, consisting only of normal recurring adjustments, which are necessary for the fair statement of the Group’s financial information.
Through the Reorganization, the Company became the holding company of the companies now comprising the Group. Accordingly, for the purpose of preparation of the consolidated financial statements of the Group, the Company is considered as the holding company of the companies now comprising the Group throughout the reporting period. Through the Reorganization, the Company became the holding company of the contributed businesses now comprising the Group, which were under the common control of Mr. Zengqiang Lin and Ms. Zhenzhu Lin before and after the Reorganization. Accordingly, the financial statements were prepared on a consolidated basis by applying the principles of the pooling of interest method as if the Reorganization had been completed at the date when contributed business first came under the control of the controlling party. The consolidated statements of operations and comprehensive income (loss), changes in equity, and cash flows of the Group included the results and cash flows of all companies now comprising the Group from the earliest date presented or since the date when the subsidiaries and/or businesses first came under the common control of the controlling stockholders, whenever the period is shorter.
Principles of consolidation
The accompanying unaudited consolidated financial statements of the Group include the financial statements of the Company and its subsidiaries. All significant intercompany transactions and balances have been eliminated in consolidation.
Use of estimates
The preparation of the unaudited consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, related disclosures of contingent assets and liabilities at the balance sheet date, and the reported revenue and expenses during the reported period in the consolidated financial statements and accompanying notes. Significant accounting estimates reflected in the Group’s consolidated financial statements mainly include, but are not limited to, assessment for impairment of long-lived assets, valuation of deferred tax assets, and current expected credit loss of receivables.
7
Management bases the estimates on historical experience and on various other assumptions as discussed elsewhere to the unaudited consolidated financial statements that are believed to be reasonable, the results of which form the basis for making judgments about the carrying values of assets and liabilities. On an ongoing basis, management evaluates its estimates based on information that is currently available. Changes in circumstances, facts, and experience may cause the Group to revise its estimates. Changes in estimates are recorded in the period in which they become known. Actual results could materially differ from these estimates.
Foreign Currency
The Group’s principal country of operations
is the PRC. The accompanying consolidated financial statements are presented in US$. The functional currency of the Company is US$, and
the functional currency of the Company’s subsidiaries is RMB. The unaudited consolidated financial statements are translated into
US$ from RMB at year-end exchange rates as to assets and liabilities and average exchange rates as to revenue and expenses. Capital accounts
are translated at their historical exchange rates when the capital transactions occurred. The resulting translation adjustments are recorded
as a component of stockholders’ equity included in other comprehensive income.
| As of | ||||||||
| June 30, 2025 | March 31, 2025 | |||||||
| US$:RMB exchange rate | ||||||||
For the three months ended June 30 | ||||||||
| 2025 | 2024 | |||||||
| US$:RMB exchange rate | ||||||||
The RMB is not freely convertible into foreign currency and all foreign exchange transactions must take place through authorized institutions. No representation is made that the RMB amounts could have been, or could be, converted into US$ at the rates used in translation.
Cash
Cash consists of cash on hand and cash in bank,
which are highly liquid and have original maturities of three months or less and are unrestricted as to withdrawal or use. The Group maintains
cash with various financial institutions primarily in mainland China. Deposit insurance system in China only insured each depositor at
one bank for a maximum of approximately US$
Restricted cash
The Company received grants from the Fuzhou Municipal
Bureau of Housing Security and Real Estate Administration amounting to US$
Accounts receivable and allowance for credit losses
Accounts receivable are stated at the historical carrying amount net of allowance for expected credit losses. To estimate expected credit losses, the Group has identified the relevant risk characteristics of its customers and the related receivables. The Group considers the past collection experience, current economic conditions, future economic conditions (external data and macroeconomic factors), and changes in the Group’s customer collection trends. The allowance for credit losses and corresponding receivables were written off when they are determined to be uncollectible.
8
Inventories
Inventories are stated at the lower of cost or net realizable value. Net realizable value is the estimated selling price in the normal course of business less any costs to complete and sell products. Cost of inventory are determined using the weighted average cost method. The Group records inventory reserves for obsolete and slow-moving inventory. Inventory reserves are based on inventory obsolescence trends, historical experience, and application of the specific identification method.
Lease
From the Perspective as a lessee
At inception of a contract, the Group assesses whether a contract is, or contains, a lease. A contract is or contains a lease if it conveys the right to control the use of an identified asset for a period of time in exchange of a consideration. To assess whether a contract is or contains a lease, the Group assesses whether the contract involves the use of an identified asset, whether it has the right to obtain substantially all the economic benefits from the use of the asset and whether it has the right to control the use of the asset.
The right-of-use assets and related lease liabilities are recognized at the lease commencement date. The Group recognizes operating lease expenses on a straight-line basis over the lease term.
From the Perspective as a lessor
The Group recognizes rental revenue under ASC 842, and the lease contracts are operating leases. The Group has elected to exclude from revenue and expenses sales taxes and other similar taxes collected from its tenant. The Group leases the buildings of Hongchang Food Industrial Park to its customers and generates revenue from monthly rent in the form of rental fees. The price of contract varies primarily based on the size and nature of buildings leased by the customers. The Group’s lease contracts include a fix periodic payment amount. The Group recognizes rental revenue when the Group provides the customers access to the buildings. Rental revenue is recognized over the lease term on a straight-line basis, subject to a collectability assessment, with the difference between the contractual rental receipts and the straight-line amounts included in accounts receivable. The lease has renewal options, and a penalty is imposed if the customers early terminate the leases. Renewal of contract is on a negotiation basis before termination.
Prior to moving into the buildings, the customer is required to provide the Group with a rental retainer in amount specified in the terms of the lease agreements. The retainer typically cannot be applied against the customer’s unpaid balance of rental or other fees.
Future minimum undiscounted lease collections from the contracts existed as of June 30, 2025 were as follows:
| As of June 30 | ||||
| 2026 | ||||
| 2027 | ||||
| 2028 | ||||
| 2029 | ||||
| 2030 | ||||
| Thereafter | ||||
| Total | ||||
9
Short-term leases
The Group has elected not to recognize right-of-use assets and lease liabilities for short-term leases that have a lease term of 12 months or less. Lease payments associated with these leases are expensed as incurred.
Sales and leaseback contracts
The Group enters sale and leaseback transactions. The Group acts as the seller-lessee, transfers its assets to a third-party entity (the buyer-lessor), and then leases the transferred assets back from the buyer-lessor at a contract designated rental price. The Group evaluates whether a sale of the underlying assets in the sale and leaseback contract has occurred in accordance with ASC 606. When a sale and leaseback transaction does not qualify for sale accounting, the transaction is accounted for as a financing transaction by the seller-lessee and a lending transaction by the buyer-lessor. The seller-lessee shall not derecognize the transferred asset and shall account for any amounts received as a financial liability.
Property and equipment, net
Property and equipment are stated at cost less accumulated depreciation and impairment loss, if any. Property and equipment are depreciated at rates sufficient to write off their costs less impairment and residual value, if any, over their estimated useful lives on a straight-line basis.
| Category | Estimated useful life | |
| Equipment | ||
| Building |
Construction-in-progress
Property and equipment that are purchased or constructed which require a period of time before the assets are ready for their intended use are accounted for as construction-in-progress. Construction-in-progress is recorded at acquisition cost, including installation costs. Construction-in-progress is transferred to specific property and equipment accounts and commences depreciation when these assets are ready for their intended use.
Capitalized Interest
Interest incurred during and directly related
to construction-in-progress is capitalized to the related property under construction during the active construction period, which generally
commences when borrowings are used to acquire assets of construction-in-progress and ends when the properties are substantially complete
or the property becomes inactive. Interest is capitalized based on the interest rate applicable to specific borrowings or the weighted
average of the rates applicable to other borrowings during the period. All other interest is expensed as incurred. For the three months
ended June 30, 2025 and 2024, the total interest capitalized in the construction-in-progress was US$
10
Intangible assets
Intangible assets are carried at cost less accumulated
amortization and impairment, if any. Intangible assets are amortized using the straight-line method over the estimated useful lives.
| Category | Estimated useful life | |
| Purchased software |
Land use right, net
The land use rights represent the operating lease prepayments for the rights to use the land in the PRC. Amortization of the prepayments is provided on a straight-line basis over the terms of the respective land use rights certificates.
Impairment of long-lived assets other than goodwill
Long-lived assets are evaluated for impairment whenever events or changes in circumstances (such as a significant adverse change to market conditions that will impact the future use of the assets) indicate that the carrying amount may not be fully recoverable or that the useful life is shorter than the Group had originally estimated. When these events occur, the Group evaluates the impairment by comparing carrying value of the assets to an estimate of future undiscounted cash flows expected to be generated from the use of the assets and their eventual disposition. If the sum of the expected future undiscounted cash flows is less than the carrying value of the assets, the Group recognizes an impairment loss based on the excess of the carrying value of the assets over the fair value of the assets. Impairment charge recognized for the three months ended June 30, 2025 and 2024 was US$.
Fair value of financial instruments
Fair value is defined as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required or permitted to be either recorded or disclosed at fair value, the Group considers the principal or most advantageous market in which it would transact, and it also considers assumptions that market participants would use when pricing the asset or liability.
Accounting guidance establishes a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement.
ASC 820 establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows:
Level 1 — Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets.
Level 2 — Other inputs that are directly or indirectly observable in the marketplace.
Level 3 — Unobservable inputs which are supported by little or no market activity.
Financial assets and liabilities of the Group primarily consist of cash, accounts receivable, amounts due from related party, advance to suppliers-related party, other receivables, accounts payables, accounts payables - construction in progress and accrued expenses and other liabilities. As of June 30, 2025 and 2024, the carrying values of these financial assets and liabilities approximated their fair values due to the short-term nature.
Revenue recognition
The Group applied ASC Topic 606 “Revenue from Contracts with Customers” (“ASC 606”) for all periods presented.
Step 1: Identify the contract(s) with a customer.
Step 2: Identify the performance obligations in the contract.
Step 3: Determine the transaction price – The transaction price is the amount of consideration in a contract to which an entity expects to be entitled in exchange for transferring promised goods or services to a customer.
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Step 4: Allocate the transaction price to the performance obligations in the contract – Any entity typically allocates the transaction price to each performance obligation on the basis of the relative standalone selling prices of each distinct good or service promised in the contract.
Step 5: Recognize revenue when (or as) the entity satisfies a performance obligation – An entity recognizes revenue when (or as) it satisfies a performance obligation by transferring a promised good or service to a customer (which is when the customer obtains control of that good or service). The amount of revenue recognized is the amount allocated to the satisfied performance obligation. A performance obligation may be satisfied at a point in time (typically for promises to transfer goods to a customer) or over time (typically for promises to transfer service to a customer).
The Group has elected to apply the practical expedient in paragraph ASC 606-10-50-14 and does not disclose information about remaining performance obligations that have original expected durations of one year or less.
The Group has elected a practical expedient that it does not adjust the promised amount of consideration for the effects of a significant financing component if the Group expects that, upon the inception of revenue contracts, the period between when the Group transfers its promised services or deliverables to its clients and when the clients pay for those services or deliverables will be one year or less.
As a practical expedient, the Group elected to expense the incremental costs of obtaining a contract when incurred if the amortization period of the asset that the Group otherwise would have recognized is one year or less.
The Group is a food provider in Fujian Province which principally engages in meat and food product sales, support infrastructure sales and installation, and property rental.
The Group’s principal revenue stream includes:
| 1. | Product revenue: |
| ● | Meat and food product sales: |
The Group enters into contracts with customers for the supply of meat and food products, whereby customers agree to pay product fees over the contract term in line with the terms set out in the sales agreements. Each contract encompasses a single promise: delivering specific goods to customers, which the Group therefore identifies as a single performance obligation, with all service fees (including but not limited to shipping and handling fees and packaging fees) allocated thereto. Control is considered transferred when the customer gains the ability to direct the use of the goods and obtain substantially all remaining economic benefits therefrom. Accordingly, the Group recognizes revenue at the point in time when control of the goods is transferred to the customer.
For the majority of meat and food product sales contracts, the Group assumes inventory risk, has the autonomy to set prices, and is responsible for fulfilling the promise to provide specific goods to customers. As the Group acts as the principal in these transactions, revenue is recognized on a gross basis. In contrast, for a small number of contracts where the Group does not assume inventory risk, does not have pricing authority, and is not primarily responsible, revenue is recognized on a net basis.
| ● | Sale and installation of support infrastructure: |
The Group bundles the installation together with the sale of mounts for photovoltaic panels. The installation services do not significantly customize or modify the mounts.
Contracts for bundled sales of equipment and installation services are comprised of two performance obligations because the equipment and installation services are both sold on a stand-alone basis and are distinct within the context of the contract. Accordingly, the Group allocates the transaction price based on the relative stand-alone selling prices of the equipment and installation services.
The Group recognizes revenue from installation services over time because the customer simultaneously receives and consumes the benefits provided to them. The Group uses an input method in measuring progress of the installation services because there is a direct relationship between the Groups effort (i.e., based on the labor hours incurred) and the transfer of service to the customer. The Group recognizes revenue on the basis of the labor hours expended relative to the total expected labor hours to complete the service.
12
| 2. | Service revenue: |
| ● | Rental services: The Group started to generate lease revenue in 2025 from the operating lease of constructed buildings in the Hongchang Food Industrial Park to customers. As a lessor, the Group accounts for these leases under ASC 842. Lease revenue is recognized on a straight-line basis over the lease term, with any difference between straight-line revenue and contractual rental receipts recorded as a component of accounts receivable. Revenue recognition is subject to a collectability assessment, considering the creditworthiness of lessees and historical payment patterns. See “Note 2. Summary of Significant Accounting Policies—Lease—from the perspective as a lessor” for more discussion. |
Disaggregation of Revenue
Disaggregation of revenue from contracts with clients, in accordance with ASC Topic 606, by major service lines is as follows:
| For the three months ended June 30, | ||||||||
| 2025 | 2024 | |||||||
| REVENUE | US$ | US$ | ||||||
| Product revenue: | ||||||||
| Meat and food product sales | ||||||||
| Service revenue: | ||||||||
| Rental services | ||||||||
| Total | ||||||||
Revenue disaggregated by timing of revenue recognition for the three months ended June 30, 2025 and 2024 is disclosed in the table below:
| For the three months ended June 30, | ||||||||
| 2025 | 2024 | |||||||
| US$ | US$ | |||||||
| Point in time: | ||||||||
| Meat and food product sales | ||||||||
| Over time: | ||||||||
| Rental services | ||||||||
The Group also selected to apply the practical
expedients allowed under ASC Topic 606 to omit the disclosure of remaining performance obligations for contracts with an original expected
duration of one year or less. As of June 30, 2025 and 2024, all contracts of the Group were with an original expected duration within
Cost of revenue
Costs of revenue consist primarily of purchase
price of products, shipping and handling expenses from suppliers to the Group, and related costs, which are directly attributable to products.
Write-down of inventories is also recorded in cost of sales, if any. Shipping and handling costs incurred to transport goods to customers
are expensed in the periods incurred and are included in cost of revenue. The Group accounts for shipping and handling expenses as fulfillment
costs because shipping and handling activities occur before the customers obtains control of the goods. Shipping and handling expenses
amounted to US$ and US$
13
Sales and marketing expenses
Sales and marketing expenses consist primarily of travelling expenses, marketing conference expenses, advertising expenses, and salaries and other compensation-related expenses to sales and marketing personnel. The Group expenses all advertising costs as incurred. Advertising costs amounted to $ for the three months ended June 30, 2025 and 2024.
General and administrative expenses
General and administrative expenses consist primarily of salaries and benefits for employees involved in general corporate functions, amortization of land use right, legal and other professional services fees, rental, and other general corporate related expenses.
Government Subsidies
Government subsidies are recognized when there
is reasonable assurance that the subsidy will be received, and all attaching conditions will be complied with. When the subsidy relates
to an expense item, it is recognized as income over the periods necessary to match the subsidy on a systematic basis to the costs that
it is intended to compensate. Where the subsidy relates to an asset, it is recognized as deferred subsidies and is released to the statement
of operations over the expected useful life in a consistent manner with the depreciation method for the relevant asset. Total government
subsidies recorded in the deferred subsidies were $
Value-added taxes
Sales revenue represents the invoiced value of
goods, net of VAT. The applicable VAT rate was
Income taxes
Current income taxes are recorded in accordance with the regulations of the relevant tax jurisdiction. The Group accounts for income taxes under the asset and liability method in accordance with ASC 740, Income Tax, (“ASC 740”). Under this method, deferred tax assets and liabilities are recognized for the tax consequences attributable to differences between carrying amounts of existing assets and liabilities in the financial statements and their respective tax basis, and operating loss carry-forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred taxes of a change in tax rates is recognized in the consolidated statements of operations and comprehensive income (loss) in the period of change. Valuation allowances are established when necessary to reduce the amount of deferred tax assets if it is considered more likely than not that amount of the deferred tax assets will not be realized.
The Group records liabilities related to uncertain tax positions when, despite the Group’s belief that the Group’s tax return positions are supportable, the Group believes that it is more likely than not that those positions may not be fully sustained upon review by tax authorities. Accrued interest and penalties related to unrecognized tax benefits are classified as income tax expense. The Group did not recognize uncertain tax positions as of June 30, 2025 and 2024.
Related party transactions
Parties are considered to be related if one party has the ability, directly or indirectly, to control the other party or exercise significant influence over the other party in making financial and operational decisions. Parties are also considered to be related if they are subject to common control or common significant influence. Related parties may be individuals or corporate entities. A transaction is considered to be a related party transaction when there is a transfer of resources or obligations between related parties.
14
Transactions involving related parties cannot be presumed to be carried out on an arm’s-length basis, as the requisite conditions of competitive, free-market dealings may not exist. Representations about transactions with related parties, if made, shall not imply that the related party transactions were consummated on terms equivalent to those that prevail in arm’s-length transactions unless such representations can be substantiated. It is not, however, practical to determine the fair value of amounts due from/to related parties due to their related party nature.
Earnings per share
The Group calculates earnings per share in accordance
with ASC Topic 260 “Earnings per Share.” Basic earnings per share is computed by dividing the net income by the weighted average
number of common stock outstanding during the period. Diluted earnings per share is computed similar to basic earnings per share except
that the denominator is increased to include the number of additional common stock that would have been outstanding if the potential common
stock equivalents had been issued and if the additional common stock were dilutive. On September 4, 2023, the Group completed the Hongchang
Acquisition, whereby Hongchang BVI’s stockholders received
Before the reorganization, Hongchang Food depended
on loans from stockholders for the construction of the Hongchang Food Industrial Park and its daily operations. These were recorded as
loans from related parties. In May 2023, Hongchang Food reached an agreement with a stockholder to convert an outstanding loan balance
of US$
Comprehensive income
The Group 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 Group during a period arising from transactions and other event and circumstances except those resulting from investments by stockholders and distributions to stockholders. For the three months ended June 30, 2025 and the fiscal years ended March 31, 2025, the Group’s comprehensive income (loss) included net income (loss) and other comprehensive income (loss).
Segment reporting
ASC 280, Segment Reporting (“ASC 280”),
establishes standards for companies to report in their financial statements information about operating segments, products, services,
geographic areas, and major customers. Based on the criteria established by ASC 280, our chief operating decision maker (“CODM”)
has been identified as our Chief Executive Officer, who reviews consolidated results when making decisions about allocating resources
and assessing performance of the Group. As a whole and hence, we have only
15
Uncertainty and risks
Political, social, and economic risks
The Group has substantial operations in China through its PRC subsidiaries. Accordingly, the Group’s business, financial condition, and results of operations may be influenced by political, economic, and legal environments in the PRC, as well as by the general state of the PRC economy. The Group’s results may be adversely affected by changes in the political, regulatory, and social conditions in the PRC. Although the Group has not experienced losses from these situations and believes that it is in compliance with existing laws and regulations including its organization and structure disclosed in Note 1, this may not be indicative of future results.
Concentration risks
Concentration of credit risk
Financial instruments that potentially expose the Group to concentrations of credit risk consist primarily of cash in bank and accounts receivable. The Group places its cash with financial institutions with high credit ratings and quality.
The Group conducts credit evaluations of customers, and generally does not require collateral or other security from its customers. The Group establishes an allowance for expected credit losses primarily based upon the factors surrounding the credit risk of specific customers.
Concentration of customers and suppliers
As of June 30, 2025, one major client accounted
for
As of March 31, 2025, one major client accounted
for
For three months ended June 30, 2025, two major
clients accounted for
For three months ended June 30, 2024, one major
client accounted for
As of June 30, 2025, one vendor accounted for
As of March 31, 2025, one vendor accounted for
16
Recent accounting pronouncements
In December 2023, the FASB issued ASU 2023-09 Improvements to Income Tax Disclosures. The ASU improves the transparency of income tax disclosures by requiring (1) consistent categories and greater disaggregation of information in the rate reconciliation and (2) income taxes paid disaggregated by jurisdiction. It also includes certain other amendments to improve the effectiveness of income tax disclosures. For public business entities, the ASU is effective for annual periods beginning after December 15, 2025. The Company is evaluating the potential impact of this guidance on its consolidated financial statements.
In November 2024, the FASB issued ASU 2024-03 Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosure (Subtopic 220-40): Disaggregation of Income Statement Expense and ASU 2025-01, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Clarifying the Effective Date. The ASU improves the disclosures about a public business entity’s expenses and provides more detailed information about the types of expenses in commonly presented expense captions. The amendments require that at each interim and annual reporting period an entity will, inter alia, disclose amounts of purchases of inventory, employee compensation, depreciation, and amortization included in each relevant expense caption (such as cost of sales, general and administrative, and research and development). The ASU is effective for annual reporting periods beginning after December 15, 2026, and interim periods within annual reporting periods beginning after December 15, 2027. Early adoption is permitted. The Company is evaluating the potential impact of this guidance on its consolidated financial statement disclosures.
Other accounting standards that have been issued by FASB that do not require adoption until a future date are not expected to have a material impact on the consolidated financial statements upon adoption. The Group does not discuss recent pronouncements that are not anticipated to have an impact on, or are unrelated to, its consolidated financial condition, results of operations, cash flows or disclosures.
3. ACCOUNTS RECEIVABLE
Accounts receivable consisted of the following:
| As of June 30, 2025 | As of March 31, 2025 | |||||||
| US$ | US$ | |||||||
| Accounts receivable | ||||||||
As of June 30, 2025 and March 31, 2025, the Company had allowance for expected credit losses for accounts receivable.
17
4. OTHER RECEIVALBE
Other receivable consisted of the following:
| As of June 30, 2025 | As of March 31, 2025 | |||||||
| US$ | US$ | |||||||
| Receivables from disposal of equity-method investments | ||||||||
| Others | ||||||||
For the three months ended June 30, 2025 and 2024, the Company had allowance for expected credit losses for other receivable.
5. OTHER CURRENT ASSETS
Other current assets consisted of the following:
| As of June 30, 2025 | As of March 31, 2025 | |||||||
| US$ | US$ | |||||||
| VAT recoverable | ||||||||
| Deferred tax assets | ||||||||
| Prepaid Expenses | ||||||||
6. PROPERTY AND EQUIPMENT, NET
Property and equipment consisted of the following:
| As of June 30, 2025 | As of March 31, 2025 | |||||||
| US$ | US$ | |||||||
| Office equipment | ||||||||
| Other machinery and Equipment | ||||||||
| Buildings | ||||||||
| Accumulated depreciation | ( | ) | ( | ) | ||||
Depreciation expenses were US$
Phase I of Hongchang Food Industrial Park was complete and reached usable condition in January 2025. The buildings started to depreciate from February 2025.
18
On February 1, 2025, Hongchang Food entered into
a lease contract with Fuqing Yuanchuang Property Management Co., Ltd. to lease out a total of seven buildings in Phase I of Hongchang
Food Industrial Park, with the leased area of
As of June 30, 2025, the buildings with a carrying
value of US$
7. CONSTRUCTION-IN-PROGRESS
Construction-in-progress consisted of the following:
| As of June 30, 2025 | As of March 31, 2025 | |||||||
| US$ | US$ | |||||||
| Construction in progress | ||||||||
Hongchang Food Industrial Park covers a site area
of
8. INTANGIBLE ASSETS, NET
Intangible assets consisted of the following:
| As of June 30, 2025 | As of March 31, 2025 | |||||||
| US$ | US$ | |||||||
| Purchased software | ||||||||
| Less: accumulated amortization | ( | ) | ( | ) | ||||
| Less: impairment allowance | ( | ) | ( | ) | ||||
Amortization expenses for the purchased software
were US$ and US$
9. LAND USE RIGHTS, NET
Land use rights, net consisted of the following:
As
of | As of March 31, 2025 | |||||||
| US$ | US$ | |||||||
| Land use rights | ||||||||
| Less: accumulated amortization | ( | ) | ( | ) | ||||
19
Amortization expenses for the land use rights
were US$
| For the fiscal years ending March 31, | ||||||||||||||||||||||||
| 2026* | 2027 | 2028 | 2029 | 2030 | 2031 and thereafter | |||||||||||||||||||
| US$ | US$ | US$ | US$ | US$ | US$ | |||||||||||||||||||
| Amortization expenses | ||||||||||||||||||||||||
| * |
As of June 30, 2025, the land use right with a
carrying value of US$
10. OTHER NON-CURRENT ASSETS
Other non-current assets consisted of the following:
| As of June 30, 2025 | As of March 31, 2025 | |||||||
| US$ | US$ | |||||||
| Other non-current asset –Advanced construction payment | ||||||||
| Other non-current asset –Leasehold deposit | ||||||||
Other non-current assets were US$
11. EQUITY-METHOD INVESTMENTS
| As of June 30, 2025 | As of March 31, 2025 | |||||||
| US$ | US$ | |||||||
| Fujian Hongding Pawnshop Co. | ||||||||
The Group acquired the equity investment in Fujian
Hongding Pawnshop Co. (“Hongding Pawnshop”) through the acquisition of Pucheng Green Health Food. Pucheng Green Health Food
held
In June 2025, Pucheng Green Health Food
disposed of all of its
12. ACCRUED EXPENSES AND OTHER LIABILITIES
Accrued expenses and other liabilities consisted of the following:
| As of June 30, 2025 | As of March 31, 2025 | |||||||
| US$ | US$ | |||||||
| Payroll and welfare payables | ||||||||
| Value-added tax and other taxes payable | ||||||||
| Others | ||||||||
20
13. LONG-TERM LOANS
Long-term loans represent the amounts due to various
banks and financial lease companies lasting over one year. As of December 31, 2023, the Group had no loans. During 2024, the Group entered
into long-term loans contracts with two creditors.
| As of June 30, 2025 | As of March 31, 2025 | Maturity | Effective Interest | ||||||||||||||
| Creditors | Balance | Balance | Date | Rate | Collateral/Guarantee | ||||||||||||
| US$ | US$ | ||||||||||||||||
| Fujian Fuqing Huitong Rural Commercial Bank Co., Ltd. | 1 | ||||||||||||||||
| 2 | |||||||||||||||||
| 3 | |||||||||||||||||
| 4 | |||||||||||||||||
| 5 | |||||||||||||||||
| Subtotal | |||||||||||||||||
| Chailease International Finance Co., Ltd. (“Chailease”) | |||||||||||||||||
| Pucheng Rural Credit Union | |||||||||||||||||
| Total | |||||||||||||||||
On October 23, 2024, Hongchang Food entered into
a sales and leaseback contract with Chailease. Pursuant to the contract, the Company sold its machines for approximately US$
During the three months ended March 31, 2025,
the Company repaid approximately US$
During the three months ended June 30, 2025, the
Company repaid approximately US$
21
The future maturities of long-term loans from Fujian Fuqing Huitong Rural Commercial Bank Co., Ltd. are as follows:
| For the period ending June 30, | Principal | |||
| Remainder of 2026 | $ | |||
| 2027 | ||||
| 2028 | ||||
| 2029 | ||||
| Thereafter | ||||
| $ | ||||
| less: current portion | $ | |||
| Non-current portion | $ | |||
The purposes of these long-term loans are for
the construction of Hongchang Food Industrial Park, and the interest of these loans was capitalized in construction-in-progress. Interest
capitalized in construction-in-progress was US$
The loan from Pucheng Rural Credit Union will
mature on August 30, 2025. As of June 30, 2025, the Company had an outstanding balance of US$
14. COMMON STOCK AND ADDITIONAL PAID-IN CAPITAL
In January 2023,
As per the Reorganization described in Note 1(b)
History and reorganization of the Group, the consolidated financial statements were prepared as if the
In preparation of the Merger Transactions, the
following transactions were undertaken to reorganize the legal structure of Operating Entity. On January 13, 2023, Mr. Zengqiang Lin and
Ms. Zhenzhu Lin, the existing stockholders of Hongchang Food established BVI-1 and BVI-2 in the British Virgin Islands, respectively.
On January 18, 2023, Hongchang BVI was then incorporated by BVI-1 and BVI-2, which held
On August 21, 2023, the Company entered into the
Share Exchange Agreement with Hongchang BVI and Hongchang BVI’s stockholders, the Selling Stockholders, in relation to the Hongchang
Acquisition. BVI-1 is wholly owned by Mr. Zengqiang Lin and BVI-2 is wholly owned by Ms. Zhenzhu Lin. Mr. Zengqiang Lin has been a director
of the Company since February 17, 2023, and Ms. Zhenzhu Lin is the sister of Mr. Zengqiang Lin. In accordance with the terms of the Share
Exchange Agreement, the Selling Stockholders sold and transferred
In May 2023, Hongchang BVI received US$
On September 1, 2023, upon closing the Merger
Transactions,
22
15. INCOME TAX
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.
United States
The Company is subject to U.S. federal tax laws.
On December 22, 2017, the “Tax Cuts and Jobs Act” (the “Act”) was enacted. Under the provisions of the Act, the
U.S. corporate tax rate decreased from
British Virgin Islands
Hongchang BVI was incorporated in the British Virgin Islands and is not subject to tax on income or capital gains under current British Virgin Islands law. In addition, upon payments of dividends by these entities to their stockholders, no British Virgin Islands withholding tax will be imposed.
Hong Kong
HK$
PRC
WFOE and its subsidiaries are 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
Hongfu Food and Pucheng Green Health Food, primarily
engaged in processing of agricultural products, are eligible for full exemption from corporate income tax under the tax preferential policies
stipulated in the “EIT Laws,” with an effective tax rate of
Income taxes in the PRC consisted of:
| For The Three Months Ended June 30, | ||||||||
| 2025 | 2024 | |||||||
| US$ | US$ | |||||||
| Income tax expense | ||||||||
| Deferred income tax benefit | ( | ) | ( | ) | ||||
| Total income tax expense (benefit) | ( | ) | ||||||
The Company had an income tax expense of US$
Below is a reconciliation of the statutory tax rate to the effective tax rate:
| For The Three Months Ended June 30, | ||||||||
| 2025 | 2024 | |||||||
| PRC statutory income tax rates* | % | % | ||||||
| Non-deductible expenses | % | ( | )% | |||||
| Preferential tax rate reduction | ( | )% | % | |||||
| Change in valuation allowance | ( | )% | ( | )% | ||||
| Actual income tax rate | % | % | ||||||
| * |
23
Deferred tax assets consisted of the following:
| As of | ||||||||
| June 30, 2025 | March 31, 2025 | |||||||
| US$ | US$ | |||||||
| Land use right amortization | $ | |||||||
| Appraisal appreciation | ||||||||
| Net operating losses carried forward in the PRC | ||||||||
| Net operating losses carried forward in the U.S. | ||||||||
| Totals | ||||||||
| Less: Valuation allowance | ( | ) | ( | ) | ||||
| Deferred tax assets, net | ||||||||
16. RELTED PARTY TRANSACTIONS
| (a) | Related parties |
The principal related parties with which the Group had transactions during the years presented are as follows:
| Names of related parties | Relationship with The Group | |
| Zengqiang Lin | ||
| Xinhongbo | ||
| Fuqing Changhong Agricultural Products Supply Chain Co. Ltd. (“Changhong”) | ||
| Zhenzhu Lin | ||
| Xindefu | ||
| Xiuhua Zhou | ||
| Fujian Xiangbing Logistics Co., Ltd. (“Xiangbing”) | ||
| Huaqiang Lin |
| (b) |
| For three months ended | ||||||||
| June 30, | ||||||||
| 2025 | 2024 | |||||||
| US$ | US$ | |||||||
| Loans from related parties: | ||||||||
| -Zhenzhu Lin | ||||||||
| -Zengqiang Lin | ||||||||
| -Xiuhua Zhou | ||||||||
| Repayments to related parties: | ||||||||
| -Zhenzhu Lin | ( | ) | ||||||
| -Zengqiang Lin | ( | ) | ( | ) | ||||
| -Xiuhua Zhou | ||||||||
| ( | ) | ( | ) | |||||
| Refunds from a related party | ||||||||
| -Xinhongbo | ||||||||
| -Changhong | ||||||||
| Capital contribution to Hongchang Food: | ||||||||
| -Zengqiang Lin | ||||||||
| Sales of goods: | ||||||||
| -Xindefu | ||||||||
| Procurement of goods: | ||||||||
| -Xindefu | ||||||||
| Procurement of service: | ||||||||
| -Xindefu | ||||||||
| -Fujian Xiangbing Logistics Co., Ltd. | ||||||||
24
| (c) |
| As of June 30, 2025 | As of March 31, 2025 | |||||||
| US$ | US$ | |||||||
| Amount due from a related party | ||||||||
| -Xindefu | ||||||||
| Advance to suppliers-related party | ||||||||
| -Xinhongbo | ||||||||
| Amount due from a related party | ||||||||
| -Changhong | ||||||||
| Amounts due to related parties: | ||||||||
| -Zhenzhu Lin– current portion | ||||||||
| -Zengqiang Lin | ||||||||
| -Zengqiang Lin – current portion | ||||||||
All balances with the related parties as of June 30, 2025 and March 31, 2025 were unsecured and interest-free and had no fixed terms of repayments.
On April 1, 2023, Hongchang Food entered into
an interest-free loan agreement with Zengqiang Lin to obtain aggregate maximum loans of up to US$
On March 1, 2024, Hongchang Food entered into
a loan agreement with Zengqiang Lin, bearing an annual interest rate of
On May 16, 2024, Hongfu Food entered into an interest-free
loan agreement with Zhenzhu Lin to obtain aggregate maximum loans of up to US$
On September 19, 2024, Hongchang Food entered
into an interest-free loan agreement with Zengqiang Lin to obtain aggregate maximum loans of up to US$
On December 15, 2024, Hongchang Supply Chain entered
into an interest-free loan agreement with Zengqiang Lin to obtain aggregate maximum loans of up to RMB
On January 25, 2025, Hongchang Supply Chain entered
into an interest-free loan agreement with Huaqiang Lin to obtain aggregate maximum loans of up to US$
On January 26, 2025, Hongchang Food entered into
a mortgage contract with Fujian Fuqing Huitong Rural Commercial Bank Co., Ltd., pledging the buildings and land use right as collateral
to secure the loans obtained by Xinhongbo. The carrying value of the buildings was US$
17. COMMITMENTS AND CONTINGENCIES
As of March 31, 2025, the Group had entered into
several contracts for construction of the Hongchang Food Industrial Park and the improvement of industrial buildings. Total outstanding
commitments under these contracts were US$
18. SUBSEQUENT EVENTS
Management has reviewed the Group’s operations for potential disclosure or financial statement impacts related to events occurring after June 30, 2025 through the date the release of the unaudited condensed consolidated financial statements contained in this quarterly report on From 10-Q were issued. Based on such evaluation, there were no additional subsequent event disclosures or financial statement impacts related to events occurring after June 30, 2025 that warranted adjustment to or disclosure in these unaudited condensed consolidated financial statements.
25
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis of financial condition and results of operations relates to the operations and financial condition reported in our unaudited condensed consolidated financial statements, which appear elsewhere in this Report, and should be read in conjunction with such financial statements and related notes included in this Report. Except for the historical information contained herein, the following discussion, as well as other information in this Report, contain “forward-looking statements,” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and are subject to the “safe harbor” created by those sections. Actual results and the timing of the events may differ materially from those contained in these forward-looking statements due to many factors, including those discussed in the “Forward-Looking Statements” set forth elsewhere in this Report.
Discussion and Analysis of Three Months Ended June 30, 2025 Compared to Three Months Ended June 30, 2024
Results of Operations
The following chart provides a summary of our results of operations for the three months ended June 30, 2025 and 2024:
| Three months ended June 30, | ||||||||
| 2025 | 2024 | |||||||
| Revenue | $ | 3,844,148 | $ | 1,981,898 | ||||
| Cost of revenue | (3,230,436 | ) | (1,883,183 | ) | ||||
| Gross profit | 613,712 | 98,715 | ||||||
| Total operating expenses | (76,277 | ) | (122,729 | ) | ||||
| Income (loss) from operations | 537,435 | (24,014 | ) | |||||
| Total other (expense) income | (7,681 | ) | 1,601 | |||||
| Income (loss) before income taxes | 529,754 | (22,413 | ) | |||||
| Income tax (expense) benefit | (29,812 | ) | 733 | |||||
| Net income (loss) | $ | 499,942 | $ | (21,680 | ) | |||
| Basic net income (loss) per share | $ | (0.00 | ) | $ | (0.00 | ) | ||
Revenue
The PRC subsidiaries generate revenue mainly from the meatpacking business, sales and installation of support infrastructure for the industrial park, and provision of rental services.
The following table sets forth the breakdown of our revenue by category, both in absolute amount and as a percentage of total revenue for each category for the periods indicated:
| Three Months Ended June 30, | ||||||||||||||||
| 2025 | 2024 | |||||||||||||||
| US$ | % | US$ | % | |||||||||||||
| Product sales – Meat products | 3,440,009 | 89 | 1,981,898 | 100 | ||||||||||||
| Services – Rental services | 404,139 | 11 | - | - | ||||||||||||
| Total | 3,844,148 | 100 | 1,981,898 | 100 | ||||||||||||
The PRC subsidiaries generated revenue of US$3,844,148 for the three months ended June 30, 2025, as compared to US$1,981,898 for the same period of 2024. The increase of 94% for the three months ended June 30, 2025 was mainly because: (i) the meat product sales revenue of US$3,440,009 from a new subsidiary, Pucheng Green Health Food and (ii) rental revenue from the lease contracts of Phrase I of Hongchang Food Industrial Park.
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Cost of revenue
Cost of revenue for meat products and support infrastructure sales and installation represents costs and expenses directly attributable to the manufacture of our products and facilities sold and delivered, which primarily comprises of costs of (1) materials, components, and parts; (2) production overhead, including mainly packaging and testing costs, amortization and depreciation of intangible assets, production equipment, and utilities; (3) direct labor, including cost to our production staff and outsourced production workers, and (4) outsourcing production costs.
Cost of rental service primarily consists depreciation expenses.
Cost of revenue was US$3,230,436 for the three months ended June 30, 2025, which is a 72 % increase as compared to US$1,883,183 for the same period of 2024, due to sales increase of Pucheng Green Health Food and rental cost of buildings in Hongchang Food Industrial Park. The following table sets forth the breakdown of our cost of revenue by category, both in absolute amount and as a percentage of the cost of revenue, for the periods indicated:
| Three Months Ended June 30, | ||||||||||||||||
| 2025 | 2024 | |||||||||||||||
| US$ | % | US$ | % | |||||||||||||
| Product sales – Meat products | 3,017,793 | 93 | 1,883,183 | 100 | ||||||||||||
| Services – Rental services | 212,643 | 7 | - | - | ||||||||||||
| Total | 3,230,436 | 100 | 1,883,183 | 100 | ||||||||||||
Gross profit and margin
Gross profit refers to the difference between operating revenue and costs. Our gross profit/loss and gross profit/loss margin of sales of meat products are primarily affected by the market price of the products and our cost of revenue.
Our gross profit/loss and gross profit/loss margin of rental services are primarily affected by the average market rent of the building space and our cost of revenue.
Gross margin is a measure used by management to indicate whether we are selling products at an appropriate gross profit. Our gross margin is influenced by product prices, product combinations, availability, and discounts, as some products typically offer higher gross profit margins, as well as the impact of our product costs, which may vary. At present, we offer competitive prices to attract and retain customers. In the future, as we grow, we plan to launch diversified products and competitive services to increase market share. We regularly evaluate the profitability of our products. As our business activities started in 2023 and we are still in the early stages, we had gross profit of US$613,712 and gross profit of US$98,715 for the three months ended June 30, 2025 and 2024, which represented gross margin of 16% and 5%%, respectively. The following table sets forth our gross profit/loss by category for the periods indicated:
| Three Months Ended June 30, | ||||||||||||||||
| 2025 | 2024 | |||||||||||||||
| US$ | % | US$ | % | |||||||||||||
| Product sales – Meat products | 422,216 | 69 | 98,715 | 100 | ||||||||||||
| Services – Rental services | 191,496 | 31 | - | - | ||||||||||||
| Total | 613,712 | 100 | 98,715 | 100 | ||||||||||||
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Operating expenses
Our operating expenses consist of sales and marketing expenses and general and administrative expenses.
Sales and marketing expenses
We incurred selling expenses of US$nil and US$155 for the three months ended June 30, 2025 and 2024, mainly due to the reduction of marketing activities.
General and administrative expenses
We incurred general and administrative expenses of US$76,277 for the three months ended June 30, 2025, as compared to US$122,574 in the same period of 2024. The decrease in management expenses was mainly due to our enhanced control measures over cost and administrative expenses and capital utilization strategies.
Income tax expenses
We incurred income tax expenses of US$29,812 for the three months ended June 30, 2025, and incurred income tax benefits of US$733 in the same period of 2024.
Net income (loss)
As a result of the foregoing, we reported net income of US$499,942 for the three months ended June 30, 2025 and a net loss of US$21,680 for the same period of 2024.
Liquidity and Capital Resources
The following chart provides a summary of our key balance sheet items as of June 30, 2025 and March 31, 2025, and should be read in conjunction with the financial statements, and notes thereto, included with this report.
| As of June 30, 2025 | As of March 31, 2025 | |||||||
| Cash and cash equivalents | $ | 50,043 | $ | 493,201 | ||||
| Restricted cash | $ | 220,500 | $ | 217,700 | ||||
| Accounts receivable, net | $ | 1,391,532 | $ | 2,278,878 | ||||
| Other receivables, net | $ | 752,314 | $ | 74,693 | ||||
| Other current assets | $ | 731,612 | $ | 757,833 | ||||
| Total current assets | $ | 3,295,326 | $ | 4,033,900 | ||||
| Construction-in-progress | $ | 17,458,476 | $ | 16,832,470 | ||||
| Land use right, net | $ | 4,026,608 | $ | 3,998,567 | ||||
| Total assets | $ | 58,937,106 | $ | 59,538,093 | ||||
| Accounts payable-construction in progress | $ | 19,650 | $ | 13,639 | ||||
| Total current liabilities | $ | 4,785,090 | $ | 6,403,007 | ||||
| Long-term loans | $ | 6,522,479 | $ | 6,600,973 | ||||
| Amounts due to a related party | $ | 3,558,083 | $ | 3,513,737 | ||||
| Total non-current liabilities | $ | 12,035,582 | $ | 12,057,847 | ||||
| Total liabilities | $ | 16,820,672 | $ | 18,460,854 | ||||
| Total stockholders’ (deficit) equity | $ | 42,116,434 | $ | 41,077,239 | ||||
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As of June 30, 2025, we had US$270,543 in cash, compared to US$710,901 as of March 31, 2025. The decrease in cash was mainly due to (i) reimbursement of accounts payable and other payables, (ii) investment in construction of Phrase II of Hongchang Food Industrial Park, and (iii) repayments of long-term payables.
As of June 30, 2025, our construction in progress balance amounted to approximately US$17,458,476, as compared to US$16,832,470 as of March 31, 2025. This reflected our continuous investment and progress of the construction schedule in Hongchang Food Industrial Park.
Capital Expenditure Commitment as of June 30, 2025
As of June 30, 2025, the Company had entered into several contracts for construction of the Hongchang Food Industrial Park and the improvement of the processing factory buildings. Total outstanding commitments under these contracts were US$3,908,374 and US$3,859,662 as of June 30, 2025 and March 31, 2025, respectively. The Company expected to pay off all the balances within one to three years.
Off Balance Sheet Arrangements
We did not have any off-balance sheet arrangements as of June 30, 2025 and March 31, 2025.
Cash Flows
The following table sets forth a summary of our cash flows for the periods presented:
| For three months ended June 30, | ||||||||
| 2025 | 2024 | |||||||
| US$ | US$ | |||||||
| Net cash used in operating activities | $ | (229,827 | ) | $ | (3,094,601 | ) | ||
| Net cash used in investing activities | $ | (135,586 | ) | $ | (75,458 | ) | ||
| Net cash (used in) provided by financing activities | $ | (79,883 | ) | $ | 2,632,506 | |||
| Effect of foreign exchange on cash | $ | 4,938 | $ | (40,147 | ) | |||
| Net decrease in cash | $ | (440,358 | ) | $ | (577,700 | ) | ||
| Cash and restricted cash at the beginning of the period | $ | 710,901 | $ | 895,074 | ||||
| Cash and restricted cash at the end of the period | $ | 270,543 | $ | 317,374 | ||||
Operating activities
Net cash used in operating activities for the three months ended June 30, 2025 was US$229,827, which primarily reflected our net income of US$499,942, as mainly adjusted for amortization of US$188,693, and adjustment for changes in working capital, primarily consisting of (i) a decrease in accounts receivable of US$907,896, (ii) a decrease in advances to supplier of US$57,126, and (iii) a decrease in other current assets of US$39,064, offset by (i) a decrease in accounts payable of US$1,385,041, (ii) a decrease in accrued expenses and other payables of US$385,940 and (iii) an increase in other receivable of US$158,970.
Net cash used in operating activities for the three months ended June 30, 2024 was US$3,094,601, which primarily reflected our net loss of US$21,680, as mainly adjusted for amortization of US$21,816, and adjustment for changes in working capital, primarily consisting of (i) an increase in accounts payable of US$155,910, (ii) an increase in accounts payable to related parties of US$422,555, (iii) a decrease in other current assets of US$149,850, and (iv) an increase in advances from customers of US$162,726, offset by (i) an increase in inventories of US$1,797,178, (ii) an increase in accounts receivable of US$1,043,021, (iii) an increase in advances to supplier of US$937,246, and (iv) a decrease in accrued expenses and other payables of US$197,675.
Investing activities
Net cash used in investing activities for the three months ended June 30, 2025 was US$135,586, mainly attributable to purchases of property and equipment. Net cash used in investing activities for the three months ended June 30, 2024 was US$75,458, mainly attributable to purchases of property and equipment.
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Financing activities
Net cash used in financing activities for the three months ended June 30, 2025 was US$79,883, primarily due to repayments of long-term payables.
Net cash provided by financing activities for the three months ended June 30, 2024 was US$2,632,506, primarily due to loans from related parties.
Critical Accounting Policies Involving Critical Accounting Estimates
The discussion and analysis of our Group’s financial condition and results of operations are based upon our Group’s unaudited condensed consolidated financial statements, which have been prepared in accordance with U.S. GAAP in a consistent manner. The preparation of these financial statements requires the selection and application of accounting policies. Further, the application of U.S. GAAP requires our Group to make estimates and judgments about future events that affect the reported amounts of assets, liabilities, revenue, and expenses and related disclosures. On an ongoing basis, our Group evaluate its estimates, including those discussed below. Our Group bases its estimates on historical experience, current trends, and various other assumptions that it believes are 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. Our Group believes it is possible that other professionals, applying reasonable judgment to the same set of facts and circumstances, could develop and support a range of alternative estimated amounts. Our Group believes that it has appropriately applied its critical accounting policies. However, in the event that inappropriate assumptions or methods were used relating to the critical accounting policies below, our Group’s consolidated statements of operations could be misstated.
A detailed summary of significant accounting policies is summarized below:
Use of estimates
The preparation of the unaudited condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, related disclosures of contingent assets and liabilities at the balance sheet date, and the reported revenue and expenses during the reported period in the unaudited condensed consolidated financial statements and accompanying notes. Significant accounting estimates reflected in our Group’s unaudited condensed consolidated financial statements mainly include, but are not limited to, assessment for impairment of long-lived assets, valuation of deferred tax assets, and current expected credit loss of receivables. Actual results could differ from those estimates.
Construction-in-progress
Property and equipment that are purchased or constructed which require a period of time before the assets are ready for their intended use are accounted for as construction-in-progress. Construction-in-progress is recorded at acquisition cost, including installation costs. Construction-in-progress is transferred to specific property and equipment accounts and commences depreciation when these assets are ready for their intended use.
Land use right, net
The land use rights represent the operating lease prepayments for the rights to use the land in the PRC. Amortization of the prepayments is provided on a straight-line basis over the terms of the respective land use rights certificates.
Revenue recognition
The Group applied ASC Topic 606 “Revenue from Contracts with Customers” (“ASC 606”) for all periods presented.
Step 1: Identify the contract(s) with a customer.
Step 2: Identify the performance obligations in the contract.
Step 3: Determine the transaction price – The transaction price is the amount of consideration in a contract to which an entity expects to be entitled in exchange for transferring promised goods or services to a customer.
Step 4: Allocate the transaction price to the performance obligations in the contract – Any entity typically allocates the transaction price to each performance obligation on the basis of the relative standalone selling prices of each distinct good or service promised in the contract.
Step 5: Recognize revenue when (or as) the entity satisfies a performance obligation – An entity recognizes revenue when (or as) it satisfies a performance obligation by transferring a promised good or service to a customer (which is when the customer obtains control of that good or service). The amount of revenue recognized is the amount allocated to the satisfied performance obligation. A performance obligation may be satisfied at a point in time (typically for promises to transfer goods to a customer) or over time (typically for promises to transfer service to a customer).
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The Group has elected to apply the practical expedient in paragraph ASC 606-10-50-14 and does not disclose information about remaining performance obligations that have original expected durations of one year or less.
The Group has elected a practical expedient that it does not adjust the promised amount of consideration for the effects of a significant financing component if the Group expects that, upon the inception of revenue contracts, the period between when the Group transfers its promised services or deliverables to its clients and when the clients pay for those services or deliverables will be one year or less.
As a practical expedient, the Group elected to expense the incremental costs of obtaining a contract when incurred if the amortization period of the asset that the Group otherwise would have recognized is one year or less.
The Group is a food provider in Fujian Province which principally engages in meat and food product sales, sale and installation of support infrastructure, and property rental.
The Group’s principal revenue stream includes:
| 1. | Product revenue: |
| ● | Meat and food product sales: |
The Group enters into contracts with customers for the supply of meat and food products, whereby customers agree to pay product fees over the contract term in line with the terms set out in the sales agreements. Each contract encompasses a single promise: delivering specific goods to customers, which the Group therefore identifies as a single performance obligation, with all service fees (including but not limited to shipping and handling fees and packaging fees) allocated thereto. Control is considered transferred when the customer gains the ability to direct the use of the goods and obtain substantially all remaining economic benefits therefrom. Accordingly, the Group recognizes revenue at the point in time when control of the goods is transferred to the customer.
For the majority of meat and food product sales contracts, the Group assumes inventory risk, has the autonomy to set prices, and is responsible for fulfilling the promise to deliver specific goods to customers. As the Group acts as the principal in these transactions, revenue is recognized on a gross basis. In contrast, for a small number of contracts where the Group does not assume inventory risk, does not have pricing authority, and is not primarily responsible, revenue is recognized on a net basis.
| ● | Sale and installation of support infrastructure: |
The Group bundles the installation together with the sale of mounts for photovoltaic panels. The installation services do not significantly customize or modify the mounts.
Contracts for bundled sales of equipment and installation services are comprised of two performance obligations because the equipment and installation services are both sold on a stand-alone basis and are distinct within the context of the contract. Accordingly, the Group allocates the transaction price based on the relative stand-alone selling prices of the equipment and installation services.
The Group recognizes revenue from installation services over time because the customer simultaneously receives and consumes the benefits provided to them. The Group uses an input method in measuring progress of the installation services because there is a direct relationship between the Groups effort (i.e., based on the labor hours incurred) and the transfer of service to the customer. The Group recognizes revenue on the basis of the labor hours expended relative to the total expected labor hours to complete the service.
| 2. | Service revenue: |
| ● | Rental services: The Group started to generate lease revenue in 2025 from operating leases of constructed buildings in the Hongchang Food Industrial Park to customers. As a lessor, the Group accounts for these leases under ASC 842. Lease revenue is recognized on a straight-line basis over the lease term, with any difference between straight-line revenue and contractual rental receipts recorded as a component of accounts receivable. Revenue recognition is subject to a collectability assessment, considering the creditworthiness of lessees and historical payment patterns. See “Note 2. Summary of Significant Accounting Policies—Lease—from the perspective as a lessor” for more discussion. |
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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Pursuant to Item 305(e) of Regulation S-K (§ 229.305(e)), the Company is not required to provide the information required by this Item as it is a “smaller reporting company,” as defined by Rule 229.10(f)(1).
ITEM 4. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
Management has evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934), as of the end of the period covered by this Report. Based on such evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that, as of such date, our disclosure controls and procedures were not effective as a result of a material weakness primarily related to a lack of a sufficient number of personnel with appropriate training and experience in U.S. GAAP. In the future, we intend to hire more personnel with sufficient training and experience in U.S. GAAP. We plan to enhance our internal control system through a series of measures, including hiring more personnel with adequate training and U.S. GAAP experience, appointing independent directors, and setting up an audit committee.
Changes in Internal Control over Financial Reporting
There was no change in our internal control over financial reporting that occurred during the quarterly period ended June 30, 2025, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
We believe that a control system, no matter how well designed and operated, cannot provide absolute assurance that the objectives of the control system are met, and no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within any company have been detected.
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PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
From time to time, we may become involved in various lawsuits and legal proceedings which arise in the ordinary course of business. Litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm our business. There are currently no legal proceedings or claims that we believe will have a material adverse effect on our business, financial condition, or operating results.
ITEM 1A. RISK FACTORS
Smaller reporting companies are not required to provide the information required by this item.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
ITEM 5. OTHER INFORMATION
There was no information required to be disclosed
in a report on Form 8-K during the period covered by this Report, but not reported. There were no material changes to the procedures by
which security holders may recommend nominees to the registrant’s board of directors.
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ITEM 6. – EXHIBITS
| * | Filed herewith. |
| ** | In accordance with Item 601(b)(32)(ii) of Regulation S-K and SEC Release No. 34-47986, the certifications furnished in Exhibits 32.1 and 32.2 herewith are deemed to accompany this Form 10-Q and will not be deemed filed for purposes of Section 18 of the Exchange Act. Such certifications will not be deemed to be incorporated by reference into any filings under the Securities Act or the Exchange Act. |
34
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.
| Hongchang International Co., Ltd | ||
| Dated: August 14, 2025 | By: | /s/ Zengqiang Lin |
| Name: | Zengqiang Lin | |
| Title: | Chief Executive Officer and Chief Financial Officer (Duly Authorized Officer, Principal Executive Officer, and Principal Financial Officer) | |
35
Exhibit 31.1
CERTIFICATION OF THE CHIEF EXECUTIVE OFFICER PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Zengqiang Lin, certify that:
I have reviewed this report on Form 10-Q of Hongchang International Co., Ltd;
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15I and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
| a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
| b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
| c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period covered by this report based on such evaluation; and |
| d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting. |
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent function):
| a) | All significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
| b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
| Dated: August 14, 2025 | By: | /s/ Zengqiang Lin |
| Name: | Zengqiang Lin | |
| Title: | Director, Chief Executive Officer, and President (Principal Executive Officer) |
Exhibit 31.2
CERTIFICATION OF THE CHIEF FINANCIAL OFFICER PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Zengqiang Lin, certify that:
I have reviewed this report on Form 10-Q of Hongchang International Co., Ltd;
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15I and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
| a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
| b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
| c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period covered by this report based on such evaluation; and |
| d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting. |
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent function):
| a) | All significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
| b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
| Dated: August 14, 2025 | By: | /s/ Zengqiang Lin |
| Name: | Zengqiang Lin | |
| Title: | Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer) |
Exhibit 32.1
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
The undersigned hereby certifies, in his capacity as an officer of Hongchang International Co., Ltd (the “Company”), for the purposes of 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of his knowledge:
| (1) | The Quarterly Report of the Company on Form 10-Q for the quarter ended June 30, 2025 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
| (2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
| Dated: August 14, 2025 | By: | /s/ Zengqiang Lin |
| Name: | Zengqiang Lin | |
| Title: | Director, Chief Executive Officer, and President (Principal Executive Officer) |
The foregoing certification is being furnished solely pursuant to section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of section 1350, chapter 63 of title 18, United States Code) and is not being filed as part of a separate disclosure document.
Exhibit 32.2
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
The undersigned hereby certifies, in his capacity as an officer of Hongchang International Co., Ltd (the “Company”), for the purposes of 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of his knowledge:
| (1) | The Quarterly Report of the Company on Form 10-Q for the quarter ended June 30, 2025 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
| (2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
| Dated: August 14, 2025 | By: | /s/ Zengqiang Lin |
| Name: | Zengqiang Lin | |
| Title: |
Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer) |
The foregoing certification is being furnished solely pursuant to section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of section 1350, chapter 63 of title 18, United States Code) and is not being filed as part of a separate disclosure document.